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What changed in Aptiv's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Aptiv's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+403 added−449 removedSource: 10-K (2024-02-06) vs 10-K (2023-02-08)

Top changes in Aptiv's 2023 10-K

403 paragraphs added · 449 removed · 331 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

62 edited+7 added−11 removed78 unchanged
Biggest changeThe following table provides the percentage of net sales to our largest customers for the year ended December 31, 2022: Customer Percentage of Net Sales General Motors Company 9% Stellantis N.V. 9% Ford Motor Company 8% Volkswagen Group 8% Tesla, Inc. 5% Geely Automobile Holdings Limited 5% Mercedes-Benz Group AG 4% SAIC General Motors Corporation Limited 3% Bayerische Motoren Werke AG 2% Toyota Motor Corporation 2% Tata Motors Limited 2% Supply Relationships with Our Customers We typically supply products to our OEM customers through purchase orders, which are generally governed by general terms and conditions established by each OEM.
Biggest changeOur ten largest customers accounted for approximately 54% of our total net sales for the year ended December 31, 2023, none of which individually exceeded 10%. Supply Relationships with Our Customers We typically supply products to our OEM customers through purchase orders, which are generally governed by general terms and conditions established by each OEM.
Convergence of Safe, Green and Connected Solutions in New Mobility and Autonomous Driving The combination of advanced technologies being developed within these mega-trends is also contributing to increasing industry development of autonomous driving technologies, leading to a fully automated driving experience.
Convergence of Safe, Green and Connected Solutions in New Mobility and Autonomous Driving Technologies The combination of advanced technologies being developed within these mega-trends is also contributing to increasing industry development of autonomous driving technologies, leading to a fully automated driving experience.
We recognize that sustaining a leadership culture requires continual focus and attention. Accordingly, senior executives and leaders throughout the Company commit time, resources and attention to ensure our culture continues to differentiate Aptiv as a great place to work. Diversity and Inclusion At Aptiv, we value each individual’s perspective and foster an environment of respect and inclusion.
We recognize that sustaining a leadership culture requires continual focus and attention. Accordingly, senior executives and leaders throughout the Company commit time, resources and attention to ensure our culture continues to differentiate Aptiv as a great place to work. Diversity and Inclusion At Aptiv, we value each individual’s perspective and we foster an environment of respect and inclusion.
Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions and higher fuel economy. • Advanced Safety and User Experience —This segment provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, cloud-native software platforms, application software, autonomous driving technologies and end-to-end DevOps tools.
Our products provide the signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions, higher fuel economy and off-vehicle connectivity. • Advanced Safety and User Experience —This segment provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, cloud-native software platforms, application software, autonomous driving technologies and end-to-end DevOps tools.
In many cases, other authorities have initiated legislation or regulation that would further tighten the standards through 2023 and beyond. Based on the current regulatory environment, we believe that OEMs, including those in the U.S. and China, will be subject to requirements for even greater reductions in carbon dioxide (“CO 2 ”) emissions over the next ten years.
In many cases, other authorities have initiated legislation or regulation that would further tighten the standards through 2024 and beyond. Based on the current regulatory environment, we believe that OEMs, including those in the U.S. and China, will be subject to requirements for even greater reductions in carbon dioxide (“CO 2 ”) emissions over the next ten years.
In addition, our customers generally require that we demonstrate improved efficiencies, through cost reductions and/or price improvement, on a year-over-year basis. Our competitors in each of our operating segments are as follows: Segment Competitors Signal and Power Solutions • Amphenol Corporation • Draexlmaier Automotive • Lear Corporation • Leoni AG • Molex Inc.
In addition, our customers generally require that we demonstrate improved efficiencies, through cost reductions and/or price improvement, on a year-over-year basis. Our competitors in each of our operating segments are as follows: Segment Competitors Signal and Power Solutions • Amphenol Corporation • Draexlmaier Group • Lear Corporation • Leoni AG • Molex Inc.
Brazier is a Certified Public Accountant and began his career with the international public accounting firm of KPMG. Matthew M. Cole , 53, is senior vice president of Aptiv and president of Advanced Safety and User Experience, effective January 2023. He joined Aptiv from Tech Transformations, where he was president and business leader from September 2021 until January 2023.
Brazier is a Certified Public Accountant and began his career with the international public accounting firm of KPMG. Matthew M. Cole , 54, is senior vice president of Aptiv and president of Advanced Safety and User Experience, effective January 2023. He joined Aptiv from Tech Transformations, where he was president and business leader from September 2021 until January 2023.
Presley , 53, is senior vice president and chief operating officer of Aptiv, a position he has held since December 2022, and president, Signal and Power Solutions, a position he has held since September 2020. Mr. Presley joined Aptiv in January 2019 as president of the Electrical Distribution Systems business unit. Prior to joining Aptiv, he was at Lear Corporation.
Presley , 54, is senior vice president and chief operating officer of Aptiv, a position he has held since December 2022, and president, Signal and Power Solutions, a position he has held since September 2020. Mr. Presley joined Aptiv in January 2019 as president of the Electrical Distribution Systems business unit. Prior to joining Aptiv, he was at Lear Corporation.
Prior to the merger with Thermo Electron, he also served as vice president and corporate controller of Fisher Scientific and held several other senior finance positions. Allan J. Brazier , 56, is vice president and chief accounting officer of Aptiv, a position he has held since February 2011. Mr.
Prior to the merger with Thermo Electron, he also served as vice president and corporate controller of Fisher Scientific and held several other senior finance positions. Allan J. Brazier , 57, is vice president and chief accounting officer of Aptiv, a position he has held since February 2011. Mr.
Clark served as Fisher-Scientific’s corporate controller and treasurer. Joseph R. Massaro , 53, is Aptiv’s chief financial officer and senior vice president, business operations. Mr. Massaro joined the Company in October 2013 as vice president, Internal Audit, and in September 2014 was appointed to the position of vice president, corporate controller.
Clark served as Fisher-Scientific’s corporate controller and treasurer. Joseph R. Massaro , 54, is Aptiv’s chief financial officer and senior vice president, business operations. Mr. Massaro joined the Company in October 2013 as vice president, Internal Audit, and in September 2014 was appointed to the position of vice president, corporate controller.
We have organized our business into two diversified segments, which enable us to develop technology solutions and manufacture highly-engineered products that enable our customers to respond to these mega-trends: • Signal and Power Solutions —This segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including engineered component products, connectors, wiring assemblies and harnesses, cable management, electrical centers and hybrid high voltage and safety distribution systems.
We have organized our business into two diversified segments, which enable us to develop technology solutions and manufacture highly-engineered products that enable our customers to respond to these mega-trends: • Signal and Power Solutions —This segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including engineered component products, connectors, wiring assemblies and harnesses, cable management, electrical centers and high voltage power and safety-critical data distribution systems.
We identify locations where we operate that are water-scarce and take action to reduce our water consumption accordingly, while also striving to comply with best practices in lower-risk locations. Our goal is to reduce water consumption in high-risk (water-scarce) locations by 2% per year.
We identify locations where we operate that are water-scarce and take action to reduce our water consumption accordingly, while also striving to comply with best practices in lower-risk locations. Our goal is to reduce water consumption in high-risk (water-scarce) locations by 2% per year through 2025.
Clark , 60, is chairman of Aptiv’s board of directors and chief executive officer (CEO) of the company. Mr. Clark was named president and CEO and became a member of the board in March 2015. Previously, Mr. Clark was chief operating officer (COO) from October 2014 to March 2015. Prior to the COO position, Mr.
Clark , 61, is chairman of Aptiv’s board of directors and chief executive officer (CEO) of the company. Mr. Clark was named president and CEO and became a member of the board in March 2015. Previously, Mr. Clark was chief operating officer (COO) from October 2014 to March 2015. Prior to the COO position, Mr.
Furthermore, the rapidly evolving nature of the markets in which we compete has attracted, and may continue to attract, new entrants, particularly in best cost countries such as China and in areas of evolving vehicle technologies such as intelligent systems software, automated driving and mobility solutions, which has attracted competitors from outside the traditional automotive industry.
Furthermore, the rapidly evolving nature of the markets in which we compete has attracted, and may continue to attract, new entrants, particularly in best cost countries such as China and 8 Table of Contents in areas of evolving vehicle technologies such as intelligent systems software, automated driving and mobility solutions, which has attracted competitors from outside the traditional automotive industry.
This segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, cable management, electrical centers and hybrid high voltage and safety distribution systems.
This segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, cable management, electrical centers and high voltage and safety-critical distribution systems.
Although customer programs typically extend to future periods, and although there is an expectation that we will supply certain levels of OEM production during such future periods, customer agreements including applicable terms and conditions do not necessarily constitute firm orders.
Although customer programs typically extend to future periods, and although there is an expectation that we will supply certain levels of OEM production during such future periods, customer agreements including applicable terms and conditions 9 Table of Contents do not necessarily constitute firm orders.
Lyon served as senior director – Special Projects Group at Apple Inc. from April 2014 to February 2021. Mr. Lyon joined Apple in 1999, and while there, held several positions of increasing responsibility. 14 Table of Contents William T.
Lyon served as senior director – Special Projects Group at Apple Inc. from April 2014 to February 2021. Mr. Lyon joined Apple in 1999, and while there, held several positions of increasing responsibility. William T.
Nothing on our website, including the aforementioned Sustainability Report, shall be deemed incorporated by reference into this Annual Report. 13 Table of Contents SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT The name, age (as of February 1, 2023), current positions and description of business experience of each of our executive officers are listed below.
Nothing on our website, including the aforementioned Sustainability Report, shall be deemed incorporated by reference into this Annual Report. 12 Table of Contents SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT The name, age (as of February 1, 2024), current positions and description of business experience of each of our executive officers are listed below.
She has also held a variety of technology and product development roles at Apple, ETM and Applied Materials. 15 Table of Contents
She has also held a variety of technology and product development roles at Apple, ETM and Applied Materials. 14 Table of Contents
(a subsidiary of Koch Industries, Inc.) • Sumitomo Corporation • TE Connectivity, Ltd. • Yazaki Corporation Advanced Safety and User Experience • Bosch Group • Continental AG • Denso Corporation • Harman International (a subsidiary of Samsung Electronics) • Hyundai Mobis • Magna International • Panasonic Corporation • Valeo • Veoneer, Inc. • Visteon Corporation • ZF Friedrichshafen AG 9 Table of Contents Customers We sell our products and services to the major global OEMs in every region of the world.
(a subsidiary of Koch Industries, Inc.) • Sumitomo Electric Industries • TE Connectivity, Ltd. • Yazaki Corporation Advanced Safety and User Experience • Bosch Group • Continental AG • Denso Corporation • Harman International (a subsidiary of Samsung Electronics) • Hyundai Mobis • LG Electronics • Magna International • Panasonic Corporation • Valeo • Visteon Corporation • ZF Friedrichshafen AG Customers We sell our products and services to the major global OEMs in every region of the world.
This system is continuously updated to ensure that our procedures remain up to date. 12 Table of Contents Reducing our Water Usage and Waste Generated While our operations are not water intensive, we include water in our environmental risk management approach.
This system is continuously updated to ensure that our procedures remain up to date. Reducing our Water Usage and Waste Generated While our operations are not water intensive, we include water in our environmental risk management approach.
We operate 131 major manufacturing facilities and 11 major technical centers utilizing a regional service model that enables us to efficiently and effectively serve our global customers from best cost countries. We have a presence in 48 countries and have approximately 22,000 scientists, engineers and technicians focused on developing market relevant product solutions for our customers.
We operate 138 major manufacturing facilities and 11 major technical centers utilizing a regional service model that enables us to efficiently and effectively serve our global customers from best cost countries. We have a presence in 50 countries and have approximately 22,200 scientists, engineers and technicians focused on developing market relevant product solutions for our customers.
This dedication to employee growth and development was demonstrated by more than half of our management role openings being filled through internal promotions in 2022. We manage succession planning as part of our operating cadence and top leadership succession plans are reviewed with the Board of Directors annually.
This dedication to employee growth and development was demonstrated by more than half of our management role openings being filled through internal promotions in 2023. We manage succession planning as part of our monthly operating cadence and senior executive leadership succession plans are reviewed with the Board of Directors annually.
To achieve these commitments, we are targeting: • Reducing Scope 1 and 2 absolute CO2e emissions by 25% between the baseline year (2019) and 2025; • Maintaining annual certification of all major manufacturing sites to the ISO 14001 standard; • Certifying ten of the most energy-intensive sites to the ISO 50001 certification by 2025; • Sourcing 100% of electricity for operations from renewable sources by 2030; and • Delivering only carbon-neutral products by 2039, from sourcing to disposal.
To achieve these commitments, we are targeting: • Reducing Scope 1 and 2 absolute CO2e emissions by 100% between the baseline year (2021) and 2030; • Reducing Scope 3 absolute CO2e emissions by 47% between the baseline year and 2030, and achieving 100% reduction by 2040; • Maintaining annual certification of all major manufacturing sites to the ISO 14001 standard; • Certifying ten of the most energy-intensive sites to the ISO 50001 certification by 2025; • Sourcing 100% of electricity for operations from renewable sources by 2030; and • Delivering only carbon-neutral products by 2039, from sourcing to disposal.
Furthermore, the Environmental Protection Agency in December 2021 finalized more stringent GHG emissions standards for passenger car and light trucks for model years 2023-2026. These and other standards will require meaningful innovation as OEMs and suppliers are challenged to find ways to improve engine management, electrical power consumption, vehicle weight and integration of electric vehicles and alternative technologies.
In 2021, the EPA also finalized more stringent GHG emissions standards for passenger car and light trucks for model years 2023-2026. These and other standards will require meaningful innovation as OEMs and suppliers are challenged to find ways to improve engine management, electrical power consumption, vehicle weight and integration of electric vehicles and alternative technologies.
As of December 31, 2022, the percentage of our U.S. based workforce represented by minorities was approximately 43% and the percentage of U.S. based management represented by minorities was approximately 34%. Aptiv is committed to continuing to increase its level of diversity, specifically in middle management, senior leadership and technology roles, over the coming years.
As of December 31, 2023, the percentage of our U.S. based workforce represented by minorities was approximately 46% and the percentage of U.S. based management represented by minorities was approximately 30%. Aptiv is committed to continuing to increase its level of diversity, specifically in middle management, senior leadership and technology roles, over the coming years.
Aptiv participates in, and sponsors, numerous outreach programs around the world, which seek to promote and recruit women and diverse candidates into science, technology, engineering and mathematical (STEM) fields. As of December 31, 2022, the percentage of our global workforce represented by women was approximately 50% and the percentage of management represented by women was 24%.
Aptiv participates in, and sponsors, numerous outreach programs around the world, which seek to promote and recruit talented and diverse candidates into science, technology, engineering and mathematical (STEM) fields. As of December 31, 2023, the percentage of our global workforce represented by women was approximately 49% and the percentage of management represented by women was 26%.
We are a leader in workplace safety as reflected in our lost time injury frequency rate of 0.143 cases per million hours worked and our lost workday case rate per 100 employees of 0.029 for the year ended December 31, 2022.
We are a leader in workplace safety as reflected in our lost time injury frequency rate of 0.120 cases per million hours worked and our lost workday case rate per 100 employees of 0.024 for the year ended December 31, 2023.
We believe we are well-aligned with industry technology trends that will result in sustainable future growth in this space, and have partnered with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies.
We believe we are well-aligned with industry technology trends that will help to support sustainable future growth in this space and are collaborating with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies.
Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions and higher fuel economy. • High quality connectors are engineered primarily for use in the automotive and related markets, but also have applications in the industrial, telematics, aerospace, defense and medical sectors. • Electrical centers provide centralized electrical power and signal distribution and all of the associated circuit protection and switching devices, thereby optimizing the overall vehicle electrical system. • Distribution systems, including hybrid high voltage systems, are integrated into one optimized vehicle electrical system that can utilize smaller cable and gauge sizes and ultra-thin wall insulation (which product line makes up approximately 44% of our total revenue for the year ended December 31, 2022 and 42% for each of the years ended December 31, 2021 and 2020).
Our products provide the signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions, higher fuel economy and off-vehicle connectivity. • High quality connectors are engineered primarily for use in automotive and related markets, and also have applications in the industrial, telematics, aerospace, defense and medical sectors. • Electrical centers provide centralized electrical power and signal distribution and all of the associated circuit protection and switching devices, needed to support the optimization of the overall vehicle electrical system. • Distribution systems, including 48-volt hybrid and high voltage systems, are integrated into one optimized vehicle electrical system that can utilize smaller cable and gauge sizes and ultra-thin wall insulation (this product line makes up approximately 42%, 44% and 42% of our total revenue for the years ended December 31, 2023, 2022 and 2021, respectively).
Other than in the case of copper, our overall success in passing commodity cost increases on to our customers has been limited. However, in 2022, we have negotiated, and will continue to negotiate, price increases with our customers in response to the global supply chain disruptions impacting the automotive industry.
Other than in the case of copper, our overall success in passing commodity cost increases on to our customers has been limited. However, we have negotiated, and will continue to negotiate as necessary, price increases with our customers in response to global inflationary pressures and the aforementioned global supply chain disruptions.
Human Capital Resources As of December 31, 2022, we employed approximately 160,000 people; 32,000 salaried employees and 128,000 hourly employees. In addition, we maintain a contingent workforce of approximately 42,000 to accommodate fluctuations in customer demand. We are a global company serving every major worldwide market.
Human Capital Resources As of December 31, 2023, we employed approximately 154,000 people; 31,000 salaried employees and 123,000 hourly employees. In addition, we maintain a contingent workforce of approximately 47,000 to accommodate fluctuations in customer demand. We are a global company serving every major worldwide market.
In March 2020, to further our leadership position in the automated driving space, we completed a transaction with Hyundai Motor Group (“Hyundai”) to form Motional AD LLC (“Motional”), a joint venture focused on the design, 7 Table of Contents development and commercialization of autonomous driving technologies.
In March 2020, we completed a transaction with Hyundai Motor Group (“Hyundai”) to form Motional AD LLC (“Motional”), a joint venture focused on the design, development and commercialization of autonomous driving technologies.
Our standard safety management system is aligned with ISO 45001 and we are committed to ensuring all of our manufacturing sites are ISO 45001 certified by 2025. Commitment to Environmental Sustainability Sustainability has always been core to Aptiv’s business, values and culture.
Our standard safety management system is aligned with ISO 45001 and we are committed to ensuring all of our manufacturing sites are ISO 45001 certified by 2025. As of December 31, 2023, 80% of our sites are certified under this standard. 11 Table of Contents Commitment to Environmental Sustainability Sustainability has always been core to Aptiv’s business, values and culture.
This segment provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, cloud-native software platforms, application software, autonomous driving technologies and end-to-end DevOps tools. • Advanced safety primarily consists of solutions that enable active and passive safety features and vehicle automation, as well as vision, radar and other sensing technologies. 8 Table of Contents • The user experience portfolio primarily enables in-cabin solutions around infotainment, driver interface and interior sensing solutions. • Connectivity and security products primarily consists of solutions that provide body control, security and unlock vehicle data.
This segment provides critical technologies and services to enhance vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, cloud-native software platforms, application software, autonomous driving technologies and end-to-end DevOps tools. • Advanced Safety primarily consists of solutions that enable advanced safety features and vehicle automation, as well as radar, vision and other sensing technologies. • User Experience primarily enables in-cabin solutions around infotainment, driver interface and interior sensing solutions. • Smart Vehicle Compute and Software primarily consists of zone control and centralized computing platforms, as well as edge-to-cloud tools.
Global automotive vehicle production increased 5% (5% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue) from 2021 to 2022, reflecting increased vehicle production of 10% in North America, 3% in China and 8% in South America, our smallest region, and a decrease of 1% in Europe.
Global automotive vehicle production increased 9% (10% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue) from 2022 to 2023, reflecting increased vehicle production of 13% in Europe, 10% in China, 9% in North America and flat production in South America, our smallest region.
Prior to joining Aptiv, Ms. Ramundo was executive vice president, chief legal officer and secretary of Howmet Aerospace Inc. (formerly Arconic Inc.), a leading global provider of advanced engineered solutions for the aerospace and transportation industries, a role she held from November 2016 to February 2021. Prior to joining Howmet Aerospace, Ms.
(formerly Arconic Inc.), a leading global provider of advanced engineered solutions for the aerospace and transportation industries, a role she held from November 2016 to February 2021. Prior to joining Howmet Aerospace, Ms. Ramundo was executive vice president, general counsel and secretary of ANN, Inc., the owner of the Ann Taylor and LOFT brands. Previously, Ms.
Our culture is based on a set of distinct values and behaviors that guide what we do and how we do it. Culture is a central pillar in our business and helps to drive consistent leadership behavior across our businesses.
Our culture is based on a set of distinct values and behaviors that guide us to always do the right thing, the right way. Culture is a central pillar in our business and helps to drive consistent leadership behavior across our businesses.
Talent Development Our people are central to our mission of developing safer, greener and more connected solutions. We continually strive to create and maintain an environment where innovation thrives and our employees are empowered to think and act like owners.
We maintain collaborative and constructive labor relationships with our employee representatives in order to foster positive employee relations. Talent Development Our people are central to our mission of developing safer, greener and more connected solutions. We continually strive to create and maintain an environment where innovation thrives and our employees are empowered to think and act like owners.
Aptiv is committed to talent development and growing the next generation of leaders. Our established leadership programs provide our leaders with the tools to be effective today while preparing them for future challenges. In 2022, our people completed over 43,000 hours of leadership and management training.
Aptiv is committed to talent development and growing the next generation of leaders. Our established leadership programs provide our leaders with the tools to be effective today while preparing them for future challenges. Our people consistently complete formal leadership and management training to enhance their abilities.
As of December 31, 2022, we have not experienced any significant shortages of raw materials, however, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels. These changes to the production environment have been primarily driven by the worldwide semiconductor shortage.
As of December 31, 2023, we have not experienced any significant shortages of raw materials, however, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels.
Overall, we expect long-term growth of global vehicle sales and production in the OEM market. In 2022, the industry experienced increased global customer sales and production schedules, despite the ongoing adverse impacts of global supply chain disruptions and increased global inflationary pressures.
Overall, we expect long-term growth of global vehicle sales and production in the OEM market. In 2023, the industry experienced increased global customer sales and production schedules, despite various global uncertainties and global inflationary pressures.
Our products increase vehicle connectivity, reduce driver distraction and enhance vehicle safety. Refer to Results of Operations by Segment in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 22. Segment Reporting to the audited consolidated financial statements for financial information about our business segments.
Refer to Results of Operations by Segment in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 22. Segment Reporting to the audited consolidated financial statements for financial information about our business segments. Our business is diversified across end-markets, regions, customers, vehicle platforms and products.
Presley held several positions at Chrysler Corporation. Mr. Presley also served in both the U.S. Army and the Michigan Army National Guard for a combined total of 13 years as a Field Artillery Officer . Katherine H. Ramundo , 55, is senior vice president, chief legal officer, chief compliance officer and secretary of Aptiv, effective March 2021.
Presley held several positions at Chrysler Corporation. Mr. Presley also served in both the U.S. Army and the Michigan Army National Guard for a combined total of 13 years as a Field Artillery Officer . 13 Table of Contents Katherine H.
For example, in the U.S., the California Air Resources Board 6 Table of Contents approved new rules, which require that all new passenger cars and light trucks sold in California be electric vehicles or other emissions-free models by 2035.
For example, in the U.S., the Environmental Protection Agency (the “EPA”) proposed new rules in 2023 that could require as much as 67% of all light-duty vehicles and 46% of medium-duty vehicles sold in the U.S. by model year 2032 to be all-electric, and the California Air Resources 6 Table of Contents Board approved rules in 2022, which require that all new passenger cars and light trucks sold in California be electric vehicles or other emissions-free models by 2035.
Our business is diversified across end-markets, regions, customers, vehicle platforms and products. Our customer base includes the 25 largest automotive OEMs in the world, and in 2022, 30% of our net sales came from the Asia Pacific region, 5 Table of Contents which we have identified as a key market likely to experience substantial long-term growth.
Our customer base includes the 25 largest automotive OEMs in the world, and in 2023, 28% of our net sales came from the Asia Pacific region, which we have identified as a key market likely to experience substantial long-term growth. Our ten largest platforms in 2023 5 Table of Contents were with six different OEMs.
Our ten largest platforms in 2022 were with seven different OEMs. In addition, in 2022 our products were found in 18 of the 20 top-selling vehicle models in the United States (“U.S.”), in 18 of the 20 top-selling vehicle models in Europe and in 12 of the 20 top-selling vehicle models in China.
In addition, in 2023 our products were found in 17 of the 20 top-selling vehicle models in the United States (“U.S.”), 16 of the 20 top-selling vehicle models in Europe and 12 of the 20 top-selling vehicle models in China.
Motional began testing fully driverless systems in 2020 and began testing a production-ready autonomous driving platform available for robotaxi providers, meal delivery providers, fleet operators and automotive manufacturers at prototype scale in 2022, with higher volume production deployments anticipated in late 2023.
Motional began testing fully driverless systems in 2020 and began testing a production-ready autonomous driving platform available for robotaxi providers, meal delivery providers, fleet operators and automotive manufacturers at prototype scale in 7 Table of Contents 2022, with initial production deployments in the fourth quarter of 2023 and commercial launch planned in the first half of 2024.
Health and Safety We prioritize the health and safety of all our employees by focusing on prevention, training, auditing and risk mitigation in our manufacturing plants, technical centers and offices. We routinely assess occupational health and safety risks, define controls and perform internal audits for all manufacturing sites, assessing, among other things, legal compliance, controls and key workplace safety metrics.
We routinely assess occupational health and safety risks, define controls and perform internal audits for all manufacturing sites, assessing, among other things, legal compliance, controls and key workplace safety metrics.
As part of our strategy to harness the full potential of connected intelligent systems across industries, strengthen our capabilities in software-defined mobility and to enable advanced smart vehicle architecture changes, we acquired Wind River Systems, Inc. (“Wind River”) in December 2022. Wind River is a global leader in delivering software for the intelligent edge.
We believe the complexity of these systems will also require ongoing software support services, as these vehicle systems will be continuously upgraded with new features and performance enhancements As part of our strategy to harness the full potential of connected intelligent systems across industries, strengthen our capabilities in software-defined mobility and to enable advanced smart vehicle architecture changes, we acquired Wind River Systems, Inc.
He began his IBM career in 2001 and held several human resources positions of increasing responsibility. Before joining IBM, Mr. Louissaint was president at Student Agencies, Inc. Benjamin Lyon , 43, is senior vice president and chief technology officer of Aptiv, effective December 2022.
Louissaint was president at Student Agencies, Inc. Benjamin Lyon , 44, is senior vice president and chief technology officer of Aptiv, effective December 2022.
As of December 31, 2022 our workforce is distributed as follows: • 53% in North America, with our largest presence in Mexico; • 31% in the Europe, Middle East and Africa region, with our largest presence in Morocco and Serbia; • 12% in the Asia Pacific region, with our largest presence in China and India; and • 4% in South America, with our largest presence in Brazil.
As of December 31, 2023 our workforce is distributed as follows: • 53% in North America, with our largest presence in Mexico; • 31% in the Europe, Middle East and Africa region, with our largest presence in Morocco and Serbia; • 12% in the Asia Pacific region, with our largest presence in China and India; and • 4% in South America, with our largest presence in Brazil. 10 Table of Contents Certain of our employees are represented worldwide by numerous unions and works councils, including the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers - Communications Workers of America, IG Metall and the Confederacion De Trabajadores Mexicanos.
Among her other positions during her 15-year tenure at Colgate, she served as general counsel of the Europe/South Pacific division, and later managed global specialty legal activities. She began her career as a litigator, practicing at major New York-based law firms, including Cravath, Swaine & Moore, and Sidley Austin. Sophia M.
Ramundo served as vice president, deputy general counsel and assistant secretary of Colgate-Palmolive. Among her other positions during her 15-year tenure at Colgate, she served as general counsel of the Europe/South Pacific division, and later managed global specialty legal activities.
We have also been impacted globally by increased overall inflation as a result of a variety of global trends.
Recently, the industry has been subjected to increased pricing pressures, specifically in relation to these commodities, which have experienced significant volatility in price. We have also been impacted globally by increased overall inflation as a result of a variety of global trends.
He joined Aptiv from IBM, where he was most recently senior vice president, Transformation and Culture from August 2020 through December 2022. He previously served as vice president, Talent, Watson Health & Employee Experience from 2019 to 2020 and vice president, Human Resources, IBM Watson, Watson Health, Research, Technical Talent & Corporate from 2015 to 2020.
He previously served as vice president, Talent, Watson Health & Employee Experience from 2019 to 2020 and vice president, Human Resources, IBM Watson, Watson Health, Research, Technical Talent & Corporate from 2015 to 2020. He began his IBM career in 2001 and held several human resources positions of increasing responsibility. Before joining IBM, Mr.
During 2022, our employees used this system to complete approximately 421,000 individual training hours. We continue to focus on developing great people in order to maximize organizational effectiveness. 11 Table of Contents Culture Aptiv’s culture is a key advantage to how we do business.
We also leverage Aptiv Academy, our online learning management system, across the business, using in-person, online and virtual reality learning opportunities. We continue to focus on developing great people in order to maximize organizational effectiveness. Culture Aptiv’s culture is a key advantage to how we do business.
Growth opportunities in this space result from increased content, additional computing power and software requirements, enhanced connectivity systems and increased electrification and interconnects. We believe the complexity of these systems will also require ongoing software support services, as these vehicle systems will be continuously upgraded with new features and performance enhancements.
Growth opportunities in this space result from increased content, additional computing power and software requirements, solutions to simplify lifecycle management, enhanced connectivity systems and increased electrification and interconnects.
We are also continuing to invest in the automated driving space, and have continued to develop market-leading automated driving platform solutions such as automated driving software, key active safety sensing technologies and our multi-domain controller, which fuses information from sensing systems as well as mapping and navigation data to make driving decisions.
We are also continuing to develop market-leading automated driving solutions such as automated driving software, key active safety sensing and compute technologies capable of supporting safety-critical applications.
He began his Aptiv career with Advanced Safety and User Experience in 1992, and following several progressive engineering and managerial roles in infotainment and user experience, was named vice president, Global Engineering for Advanced Safety and User Experience in 2012. Obed D. Louissaint , 43, is senior vice president and chief people officer of Aptiv, effective January 2023.
He began his career at Ford Motor Company in 1992. Obed D. Louissaint , 44, is senior vice president and chief people officer of Aptiv, effective January 2023. He joined Aptiv from IBM, where he was most recently senior vice president, Transformation and Culture from August 2020 through December 2022.
We continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the 10 Table of Contents efficient use of working capital. Normally we do not carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules.
These changes to the production environment were primarily driven by the global supply chain disruptions that impacted the automotive industry at times during 2023 and previous years. We continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital.
Commodity cost volatility, most notably related to copper, petroleum-based resin products and fuel, is a challenge for us and our industry. Recently, the industry has been subjected to increased pricing pressures, specifically in relation to these commodities, which have experienced significant volatility in price.
Normally we do not carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules. Commodity cost volatility, most notably related to copper, petroleum-based resin products and fuel, is a challenge for us and our industry.
Velastegui , 47, is senior vice president and chief product officer of Aptiv, effective February 2022.
She began her career as a litigator, practicing at major New York-based law firms, including Cravath, Swaine & Moore, and Sidley Austin. Sophia M. Velastegui , 48, is senior vice president and chief product officer of Aptiv, effective February 2022.
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Previously, in 2021, we executed a strategic collaboration agreement with Wind River to develop a software toolchain for various automotive applications.
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(“Wind River”) in December 2022. Wind River is a global leader in delivering software for the intelligent edge for multiple industries, including automotive, by leveraging mixed-criticality software products and solutions enabling customers to develop in the cloud, deploy over the air and run and manage software at the vehicle edge.
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Motional brings together one of the industry’s most innovative vehicle technology providers with one of the world’s largest OEMs. We expect this partnership to accelerate the path towards the development of production-ready autonomous driving systems for commercialization in the new mobility space.
Added
We routinely host culture training workshops to help newly appointed managers understand Aptiv’s values and behaviors to become better leaders. Additionally, we conduct regular employee feedback surveys to ensure our employees have the opportunity to be heard and to measure engagement, which includes assessing each employee’s commitment to our company’s goals and the overall employee experience at Aptiv.
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We believe that substantial strategic value will be created from our partnership with Hyundai through our commitment to a shared mission of making driverless vehicles a safe, reliable and accessible reality.
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During 2023, 90% of our salaried employees responded to these surveys and our employee net promoter score increased by 8 points as compared to the previous cycle. Our management team actively utilizes feedback at all levels of our organization to continually improve how we engage with our people and improve our operations.
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Furthermore, we anticipate Motional’s presence in both North America and Asia, along with the global presence of both Aptiv and Hyundai, to generate economies of scale to support the development of a complete autonomous driving platform, as well as to facilitate mobility infrastructure advancements.
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A key accomplishment in 2023 included achieving gender pay equity among comparable roles globally. Health and Safety We prioritize the health, safety and well-being of all our employees by focusing on prevention, training, auditing and risk mitigation in our manufacturing plants, technical centers and offices.
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Certain of our employees are represented worldwide by numerous unions and works councils, including the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers - Communications Workers of America, IG Metall and the Confederacion De Trabajadores Mexicanos. We maintain collaborative and constructive labor relationships with our employee representatives in order to foster positive employee relations.
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Expenditures required to meet our environmental sustainability goals, which are described below, are included in our normal budgeting process. Decreasing our Carbon Footprint Aptiv has committed to the Science-Based Targets initiative (the “SBTi”) Business Ambition for 1.5℃ campaign, which requires greenhouse gas emissions to be net-zero across Aptiv’s value chain by 2050 at the latest.
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Our Global Leadership Development Program develops business acumen and personal competencies, as well as the opportunity to learn and interact with peers from around the world. We also leverage Aptiv Academy, our online learning management system, across the business, using in-person, online and virtual reality learning opportunities.
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Our target is to reach net-zero by 2040. Aptiv’s targets were validated by the SBTi in November 2023.
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In 2022, we hosted 16 culture training workshops with 620 participants to help newly appointed managers understand Aptiv’s values and behaviors to become better leaders. Our management team actively receives feedback at all levels in our organization and utilizes this feedback to continually improve how we engage our people and improve our operations.
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Ramundo , 56, is senior vice president, chief legal officer, chief compliance officer and secretary of Aptiv, effective March 2021. Prior to joining Aptiv, Ms. Ramundo was executive vice president, chief legal officer and secretary of Howmet Aerospace Inc.
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Expenditures required to meet our environmental sustainability goals, which are described below, are included in our normal budgeting process. Decreasing our Carbon Footprint We have committed to becoming carbon-neutral in our global operations by 2030 and to achieve net carbon neutrality by 2040 as we transition away from carbon-intensive energy and processes in our global operations.
Removed
He began his career at Ford Motor Company in 1992. Glen W. De Vos , 62, is senior vice president, transformation and special programs of Aptiv, a position he has held since December 2022. Previously, he was senior vice president and chief technology officer of Aptiv, effective March 2017, and president, Advanced Safety and User Experience, effective April 2021.
Removed
From November 2017 to October 2019, he was also president of Aptiv’s Mobility and Services Group. Mr. De Vos was previously vice president of Software and Services for Aptiv’s Advanced Safety and User Experience segment, located at the Company’s Silicon Valley Lab in Mountain View, California from 2016 to 2017.
Removed
Ramundo was executive vice president, general counsel and secretary of ANN, Inc., the owner of the Ann Taylor and LOFT brands. Previously, Ms. Ramundo served as vice president, deputy general counsel and assistant secretary of Colgate-Palmolive.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+19 added−16 removed164 unchanged
Biggest changeThe direct adverse impacts of the COVID-19 pandemic on Aptiv, which primarily affected us in the first half of 2020, included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from temporary governmental “lockdown” orders for all non-essential activities, initially in the first quarter of 2020 in China and subsequently in Europe, North America and South America.
Biggest changeFor example, the COVID-19 pandemic caused extended work stoppages, travel restrictions at our facilities and those of our customers and suppliers, decreases and volatility in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts.
Furthermore, management continues to monitor the volatile geopolitical environment to identify, quantify and assess threatened duties, taxes or other business restrictions which could adversely affect our business and financial results. Increasing our manufacturing footprint in Asian markets, including China, and our business relationships with Asian automotive manufacturers are important elements of our long-term strategy.
Furthermore, management continues to monitor the volatile geopolitical environment to identify, quantify and assess proposed or threatened duties, taxes or other business restrictions which could adversely affect our business and financial results. Increasing our manufacturing footprint in Asian markets, including China, and our business relationships with Asian automotive manufacturers are important elements of our long-term strategy.
International operations are subject to certain risks inherent in doing business globally, including: • exposure to local economic, political and labor conditions; • unexpected changes in laws, regulations, economic and trade sanctions, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes in the rate of inflation in the U.S. and other countries; • tariffs, quotas, customs and other import or export restrictions and other trade barriers; • expropriation and nationalization; • difficulty of enforcing agreements, collecting receivables and protecting assets through certain non-U.S. legal systems; • reduced technology, data or intellectual property protections; • limitations on repatriation of earnings; • withholding and other taxes on remittances and other payments by subsidiaries; • investment restrictions or requirements; • violence and civil unrest in local countries, including the conflict between Ukraine and Russia; and • compliance with the requirements of an increasing body of applicable anti-bribery laws, including the U.S.
International operations are subject to certain risks inherent in doing business globally, including: • exposure to local economic, political and labor conditions; • unexpected changes in laws, regulations, economic and trade sanctions, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes in the rate of inflation in the U.S. and other countries; • tariffs, quotas, customs and other import or export restrictions and other trade barriers; • expropriation and nationalization; • difficulty of enforcing agreements, collecting receivables and protecting assets through certain non-U.S. legal systems; • reduced technology, data or intellectual property protections; • limitations on repatriation of earnings; • withholding and other taxes on remittances and other payments by subsidiaries; • investment restrictions or requirements; • violence and civil unrest in local countries, including the conflict between Ukraine and Russia and the conflicts in the Middle East; and • compliance with the requirements of an increasing body of applicable anti-bribery laws, including the U.S.
Although we engage in extensive product quality programs and processes, these may not be sufficient to avoid product failures, which could cause us to: 25 Table of Contents • lose net revenue; • incur increased costs such as warranty expense and costs associated with customer support; • experience delays, cancellations or rescheduling of orders for our products; • experience increased product returns or discounts; or • damage our reputation, all of which could negatively affect our financial condition and results of operations.
Although we engage in extensive product quality programs and processes, these may not be sufficient to avoid product failures, which could cause us to: • lose net revenue; • incur increased costs such as warranty expense and costs associated with customer support; • experience delays, cancellations or rescheduling of orders for our products; • experience increased product returns or discounts; or 24 Table of Contents • damage our reputation, all of which could negatively affect our financial condition and results of operations.
If we are unable to deepen existing and develop additional customer relationships in the Asia Pacific region, or if we are unable to develop and introduce market-relevant advanced driver assistance or autonomous driving technologies, we may not only fail to realize expected rates of return on our existing investments, but we may incur losses on such investments and be unable to timely redeploy the invested capital to take advantage of other markets or product categories, potentially resulting in lost market share to our competitors.
If we are unable to deepen existing and develop additional customer relationships in the Asia Pacific region, or if we are unable to develop and introduce market-relevant advanced driver assistance or autonomous driving technologies, we may not only fail to realize expected rates of return on our existing investments, but we may incur losses on such investments and be unable to timely 17 Table of Contents redeploy the invested capital to take advantage of other markets or product categories, potentially resulting in lost market share to our competitors.
A prolonged downturn in the global or regional automotive industry, or a significant change in product mix due to consumer demand, could require us to shut down plants or result in impairment charges, restructuring actions or changes in our valuation allowances 17 Table of Contents against deferred tax assets, which could be material to our financial condition and results of operations.
A prolonged downturn in the global or regional automotive industry, or a significant change in product mix due to consumer demand, could require us to shut down plants or result in impairment charges, restructuring actions or changes in our valuation allowances against deferred tax assets, which could be material to our financial condition and results of operations.
Such disruptions could be caused by any one of a myriad of potential problems, such as closures of one of our or our suppliers’ plants or critical manufacturing lines due to strikes, mechanical breakdowns or failures, electrical outages, fires, explosions or political upheaval, as well as logistical complications due to weather, global climate change, volcanic eruptions, or other natural or nuclear disasters, delayed customs processing, the spread of an infectious disease, virus or other widespread illness and more.
Such disruptions could be caused by any one of a myriad of potential problems, such as closures of one of our or our suppliers’ plants or critical manufacturing lines due to strikes, mechanical breakdowns or failures, electrical outages, fires, explosions, political upheaval, terrorism or war, material shortages, as well as logistical complications due to weather, global climate change, volcanic eruptions, or other natural or nuclear disasters, delayed customs processing, the spread of an infectious disease, virus or other widespread illness and more.
There are certain risks involved in such relationships, as our collaborative partners may not devote sufficient resources to the success of our collaborations; may be acquired by other 19 Table of Contents companies and subsequently terminate our collaborative arrangement; may compete with us; may not agree with us on key details of the collaborative relationship; or may not agree to renew existing collaborations on acceptable terms.
There are certain risks involved in such relationships, as our collaborative partners may not devote sufficient resources to the success of our collaborations; may be acquired by other companies and subsequently terminate our collaborative arrangement; may compete with us; may not agree with us on key details of the collaborative relationship; or may not agree to renew existing collaborations on acceptable terms.
As a result of changes impacting our customers, sales mix can shift which may have either favorable or unfavorable impacts on our revenues and would include shifts in regional growth, shifts in OEM sales demand, as well as shifts in consumer demand related to vehicle segment purchases and content penetration.
As a result of changes impacting our customers, sales mix can shift which may have either favorable or unfavorable impacts on our revenues and would include shifts in regional growth, shifts in OEM sales demand, as well as shifts in consumer 16 Table of Contents demand related to vehicle segment purchases and content penetration.
If we do not continue to respond quickly and effectively to this evolutionary process our results of operations could be adversely impacted. 18 Table of Contents We have invested substantial resources in markets and technologies where we expect growth and we may be unable to timely alter our strategies should such expectations not be realized.
If we do not continue to respond quickly and effectively to this evolutionary process, our results of operations could be adversely impacted. We have invested substantial resources in markets and technologies where we expect growth and we may be unable to timely alter our strategies should such expectations not be realized.
Therefore, a significant decrease in demand for certain key models or group of related models sold by any of our major customers or the ability of a manufacturer to re-source and discontinue purchasing from us, for a particular model or group of models, could have a material adverse effect on us.
Therefore, a significant decrease in demand for certain key models or group of related models sold by any of our major customers or the 19 Table of Contents ability of a manufacturer to re-source and discontinue purchasing from us, for a particular model or group of models, could have a material adverse effect on us.
Significant increases in labor costs as a result of the renegotiation of collective bargaining agreements could also adversely affect our business and harm our profitability. We are exposed to foreign currency fluctuations as a result of our substantial global operations, which may affect our financial results.
Significant increases in labor costs as a result of the renegotiation of collective bargaining agreements could also adversely affect our business and harm our profitability. 21 Table of Contents We are exposed to foreign currency fluctuations as a result of our substantial global operations, which may affect our financial results.
However, the impacts of the conflict have adversely impacted, and may continue to adversely impact, global economies, and in particular, the European economy, a region which accounted for approximately 31% of our net sales for the year ended December 31, 2022.
However, the impacts of the conflict have adversely impacted, and may continue to adversely impact, global economies, and in particular, the European economy, a region which accounted for approximately 34% of our net sales for the year ended December 31, 2023.
While it is often difficult to predict the final outcome or the timing of the resolution of a tax examination, our 27 Table of Contents reserves for uncertain tax benefits reflect the outcome of tax positions that are more likely than not to occur.
While it is often difficult to predict the final outcome or the timing of the resolution of a tax examination, our reserves for uncertain tax benefits reflect the outcome of tax positions that are more likely than not to occur.
Certain of our non-U.S. subsidiaries sponsor defined benefit pension plans, which generally provide benefits based on negotiated amounts for each year of service. Our primary funded non-U.S. plans are located in Mexico and the United Kingdom and were underfunded by $73 million as of December 31, 2022.
Certain of our non-U.S. subsidiaries sponsor defined benefit pension plans, which generally provide benefits based on negotiated amounts for each year of service. Our primary funded non-U.S. plans are located in Mexico and the United Kingdom and were underfunded by $104 million as of December 31, 2023.
We also could be named as a potentially responsible party at additional sites in the future and the costs associated with such future sites may be material. Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time.
We also could be named as a potentially responsible party at additional sites in the future and the costs associated with such future sites may be material. 25 Table of Contents Environmental laws and regulations are complex, change frequently and have tended to become more stringent over time.
Approximately 64% of our net revenue for the year ended December 31, 2022 came from sales outside the U.S., which were primarily invoiced in currencies other than the U.S. dollar, and we expect net revenue from non-U.S. markets to continue to represent a significant portion of our net revenue.
Approximately 65% of our net revenue for the year ended December 31, 2023 came from sales outside the U.S., which were primarily invoiced in currencies other than the U.S. dollar, and we expect net revenue from non-U.S. markets to continue to represent a significant portion of our net revenue.
However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels as of December 31, 2022 and 2021.
However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels as of both December 31, 2023 and 2022.
Declines in the market share or business of our five largest customers may adversely impact our revenues and profitability. Our five largest customers accounted for approximately 39% of our total net sales for the year ended December 31, 2022. Accordingly, our revenues may be adversely affected by decreases in any of their businesses or market share.
Declines in the market share or business of our five largest customers may adversely impact our revenues and profitability. Our five largest customers accounted for approximately 40% of our total net sales for the year ended December 31, 2023. Accordingly, our revenues may be adversely affected by decreases in any of their businesses or market share.
A labor dispute involving us or one or more of our customers or suppliers or that could otherwise affect 22 Table of Contents our operations could reduce our sales and harm our profitability.
A labor dispute involving us or one or more of our customers or suppliers or that could otherwise affect our operations could reduce our sales and harm our profitability.
In addition, automotive sales and production can be affected by labor relations issues, regulatory requirements, trade agreements, the availability of consumer financing, inflationary pressures, interest rate volatility, supply chain disruptions and other factors, including global health crises, such as the COVID-19 pandemic.
In addition, automotive sales and production can be affected by labor relations issues, regulatory requirements, trade agreements, the availability of consumer financing, inflationary pressures, interest rate volatility, supply chain disruptions and other factors, including global health crises.
While no assurances can be made as to the ultimate outcome of these customer expectations or any other future claims, we do not currently believe a loss is probable. We will continue to actively monitor all direct and indirect potential impacts of these supply chain disruptions, and will seek to aggressively mitigate and minimize their impact on our business.
While no assurances can be made as to the ultimate outcome of these customer expectations or any other future claims, we do not currently believe a loss is probable. We will continue to actively monitor our global supply chain and will seek to aggressively mitigate and minimize the impact of any future disruptions on our business.
Where a customer halts production because of another supplier failing to deliver on time, there can be no assurance we will be fully compensated, if at all. Due to various factors that are beyond our control, there are currently global supply chain disruptions, including a worldwide semiconductor supply shortage.
Where a customer halts production because of another supplier failing to deliver on time, there can be no assurance we will be fully compensated, if at all. Due to various factors that are beyond our control, there have been global supply chain disruptions at times during recent years, including a worldwide semiconductor supply shortage.
Changes in these guidelines are being contemplated at the local, national, regional (particularly in the European Union), and global levels (through organizations like the G20 and the Organisation for Economic Co-operation and Development). Any changes, especially if made inconsistently, could have a materially adverse impact on our financial results.
Changes in these guidelines are being contemplated at the local, national, regional (particularly in the European Union), and global levels (through organizations like the G20 and the OECD). Any changes, especially if made inconsistently, could have a materially adverse impact on our financial results.
Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales and production are highly cyclical and, in addition to general economic conditions, also depend on other factors, such as consumer confidence and consumer preferences.
The cyclical nature of automotive sales and production can adversely affect our business. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales and production are highly cyclical and, in addition to general economic conditions, also depend on other factors, such as consumer confidence and consumer preferences.
Obligations, net of plan assets, related to these non-U.S. defined benefit pension plans and statutorily required retirement obligations totaled $344 million at December 31, 2022, of which $18 million is included in accrued liabilities, $351 million is included in long-term liabilities and $25 million is included in long-term assets in our consolidated balance sheets.
Obligations, net of plan assets, related to these non-U.S. defined benefit pension plans and statutorily required retirement obligations totaled $405 million at December 31, 2023, of which $18 million is included in accrued liabilities, $415 million is included in long-term liabilities and $28 million is included in long-term assets in our consolidated balance sheets.
While we have environmental reserves of approximately $2 million at December 31, 2022 for the cleanup of presently-known 26 Table of Contents environmental contamination conditions, it cannot be guaranteed that actual costs will not significantly exceed these reserves.
While we have environmental reserves of approximately $4 million at December 31, 2023 for the cleanup of presently-known environmental contamination conditions, it cannot be guaranteed that actual costs will not significantly exceed these reserves.
For the year ended December 31, 2022, approximately 64% of our net revenue came from sales outside the U.S.
For the year ended December 31, 2023, approximately 65% of our net revenue came from sales outside the U.S.
For instance, the COVID-19 pandemic and the worldwide semiconductor shortage have adversely impacted the automotive industry in recent years resulting in reduced vehicle production schedules and sales from historical levels, which adversely impacted our financial condition, operating results and cash flows for portions of the years ended December 31, 2022, 2021 and 2020.
For instance, the worldwide semiconductor shortage adversely impacted the automotive industry in recent years resulting in reduced vehicle production schedules and sales from historical levels, which adversely impacted our financial condition, operating results and 18 Table of Contents cash flows for portions of the years ended December 31, 2023, 2022 and 2021.
We, along with most automotive component manufacturers that use semiconductors, have been unable to fully meet the vehicle production demands of OEMs because of events which are outside our control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, fires in our suppliers’ facilities, unprecedented weather events in the southwestern United States, and other extraordinary events.
We, along with most automotive component manufacturers that use semiconductors, have suffered interruptions in our production and were unable to fully meet the vehicle production demands of OEMs at times over the last several years because of events which are outside our control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, fires in our suppliers’ facilities, unprecedented weather events and other extraordinary events.
We receive OEM purchase orders for specific components supplied for particular vehicles. In most instances our OEM customers agree to purchase their requirements for specific products but are not required to purchase any minimum amount of products from us.
In most instances our OEM customers agree to purchase their requirements for specific products but are not required to purchase any minimum amount of products from us.
Global automotive vehicle production increased 5% (5% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue) from 2021 to 2022, reflecting increased vehicle production of 10% in North America, 3% in China and 8% in South America, our smallest region, and a decrease of 1% in Europe.
Global automotive vehicle production increased 9% (10% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue) from 2022 to 2023, reflecting increased vehicle production of 13% in Europe, 10% in China, 9% in North America and flat production in South America, our smallest region.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory rates and changes in tax laws or their interpretation including changes related to tax holidays or tax incentives.
Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory rates and changes in tax laws, or their interpretation, including the Organisation for Economic Co-operation’s (“OECD”) Pillar Two Directive, and changes related to tax holidays or tax incentives.
Although we are working closely with suppliers and customers to minimize any potential adverse impacts of these events, some of our customers have indicated that they expect us to bear at least some responsibility for their lost production and other costs.
Although we work closely with suppliers and customers to minimize any supply disruptions, some of our customers have indicated that they expect us to bear at least some responsibility for their lost production and other costs.
If we are unable to generate sufficient production cost savings in the future to offset price reductions, our gross margin and profitability would be adversely affected. See Item 1.
If we are unable to generate sufficient production cost savings in the future to offset price reductions, our gross margin and profitability would be adversely affected. See Item 1. Supply Relationships with Our Customers for a detailed discussion of our supply agreements with our customers.
This includes the lockdowns in China that occurred in 2022, as discussed further above. This or any further political or governmental developments or health concerns in China or Mexico and other countries in which we operate could result in social, economic and labor instability.
This includes the lockdowns in China that occurred in 2022, as discussed further above. This or any further widespread public health crises in China or any other country in which we operate could result in social, economic and labor instability.
The loss of the services of any member of senior management or a key salaried employee could have an adverse effect on our business. ITEM 1B. UNRESOLVED STAFF COMMENTS We have no unresolved SEC staff comments to report.
We may not be as successful as competitors at recruiting, assimilating and retaining highly skilled personnel. The loss of the services of any member of senior management or a key salaried employee could have an adverse effect on our business. ITEM 1B. UNRESOLVED STAFF COMMENTS We have no unresolved SEC staff comments to report.
A decrease in consumer demand for specific types of vehicles where we have traditionally provided significant content could have a significant effect on our business and financial condition. Our sales of products in the regions in which our customers operate also depend on the success of these customers in those regions.
A decrease in consumer demand for specific types of vehicles where we have traditionally provided significant content could have a significant effect on our business and financial condition.
Supply Relationships with Our Customers for a detailed discussion of our supply agreements with our customers. 20 Table of Contents Our supply agreements with our OEM customers are generally requirements contracts, and a decline in the production requirements of any of our customers, and in particular our largest customers, could adversely impact our revenues and profitability.
Our supply agreements with our OEM customers are generally requirements contracts, and a decline in the production requirements of any of our customers, and in particular our largest customers, could adversely impact our revenues and profitability. We receive OEM purchase orders for specific components supplied for particular vehicles.
Our future hedging positions may not correlate to actual raw material costs, which could cause acceleration in the recognition of unrealized gains and losses on hedging positions in operating results. 21 Table of Contents We may encounter manufacturing challenges.
Our hedging activities are not designed to mitigate long-term commodity price fluctuations and, therefore, will not protect from long-term commodity price increases. Our future hedging positions may not correlate to actual raw material costs, which could cause acceleration in the recognition of unrealized gains and losses on hedging positions in operating results. We may encounter manufacturing challenges.
These uncertainties could have a material adverse effect on the continuity of our business and our results of operations and financial condition. Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.
We rely on third-party suppliers for components used in our products, and we rely on third-party manufacturers to manufacture certain of our assemblies and finished products. Our results of operations, financial condition and cash flows could be adversely affected if our third-party suppliers lack sufficient quality control or if there are significant changes in their financial or business condition.
Our results of operations, financial condition and cash flows could 20 Table of Contents be adversely affected if our third-party suppliers lack sufficient quality control or if there are significant changes in their financial or business condition.
Certain of our businesses rely on relationships with collaborative partners and other third-parties for development of certain products and potential products, and such collaborative partners or other third-parties could fail to perform sufficiently.
Certain of our businesses rely on relationships with collaborative partners and other third-parties for development of products and potential products, and such collaborative partners or other third-parties could fail to perform sufficiently. We believe that for certain of our businesses, success in developing market-relevant products depends in part on our ability to develop and maintain collaborative relationships with other companies.
While we believe that we have complied with all applicable tax laws, there can be no assurance that a taxing authority will not have a different interpretation of the law and assess us with additional taxes. Should additional taxes be assessed, this may result in a material adverse effect on our results of operations and financial condition.
While we believe that we have complied with all applicable tax laws, there can be no assurance that a taxing authority will not have a different 26 Table of Contents interpretation of the law and assess us with additional taxes.
We do not have a material physical presence in either Ukraine or Russia, with less than 1% of our workforce located in the countries as of December 31, 2022 and less than 1% of our net sales for the year ended December 31, 2022 generated from manufacturing facilities in those countries.
Furthermore, the conflict has caused our customers to analyze their and their suppliers’ continued presence in the region and future customer production plans in the region remain uncertain. 22 Table of Contents We do not have a material physical presence in either Ukraine or Russia, with less than 1% of our workforce located in the countries as of December 31, 2023 and less than 1% of our net sales for the year ended December 31, 2023 generated from manufacturing facilities in those countries.
We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital. 16 Table of Contents The extent to which the COVID-19 pandemic, including its variants, and measures taken in response thereto impact our business, financial condition, results of operations and cash flows will depend on future developments, which are highly uncertain and difficult to predict.
We will continue to actively monitor and manage inventory levels across all inventory types in order to maximize both supply continuity and the efficient use of working capital. 15 Table of Contents Public health crises and other global health pandemics, epidemics and disease outbreaks and the measures taken in response thereto could adversely impact our business, financial condition, results of operations and cash flows.
There can be no assurance that our products will be able to compete successfully with the products of our competitors.
Competition is based primarily on price, technology, quality, delivery and overall customer service. There can be no assurance that our products will be able to compete successfully with the products of our competitors.
In addition, to the extent the factors indicated above adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section. The cyclical nature of automotive sales and production can adversely affect our business.
The extent to which the COVID-19 pandemic or similar significant health crises will impact our business in the future is uncertain. In addition, to the extent such significant health crises may adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section.
We operate in the highly competitive automotive technology and component supply industry, and are dependent on the acceptance of new product introductions for continued growth. The global automotive technology and component supply industry is highly competitive. Competition is based primarily on price, technology, quality, delivery and overall customer service.
Our sales of products in the regions in which our customers operate also depend on the success of these customers in those regions. We operate in the highly competitive automotive technology and component supply industry, and are dependent on the acceptance of new product introductions for continued growth. The global automotive technology and component supply industry is highly competitive.
General Risk Factors Any changes in consumer credit availability or cost of borrowing could adversely affect our business. Declines in the availability of consumer credit and increases in consumer borrowing costs have negatively impacted global automotive sales and resulted in lower production volumes in the past.
Declines in the availability of consumer credit and increases in consumer borrowing costs have negatively impacted global automotive sales and resulted in lower production volumes in the past. Substantial declines in automotive sales and production by our customers could have a material adverse effect on our business, results of operations and financial condition.
Our ability to do so is influenced by a variety of factors, including the compensation we award and the competitive market position of our overall compensation package. We may not be as successful as competitors at recruiting, assimilating and retaining highly skilled personnel.
An important aspect of our competitiveness is our ability to attract and retain key salaried employees and management personnel. Our ability to do so is influenced by a variety of factors, including the compensation we award and the competitive market position of our overall compensation package.
Among other impacts, this may cause widespread economic disruptions during this time period, including potential shutdowns at our suppliers’ or customers’ facilities in the region. The conflict has also increased the possibility of cyberattacks occurring, which could either directly or indirectly impact our operations.
The conflict has also increased the possibility of cyberattacks occurring, which could either directly or indirectly impact our operations.
For instance, the conflict between Ukraine and Russia caused the U.S., European Union and other nations to implement broad economic sanctions against Russia. These countries may impose further sanctions and take other actions as the situation continues.
These countries may impose further sanctions and take other actions as the situation continues.
We may also encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration of an acquired company. If we 24 Table of Contents fail to assimilate or integrate acquired companies successfully, our business, reputation and operating results could be materially impacted.
Furthermore, we may not be successful in fully or partially integrating companies that we acquire, including their personnel, financial systems, distribution, operations and general operating procedures. We may also encounter challenges in achieving appropriate internal control over financial reporting in connection with the integration of an acquired company.
We believe that for certain of our businesses, success in developing market-relevant products depends in part on our ability to develop and maintain collaborative relationships with other companies. In particular, Motional is dependent on the success of our relationship with Hyundai, our joint venture partner.
In particular, Motional is dependent on the success of our relationship with Hyundai, our joint venture partner.
Likewise, our failure to integrate and manage acquired companies profitably may lead to future impairment of any associated goodwill and intangible asset balances. Furthermore, if the benefits of an acquisition do not meet the expectations of investors or securities analysts, the market price of our ordinary shares prior to the closing of the acquisition may decline.
If we fail to assimilate or integrate acquired companies successfully, our business, reputation and operating results could be materially impacted. Likewise, our failure to integrate and manage acquired companies profitably may lead to future impairment of any associated goodwill and intangible asset balances.
Our capabilities, as well as those of our customers, suppliers, partners and service providers, are crucial to operations and contain confidential personal information, business-related information or intellectual property. These capabilities are also susceptible to interruptions (including those caused by systems failures, cyber-attacks and other natural or man-made incidents or disasters), which may be prolonged or go undetected.
Our ability to keep our business operating effectively depends on the functional and efficient operation of information technology capabilities, both internally and externally. Our capabilities, as well as those of our customers, suppliers, partners and service providers, are crucial to our operations and may contain confidential personal information, business-related information or intellectual property.
Most of the lockdowns were eased in China late in the second quarter, however many lockdowns were re-imposed and production was once again adversely impacted for portions of the fourth quarter of 2022. Estimated total indirect and direct adverse impacts to revenue as a result of these lockdowns during 2022 was approximately $270 million.
In 2022, certain of our operations in China were impacted by lockdowns imposed by governmental authorities to mitigate the spread of COVID-19, resulting in total indirect and direct adverse impacts to revenue of approximately $270 million during the year ended December 31, 2022.
The semiconductor supply shortage, due in part to increased demand across multiple industries, is impacting production in automotive and other industries. We anticipate these supply chain disruptions will persist in 2023.
The semiconductor supply shortage impacted production in automotive and other industries.
Removed
The global spread of COVID-19, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, negatively impacted the global economy, disrupted supply chains and created significant volatility in global financial markets in 2020 with various adverse impacts continuing to date.
Added
A significant public health crisis, such as the COVID-19 pandemic, could adversely impact our business as well as those of our suppliers and customers.
Removed
During the second half of 2020, many of these impacts abated, resulting in increased sales and profitability from the levels observed earlier in 2020. In 2021, our manufacturing facilities were not impacted by prolonged shutdowns directly resulting from the COVID-19 pandemic.
Added
Any future significant public health crisis could adversely impact the global economy, our industry and the overall demand for our products. In addition, preventative or reactionary measures taken by governmental authorities may disrupt the ability of our employees, suppliers and other business partners to perform their respective functions and obligations relative to the conduct of our business.
Removed
Beginning late in the first quarter of 2022 and continuing into the second quarter, various regions in China, including regions where Aptiv has operations, were subjected to lockdowns imposed by governmental authorities to mitigate the spread of COVID-19. In response, our manufacturing facilities located in these areas implemented measures designed to minimize the impacts of any shutdowns.
Added
Our ability to predict and respond to future changes resulting from potential health crises is uncertain as are the ultimate potential impacts on our business. In 2023, our manufacturing facilities were not impacted by prolonged shutdowns directly resulting from any public health crises.
Removed
Despite these measures, industry-wide production interruptions adversely impacted our sales and profitability beginning at the end of the first quarter and continuing throughout much of the second quarter.
Added
For example, while we have identified high voltage electrification systems as a key product market, certain of our OEM customers have recently announced delays in their electric vehicle investment strategies amidst reduced expectations for future consumer demand for these products, which could adversely impact the growth of this product market within our business.
Removed
The overall duration and impact, as well as possible reoccurrence, of these lockdowns in China or other regions, or other measures aimed at containing and mitigating the effects of the pandemic, including renewed travel bans and restrictions, quarantines, social distancing orders, “lockdown” orders and shutdowns of non-essential activities, remain uncertain and may adversely impact our results of operations and cash flows in future periods.
Added
In addition, certain United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) represented employees at General Motors (“GM”), Ford Motor Company (“Ford”) and Stellantis N.V. (“Stellantis”) initiated labor strikes in September 2023, lasting more than six weeks in duration.
Removed
Other than these production interruptions in China, our manufacturing facilities were not impacted by prolonged shutdowns directly resulting from the COVID-19 pandemic in 2022.
Added
As GM, Ford and Stellantis are among our largest customers, these labor strikes adversely impacted our financial condition, operating results and cash flows for the year ended December 31, 2023.
Removed
Due to the continuing uncertainties of the COVID-19 pandemic, including potential future governmental actions and economic impacts, it is possible that these adverse impacts could reoccur, resulting in further adverse impacts on our future operating earnings and cash flows.
Added
We rely on third-party suppliers for components used in our products, and we rely on third-party manufacturers to manufacture certain of our assemblies and finished products.
Removed
Our hedging activities are not designed to mitigate long-term commodity price fluctuations and, therefore, will not protect from long-term commodity price increases.
Added
In addition, certain UAW-represented employees at GM, Ford and Stellantis initiated labor strikes in September 2023, lasting more than six weeks in duration. As GM, Ford and Stellantis are among our largest customers, these labor strikes adversely impacted our financial condition, operating results and cash flows for the year ended December 31, 2023.
Removed
In addition, in July 2022, the E.U. introduced an emergency natural gas rationing plan to reduce the 23 Table of Contents use of natural gas by businesses and in public buildings in E.U. member states from August 2022 through March 2023 in order to replenish gas reserves.
Added
For instance, the outbreak of armed conflicts in the Middle East beginning in October 2023 has created numerous uncertainties, including the risk that the conflicts spread to the broader region, and their impact on the global economy and supply chains.
Removed
For instance, our acquisition of Wind River, is subject to numerous risks and uncertainties, which may result in the failure to realize the expected benefits of the transaction.
Added
In addition, the conflict between Ukraine and Russia, which began in February 2022, has had, and is expected to continue to have, negative economic impacts to both countries and to the European and global economies. In response to the conflict, the European Union (“the E.U.”), the U.S. and other nations implemented broad economic sanctions against Russia.
Removed
We expect Wind River to become a foundational element of executing our business strategy as Wind River’s industry-leading software services are complementary to our existing portfolio of software solutions, advanced compute and smart architectures and we intend to establish Wind River as the cornerstone of our software strategy.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeThe following table shows the regional distribution of our major manufacturing sites by the operating segment that uses such facilities: North America Europe, Middle East & Africa Asia Pacific South America Total Signal and Power Solutions 45 37 33 5 120 Advanced Safety and User Experience 2 5 4 — 11 Total 47 42 37 5 131 In addition to these manufacturing sites, we had 11 major technical centers: four in North America; two in Europe, Middle East and Africa; and five in Asia Pacific.
Biggest changeThe following table shows the regional distribution of our major manufacturing sites by the operating segment that uses such facilities: North America Europe, Middle East & Africa Asia Pacific South America Total Signal and Power Solutions 46 40 36 5 127 Advanced Safety and User Experience 2 5 4 — 11 Total 48 45 40 5 138 In addition to these manufacturing sites, we had 11 major technical centers: four in North America; two in Europe, Middle East and Africa; and five in Asia Pacific.
ITEM 2. PROPERTIES As of December 31, 2022, we owned or leased 131 major manufacturing sites and 11 major technical centers. A manufacturing site may include multiple plants and may be wholly or partially owned or leased. We also have many smaller manufacturing sites, sales offices, warehouses, engineering centers, joint ventures and other investments strategically located throughout the world.
ITEM 2. PROPERTIES As of December 31, 2023, we owned or leased 138 major manufacturing sites and 11 major technical centers. A manufacturing site may include multiple plants and may be wholly or partially owned or leased. We also have many smaller manufacturing sites, sales offices, warehouses, engineering centers, joint ventures and other investments strategically located throughout the world.
Of our 131 major manufacturing sites and 11 major technical centers, which include facilities owned or leased by our consolidated subsidiaries, 65 are primarily owned and 77 are primarily leased. We frequently review our real estate portfolio and develop footprint strategies to support our customers’ global plans, while at the same time supporting our technical needs and controlling operating expenses.
Of our 138 major manufacturing sites and 11 major technical centers, which include facilities owned or leased by our consolidated subsidiaries, 66 are primarily owned and 83 are primarily leased. We frequently review our real estate portfolio and develop footprint strategies to support our customers’ global plans, while at the same time supporting our technical needs and controlling operating expenses.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−5 removed2 unchanged
Biggest changeWith respect to warranty matters, although we cannot ensure that the future costs of warranty claims by customers will not be material, we believe our established reserves are adequate to cover potential warranty settlements.
Biggest changeWith respect to warranty matters, although we cannot ensure that the future costs of warranty claims by customers will not be material, we believe our established reserves are adequate to cover potential warranty settlements. However, the final amounts required to resolve these matters could differ materially from our recorded estimates.
Removed
However, the final amounts required to resolve these matters could differ materially from our recorded estimates. 28 Table of Contents Brazil Matters Aptiv conducts business operations in Brazil that are subject to the Brazilian federal labor, social security, environmental, health and safety, tax and customs laws, as well as a variety of state and local laws.
Removed
While Aptiv believes it complies with such laws, they are complex, subject to varying interpretations, and the Company is often engaged in litigation with government agencies regarding the application of these laws to particular circumstances. As of December 31, 2022, the majority of claims asserted against Aptiv in Brazil relate to such litigation.
Removed
The remaining claims in Brazil relate to commercial and labor litigation with private parties. As of December 31, 2022, claims totaling approximately $105 million (using December 31, 2022 foreign currency rates) have been asserted against Aptiv in Brazil.
Removed
As of December 31, 2022, the Company maintains accruals for these asserted claims of $5 million (using December 31, 2022 foreign currency rates). The amounts accrued represent claims that are deemed probable of loss and are reasonably estimable based on the Company’s analyses and assessment of the asserted claims and prior experience with similar matters.
Removed
While the Company believes its accruals are adequate, the final amounts required to resolve these matters could differ materially from the Company’s recorded estimates and Aptiv’s results of operations could be materially affected. The Company estimates the reasonably possible loss in excess of the amounts accrued related to these claims to be zero to $40 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+2 added−5 removed0 unchanged
Biggest changeThis program will commence following the completion of the previously announced share repurchase program of $1.5 billion, which was approved by the Board of Directors in April 2016. As of December 31, 2022, approximately $2,013 million remained available for repurchases pursuant to these programs. ITEM 6. [RESERVED] Not applicable.
Biggest change(2) Excluding commissions. (3) In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion. This program follows the completion of the previously announced share repurchase program of $1.5 billion, which was approved by the Board of Directors in April 2016.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s ordinary shares are publicly traded on the New York Stock Exchange under the symbol “APTV.” As of February 3, 2023, there were 2 shareholders of record of our ordinary shares.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s ordinary shares are publicly traded on the New York Stock Exchange under the symbol “APTV.” As of February 2, 2024, there were 2 shareholders of record of our ordinary shares.
The following graph reflects the comparative changes in the value from December 31, 2017 through December 31, 2022, assuming an initial investment of $100 and the reinvestment of dividends, if any in (1) our ordinary shares, (2) the S&P 500 index and (3) the Automotive Peer Group. Historical performance may not be indicative of future shareholder returns.
The following graph reflects the comparative changes in the value from December 31, 2018 through December 31, 2023, assuming an initial investment of $100 and the reinvestment of dividends, if any in (1) our ordinary shares, (2) the S&P 500 index and (3) the Automotive Peer Group. Historical performance may not be indicative of future shareholder returns.
Stock Performance Graph * $100 invested on December 31, 2017 in our stock or in the relevant index, including reinvestment of dividends. Fiscal year ended December 31, 2022.
Stock Performance Graph * $100 invested on December 31, 2018 in our stock or in the relevant index, including reinvestment of dividends. Fiscal year ended December 31, 2023.
Removed
(1) Aptiv PLC (2) S&P 500 – Standard & Poor’s 500 Total Return Index (3) Automotive Peer Group – Adient Plc, American Axle & Manufacturing Holdings Inc, Aptiv PLC, Borgwarner Inc, Cooper-Standard Holdings Inc, Dana Inc, Dorman Products Inc, Ford Motor Co, General Motors Co, Gentex Corp, Gentherm Inc, Genuine Parts Co, Goodyear Tire & Rubber Co, Lear Corp, Lkq Corp, Motorcar Parts Of America Inc, Standard Motor Products Inc, Stoneridge Inc, Tesla Inc, Visteon Corp Company Index December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Aptiv PLC (1) $ 100.00 $ 73.29 $ 114.25 $ 157.12 $ 198.92 $ 112.31 S&P 500 (2) 100.00 95.62 125.72 148.85 191.58 156.89 Automotive Peer Group (3) 100.00 76.47 94.74 188.76 284.00 141.98 30 Table of Contents Equity Compensation Plan Information The table below contains information about securities authorized for issuance under equity compensation plans.
Added
(1) Aptiv PLC (2) S&P 500 – Standard & Poor’s 500 Total Return Index (3) Automotive Peer Group – Adient Plc, American Axle & Manufacturing Holdings Inc, Aptiv PLC, Blink Charging Co, Borgwarner Inc, CarParts.com Inc, Cooper-Standard Holdings Inc, Dana Inc, Dorman Products Inc, Driven Brands Holdings Inc, Fisker Inc, Ford Motor Co, General Motors Co, Gentex Corp, Gentherm Inc, Genuine Parts Co, Goodyear Tire & Rubber Co, Holley Inc, Luminar Technologies Inc, Lucid Group Inc, Lear Corp, Lkq Corp, Monro Inc, PHINIA Inc, QuantumScape Corporation, Rivian Automotive Inc, SES AI Corporation, Standard Motor Products Inc, Stoneridge Inc, Tesla Inc, Visteon Corp, XPEL Inc Company Index December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Aptiv PLC (1) $ 100.00 $ 155.88 $ 214.37 $ 271.39 $ 153.23 $ 147.62 S&P 500 (2) $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Automotive Peer Group (3) $ 100.00 $ 124.13 $ 361.12 $ 537.91 $ 228.29 $ 368.44 30 Table of Contents Equity Compensation Plan Information Information as of December 31, 2023 regarding the Company’s ordinary shares that may be issued under all of its equity compensation plans is incorporated by reference to the Company’s Proxy Statement under the heading “Equity Compensation Plan Information.” Repurchase of Equity Securities A summary of our ordinary shares repurchased during the quarter ended December 31, 2023, is shown below: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (3) October 1, 2023 to October 31, 2023 — $ — — $ 1,915 November 1, 2023 to November 30, 2023 3,828,784 $ 78.34 3,828,784 $ 1,615 December 1, 2023 to December 31, 2023 — $ — — $ 1,615 Total 3,828,784 $ 78.34 3,828,784 (1) The total number of shares purchased under the plans authorized by the Board of Directors are described below.
Removed
The features of these plans are discussed further in Note 21. Share-Based Compensation to our audited consolidated financial statements.
Added
The timing of repurchases is dependent on price, market conditions and applicable regulatory requirements. ITEM 6. [RESERVED] Not applicable.
Removed
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 1,566,458 (1) $ — (2) 12,742,596 (3) Equity compensation plans not approved by security holders — — — Total 1,566,458 $ — 12,742,596 (1) Includes (a) 23,387 outstanding restricted stock units granted to our Board of Directors and (b) 1,543,071 outstanding time- and performance-based restricted stock units granted to our employees.
Removed
All grants were made under the Aptiv PLC Long Term Incentive Plan, as amended and restated effective April 23, 2015 (the “PLC LTIP”). Includes accrued dividend equivalents. (2) The restricted stock units have no exercise price. (3) Remaining shares available under the PLC LTIP.
Removed
Repurchase of Equity Securities There were no repurchases of equity securities during the quarter ended December 31, 2022. In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

187 edited+43 added−80 removed129 unchanged
Biggest changeAcquisitions and Divestitures to the audited consolidation financial statements included herein for further information. 45 Table of Contents Signal and Power Solutions Advanced Safety and User Experience Total (in millions) For the Year Ended December 31, 2021: Adjusted operating income $ 1,225 $ 153 $ 1,378 Amortization (141) (7) (148) Restructuring (8) (16) (24) Other acquisition and portfolio project costs (11) (4) (15) Asset impairments (1) (1) (2) Operating income $ 1,064 $ 125 1,189 Interest expense (150) Other expense, net (129) Income before income taxes and equity loss 910 Income tax expense (101) Equity loss, net of tax (200) Net income 609 Net income attributable to noncontrolling interest 19 Net income attributable to Aptiv $ 590 Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the years ended December 31, 2022 and 2021 are as follows: Net Sales by Segment Year Ended December 31, Variance Due To: 2022 2021 Favorable/ (unfavorable) Volume, net of contractual price reductions FX Commodity Pass-through Other Total (in millions) (in millions) Signal and Power Solutions $ 12,943 $ 11,598 $ 1,345 $ 1,908 $ (626) $ 45 $ 18 $ 1,345 Advanced Safety and User Experience 4,587 4,056 531 558 (53) — 26 531 Eliminations and Other (41) (36) (5) (8) 3 — — (5) Total $ 17,489 $ 15,618 $ 1,871 $ 2,458 $ (676) $ 45 $ 44 $ 1,871 Gross Margin Percentage by Segment Year Ended December 31, 2022 2021 Signal and Power Solutions 17.2 % 17.6 % Advanced Safety and User Experience 8.9 % 9.8 % Total 15.1 % 15.6 % 46 Table of Contents Adjusted Operating Income by Segment Year Ended December 31, Variance Due To: 2022 2021 Favorable/ (unfavorable) Volume, net of contractual price reductions Operational performance Other Total (in millions) (in millions) Signal and Power Solutions $ 1,441 $ 1,225 $ 216 $ 712 $ (304) $ (192) $ 216 Advanced Safety and User Experience 144 153 (9) 265 (316) 42 (9) Total $ 1,585 $ 1,378 $ 207 $ 977 $ (620) $ (150) $ 207 As noted in the table above, Adjusted Operating Income for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was impacted by volume, including product mix, and the favorable impact of price recoveries, net of contractual price reductions, and operational performance.
Biggest changeNet sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the years ended December 31, 2023 and 2022 are as follows: Net Sales by Segment Year Ended December 31, Variance Due To: 2023 2022 Favorable/ (unfavorable) Volume, net of contractual price reductions FX Commodity Pass-through Other Total (in millions) (in millions) Signal and Power Solutions $ 14,404 $ 12,943 $ 1,461 $ 1,368 $ (96) $ (68) $ 257 $ 1,461 Advanced Safety and User Experience 5,695 4,587 1,108 754 (23) — 377 1,108 Eliminations and Other (48) (41) (7) (8) 1 — — (7) Total $ 20,051 $ 17,489 $ 2,562 $ 2,114 $ (118) $ (68) $ 634 $ 2,562 Gross Margin Percentage by Segment Year Ended December 31, 2023 2022 Signal and Power Solutions 18.0 % 17.2 % Advanced Safety and User Experience 15.0 % 8.9 % Total 17.2 % 15.1 % 45 Table of Contents Adjusted Operating Income by Segment Year Ended December 31, Variance Due To: 2023 2022 Favorable/ (unfavorable) Volume, net of contractual price reductions Operational performance Other Total (in millions) (in millions) Signal and Power Solutions $ 1,676 $ 1,441 $ 235 $ 527 $ (88) $ (204) $ 235 Advanced Safety and User Experience 451 144 307 324 (3) (14) 307 Total $ 2,127 $ 1,585 $ 542 $ 851 $ (91) $ (218) $ 542 As noted in the table above, Adjusted Operating Income for the year ended December 31, 2023 as compared to the year ended December 31, 2022 was impacted by volume, including product mix and adverse impacts of approximately $80 million resulting from the UAW labor strikes, and the impacts of favorable pricing, net of contractual price reductions, of $345 million, as well as operational performance.
Our management utilizes segment Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of our operating segments.
Our management utilizes Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of our operating segments.
However, there are many risks associated with these evolving areas, including the high development costs of active safety and autonomous driving technologies, the uncertain timing of customer and consumer adoption of these technologies, increased competition from entrants outside the traditional automotive industry and evolving regulations, such as the guidance for automated driving systems published by the U.S. Department of Transportation.
There are many risks associated with these evolving areas, including the high development costs of active safety and autonomous driving technologies, the uncertain timing of customer and consumer adoption of these technologies, increased competition from entrants outside the traditional automotive industry and evolving regulations, such as the guidance for automated driving systems published by the U.S. Department of Transportation.
Despite the moderation in the level of economic growth in China, rising income levels in China and other key growth markets are expected to result in stronger growth rates in these markets over the long-term. Our strong global presence, and presence in these markets, has positioned us to experience above-market growth rates over the long-term.
Despite the market volatility and moderation in the level of economic growth in China, rising income levels in China and other key growth markets are expected to result in stronger growth rates in these markets over the long-term. Our strong global presence, and presence in these markets, has positioned us to experience above-market growth rates over the long-term.
Furthermore, the conflict has caused our customers to analyze their continued presence in the region and future customer production plans in the region remain uncertain. 34 Table of Contents We do not have a material physical presence in either Ukraine or Russia, with less than 1% of our workforce located in the countries as of December 31, 2022 and less than 1% of our net sales for the year ended December 31, 2022 generated from manufacturing facilities in those countries.
Furthermore, the conflict has caused our customers to analyze their continued presence in the region and future customer production plans in the region remain uncertain. 34 Table of Contents We do not have a material physical presence in either Ukraine or Russia, with less than 1% of our workforce located in the countries as of December 31, 2023 and less than 1% of our net sales for the year ended December 31, 2023 generated from manufacturing facilities in those countries.
The effective tax rate was also impacted by impairments and charges related to our planned exit from our majority owned Russian subsidiary and other charges in Ukraine for which no tax benefit was recognized.
The effective tax rate was also impacted by impairments and charges related to our exit from our majority owned Russian subsidiary and other charges in Ukraine for which no tax benefit was recognized.
We are benefiting from the substantial increase in vehicle content, software and electrification that requires a complex and reliable electrical architecture and systems to operate, such as automated advanced driver assistance technologies, electrical vehicle monitoring, active safety systems, lane 36 Table of Contents departure warning systems, integrated vehicle cockpit displays, navigation systems and technologies that enable connected infotainment in vehicles.
We are benefiting from the substantial increase in vehicle content, software and electrification that requires a complex and reliable electrical architecture and systems 35 Table of Contents to operate, such as automated advanced driver assistance technologies, electrical vehicle monitoring, active safety systems, lane departure warning systems, integrated vehicle cockpit displays, navigation systems and technologies that enable connected infotainment in vehicles.
Business Strategy We believe the Company is well-positioned for growth from increasing global vehicle production volumes, as well as the industry’s accelerating transition to software-defined vehicles, the commercialization of active safety, autonomous driving, enhanced user experiences and connected services, and providing the software, advanced computing platforms and networking architecture required to do so.
Business Strategy We believe the Company is well-positioned for growth from increasing global vehicle production volumes, as well as the industry’s accelerating transition to software-defined vehicles, the commercialization of active safety, the adoption of autonomous driving technologies, enhanced user experiences and connected services, and providing the software, advanced computing platforms and networking architecture required to do so.
Furthermore, management continues to monitor the volatile geopolitical environment to identify, quantify and assess threatened duties, taxes or other business restrictions which could adversely affect our business and financial results. Product development . The automotive technology and components industry is highly competitive and is characterized by rapidly changing technology, evolving industry standards and changes in customer needs.
Management continues to monitor the volatile geopolitical environment to identify, quantify and assess proposed or threatened duties, taxes or other business restrictions which could adversely affect our business and financial results. Product development . The automotive technology and components industry is highly competitive and is characterized by rapidly changing technology, evolving industry standards and changes in customer needs.
These countries may impose further sanctions and take other actions as the situation continues. Given the sanctions put in place by the E.U., U.S. and other governments, which restrict our ability to conduct business in Russia, we initiated a plan to exit our majority owned subsidiary in Russia in the second quarter of 2022.
These countries may impose further sanctions and take other actions as the situation continues. Given the sanctions put in place by the E.U., U.S. and other governments, which restrict our ability to conduct business in Russia, we initiated a plan in the second quarter of 2022 to exit our 51% owned subsidiary in Russia.
The June 2021 amendment, among other things, (1) refinanced and replaced the existing term loan A and revolver with a new term loan A that matures in 2026, and a new five-year revolving credit facility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, and (3) established the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement) and allowed for dividends and other payments on equity.
The June 2021 amendment, among other things, (1) refinanced and replaced the term loan A and revolver with a new term loan A with an original maturity in 2026, and a new five-year revolving credit facility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, and (3) established the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement) and allowed for dividends and other payments on equity.
Intercable Automotive —On November 30, 2022, Aptiv acquired 85% of the equity interests of Intercable Automotive Solutions S.r.l. (“Intercable Automotive”), a manufacturer of high-voltage busbars and interconnect solutions, for total consideration of $606 million. The results of operations of Intercable Automotive are reported within the Signal and Power Solutions segment from the date of acquisition.
Intercable Automotive —On November 30, 2022, Aptiv acquired 85% of the equity interests of Intercable Automotive Solutions S.r.l. (“Intercable Automotive”), a manufacturer of high-voltage busbars and interconnect solutions, for total consideration of $609 million. The results of operations of Intercable Automotive are reported within the Signal and Power Solutions segment from the date of acquisition.
The reconciliation of Adjusted Operating Income to operating income includes, as applicable, amortization, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments and other related charges and gains (losses) on business divestitures and other transactions.
The reconciliation of Adjusted Operating Income to operating income includes, as applicable, amortization, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments and other related charges, compensation expense related to acquisitions and gains (losses) on business divestitures and other transactions.
Segment 44 Table of Contents Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP.
Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be 43 Table of Contents considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP.
The Company acquired Wind River utilizing cash on hand, which included proceeds from the 2022 Senior Notes. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $43 million, which were recorded within other expense, net in the statement of operations.
The Company acquired Wind River utilizing cash on hand, which included proceeds from the 2022 Senior Notes. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $43 million, which were recorded within other expense, net in the statement of operations in the fourth quarter of 2022.
We have a team of approximately 22,000 scientists, engineers and technicians focused on developing leading product solutions for our key markets, located at 11 major technical centers in China, Germany, India, Mexico, Poland, Singapore and the United States.
We have a team of approximately 22,200 scientists, engineers and technicians focused on developing leading product solutions for our key markets, located at 11 major technical centers in China, Germany, India, Mexico, Poland, Singapore and the United States.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the year ended December 31, 2022. This discussion should be read in conjunction with Item 8.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the year ended December 31, 2023. This discussion should be read in conjunction with Item 8.
Results of Operations by Segment We operate our core business along the following operating segments, which are grouped on the basis of similar product, market and operating factors: • Signal and Power Solutions, which includes complete electrical architecture and component products. • Advanced Safety and User Experience, which includes vehicle technology and services in advanced safety, user experience and connectivity and security solutions, as well as cloud-native software platforms, autonomous driving technologies and DevOps tools. • Eliminations and Other, which includes i) the elimination of inter-segment transactions, and ii) certain other expenses and income of a non-operating or strategic nature.
Results of Operations by Segment We operate our core business along the following operating segments, which are grouped on the basis of similar product, market and operating factors: • Signal and Power Solutions, which includes complete electrical architecture and component products. • Advanced Safety and User Experience, which includes vehicle technology and services in advanced safety, user experience and smart vehicle compute and software, as well as cloud-native software platforms, autonomous driving technologies and DevOps tools. • Eliminations and Other, which includes i) the elimination of inter-segment transactions, and ii) certain other expenses and income of a non-operating or strategic nature.
The final purchase price is contractually defined and will be determined based on Intercable Automotive’s 2025 operating results. El-Com —On December 30, 2021, Aptiv acquired 100% of the equity interests of El-Com, Inc. (“El-Com”), a manufacturer of custom wire harnesses and cable assemblies for high-reliability products and industries, for total consideration of up to $88 million.
The final purchase price is contractually defined and will be determined based on Intercable Automotive’s 2025 operating results. 47 Table of Contents El-Com —On December 30, 2021, Aptiv acquired 100% of the equity interests of El-Com, Inc. (“El-Com”), a manufacturer of custom wire harnesses and cable assemblies for high-reliability products and industries, for total consideration of up to $88 million.
Our ability to design a reliable electrical architecture that optimizes power distribution and/or consumption is key to satisfying the OEMs’ needs to reduce emissions while continuing to meet consumer demand for increased vehicle content and technology. Global capabilities .
Our ability to design a reliable electrical architecture that optimizes power distribution and/or consumption is key to satisfying the OEMs’ needs to reduce emissions while continuing to meet consumer demand for increased vehicle content and technology.
Subsequently, Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiary of Aptiv PLC, executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGFL guarantees the obligations under the Credit Agreement, subject to certain exceptions.
Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiary of Aptiv PLC, previously executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGFL guarantees the obligations under the Credit Agreement, subject to certain exceptions.
Other intangible assets with definite lives are amortized over their useful lives and are subject to impairment testing only if events or circumstances indicate that the asset might be impaired, as described above. Income Taxes Deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes.
Other intangible assets with definite lives are amortized over their useful 56 Table of Contents lives and are subject to impairment testing only if events or circumstances indicate that the asset might be impaired, as described above. Income Taxes Deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes.
Such future restructuring actions are dependent on market conditions, customer actions and other factors. 42 Table of Contents Refer to Note 10. Restructuring to the audited consolidated financial statements included herein for additional information.
Such future restructuring actions are dependent on market conditions, customer actions and other factors. 41 Table of Contents Refer to Note 10. Restructuring to the audited consolidated financial statements included herein for additional information.
Suppliers that can provide fully-engineered solutions, systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing. 37 Table of Contents Engineering, design and development .
Suppliers that can provide fully-engineered solutions, systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing. 36 Table of Contents Engineering, design and development .
Senior Unsecured Notes As of December 31, 2022, the Company had the following senior unsecured notes issued and outstanding: Aggregate Principal Amount (in millions) Stated Coupon Rate Issuance Date Maturity Date Interest Payment Date $ 700 2.396% February 2022 February 2025 February 18 and August 18 749 1.50% March 2015 March 2025 March 10 535 1.60% September 2016 September 2028 September 15 300 4.35% March 2019 March 2029 March 15 and September 15 800 3.25% February 2022 March 2032 March 1 and September 1 300 4.40% September 2016 October 2046 April 1 and October 1 350 5.40% March 2019 March 2049 March 15 and September 15 1,500 3.10% November 2021 December 2051 June 1 and December 1 1,000 4.15% February 2022 May 2052 May 1 and November 1 Although the specific terms of each indenture governing each series of senior notes vary, the indentures contain certain restrictive covenants, including with respect to Aptiv’s (and Aptiv’s subsidiaries) ability to incur liens, enter into sale and leaseback transactions and merge with or into other entities.
Senior Unsecured Notes As of December 31, 2023, the Company had the following senior unsecured notes issued and outstanding: Aggregate Principal Amount (in millions) Stated Coupon Rate Issuance Date Maturity Date Interest Payment Date $ 700 2.396% February 2022 February 2025 February 18 and August 18 $ 773 1.50% March 2015 March 2025 March 10 $ 552 1.60% September 2016 September 2028 September 15 $ 300 4.35% March 2019 March 2029 March 15 and September 15 $ 800 3.25% February 2022 March 2032 March 1 and September 1 $ 300 4.40% September 2016 October 2046 April 1 and October 1 $ 350 5.40% March 2019 March 2049 March 15 and September 15 $ 1,500 3.10% November 2021 December 2051 June 1 and December 1 $ 1,000 4.15% February 2022 May 2052 May 1 and November 1 Although the specific terms of each indenture governing each series of senior notes vary, the indentures contain certain restrictive covenants, including with respect to Aptiv’s (and Aptiv’s subsidiaries’) ability to incur liens, enter into sale and leaseback transactions and merge with or into other entities.
As of December 31, 2022, all obligations under the Credit Agreement were borrowed by Aptiv Corporation and jointly and severally guaranteed by AGFL and Aptiv PLC, subject to certain exceptions set forth in the Credit Agreement.
As of December 31, 2023, all obligations under the Credit Agreement were borrowed by Aptiv Corporation and jointly and severally guaranteed by AGFL and Aptiv PLC, subject to certain exceptions set forth in the Credit Agreement.
Assuming constant product mix and pricing, based on our 2022 results, we estimate that our EBITDA breakeven level would be reached if we experienced a 45% downturn to current product volumes.
Assuming constant product mix and pricing, based on our 2023 results, we estimate that our EBITDA breakeven level would be reached if we experienced a 45% downturn to current product volumes.
In 2022, we continued to complete selected acquisitions and strategic investments in order to continue to leverage our technology capabilities and enhance and expand our commercialization of new mobility solutions, product offerings, customer base, geographic penetration and scale to complement our current businesses, while continuing to enhance our product offerings and competitive position in growing market segments.
In recent years, we continued to complete selected acquisitions and strategic investments in order to continue to leverage our technology capabilities and enhance and expand our commercialization of new mobility solutions, product offerings, customer base, geographic penetration and scale to complement our current businesses, while continuing to enhance our product offerings and competitive position in growing market segments.
We utilize a combination of strategies, including 47 Table of Contents dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Aptiv.
We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Aptiv.
For purposes of analysis, the following table highlights the sensitivity of our pension obligations and expense attributable to changes in key assumptions: Change in Assumption Impact on Pension Expense Impact on PBO 25 basis point (“bp”) decrease in discount rate Less than + $1 million ‘ + $16 million 25 bp increase in discount rate ‘ - $1 million ‘ - $15 million 25 bp decrease in long-term expected return on assets ‘ + $1 million — 25 bp increase in long-term expected return on assets ‘ - $1 million — The above sensitivities reflect the effect of changing one assumption at a time.
For purposes of analysis, the following table highlights the sensitivity of our pension obligations and expense attributable to changes in key assumptions: Change in Assumption Impact on Pension Expense Impact on PBO 25 basis point (“bp”) decrease in discount rate Less than + $1 million ‘ + $18 million 25 bp increase in discount rate Less than + $1 million ‘ - $17 million 25 bp decrease in long-term expected return on assets ‘ + $1 million — 25 bp increase in long-term expected return on assets ‘ - $1 million — The above sensitivities reflect the effect of changing one assumption at a time.
The conflict between Ukraine and Russia, which began in February 2022, has had, and is expected to continue to have, negative economic impacts to both countries and to the European and global economies. In response to the conflict, the European Union (the “E.U.”), United States (the “U.S.”) and other nations implemented broad economic sanctions against Russia.
The conflict between Ukraine and Russia, which began in February 2022, has had, and is expected to continue to have, negative economic impacts to both countries and to the European and global economies. In response to the conflict, the European Union (the “E.U.”), the U.S. and other nations implemented broad economic sanctions against Russia.
A detailed discussion of our consolidated results of operations and results of operations by segment for the years ended December 31, 2021 versus 2020 can be found under Item 7.
A detailed discussion of our consolidated results of operations and results of operations by segment for the years ended December 31, 2022 versus 2021 can be found under Item 7.
The determination of the amount of such reserves is based on knowledge and experience with regard to past and current matters and consultation with internal personnel involved with such matters and with outside legal counsel handling such matters. The amount of such reserves may change in the future due to new developments or changes in circumstances.
The determination of the amount of such 54 Table of Contents reserves is based on knowledge and experience with regard to past and current matters and consultation with internal personnel involved with such matters and with outside legal counsel handling such matters. The amount of such reserves may change in the future due to new developments or changes in circumstances.
We believe we are well-aligned with industry technology trends that will result in sustainable future growth in this space, and have partnered with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies.
We believe we are well-aligned with industry technology trends that will help to support sustainable future growth in this space and have partnered with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies.
The Company acquired its interest in Intercable Automotive utilizing cash on hand. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $10 million, which were recorded within other expense, net in the statement of operations.
The Company acquired its interest in Intercable Automotive utilizing cash on hand. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $10 million, which were recorded within other expense, net in the statement of operations in the fourth quarter of 2022.
Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment. We are one of the largest vehicle technology suppliers and our customers include the 25 largest automotive OEMs in the world.
Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment. 31 Table of Contents We are one of the largest vehicle technology suppliers and our customers include the 25 largest automotive OEMs in the world.
To compete effectively in the automotive technology and components industry, we must be able to develop and launch new products to meet our customers’ demands in a timely manner. Our innovative technologies and robust global engineering and development capabilities have us well positioned to meet the increasingly stringent vehicle manufacturer demands and consumer preferences for high-technology content in automobiles.
To compete effectively in the automotive technology and components industry, we must be able to develop and launch new products to meet our customers’ demands in a timely manner. With our innovative technologies and robust global engineering and development capabilities we are well positioned to meet the increasingly stringent vehicle manufacturer demands and consumer preferences for high-technology content in automobiles.
The Credit Agreement also contains events of default customary for financings of this type. The Company was in compliance with the Credit Agreement covenants as of December 31, 2022.
The Credit Agreement also contains events of default customary for financings of this type. The Company was in compliance with the Credit Agreement covenants as of December 31, 2023.
However, the impacts of the conflict have adversely impacted, and may continue to adversely impact, global economies, and in particular, the European economy, a region which accounted for approximately 31% of our net sales for the year ended December 31, 2022.
However, the impacts of the conflict have adversely impacted, and may continue to adversely impact, global economies, and in particular, the European economy, a region which accounted for approximately 34% of our net sales for the year ended December 31, 2023.
We utilize a global cash pooling arrangement to consolidate and manage our global cash balances, which enables us to efficiently move cash into and out of a number of the countries in which we operate. Operating activities —Net cash provided by operating activities totaled $1,263 million and $1,222 million for the years ended December 31, 2022 and 2021, respectively.
We utilize a global cash pooling arrangement to consolidate and manage our global cash balances, which enables us to efficiently move cash into and out of a number of the countries in which we operate. Operating activities —Net cash provided by operating activities totaled $1,896 million and $1,263 million for the years ended December 31, 2023 and 2022, respectively.
The Company also recorded $15 million during the year ended December 31, 2022 related to the components of net periodic pension and postretirement benefit cost other than service costs, as further described in Note 12. Pension Benefits to the audited consolidated financial statements included herein. As further discussed in Note 11.
The Company also recorded $15 million during the year ended December 31, 2022 related to the components of net periodic pension and postretirement benefit cost other than service costs, as further described in Note 12. Pension Benefits to the audited consolidated financial statements included herein. Refer to Note 19.
The 51 Table of Contents Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility, which are also subject to adjustment based on the sustainability-linked targets as described above, and certain letter of credit issuance and fronting fees.
The Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility, which are also subject to adjustment based on the sustainability-linked targets as described above, and certain letter of credit issuance and fronting fees.
However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels as of December 31, 2022 and 2021.
However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material inventories has increased substantially from customary levels as of both December 31, 2023 and 2022.
Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced 31 Table of Contents computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles.
Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles.
The Applicable Rates under the Credit Agreement on the specified dates are set forth below: December 31, 2022 December 31, 2021 LIBOR plus ABR plus LIBOR plus ABR plus Revolving Credit Facility 1.06 % 0.06 % 1.10 % 0.10 % Tranche A Term Loan 1.105 % 0.105 % 1.125 % 0.125 % Under the June 2021 amendment, the Applicable Rate under the Credit Agreement, as well as the facility fee, may increase or decrease from time to time based on changes in the Company’s credit ratings and whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety.
The rates under the Credit Agreement on the specified dates are set forth below: December 31, 2023 December 31, 2022 SOFR plus ABR plus LIBOR plus ABR plus Revolving Credit Facility 1.06 % 0.06 % 1.06 % 0.06 % Tranche A Term Loan N/A N/A 1.105 % 0.105 % The Applicable Rate under the Credit Agreement, as well as the facility fee, may increase or decrease from time to time based on changes in the Company’s credit ratings and whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety.
We have also negotiated, and will continue to negotiate, price increases with our customers in response to the aforementioned global supply chain disruptions. This section discusses our consolidated results of operations and results of operations by segment for the years ended December 31, 2022 versus 2021.
We have also negotiated, and will continue to negotiate, price increases with our customers in response to the aforementioned increased overall inflation and global supply chain disruptions. This section discusses our consolidated results of operations and results of operations by segment for the years ended December 31, 2023 versus 2022.
We have a strong balance sheet with gross debt of approximately $6.5 billion and substantial available liquidity of approximately $4.0 billion consisting of cash and cash equivalents, and available financing under our Revolving Credit Facility 38 Table of Contents and committed European accounts receivable factoring facility (as defined below in Liquidity and Capital Resources) as of December 31, 2022, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits liabilities.
We have a strong balance sheet with gross debt of approximately $6.2 billion and substantial available liquidity of approximately $4.1 billion consisting of cash and cash equivalents, and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility (as defined below in Liquidity and Capital Resources) as of 37 Table of Contents December 31, 2023, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits liabilities.
There have been periods of increased market volatility and moderation in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Automotive production in China experienced growth of 3% in 2022, which follows growth of 2% in 2021.
There have been periods of increased market volatility and moderation in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Automotive production in China experienced growth of 10% in 2023, which follows growth of 3% in 2022.
We report tax-related interest and penalties as a component of income tax expense. We do not believe there is a reasonable likelihood that there will be a material change in the tax related balances or valuation allowance balances. However, due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate.
We report tax-related interest and penalties as a component of income tax expense. We do not believe there is a reasonable likelihood that there will be a material change in the tax related balances. However, due to the complexity of some of these uncertainties, the ultimate resolution may be materially different from the current estimate. Refer to Note 14.
While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability. Key growth markets .
While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability. Ukraine/Russia conflict.
No amounts were drawn on the Revolving Credit Facility during the year ended December 31, 2022.
No amounts were drawn on the Revolving Credit Facility during the year ended December 31, 2023.
We are committed to becoming carbon-neutral in our global operations by 2030 and to achieving net carbon neutrality by 2040 as we transition away from carbon-intensive energy and processes in our global operations. We also continue to focus on minimizing the overall environmental impact of vehicles as a key part of our overall business strategy.
Accelerating an electric, zero-emissions future. We are committed to becoming carbon-neutral in our global operations by 2030 and to achieving net carbon neutrality by 2040 as we transition away from carbon-intensive energy and processes in our global operations. We also continue to focus on minimizing the overall environmental impact of vehicles as a key part of our overall business strategy.
Aptiv does not have any U.S. pension assets; therefore no U.S. asset rate of return calculation was necessary. The primary funded non-U.S. plans are in the U.K. and Mexico. For the determination of 2022 expense, we assumed a long-term expected asset rate of return of approximately 3.75% and 7.50% for the U.K. and Mexico, respectively.
Aptiv does not have any U.S. pension assets; therefore no U.S. asset rate of return calculation was necessary. The primary funded non-U.S. plans are in the U.K. and Mexico. For the determination of 2023 expense, we assumed a long-term expected asset rate of return of approximately 4.25% and 7.50% for the U.K. and Mexico, respectively.
Planned Exit from Majority Owned Russian Subsidiary —Given the sanctions put in place by the E.U., U.S. and other governments, which restrict our ability to conduct business in Russia, we initiated a plan to exit our majority owned subsidiary in Russia in the second quarter of 2022.
Sale of Interest in Majority Owned Russian Subsidiary —Given the sanctions put in place by the E.U., U.S. and other governments, which restrict our ability to conduct business in Russia, we initiated a plan in the second quarter of 2022 to exit our 51% owned subsidiary in Russia.
As of December 31, 2022, the Company was in compliance with the provisions of all series of the outstanding senior notes. Refer to Note 11. Debt to the audited consolidated financial statements included herein for additional information. 52 Table of Contents Guarantor Summarized Financial Information As further described in Note 11.
As of December 31, 2023, the Company was in compliance with the provisions of all series of the outstanding senior notes. Refer to Note 11. Debt to the audited consolidated financial statements included herein for additional information. Guarantor Summarized Financial Information As further described in Note 11.
Income Taxes Year Ended December 31, 2022 2021 Favorable/ (unfavorable) (in millions) Income tax expense $ 121 $ 101 $ (20) The Company’s tax rate is affected by the fact that its parent entity is an Irish resident taxpayer, the tax rates in Ireland and other jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance.
Income Taxes Year Ended December 31, 2023 2022 Favorable/ (unfavorable) (in millions) Income tax (benefit) expense $ (1,928) $ 121 $ 2,049 The Company’s tax rate is affected by the fact that its parent entity is an Irish resident taxpayer, the tax rates in Ireland and other jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance.
Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions. In addition, during recent years, global economies and our industry were subjected to significant inflationary cost pressures, and these pressures are expected to continue in 2023.
Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions. In addition, during recent years, global economies and our industry were subjected to significant inflationary cost pressures, and these pressures may continue in 2024.
An acquisition may also include a redeemable noncontrolling interest component. The fair value of the noncontrolling interest is recorded to temporary equity in the consolidated balance sheet and is estimated as of the date of acquisition using a Monte Carlo simulation approach, which includes several assumptions including estimated future profitability, expected volatility rate and risk free rate.
The fair value of the noncontrolling interest is recorded to temporary equity in the consolidated balance sheet and is estimated as of the date of acquisition using a Monte Carlo simulation approach, which includes several assumptions including estimated future profitability, expected volatility rate and risk free rate.
In 2022, global inflationary pressures both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our profitability and this trend is expected to continue in 2023. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector.
In 2023, global inflationary pressures have, at times, both reduced consumer demand for automotive vehicles and increased the price of inputs to our products, which has adversely impacted our profitability and this trend may continue in 2024. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector.
Plans 2022 2021 2020 2022 2021 2020 Weighted-average discount rate 1.90 % 1.20 % 2.40 % 3.09 % 2.21 % 2.87 % Weighted-average rate of increase in compensation levels N/A N/A N/A 2.47 % 3.64 % 3.69 % Weighted-average expected long-term rate of return on plan assets N/A N/A N/A 4.46 % 4.29 % 4.68 % We select discount rates by analyzing the results of matching each plan’s projected benefit obligations with a portfolio of high-quality fixed income investments rated AA or higher by Standard and Poor’s or Moody’s.
Plans 2023 2022 2021 2023 2022 2021 Weighted-average discount rate 5.20 % 1.90 % 1.20 % 5.95 % 3.09 % 2.21 % Weighted-average rate of increase in compensation levels N/A N/A N/A 2.82 % 2.47 % 3.64 % Weighted-average expected long-term rate of return on plan assets N/A N/A N/A 4.98 % 4.46 % 4.29 % We select discount rates by analyzing the results of matching each plan’s projected benefit obligations with a portfolio of high-quality fixed income investments rated AA or higher by Standard and Poor’s or Moody’s.
Our total investment in research and development, including engineering, was approximately $1.5 billion, $1.4 billion and $1.3 billion for the years ended December 31, 2022, 2021 and 2020, respectively, which includes approximately $379 million, $320 million and $303 million of co-investment by customers and government agencies.
Our total investment in research and development, including engineering, was approximately $1.8 billion, $1.5 billion and $1.4 billion for the years ended December 31, 2023, 2022 and 2021, respectively, which includes approximately $492 million, $379 million and $320 million of co-investment by customers and government agencies.
The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021.
The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021, and was further amended on April 19, 2023.
After expiration of the three-year term, either party can terminate with three months’ notice. Borrowings denominated in Euros under the facility bear interest at the three-month Euro Interbank Offered Rate (“EURIBOR”) plus 0.50% and USD borrowings bear interest at two-month LIBOR plus 0.50%, with borrowings under either denomination carrying a minimum interest rate of 0.20%.
After expiration of the new three-year term, either party can terminate with three months’ notice. Borrowings denominated in Euros under the facility bear interest at the three-month Euro Interbank Offered Rate (“EURIBOR”) plus 0.50%. As of December 31, 2022, USD borrowings bore interest at two-month LIBOR plus 0.50%, with borrowings under either denomination carrying a minimum interest rate of 0.20%.
We review goodwill for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company performs the goodwill impairment review at the reporting unit level.
Goodwill and Intangible Assets We periodically review goodwill for impairment indicators. We review goodwill for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate that goodwill might be impaired. The Company performs the goodwill impairment review at the reporting unit level.
In addition, under the June 2021 amendment, the Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement) of not more than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement).
In addition, the Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total 49 Table of Contents Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement) of not more than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement).
Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 24% of the hourly workforce as of December 31, 2022.
Furthermore, we have substantial operational flexibility by leveraging a large workforce of contingent workers, which represented approximately 27% of the hourly workforce as of December 31, 2023.
Accordingly, the interest rate is subject to fluctuation during the term of the Credit Agreement based on changes in the ABR, LIBOR, changes in the Company’s corporate credit ratings or whether the Company achieves or fails to achieve its sustainability-linked targets.
Accordingly, the interest rate is subject to fluctuation during the term of the Credit Agreement based on changes in the ABR, SOFR (after the April 2023 amendment), LIBOR (before the April 2023 amendment), changes in the Company’s corporate credit ratings or whether the Company achieves or fails to achieve its sustainability-linked targets.
Credit Agreement Aptiv PLC and its wholly-owned subsidiary, Aptiv Corporation, entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit facilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit facility of $2 billion (the “Revolving Credit Facility”).
Credit Agreement Aptiv PLC and its wholly-owned subsidiary, Aptiv Corporation, entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains a senior 48 Table of Contents unsecured credit facility currently consisting of a revolving credit facility of $2 billion (the “Revolving Credit Facility”).
We believe companies with strong balance sheets and financial discipline are in the best position to take advantage of these trends. Consolidated Results of Operations Our total net sales during the year ended December 31, 2022 were $17.5 billion, an increase of approximately 12% compared to 2021.
We believe companies with strong balance sheets and financial discipline are in the best position to take advantage of these trends. Consolidated Results of Operations Our total net sales during the year ended December 31, 2023 were $20.1 billion, an increase of approximately 15% compared to 2022.
Liquidity and Capital Resources Overview of Capital Structure Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements, operational restructuring activities and dividends on our outstanding preferred shares.
Liquidity and Capital Resources Overview of Capital Structure Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements and operational restructuring activities.
As of December 31, 2022, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $1.4 billion.
As of December 31, 2023, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $1.6 billion.
As of December 31, 2022, there were no amounts drawn on the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.
As of December 31, 2023, there were no amounts outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.
The key factors which impact our estimates are (1) the stated or implied warranty period; (2) OEM source; (3) OEM policy decisions regarding warranty claims; and (4) OEMs seeking to hold suppliers responsible for product warranties.
The key factors which impact our estimates are (1) the stated or implied warranty period; (2) OEM source; (3) OEM policy decisions regarding warranty claims; and (4) OEMs seeking to hold suppliers responsible for product warranties. These estimates are re-evaluated on an ongoing basis.
December 31, 2022 (in millions) Cash and cash equivalents $ 1,531 Revolving Credit Facility, unutilized portion (1) 2,000 Committed European accounts receivable factoring facility, unutilized portion (2) 482 Total available liquidity $ 4,013 (1) Availability reduced by less than $1 million in letters of credit issued under the Credit Agreement as of December 31, 2022.
December 31, 2023 (in millions) Cash and cash equivalents $ 1,640 Revolving Credit Facility, unutilized portion (1) 2,000 Committed European accounts receivable factoring facility, unutilized portion (2) 497 Total available liquidity $ 4,137 (1) Availability reduced by less than $1 million in letters of credit issued under the Credit Agreement as of December 31, 2023.
Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China, and may be affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in China, as have recently been experienced as a result of the COVID-19 pandemic and related governmental lockdowns.
Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China, and may be affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in China, such as during the COVID-19 pandemic and related governmental lockdowns in 2022.
Such adjustments may be up to 0.04% per annum on interest rate margins on the Revolving Credit Facility, 0.02% per annum on interest rate margins on the Tranche A Term Loan and 0.01% per annum on the facility fee.
Such adjustments may be up to 0.04% per annum on interest rate margins on the Revolving Credit Facility, 0.02% per annum on interest rate margins on the Tranche A Term Loan (prior to its repayment, as described above) and 0.01% per annum on the facility fee.
Significant Accounting Policies to the audited consolidated financial statements included herein. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
Significant Accounting Policies and Critical Accounting Estimates Our significant accounting policies are described in Note 2. Significant Accounting Policies to the audited consolidated financial statements included herein. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates.
For instance, as described above, the conflict between Ukraine and Russia has created numerous economic uncertainties, including the potential for further sanctions against Russia, the impact on the global supply chain for raw materials produced in each country, as well as increased logistics costs and transit times, the impact of the E.U. natural gas rationing plan and the actions of automotive OEMs and suppliers as they relate to production plans in each country.
In addition, as described above, the conflict between Ukraine and Russia has also created numerous economic uncertainties, including the potential for further sanctions against Russia, the impact on the global supply chain for raw materials produced in each country, as well as increased logistics costs and transit times, and the actions of automotive OEMs and suppliers as they relate to production plans in each country and within the region.
We believe that this strong, foundational focus on sustainability makes Aptiv a partner of choice for our customers, a desirable place to work for our employees and a valued contributor to the communities in which we operate. Trends, Uncertainties and Opportunities Ukraine/Russia conflict.
We believe that this strong, foundational focus on sustainability makes Aptiv a partner of choice 33 Table of Contents for our customers, a desirable place to work for our employees and a valued contributor to the communities in which we operate. Trends, Uncertainties and Opportunities Economic conditions .
The Company’s 43 Table of Contents effective tax rate is also impacted by the receipt of certain tax incentives and holidays that reduce the effective tax rate for certain subsidiaries below the statutory rate. The Company’s effective tax rate was 12% and 11% for the years ended December 31, 2022 and 2021, respectively.
The Company’s effective tax rate is also impacted by the receipt of certain tax incentives and holidays that reduce the effective tax rate for certain subsidiaries below the statutory rate. The Company’s effective tax rate was (144)% and 12% for the years ended December 31, 2023 and 2022, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

15 edited+1 added−1 removed13 unchanged
Biggest changeThe assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar. 60 Table of Contents Commodity Price Risk Commodity swaps/average rate forward contracts are executed to offset a portion of our exposure to the potential change in prices mainly for various non-ferrous metals used in the manufacturing of automotive components, primarily copper.
Biggest changeCommodity Price Risk Commodity swaps/average rate forward contracts are executed to offset a portion of our exposure to the potential change in prices mainly for various non-ferrous metals used in the manufacturing of automotive components, primarily copper.
The interest rate period with respect to the LIBOR interest rate option can be set at one-, three-, or six-months as selected by us in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable lenders), but payable no less than quarterly.
The interest rate period with respect to the SOFR interest rate option can be set at one-, three-, or six-months as selected by us in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable lenders), but payable no less than quarterly.
We also face an inherent business risk of exposure to commodity prices risks, and have historically offset our exposure, particularly to changes in the price of various non-ferrous metals used in our manufacturing operations, through fixed price purchase agreements, commodity swaps and option contracts.
We also face an inherent business risk of exposure to commodity prices risks, and have historically offset our exposure, particularly to changes in the price of various non-ferrous 57 Table of Contents metals used in our manufacturing operations, through fixed price purchase agreements, commodity swaps and option contracts.
Derivatives and Hedging Activities to the audited consolidated financial statements included herein, in order to manage certain translational exposure, we have designated the 2015 Euro-denominated Senior Notes and the 2016 Euro-denominated Senior Notes as net investment hedges of the foreign currency exposure of our investments in certain Euro-denominated subsidiaries.
As described in Note 17. Derivatives and Hedging Activities to the audited consolidated financial statements included herein, in order to manage certain translational exposure, we have designated the 2015 Euro-denominated Senior Notes and the 2016 Euro-denominated Senior Notes as net investment hedges of the foreign currency exposure of our investments in certain Euro-denominated subsidiaries.
If the price of the commodities that are being hedged by our commodity swaps/average rate forward contracts changed adversely or favorably by 10%, the fair value of our commodity swaps/average rate forward contracts would decrease or increase by $37 million and $36 million as of December 31, 2022 and 2021, respectively.
If the price of the commodities that are being hedged by our commodity swaps/average rate forward contracts changed adversely or favorably by 10%, the fair value of our commodity swaps/average rate forward contracts would decrease or increase by $43 million and $37 million as of December 31, 2023 and 2022, respectively.
Debt to the audited consolidated financial statements included herein. Accordingly, the interest rate will fluctuate during the term of the Credit Agreement based on changes in the Alternate Base Rate, LIBOR, future changes in our corporate credit ratings or the sustainability-linked targets as discussed above.
Debt to the audited consolidated financial statements included herein. Accordingly, the interest rate will fluctuate during the term of the Credit Agreement based on changes in the Alternate Base Rate, SOFR, future changes in our corporate credit ratings or the sustainability-linked targets as discussed above. 59 Table of Contents
As of December 31, 2022 and 2021 the net fair value liability of all financial instruments, including hedges and underlying transactions, with exposure to currency risk was approximately $446 million and $876 million, respectively.
As of December 31, 2023 and 2022 the net fair value liability of all financial instruments, including hedges and underlying transactions, with exposure to currency risk was approximately $507 million and $446 million, respectively.
The potential change in fair value for such financial instruments from a hypothetical 10% adverse change in quoted currency exchange rates would be a gain of approximately $17 million and a loss of approximately $34 million as of December 31, 2022 and 2021, respectively.
The potential change in fair value for such financial instruments from a hypothetical 10% adverse change in quoted currency exchange rates would be a gain of approximately $23 million and $17 million as of December 31, 2023 and 2022, respectively.
We may elect to change the selected interest rate option over the term of the credit facilities in accordance with the provisions of the Credit Agreement.
We may elect to change the selected interest rate option over the term of the Revolving Credit Facility in accordance with the provisions of the Credit Agreement.
The potential change in fair value from a hypothetical 10% favorable change in quoted currency exchange rates would be a loss of approximately $6 million and a gain of approximately $43 million as of December 31, 2022 and 2021, respectively.
The potential change in fair value from a hypothetical 10% favorable change in quoted currency exchange rates would be a loss of approximately $9 million and $6 million as of December 31, 2023 and 2022, respectively.
The applicable interest rates listed above for the Revolving Credit Facility and the Tranche A Term Loan may increase or decrease from time to time in increments of 0.01% to 0.25%, up to a maximum of 0.50% based on changes to our corporate credit ratings or based on whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety, as further discussed in Note 11.
The applicable interest rates listed above for the Revolving Credit Facility may increase or decrease from time to time in increments of 0.01% to 0.20%, up to a maximum of 0.40% based 58 Table of Contents on changes to our corporate credit ratings or based on whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety, as further discussed in Note 11.
The Credit Agreement carries an interest rate, at our option, on Tranche A Term Loan borrowings of either (a) the ABR plus 0.105% per annum, or (b) LIBOR plus 1.105% per annum, and on Revolving Credit Facility borrowings of either (a) the ABR plus 0.06% per annum, or (b) LIBOR plus 1.06% per annum, each of which include an adjustment resulting from the Company having met the sustainability-linked targets for the 2021 calendar year.
The Credit Agreement carries an interest rate, at our option, on Revolving Credit Facility borrowings of either (a) the ABR plus 0.06% per annum, or (b) SOFR plus 1.06% per annum, each of which include an adjustment resulting from the Company having met the sustainability-linked targets for the 2022 calendar year.
The net fair value of our contracts was a liability of $35 million and an asset of $34 million as of December 31, 2022 and 2021, respectively.
The net fair value of our contracts was a liability of $2 million and $35 million as of December 31, 2023 and 2022, respectively.
Interest Rate Risk Our exposure to market risk associated with changes in interest rates relates primarily to our debt obligations. We do not use interest rate swap or other derivative contracts to manage our exposure to fluctuations in interest rates. As of December 31, 2022, we had approximately $309 million of floating rate debt, related to the Credit Agreement.
Interest Rate Risk Our exposure to market risk associated with changes in interest rates relates primarily to our debt obligations. We do not use interest rate swap or other derivative contracts to manage our exposure to fluctuations in interest rates. As of December 31, 2023, we had no floating rate debt outstanding.
During the year ended December 31, 2022, the foreign currency translation adjustment loss of $198 million was primarily due to the impact of a strengthening U.S. dollar, which increased approximately 5% in relation to the Euro and 8% in relation to the Chinese Yuan Renminbi from December 31, 2021. As described in Note 17.
During the year ended December 31, 2023, the foreign currency translation adjustment gain of $30 million was primarily due to the impact of a weakening U.S. dollar, which decreased approximately 15% in relation to the Mexican Peso and 3% in relation to the Euro, partially offset by an increase of approximately 2% in relation to the Chinese Yuan Renminbi from December 31, 2022.
Removed
The table below indicates interest rate sensitivity on interest expense to floating rate debt based on amounts outstanding as of December 31, 2022. Credit Agreement Change in Rate (impact to annual interest expense, in millions) 25 bps decrease - $1 25 bps increase +$1 61 Table of Contents
Added
The assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar.

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