Aptiv Annual Report 2022

Plain-text annual report

2022 Annual Report MESSAGE TO OUR STAKEHOLDERS A CLEAR PATH FORWARD More than a decade ago, Aptiv recognized that demands for a safer, greener and more connected world would reshape the future of the automotive industry, and since that time we have continued to reﬁne and execute our strategy to capitalize on these megatrends. While the recent pandemic and supply chain challenges tested our resilience, our ability to meet customer demands and achieve record new bookings conﬁrmed the strength of our portfolio, the commitment of our global workforce and the value of our mission. Today, the megatrends are accelerating, driven by the growing appeal of feature-rich, highly electriﬁed vehicles. Our ability to enable these advanced features at a price consumers can afford is a testament to our capabilities. We are uniquely positioned as the industry’s only full- system solutions provider, which enables us to optimize the performance and cost of the solutions we develop. Each day, our products help customers solve their toughest challenges, support the sustainability of our planet and deliver long-term value for our shareholders. While we are proud of the resilient and innovative company that we have built, we are even more excited about how we are positioned for the future. DEMAND ACCELERATING FOR ELECTRIFIED, FEATURE-RICH VEHICLES During 2022, battery electric vehicles (BEVs) accounted for approximately 10 percent of new-vehicle production, reﬂecting continued strong growth driven by more stringent government regulations and increasing consumer demand. As a result, we expect the market for high-voltage electriﬁcation to increase by more than 20 percent annually between now and 2030. The demand for higher levels of vehicle safety also increased, which is reﬂected in almost 20 percent of new vehicles built including Level 2 or higher advanced driver-assistance systems (ADAS). Multiple OEMs have now launched hands-free driving applications, many of which are enabled by Aptiv solutions that deliver greater levels of efﬁciency, ﬂexibility and robustness across the broadest possible range of driving scenarios. 2022 also saw a step-function increase in OEMs beginning the transition to next-generation hardware and software architectures. By 2030, we expect that nearly 1 out of every 4 vehicles produced will use a highly centralized, software-deﬁned architecture approach similar to the one Aptiv has been developing. Aptiv is leading the transformation in advanced vehicle architectures. This effort has been informed by the experience of launching more than 200 BEV architecture platforms and 60 high-complexity, software-intensive programs across more than 20 OEMs — all while maintaining exceptional levels of quality and delivery. Our Smart Vehicle Architecture™ (SVA™) solution, introduced in 2017, comprises hardware and software building blocks designed to efﬁciently enable new software-deﬁned functionality. We have worked with multiple global OEMs on advanced development programs. In doing so, we have leveraged our expertise in both the “brain” (software and compute) and the “nervous system” (power and data distribution) of the vehicle to serve as a trusted technology partner. This resulted in more than $4 billion in new SVA™ business awards during 2022 — up signiﬁcantly from less than $1 billion total when we entered the year. We continue to be recognized for our innovation. In 2022, we won our 25th Automotive News PACE Award for the central vehicle controller, a key component of SVA™. At the same time, Aptiv’s high-voltage solutions are reducing weight and mass while also improving range and enabling faster charging — critical factors for BEV adoption. We have a comprehensive high-voltage portfolio, which we expanded during 2022 to include integrated power electronics. This solution combines six devices into one while also hosting battery management system software, and we won our ﬁrst program to deliver this integrated solution to a major OEM. During 2022, Aptiv also acquired an 85 percent equity stake in Intercable Automotive Solutions, a pioneer in the design and manufacture of high-voltage power distribution and interconnect technology. The company’s industry-leading busbar technologies enhance our high-voltage product portfolio, and Intercable Automotive is able to leverage Aptiv’s global scale and manufacturing footprint. THE NEXT CHAPTER FOR APTIV Consumers increasingly are demanding advanced, software-enabled features, which need to be supported across the full life cycle of the vehicle. This requires a continued evolution of the in-vehicle software architecture, as well as the development tools and processes OEMs use to enable these solutions. We acquired Wind River, a global leader in delivering software for mission-critical intelligent systems, whose technology is in more than 2 billion edge devices for more than 1,700 customers across multiple end-markets, including telecommunications, aerospace and defense and industrial. Wind River’s proven solutions are ideally suited to support next-generation vehicle architectures through software abstraction and a cloud-native approach that modernizes software development, deployment and operation over the life cycle of the vehicle. agile, cloud-native approach. This modernizes software development and life-cycle management, enables new business models and accelerates the industry’s digital transformation. As a result, Aptiv is better positioned to execute against the attractive opportunities in software-deﬁned mobility, and Wind River can accelerate its growth in other high-value industries by providing its world-class team with additional resources. POSITIONED FOR THE EMERGING INTELLIGENT EDGE This acquisition is an enabler for our future, positioning us to move away from legacy monolithic architectures that have historically deﬁned our industry to a more In the future, the vehicle will increasingly become an intelligent edge device integrated into the broader internet of things ecosystem, enabling more advanced Aptiv employees in Wuppertal, Germany “I offer my deepest thanks to our 200,000 employees around the world, whose determination and sacriﬁces have positioned us for the future, and I thank all our stakeholders for their continued support of our mission.” processing to take place in the cloud, powered by machine learning for insights and deep personalization. We are well positioned to leverage our entire hardware and software portfolio to address this expanded opportunity. Aptiv’s solutions are not limited to the automotive industry, as applications in industrial, transportation, renewable energy and other attractive markets are being shaped by the same technology trends and customer needs, including increasing data, power and connectivity requirements. Looking ahead, our ability to serve these markets nearly doubles our total addressable market opportunity to $400 billion by 2030. REALIZING OUR VISION FOR TODAY AND BEYOND The strategy we developed roughly a decade ago has proved to be the right one, helping us stay focused on our goals and allowing us to successfully navigate the challenges facing our industry. Our priority remains to deliver on our commitments to our customers and our shareholders — both today and in the future. I offer my deepest thanks to our 200,000 employees around the world, whose determination and sacriﬁces have positioned us for the future, and I thank all our stakeholders for their continued support of our mission. Kevin P. Clark Chairman and Chief Executive Ofﬁcer “Consumers increasingly are demanding advanced, software-enabled features, which need to be supported across the full life cycle of the vehicle. This requires a continued evolution of the in-vehicle software architecture, as well as the development tools and processes OEMs use to enable these solutions.” Aptiv employees in Anting, China UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANAA NUAL REPORT PURSUANAA T TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANA GE ACT OF 1934 For the fiff scal year ended December 31, 2022 OR ☐ TRARR NA SITION REPORT PURSUANAA T TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANA GE ACT OF 1934 For the transition period frff om to . Commission fiff le number: 001-35346 APTIV PLC (Exact name of registrant as specififf ed in its charter) Jersey (State or other jurisdiction of incorprr oration or organization) 98-1029562 (I.R.S. Employer Identififf cation No.) 5 Hanover Quay, Grand Canal Dock, Dublin, D02 VY79, Ireland (Address of principal executive offff iff ces) 353-1-259-7013 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Trading symbol(s) APTV Name of each exchange on which registered New York Stock Exchange Title of each class Ordinaryrr Shares. $0.01 par value per share 5.50% Mandatoryrr Convertible Prefeff rred Shares, Series A, $0.01 par value per share 2.396% Senior Notes due 2025 1.500% Senior Notes due 2025 1.600% Senior Notes due 2028 4.350% Senior Notes due 2029 3.250% Senior Notes due 2032 4.400% Senior Notes due 2046 5.400% Senior Notes due 2049 3.100% Senior Notes due 2051 4.150% Senior Notes due 2052 APTV PRAR APTV APTV APTV APTV APTV APTV APTV APTV APTV New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes ☒. No ☐. Indicate by check mark if the registrant is not required to fiff le reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐. No ☒. Indicate by check mark whether the registrant (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forff (2) has been subject to such fiff ling requirements forff the past 90 days. Yes ☒. No ☐. such shorter period that the registrant was required to fiff le such reports), and Indicate by check mark whether the registrant has submitted electronically everyr pursuant to RulRR e 405 of Regulation S-T (§232.405 of this chapta er) during the preceding 12 months (or forff registrant was required to submit such fiff les). Yes ☒. No ☐. Interactive Data File required to be submitted such shorter period that the Indicate by check mark whether the registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, a smaller reporting company, or an emerging growth company. See the defiff nitions of “large accelerated fiff ler,” “accelerated fiff ler,” “smaller reporting company,” and “emerging growth company” in RulRR e 12b-2 of the Exchange Act. Large accelerated fiff ler Non-accelerated fiff ler ☒ ☐ Accelerated fiff ler Smaller reporting company Emerging growth company ☐ ☐ ☐ If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period forff complying with any new or revised fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐. Indicate by check mark whether the registrant has fiff led a report on and attestation to its management’s assessment of the effff eff ctiveness of its internal control over fiff nancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting fiff rm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant included in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recoveryr analysis of incentive-based compensation received by any of the registrant’s executive offff iff cers during the relevant recoveryrr period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defiff ned in RulRR e 12b-2 of the Exchange Act). Yes ☐. No ☒. The aggregate market value of the ordinaryrr shares held by non-affff iff liates of the registrant as of June 30, 2022, the last business day of the registrant’s most recently completed second fiff scal quarter, was $24,055,205,443 (based on the closing sale price of the registrant’s ordinaryrr shares on that date as reported on the New York Stock Exchange). The number of the registrant’s ordinaryr shares outstanding, $0.01 par value per share as of Februarr ryr 3, 2023, was 270,949,579. Portions of the registrant’s defiff nitive Proxy Statement related to the 2023 Annual General Meeting of Shareholders to be fiff led subsequently are incorpor rr ated by refeff rence into Part III of this Form 10-K. DOCUMENTS INCORPORARR TED BY REFERENCE APTIV PLC INDEX Part I Item 1. Business Supplementaryrr Item. Item 1A. Executive Offff iff cers of the Registrant Risk Factors Item 1B. Unresolved Staffff Comments Item 2. Item 3. Item 4. Item 5. Item 6. Item 7. Properties Legal Proceedings Mine Safeff ty Disclosures Part II Market forff Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Item 9. Item 9A. Item 9B. Item 10. Item 11. Item 12. Item 13. Item 14. Financial Statements and Supplementaryrr Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Inforff mation Directors, Executive Offff iff cers and Corpor r Executive Compensation Part III ate Governance Security Ownership of Certain Benefiff cial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services Item 15. Exhibits, Financial Statement Schedules Part IV Page 5 14 16 28 28 28 29 30 31 31 60 62 133 133 133 134 134 134 134 134 135 3 CAUTIONARYR STATEMENT REGARDING FORWAR RD-LOOKING INFORMATION This Annual Report on Form 10-K, including the exhibits being fiff led as part of this report, as well as other statements made by Aptiv PLC (“Aptiv,” the “Company,” “we,” “us” and “our”), contain forff ward-looking statements that reflff ect, when made, the Company’s current views with respect to current events, certain investments and acquisitions and fiff nancial perforff mance. Such forff ward-looking statements are subject to many risks, uncertainties and faff ctors relating to the Company’s operations and business environment, which may cause the actuat l results of the Company to be materially diffff eff rent frff om any futff urt e results, express or implied, by such foff rward-looking statements. All statements that address futff urt e operating, fiff nancial or business perforff mance or the Company’s strategies or expectations are forff ward-looking statements. In some cases, you can identifyff these statements by forff ward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparabla e terminology. Factors l results to diffff eff r materially frff om these forff ward-looking statements include, but are not limited to, the that could cause actuat folff lowing: global and regional economic conditions, including conditions affff eff cting the credit market; global inflff ationaryrr pressures; uncertainties posed by the COVID-19 pandemic and the diffff iff culty in predicting its futff urt e course and its impact on the global economy and the Company’s futff urt e operations; uncertainties created by the conflff ict between Ukraine and RusRR sia, and its tions in interest rates and forff eign impacts to the European and global economies and our operations in each country;rr currency exchange rates; the cyclical naturt e of global automotive sales and production; the potential disrupt ions in the supply of and changes in the competitive environment forff raw material and other components integral to the Company’s products, including the ongoing semiconductor supply shortage; the Company’s abia lity to maintain contracts that are critical to its operations; potential changes to benefiff cial frff ee trade laws and regulations, such as the United States-Mexico-Canada Agreement; the abia lity of the Company to integrate and realize the expected benefiff ts of recent transactions; the abia lity of the Company to attract, motivate and/or retain key executives; the abia lity of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers; and the abia lity of the Company to attract and retain customers. Additional faff ctors are discussed under the capta ions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s fiff lings with the Securities and Exchange Commission. New risks and uncertainties arise frff om time to time, and it is impossible forff us to predict these events or how they may affff eff ct the Company. It should be remembered that the price of the ordinaryrr shares and any income frff om them can go down as well as up. Aptiv disclaims any intention or obligation to update or revise any forff ward- looking statements, whether as a result of new inforff mation, futff urt e events and/or otherwise, except as may be required by law. flff uctuat r 4 ITEM 1. BUSINESS PART I “Aptiv,” the “Company,” “we,” “us” and “our” refeff r to Aptiv PLC (forff merly known as Delphi Automotive PLC), a public limited company forff med under the laws of Jersey on May 19, 2011, which completed an initial public offff eff ring on November 22, 2011, and its consolidated subsidiaries. The Company’s ordinaryrr shares are publicly traded on the New York Stock Exchange under the symbol “APTV.” Aptiv is a leading global technology and mobility architecturt e company primarily serving the automotive sector. We deliver end-to-end mobility solutions, enabla ing our customers’ transition to more electrififf ed, softff ware-defiff ned vehicles. We design and manufaff cturt e vehicle components and provide electrical, electronic and active safeff ty technology solutions to the vehicle feff aturt es and global automotive and commercial vehicle markets, creating the softff ware and hardware founda func ff computing platforff ms, and our Signal and Power Solutions segment is focff used on providing the requisite networking architecturt e required to support the integrated systems in today’s complex vehicles. Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment. tionality. Our Advanced Safeff ty and User Experience segment is focff used on providing the necessaryrr softff ware and advanced tion forff ff We are one of the largest vehicle technology suppliers and our customers include the 25 largest automotive original equipment manufaff cturt ers (“OEMs”) in the world. We operate 131 maja or manufaff cturt utilizing a regional service model that enabla es us to effff iff ciently and effff eff ctively serve our global customers frff om best cost countries. We have a presence in 48 countries and have appr developing market relevant product solutions forff oximately 22,000 scientists, engineers and technicians focff used on ing faff cilities and 11 maja or technical centers a our customers. We are focff used on growing and improving the profiff tabia lity of our businesses, and have implemented a strategy designed leading long-term shareholder returt ns. This strategy includes disciplined investing io in high-technology, high-growth to position the Company to deliver industry-rr in our business to grow and enhance our product offff eff rings, strategically focff using our portfolff spaces in order to meet consumer prefeff rences and leveraging an industry-rr margins. turt e to expand our operating leading cost strucr Website Access to Company’s Reports Aptiv’s website address is aptiv.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports fiff led or furff nished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) are availabla e frff ee of charge through our website as soon as reasonabla y practicabla e aftff er they are electronically fiff led with, or furff nished to, the Securities and Exchange Commission (“SEC”). Our Company We believe the automotive industryrr is being shapea d by rapia dly increasing consumer demand forff new mobility solutions, advanced technologies, including softff ware-defiff ned vehicles, and vehicle connectivity, as well as increasing government regulation related to vehicle safeff ty, fueff “Safeff ,” “Green” and “Connected,” are driving higher growth in products that address these trends than growth in the automotive industryrr overall. We have organized our business into two diversififf ed segments, which enabla e us to develop technology solutions and manufaff cturt e highly-engineered products that enabla e our customers to respond to these mega-trends: l effff iff ciency and emissions control. These industryrr mega-trends, which we refeff r to as • • SiSS gni al and PowPP er SolSS utitt ons—This segment provides complete design, manufaff cturt e and assembly of the vehicle’s electrical architecturt e, including engineered component products, connectors, wiring assemblies and harnesses, cabla e management, electrical centers and hybrid high voltage and safeff ty distribution systems. Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrififf cation, reduced emissions and higher fueff l economy. rience—Tee Advanced SafSS eff tytt and UsUU er ExpeEE safeff ty, security, comforff domain controllers, vehicle connectivity systems, cloud-native softff ware platforff ms, appl driving technologies and end-to-end DevOps tools. Our products increase vehicle connectivity, reduce driver distraction and enhance vehicle safeff ty. t and convenience, including sensing and perception systems, electronic control units, multi- ication softff ware, autonomous his segment provides critical technologies and services to enhance vehicle a Refeff r 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 fiff nancial statements forff inforff mation about our business segments. a fiff nancial Our business is diversififf ed across end-markets, regions, customers, vehicle platforff ms and products. Our customer base includes the 25 largest automotive OEMs in the world, and in 2022, 30% of our net sales came frff om the Asia Pacififf c region, 5 which we have identififf ed as a key market likely to experience substantial long-term growth. Our ten largest platforff ms in 2022 were with seven diffff eff rent OEMs. In addition, in 2022 our products were found 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 18 of the 20 top-selling vehicle models in the ff We have establa ished a worldwide design and manufaff cturt int with a regional service model that enabla es us to effff iff ciently and effff eff ctively serve our global customers frff om best cost countries. This regional model is strucr turt ed primarily to service the North American market frff om Mexico, the South American market frff om Brazil, the European market frff om Eastern Europe and North Afrff ica, and the Asia Pacififf c market frff om China. Our global scale and regional service model enabla es us to engineer globally and execute regionally to serve the largest OEMs, which are seeking suppliers that can serve them on a worldwide basis. Our foot serving key growth market OEMs. to the regional design variations the global OEMs require while also int also enabla es us to adapta ff ing foot prt prt ff Our Industry The automotive technology and components industryrr provides critical technologies, components, systems, subsystems a use as replacement parts forff ions and increased global inflff ationaryrr pressures. Global the manufaff cturt e of new vehicles, as well as to the aftff ermarket forff current is increasingly progressing towards softff ware-defiff ned vehicles becoming and modules to OEMs forff production and older vehicles. In addition, the industryrr critical elements of the overall automotive ecosystem. Overall, we expect long-term growth of global vehicle sales and production in the OEM market. In 2022, the industryrr experienced increased global customer sales and production schedules, r despite the ongoing adverse impacts of global supply chain disrupt automotive vehicle production increased 5% (5% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographi c regions in which the Company generates its revenue) frff om 2021 to 2022, reflff ecting 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. Demand forff new vehicles produced in response to consumer demand, which is primarily driven by macro-economic faff ctors such as credit availabia lity, interest rates, fueff l prices, consumer confiff dence, employment and other trends. Although OEM demand is tied to actuat through increasing product content per vehicle by furff gaining new customers and increasing their presence in global markets. We believe that evolving entrants into the global transportation industryrr such as mobility providers, electric vehicle developers and smart cities will provide additional markets forff our advanced technologies. We believe that as a company with a global presence and advanced technology, engineering, manufaff cturt ty to grow ther penetrating business with existing customers and in existing markets, l vehicle production, participants in the automotive technology and components industryrr also have the opportuni ing and customer support capaa bia lities, we are well-positioned to benefiff t frff om these opportuni automotive components in the OEM market is generally a func tion of the number of ties. ff t t We believe that continuously increasing societal demands have created the three “mega-trends” that serve as the basis forff the next wave of market-driven automotive technology advancement. We aim to continue developing leading edge technology focff used on addressing these mega-trends, and appl y that technology toward products with sustainabla e margins that enabla e our customers, both OEMs and others, to produce distinctive market-leading products. We have identififf ed a core portfolff products that draw on our technical strengths and align with these mega-trends where we believe we can provide diffff eff rentiation to our customers. io of a SafSS eff . The fiff rst mega-trend, “Safeff ,” represents technologies aimed not just at protecting vehicle occupants when lly proactively reduce the risk of a crash occurring. OEMs continue to focff us on a crash occurs, but those that actuat improving occupant and pedestrian safeff ty in order to meet increasingly stringent regulatoryrr requirements in various markets. As a result, suppliers are focff used on developing technologies aimed at protecting vehicle occupants when a crash occurs, as well as advanced driver assistance systems that reduce driver distractions and automated safeff ty feff aturt es that proactively mitigate the risk of a crash occurring. Examples of new and alternative technologies that incorpor collision avoidance include lane departurt e warning rr and centering systems, adapta ive cruirr se control and traffff iff c jam assist, and driver and cabia n monitoring systems. ate sophisticated detection and advanced softff ware forff GrGG een. The second mega-trend, “Green,” represents technologies designed to help reduce emissions, increase l economy and minimize the environmental impact of vehicles. Green is a key mega-trend today because of the fueff convergence of several issues: climate change, volatility in oil prices, an increasing number of vehicles in use worldwide and recent and pending regulation in everyrr emissions. OEMs continue to focff us on improving fueff requirements in various markets. On a worldwide basis, the relevant authorities in increasingly stringent regulatoryrr the largest markets in which we operate have already institutt ed regulations requiring reductions in emissions and/or increased fueff l economy. In many cases, other authorities have initiated legislation or regulation that would furff tighten the standards through 2023 and beyond. Based on the current regulatoryrr environment, we believe that OEMs, including those in the U.S. and China, will be subject to requirements forff dioxide (“CO2”) emissions over the next ten years. For example, in the U.S., the Califorff nia Air Resources Board region regarding fueff l effff iff ciency and reducing emissions in order to meet l economy and greenhouse gas (“GHG”) even greater reductions in carbonr ther 6 passenger car and light trucrr ks forff model years oved new rulrr es, which require that all new passenger cars and light trucr ks sold in Califorff nia be electric appr a vehicles or other emissions-frff ee models by 2035. Furthermore, the Environmental Protection Agency in December 2021 fiff nalized more stringent GHG emissions standards forff 2023-2026. These and other standards will require meaningfulff innovation as OEMs and suppliers are challenged to fiff nd ways to improve engine management, electrical power consumption, vehicle weight and integration of electric vehicles and alternative technologies. As a result, suppliers are developing innovations that result in signififf cant improvements in fueff At the same time, suppliers are also developing and marketing new and alternative technologies that support electric vehicles, hybrid vehicles and fueff l cell products to improve fueff key enabla ing technologies in the areas of vehicle charging and vehicle power distribution and control that are essential to the introduction of our customers’ electrififf ed vehicle platforff ms. We are also enabla ing the trend towards vehicle electrififf cation with high voltage electrififf cation solutions that reduce CO2 emissions and increase fueff l economy, helping to make the world greener. l economy, emissions and perforff mance frff om internal combustion engines and electric vehicles. l economy and emissions. We are developing ConCC nectett d.dd The third mega-trend, “Connected,” represents technologies designed to seamlessly integrate today’s highly complex vehicles into the electronic operating environment, and provide drivers with connectivity to the global inforff mation network. The technology content of vehicles continues to increase as consumers demand greater safeff ty, personalization, infotff ainment, productivity and convenience while driving, which in turt n leads to increasing demand forff this content. Also with increased smart device usage in vehicles, driver distractions can be dramatically increased, which in turt n results in greater risk of accidents. We are pioneering vehicle-to-vehicle (V2V) and vehicle-to-infrff astrucrr turt e (V2I) communication technologies which enabla e vehicles to detect and signal danger, reducing vehicle collisions and improving driver safeff ty, while also maintaining connectivity to an increasing number of devices inside and outside of vehicles. We also utilize advanced connectivity solutions such as over-the-air (OTA) technology that enabla e vehicles to receive softff ware updates remotely and collect market-relevant data frff om connected vehicles. electrical architecturt e as a founda tion forff ff We expect these mega-trends to continue to create growth and opportuni us. We believe we are well-positioned to provide solutions and products to OEMs to expand the electronic and technological content of their vehicles. We also believe electronics integration, which generally refeff rs to products and systems that combine integrated circuits, softff ware algorithms, sensor technologies and mechanical components within the vehicle will allow OEMs to achieve substantial reductions in weight and mechanical complexity, resulting in easier assembly, enhanced fueff vehicle perforff mance. l economy, improved emissions control and better ty forff t ConCC verger nce of SafSS eff ,e GrGG een and ConCC nectett d SolSS utitt ons inii NeNN w MobiMM lii ill tii ytt and Autontt omous Drivinii g The combination of advanced technologies being developed within these mega-trends is also contributing to increasing industryrr development of autonomous driving technologies, leading to a fulff our automated driving technologies will provide strong societal benefiff t as well as the opportuni product offff eff rings in this space, including new potential customers such as mobility providers and smart cities that require solutions to increasing urbar n mobility challenges. Societal benefiff ts of increased vehicle automation include enhanced safeff ty (resulting frff om collision avoidance and improved vehicle control), environmental improvements (a reduction in CO2 emissions resulting frff om optimized driving behavior), labor drive ties in this space result frff om increased content, additional computing power and softff ware requirements, time). Growth opportuni enhanced connectivity systems and increased electrififf cation and interconnects. We believe the complexity of these systems will also require ongoing softff ware suppor perforff mance enhancements. ly automated driving experience. We expect long-term growth forff t services, as these vehicle systems will be continuously upgraded with new feff aturt es and cost savings and improved productivity (as a result of alternate uses forff ty forff u a t t As part of our strategy to harness the fulff l potential of connected intelligent systems across industries, strengthen our capaa bia lities in softff ware-defiff ned mobility and to enabla e advanced smart vehicle architecturt e changes, we acquired Wind River Systems, Inc. (“Wind River”) in December 2022. Wind River is a global leader in delivering softff ware forff the intelligent edge. Previously, in 2021, we executed a strategic collabor various automotive appl ation agreement with Wind River to develop a softff ware toolchain forff ications. a a We are also continuing to invest in the automated driving space, and have continued to develop market-leading automated driving platforff m solutions such as automated driving softff ware, key active safeff ty sensing technologies and our multi- domain controller, which fusff decisions. We believe we are well-aligned with industryrr technology trends that will result in sustainabla e futff urt e growth in this space, and have partnered with leaders in their respective fiff elds to advance the pace of development and commercialization of these emerging technologies. es inforff mation frff om sensing systems as well as mappi ng and navigation data to make driving a In March 2020, to furff ther our leadership position in the automated driving space, we completed a transaction with Hyundai Motor Group (“Hyundai”) to forff m Motional AD LLC (“Motional”), a joint venturt e focff used on the design, 7 development and commercialization of autonomous driving technologies. Motional brings together one of the industry’rr 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 forff commercialization in the new mobility space. s most We believe that substantial strategic value will be created frff om our partnership with Hyundai through our commitment to a shared mission of making driverless vehicles a safeff , reliabla e and accessible reality. 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 platforff m, as well as to faff cilitate mobility infrff astrucrr advancements. turt e Motional began testing fulff ly driverless systems in 2020 and began testing a production-ready autonomous driving robotaxi providers, meal deliveryrr providers, flff eet operators and automotive manufaff cturt ers at prototype platforff m availabla e forff scale in 2022, with higher volume production deployments anticipated in late 2023. In addition, Motional is involved in collabor a a Singapor ative arrangements with mobility providers and with smart cities such as Boston, Las Vegas, Los Angeles and the evolving naturt e of the mobility industry.rr e as solutions are developed forff To guide our product strategies and investments in technology with a focff us on developing advanced technologies to drive growth within the Safeff , Green and Connected mega-trends, we utilize and benefiff t frff om our Technology Advisoryrr Council, a panel of prominent global technology thought leaders. StSS antt dardizii atitt on of SouSS rcinii g by OEOO MEE sMM Many OEMs have adopted global vehicle platforff ms to increase standardization, reduce per unit cost and increase capia tal effff iff ciency and profiff tabia lity. As a result, OEMs select suppliers that have the capaa bia lity to manufaff cturt e products on a worldwide basis as well as the flff exibility to adapta manufaff cturt ing capaa bia lities, are best positioned to benefiff t frff om this trend. OEMs are also increasingly looking to their suppliers to simplifyff vehicle design and assembly processes to reduce costs. As a result, suppliers that sell vehicle components directly to manufaff cturt ers (Tier I suppliers) have assumed many of the design, engineering, research and development and assembly func ff pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing. tions traditionally perforff med by vehicle manufaff cturt ers. Suppliers that can provide fulff to regional variations. Suppliers with global scale and strong design, engineering and ly-engineered solutions, systems and ShSS ortett r PrPP oduct Developmll ent CyCC clell s As a result of government regulations and customer prefeff rences, OEMs are requiring suppliers to respond faff ster with new designs and product innovations. While these trends are more prevalent in maturt e markets, certain key growth markets are advancing rapia dly towards the regulatoryrr standards and consumer prefeff rences of the more maturt e markets. Suppliers with strong technologies, robust global engineering and development capaa bia lities will be best positioned to meet OEM demands forff rapia d innovation. Products Our organizational strucrr turt e and management reporting support the management of these core product lines: SiSS gni al and PowPP er SolSS utitt ons. This segment provides complete design, manufaff cturt e and assembly of the vehicle’s electrical architecturt e, including connectors, wiring assemblies and harnesses, cabla e management, electrical centers and hybrid high voltage and safeff ty distribution systems. Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrififf cation, reduced emissions and higher fueff l economy. • • • High quality connectors are engineered primarily forff a appl ications in the industrial, telematics, aerospace, defeff nse and medical sectors. use in the automotive and related markets, but also have 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 cabla e and gauge sizes and ultra-thin wall insulation (which product line makes up appr a December 31, 2021 and 2020). the year ended December 31, 2022 and 42% forff oximately 44% of our total revenue forff each of the years ended Advanced SafSS eff tytt and UsUU er ExpeEE rience. This segment provides critical technologies and services to enhance vehicle t and convenience, including sensing and perception systems, electronic control units, multi-domain safeff ty, security, comforff controllers, vehicle connectivity systems, cloud-native softff ware platforff ms, appl technologies and end-to-end DevOps tools. a ication softff ware, autonomous driving • Advanced safeff ty primarily consists of solutions that enabla e active and passive safeff ty feff aturt es and vehicle automation, as well as vision, radar and other sensing technologies. 8 • • The user experience portfolff sensing solutions. io primarily enabla es in-cabia n solutions around infotff ainment, driver interfaff ce and interior Connectivity and security products primarily consists of solutions that provide body control, security and unlock vehicle data. Competition Although the overall number of our top competitors has decreased due to ongoing industryrr consolidation, the automotive technology and components industryrr remains extremely competitive. Furthermore, the rapia dly evolving naturt e 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 softff ware, automated driving and mobility solutions, which has attracted competitors frff om outside the traditional automotive industry.rr OEMs rigorously evaluate suppliers on the basis of product quality, price, reliabia lity and timeliness of delivery,rr capaa bia lity, new product innovation, fiff nancial viabia lity, appl and overall management. In addition, our customers generally require that we demonstrate improved effff iff ciencies, through cost reductions and/or price improvement, on a year-over-year basis. product design capaa bia lity, technical expertise and development ication of lean principles, operational flff exibility, customer service a Our competitors in each of our operating segments are as folff lows: Segment Signal and Power Solutions ...................................................... • Amphenol Corpor Competitors rr ation ation • Draexlmaier Automotive • Lear Corpor r • Leoni AG • Molex Inc. (a subsidiaryrr of Koch Industries, Inc.) • Sumitomo Corpor ation • TE Connectivity, Ltd. r • Yazaki Corpor ation r Advanced Safeff ty and User Experience..................................... • Bosch Group rr ation • Continental AG • Denso Corpor • Harman International (a subsidiaryrr of Samsung Electronics) • Hyundai Mobis • Magna International • Panasonic Corpor • Valeo • Veoneer, Inc. • Visteon Corpor r • ZF Friedrichshafeff n AG ation ation rr 9 Customers We sell our products and services to the maja or global OEMs in everyrr region of the world. The folff lowing tabla e provides the percentage of net sales to our largest customers forff the year ended December 31, 2022: Customer General Motors Company ......................................................................................................................... Stellantis N.V. ........................................................................................................................................... Ford Motor Company................................................................................................................................ Volkswagen Group ................................................................................................................................... Tesla, Inc. .................................................................................................................................................. Geely Automobile Holdings Limited........................................................................................................ Percentage of Net Sales 9% 9% 8% 8% 5% 5% Mercedes-Benz Group AG........................................................................................................................ ation Limited ............................................................................................. SAIC General Motors Corpor Bayerische Motoren Werke AG................................................................................................................ ation ........................................................................................................................ Toyota Motor Corpor r rr Tata Motors Limited ................................................................................................................................. 4% 3% 2% 2% 2% Supply Relationships with Our Customers We typically supply products to our OEM customers through purchase orders, which are generally governed by general particular vehicles but are not required to purchase any minimum amount of products frff om us. These relationships terms and conditions establa ished by each OEM. Although the terms and conditions varyrr typically contemplate a relationship under which our customers place orders forff supplied forff typically extend over the lifeff of the related vehicle. Prices are negotiated with respect to each business award, which may be subject to adjustments under certain circumstances, such as commodity or forff eign exchange escalation/de-escalation clauses or forff cost reductions achieved by us. The terms and conditions typically provide that we are subject to a warranty on the products supplied; in most cases, the duration of such warranty is coterminous with the warranty offff eff red by the OEM to the end-user of the vehicle. We may also be obligated to share in all or a part of recall costs if the OEM recalls its vehicles forff attributabla e to our products. their requirements of specififf c components frff om customer to customer, they defeff cts Individual purchase orders are terminabla e forff cause or non-perforff mance and, in most cases, upon our insolvency and convenience on certain change of control events. In addition, many of our OEM customers have the option to terminate forff certain programs, which permits our customers to impose pressure on pricing during the lifeff of the vehicle program, and issue less than the duration of the vehicle program, which potentially reduces our profiff t margins and increases purchase contracts forff the risk of our losing futff urt e sales under those purchase contracts. We manufaff cturt e and ship based on customer release schedules, normally provided on a weekly basis, which can varyrr due to cyclical automobile production or dealer inventoryrr levels. Although customer programs typically extend to futff urt e periods, and although there is an expectation that we will supply certain levels of OEM production during such futff urt e periods, customer agreements including appl icabla e terms and conditions do not necessarily constitutt e fiff rm orders. Firm orders are generally limited to specififf c and authorized customer purchase order releases placed with our manufaff cturt typically fulff inventoryrr purchase order releases on hand and not processed at any point in time is not believed to be signififf cant based upon the time frff ame involved. actuat fiff lled as promptly as possible frff om the conversion of availabla e raw materials, sub-components and work-in-process aftff ermarket orders. The dollar amount of such forff OEM orders and frff om current on-hand fiff nished goods inventoryrr ing and distribution centers forff l production and order fulff fiff llment. Firm orders are forff a Materials We procure our raw materials frff om a variety of suppliers around the world. Generally, we seek to obtain materials in the region in which our products are manufaff cturt ed in order to minimize transportation and other costs. The most signififf cant raw materials we use to manufaff cturt e our products include copper and resins. As of December 31, 2022, we have not experienced any signififf cant 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 frff om customaryrr levels. These changes to the production environment have been primarily driven by the worldwide semiconductor shortage. We continue to actively monitor and manage inventoryrr types in order to maximize both supply continuity and the levels across all inventoryrr 10 effff iff cient use of working capia tal. Normally we do not carryrr required to meet our production and shipping schedules. inventories of such raw materials in excess of those reasonabla y Commodity cost volatility, most notabla y related to copper, petroleum-based resin products and fueff l, is a challenge forff us and our industry.rr Recently, the industryrr has been subjected to increased pricing pressures, specififf cally in relation to these commodities, which have experienced signififf cant volatility in price. We have also been impacted globally by increased overall inflff ation as a result of a variety of global trends. We are continually seeking to manage these and other material-related cost pressures using a combination of strategies, including working with our suppliers to mitigate costs, seeking alternative product designs and material specififf cations, combining our purchase requirements with our customers and/or suppliers, changing suppliers, hedging of certain commodities and other means. In the case of copper, which primarily affff eff cts our Signal and Power Solutions segment, contract clauses have enabla ed us to pass on some of the price increases to our customers and thereby partially offff sff et the impact of increased commodity costs on operating income forff 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 disrupt r our customers in an effff orff contracts with our customers expire. ts to pass market-driven commodity cost increases to t to mitigate all or some of the adverse earnings impacts, including by seeking to renegotiate terms as ions impacting the automotive industry.rr We will continue our effff orff the related products. Other than in the case of Seasonality In general, our business is moderately seasonal, as our primaryrr North American customers historically reduce production during the month of July and halt operations forff reduce production during the months of July and August and forff operations forff by country.rr launch of component production forff one week during the months of Februarr one week in December. Our Chinese customers generally halt ryrr and October. Shut-down periods in the rest of the world generally varyrr In addition, automotive production is traditionally reduced in the months of July, August and September due to the oximately one week in December. Our European customers generally new vehicle models. a appr Human Capital Resources As of December 31, 2022, we employed appr a employees. In addition, we maintain a contingent workforff ce of appr demand. We are a global company serving everyrr maja or worldwide market. As of December 31, 2022 our workforff ce is distributed as folff lows: a oximately 160,000 people; 32,000 salaried employees and 128,000 hourly oximately 42,000 to accommodate flff uctuat tions in customer • • • • 53% in North America, with our largest presence in Mexico; 31% in the Europe, Middle East and Afrff ica region, with our largest presence in Morocco and Serbir a; 12% in the Asia Pacififf c region, with our largest presence in China and India; and 4% in South America, with our largest presence in Brazil. Certain of our employees are represented worldwide by numerous unions and works councils, including the International Union of Electronic, Electrical, Salaried, Machine and Furniturt e Workers - Communications Workers of America, IG Metall relationships with our and the Confeff deracion De Trabaa employee representatives in order to fosff a ter positive employee relations. ja adores Mexicanos. We maintain collabor ative and construcr a tive labor TalTT ell nt Developmll ent Our people are central to our mission of developing safeff r, 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. To this end, we continually provide coaching and mentoring to our employees at all levels, as well as internal job opportuni including global rotations and stretch assignments to help our employees develop and grow their careers. This dedication to employee growth and development was demonstrated by more than half of our management role openings being fiff lled 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. ties t Aptiv is committed to talent development and growing the next generation of leaders. Our establa ished leadership programs provide our leaders with the tools to be effff eff ctive today while preparing them forff people completed over 43,000 hours of leadership and management training. Our Global Leadership Development Program develops business acumen and personal competencies, as well as the opportuni the world. We also leverage Aptiv Academy, our online learning management system, across the business, using in-person, online and virtuat 421,000 individual training hours. We continue to focff us on developing great people in order to maximize organizational effff eff ctiveness. ties. During 2022, our employees used this system to complete appr ty to learn and interact with peers frff om around futff urt e challenges. In 2022, our l reality learning opportuni oximately a t t 11 CuCC ltll ure Aptiv’s culturt e is a key advantage to how we do business. Our culturt e is based on a set of distinct values and behaviors that guide what we do and how we do it. Culturt e is a central pillar in our business and helps to drive consistent leadership behavior across our businesses. In 2022, we hosted 16 culturt e training workshops with 620 participants to help newly appoi nted managers understand Aptiv’s values and behaviors to become better leaders. Our management team actively receives feff edback at all levels in our organization and utilizes this feff edback to continually improve how we engage our people and improve our operations. We recognize that sustaining a leadership culturt e requires continual focff us and attention. Accordingly, senior executives and leaders throughout the Company commit time, resources and attention to ensure our culturt e continues to diffff eff rentiate Aptiv as a great place to work. a Diversrr itii ytt and InII clusion At Aptiv, we value each individual’s perspective and fosff ter an environment of respect and inclusion. Leveraging our employees’ diverse backgrounds and experiences allows us to make better decisions and supports stronger perforff mance. Our Board of Directors reviews Aptiv’s talent evolution, inclusion and diversity effff orff Resources Committee reviews employee retention, attrition and pay equity on a continual basis. ts annually, and our Compensation & Human t Aptiv participates in, and sponsors, numerous outreach programs around the world, which seek to promote and recruir women and diverse candidates into science, technology, engineering and mathematical (STEM) fiff elds. As of December 31, 2022, the percentage of our global workforff ce represented by women was appr management represented by women was 24%. As of December 31, 2022, the percentage of our U.S. based workforff ce represented by minorities was appr appr a senior leadership and technology roles, over the coming years. oximately 34%. Aptiv is committed to continuing to increase its level of diversity, specififf cally in middle management, oximately 43% and the percentage of U.S. based management represented by minorities was oximately 50% and the percentage of a a HeHH altll htt and SafSS eff tytt We prioritize the health and safeff ty of all our employees by focff using on prevention, training, auditing and risk mitigation ing plants, technical centers and offff iff ces. We routinely assess occupational health and safeff ty risks, defiff ne in our manufaff cturt controls and perforff m internal audits forff key workplace safeff ty metrics. We are a leader in workplace safeff ty as reflff ected in our lost time injuryrr cases per million hours worked and our lost workday case rate per 100 employees of 0.029 forff 2022. Our standard safeff ty management system is aligned with ISO 45001 and we are committed to ensuring all of our manufaff cturt ing sites, assessing, among other things, legal compliance, controls and frff equency rate of 0.143 the year ended December 31, ing sites are ISO 45001 certififf ed by 2025. all manufaff cturt Commitment to Environmental Sustainability Sustainabia lity has always been core to Aptiv’s business, values and culturt e. We believe this strong, founda ff tional focff us on sustainabia lity makes Aptiv a partner of choice forff contributor to the communities in which we operate. While a key part of our business is to design solutions that help transition prt the world’s vehicles to cleaner sources of power, we are also committed to reducing our environmental foot operations around the globe. We aim to reduce our environmental impact by decreasing our carbon int, reducing waste generated and consuming less water in our operations. Expenditurt es required to meet our environmental sustainabia lity goals, which are described below, are included in our normal budgeting process. our customers, a desirabla e place to work forff our employees and a valued ff prt ff foot int throughout our r Decreasinii g our CarCC bon FootFF prtt inii t We have committed to becoming carbon- 2040 as we transition away frff om carbon- commitments, we are targeting: r neutral in our global operations by 2030 and to achieve net carbon r intensive energy and processes in our global operations. To achieve these r neutrality by Reducing Scope 1 and 2 absa olute CO2e emissions by 25% between the baseline year (2019) and 2025; • • Maintaining annual certififf cation of all maja or manufaff cturt • • • Delivering only carbon- r Certifyiff ng ten of the most energy-intensive sites to the ISO 50001 certififf cation by 2025; Sourcing 100% of electricity forff operations frff om renewabla e sources by 2030; and neutral products by 2039, frff om sourcing to disposal. ing sites to the ISO 14001 standard; Key to achieving these goals is our global Environmental, Health and Safeff ty and Sustainabia lity management system, which helps to keep us aligned with stringent environmental, health and safeff ty regulations and provides a strucrr continuous improvement. This system appl local regulations and requirements. This system is continuously updated to ensure that our procedures remain up to date. ies to all Aptiv sites, which means that in some countries our procedures go beyond turt e forff a 12 Reducinii g our WatWW ett r UsUU age and WasWW tett GeGG neratett d While our operations are not water intensive, we include water in our environmental risk management appr a oach. We locations where we operate that are water-scarce and take action to reduce our water consumption accordingly, while identifyff 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 are also committed to reducing waste, with a waste recycled target (volume of recycled waste divided by total waste ing operations, as well as in volume) of 80%. We continue to strive to actively reduce and manage waste across our manufaff cturt our offff iff ces. We are creating packaging that uses less material and we continue to strive to increase the share of waste and excess materials we divert to recycling. Additii itt onal Sustaitt nii abilii ill tii ytt InII fn orff mrr atitt on Additional inforff mation regarding our environmental sustainabia lity and human capia tal initiatives, as well as inforff mation on our progress towards our commitments, is availabla e in our annual Sustainabia lity Report located on our website at www.aptiv.com/about/sustainability. Nothing on our website, including the aforff ementioned Sustainabia lity Report, shall be deemed incorpor ated by refeff rence into this Annual Report. r 13 SUPPLEMENTARYR ITEM. EXECUTIVE OFFICERS OF THE REGISTRARR NT The name, age (as of Februarr ryrr 1, 2023), current positions and description of business experience of each of our executive offff iff cers are listed below. Our executive offff iff cers are elected annually by the Board of Directors and hold offff iff ce until their successors are elected and qualififf ed or until the offff iff cer’s resignation or removal. Positions noted below reflff ect current service to Aptiv PLC and prior service to Delphi Automotive PLC and Delphi Automotive LLP. KeKK vin P. Clarkrr , 60, is chairman of Aptiv’s board of directors and chief executive offff iff cer (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 offff iff cer (COO) frff om October 2014 to March 2015. Prior to the COO position, Mr. Clark was chief fiff nancial offff iff cer and executive vice president frff om Februarr ding partner of Liberty Lane Partners, LLC, a private-equity investment fiff rm focff used on Previously, Mr. Clark was a foun building and improving middle-market companies. Prior to Liberty Lane Partners, Mr. Clark served as the chief fiff nancial offff iff cer of Fisher-Scientififf c International Inc., a manufaff cturt er, distributor and service provider to the global healthcare market. Mr. Clark served as Fisher-Scientififf c’s chief fiff nancial offff iff cer frff om the company’s initial public offff eff ring in 2001 through the completion of its merger with Thermo Electron Corpor ate controller and treasurer. as Fisher-Scientififf c’s corpor nted vice president and chief fiff nancial offff iff cer in July 2010. ation in 2006. Prior to becoming chief fiff nancial offff iff cer, Mr. Clark served ryrr 2013. He was appoi a ff r r JosJJ ephe R. MasMM saro, 53, is Aptiv’s chief fiff nancial offff iff cer and senior vice president, business operations. Mr. Massaro rr ate controller. In March 2016, he was named senior vice president and chief fiff nancial offff iff cer and in joined the Company in October 2013 as vice president, Internal Audit, and in September 2014 was appoi vice president, corpor September 2020, also assumed the role of senior vice president, business operations. Previously, Mr. Massaro was a managing director at Liberty Lane Partners frff om 2008 to 2010. He also served as chief fiff nancial offff iff cer of inVentiv Health Inc. frff om 2010 to 2013, a Liberty Lane portfolff Thermo Fisher Scientififf c frff om 2002 to 2007, including senior vice president of Global Business Services where his responsibilities included the global sourcing and inforff mation technology func r he also served as vice president and corpor io company. Prior to Liberty Lane, he served in a variety of fiff nance and operational roles at ate controller of Fisher Scientififf c and held several other senior fiff nance positions. tions. Prior to the merger with Thermo Electron, nted to the position of a ff Allan J.JJ Brazier, 56, is vice president and chief accounting offff iff cer of Aptiv, a position he has held since Februarr ryrr 2011. Mr. Brazier joined the Company in June 2005 as senior manager of technical accounting and reporting, and prior to his current role served as assistant controller of technical accounting and reporting. Prior to joining Aptiv, Mr. Brazier was employed forff seventeen years in fiff nancial roles of increasing responsibility at various companies. Mr. Brazier is a Certififf ed Public Accountant and began his career with the international public accounting fiff rm of KPMG. MatMM thett w M.MM ColCC e, 53, is senior vice president of Aptiv and president of Advanced Safeff ty and User Experience, effff eff ctive Januaryrr 2023. He joined Aptiv frff om Tech Transforff mations, where he was president and business leader frff om September 2021 until Januaryrr 2023. He previously served as senior vice president, Global Product Development at Visteon Corpor ation frff om 2014 to July 2021. Prior to Visteon, Mr. Cole served as vice president, Product Development, Global Electronics at Johnson Controls frff om 2010 to 2014. Prior to joining Johnson Controls, Mr. Cole served in a variety of positions of increasing responsibility at Visteon frff om 1999 to 2010. He began his career at Ford Motor Company in 1992. rr Glen W.WW De VosVV , 62, is senior vice president, transforff mation and special programs of Aptiv, a position he has held since December 2022. Previously, he was senior vice president and chief technology offff iff cer of Aptiv, effff eff ctive March 2017, and president, Advanced Safeff ty and User Experience, effff eff ctive April 2021. 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 Softff ware and Services forff Aptiv’s Advanced Safeff ty and User Experience segment, located at the Company’s Silicon Valley Laba in Mountain View, Califorff nia frff om 2016 to 2017. He began his Aptiv career with Advanced Safeff ty and User Experience in 1992, and following several progressive engineering and managerial roles in infotff ainment and user experience, was named vice president, Global Engineering forff Advanced Safeff ty and User Experience in 2012. Obed D. Louisii saint, 43, is senior vice president and chief people offff iff cer of Aptiv, effff eff ctive Januaryrr 2023. He joined Aptiv frff om IBM, where he was most recently senior vice president, Transforff mation and Culturt e frff om August 2020 through December 2022. He previously served as vice president, Talent, Watson Health & Employee Experience frff om 2019 to 2020 and vice president, Human Resources, IBM Watson, Watson Health, Research, Technical Talent & Corpor He began his IBM career in 2001 and held several human resources positions of increasing responsibility. Beforff e joining IBM, Mr. Louissaint was president at Stude ate frff om 2015 to 2020. nt Agencies, Inc. r t Benjamin LyL on, 43, is senior vice president and chief technology offff iff cer of Aptiv, effff eff ctive December 2022. He joined Aptiv frff om Astra Space, Inc., a provider of space products and launch services to the global space industry,rr where he was chief engineer and executive vice president, Operations and Engineering frff om Februarr joining Astra, Mr. Lyon served as senior director – Special Projects Group at Apple Inc. frff om April 2014 to Februar Lyon joined Apple in 1999, and while there, held several positions of increasing responsibility. ryrr 2021 through December 2022. Prior to ryrr 2021. Mr. 14 ation. Mr. Presley most recently served as Lear’s vice president of the Wire Harness and Component business unit frff om WiWW lliam T.TT Presleye , 53, is senior vice president and chief operating offff iff cer 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 Januaryrr 2019 as president of the Electrical Distribution Systems business unit. Prior to joining Aptiv, he was at Lear Corpor r 2018 to 2019, vice president of the Component business unit in 2017 and vice president, Global Electrical Engineering frff om 2013 to 2017. He began his Lear career in 2008 and held several leadership positions of increasing responsibility. Beforff e ler Corpor joining Lear, Mr. Presley held several positions at Chrysrr Michigan Army National Guard forff ation. Mr. Presley also served in both the U.S. Army and the a combined total of 13 years as a Field Artilleryrr Offff iff cer. rr KatKK hett rine H.HH Ramundo, 55, is senior vice president, chief legal offff iff cer, chief compliance offff iff cer and secretaryrr of Aptiv, effff eff ctive March 2021. Prior to joining Aptiv, Ms. Ramundo was executive vice president, chief legal offff iff cer and secretaryrr of Howmet Aerospace Inc. (forff merly Arconic Inc.), a leading global provider of advanced engineered solutions forff and transportation industries, a role she held frff om November 2016 to Februarr Ramundo was executive vice president, general counsel and secretaryrr of ANAA N, Inc., the owner of the Ann Taylor and LOFT brands. Previously, Ms. Ramundo served as vice president, deputy general counsel and assistant secretaryrr of Colgate- Palmolive. Among her other positions during her 15-year tenure at Colgate, she served as general counsel of the Europe/South Pacififf c division, and later managed global specialty legal activities. She began her career as a litigator, practicing at maja or New York-based law fiff rms, including Cravath, Swaine & Moore, and Sidley Austin. the aerospace ryrr 2021. Prior to joining Howmet Aerospace, Ms. r e Sophia M.MM VeVV lastegui , 47, is senior vice president and chief product offff iff cer of Aptiv, effff eff ctive Februar ryrr 2022. She joined ation, where she served as the chief technology offff iff cer of Artififf cial Intelligence and product head Aptiv frff om Microsoftff Corpor of Power Apps Edge within their Business Application Group frff om Februar general manager in the AI and Research group since December 2017. Prior to joining Microsoftff , Ms. Velastegui served as chief product offff iff cer at Doppler Labsa Labsa 2014 to April 2017, initially as lead forff Silicon/Architecturt e Roadmap,a also held a variety of technology and product development roles at Apple, ETM and Applied Materials. t, Inc., frff om July then as head of Silicon/Architecturt e Roadmap.a She has , an audio technology company, frff om April 2017 to September 2017. Prior to joining Doppler , Inc., a home automation specialist company that is part of Alphabea ryrr 2020 to Januaryrr 2022, and previously served as , Ms. Velastegui worked at Nest Labsa 15 ITEM 1A. RISK FACTORS Set forff th below are certain risks and uncertainties that could adversely affff eff ct our results of operations or fiff nancial condition and cause our actuat Company. Also refeff r to the Cautionaryrr Statement Regarding Forward-Looking Inforff mation in this Annual Report. l results to diffff eff r materially frff om those expressed in forff ward-looking statements made by the Risks Related to Business Environment and Economic Conditions Disii ruptu itt ons inii adversrr elyll affff eff ct our profiff tii abi thtt e supplu tt lii ill tii ytt .yy yll of raw matett rialsll and othtt er supplu ill es thtt at we and our customtt ersrr use inii our productstt may We and our customers use a broad range of materials and supplies, including copper and other metals, petroleum-based any resins, chemicals, electronic components and semiconductors. A signififf cant disrupt reason could decrease our production and shipping levels, which could materially increase our operating costs and materially decrease our profiff t margins. ion in the supply of these materials forff r We, as with other component manufaff cturt ers in the automotive industry,rr ship products to our customers’ vehicle assembly plants throughout the world so they are delivered on a “j“ ust-in-time” basis in order to maintain low inventoryrr suppliers also use a similar method. However, this “j“ ust-in-time” method makes the logistics supply chain in our industryrr veryrr complex and veryrr vulnerabla e to disrupt levels. Our ions. rr rr Such disrupt ions 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 manufaff cturt ing lines due to strikes, mechanical breakdowns or faff ilures, electrical outages, fiff res, explosions or political upheaval, as well as logistical complications due to weather, global climate change, volcanic erupt or other naturt al or nuclear disasters, delayed customs processing, the spread of an infeff ctious disease, virusrr illness and more. Additionally, as we focff us operations in best cost countries, the risk forff lack of any single subcomponent necessaryrr forff a prolonged period. Similarly, a potential quality issue could forff ce us to halt deliveries while we validate the products. Even where products are ready to be shipped, or have been shipped, delays may arise beforff e they reach our customer. Our customers may halt or delay their production forff the same reason if one of their other suppliers faff ils to deliver necessaryrr components. This may cause our customers, in turt n to suspend their orders, or instrucrr adversely affff eff ct our fiff nancial perforff mance. to manufaff cturt e one of our products could forff ce us to cease production, potentially ions, r or other widespread of our products, which may t us to suspend delivery,rr ions is heightened. The such disrupt r When we faff il to make timely deliveries in accordance with our contractuat l obligations, we generally have to absa orbr our identifyiff ng and solving the “root cause” problem as well as expeditiously producing replacement components or the costs associated with “catching up,” such as overtime and premium frff eight. own costs forff products. Generally, we must also carryrr Additionally, if we are the cause forff a customer being forff ced to halt production, the customer may seek to recoup all of its losses and expenses frff om us. These losses and expenses could be signififf cant, and may include consequential losses such as lost ion, however small, could potentially cause the complete shutdown of an assembly line of one profiff ts. Any supply-chain disrupt of our customers, and any such shutdown that is due to causes that are within our control could expose us to material claims of compensation. Where a customer halts production because of another supplier faff iling to deliver on time, there can be no assurance we will be fulff ly compensated, if at all. rr Due to various faff ctors that are beyond our control, there are currently global supply chain disrupt rr ions, including a worldwide semiconductor supply shortage. 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 disrupt ions will persist in 2023. We, along with most automotive component manufaff cturt ers that use semiconductors, have been unabla e to fulff 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, fiff res in our suppliers’ faff cilities, unprecedented weather events in the southwestern United States, and other extraordinaryrr events. 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 forff of these customer expectations or any other futff urt e claims, we do not currently believe a loss is probabla e. We will continue to actively monitor all direct and indirect potential impacts of these supply chain disrupt mitigate and minimize their impact on our business. their lost production and other costs. While no assurances can be made as to the ultimate outcome ions, and will seek to aggressively ly meet r r In addition, we are carryirr ng critical inventoryrr items and key components, and we continue to procure productive, raw material and non-critical inventoryrr components in order to satisfyff our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material levels as of December 31, 2022 and 2021. We will continue to actively inventories has increased substantially frff om customaryrr types in order to maximize both supply continuity and the effff iff cient monitor and manage inventoryrr use of working capia tal. levels across all inventoryrr 16 ThTT e extee ett nt tott which thtt e COCC VIVV DII -19 pandemic,c inii cludinii g itii stt variantstt ,s and measures take our businii ess,s fiff nii ancial conditii itt on, resultll stt of operatitt ons and cash flff owll highi lyll uncertaitt nii and difi fff iff cultll tott predict.tt tt s wilii lll depeee nd on fuff ture developmll entstt ,s which are n inii respons se thtt eretott imii pacm t 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, disrupt in global fiff nancial markets in 2020 with various adverse impacts continuing to date. rr ed supply chains and created signififf cant volatility The direct adverse impacts of the COVID-19 pandemic on Aptiv, which primarily affff eff cted us in the fiff rst half of 2020, included extended work stoppages and travel restrictions at our faff cilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disrupt impacts, particularly those resulting frff om temporaryrr governmental “lockdown” orders forff the fiff rst quarter of 2020 in China and subsequently in Europe, North America and South America. During the second half of 2020, many of these impacts abaa ted, resulting in increased sales and profiff tabia lity frff om the levels observed earlier in 2020. In 2021, our manufaff cturt ing faff cilities were not impacted by prolonged shutdowns directly resulting frff om the COVID-19 pandemic. ions to our supply chain and other adverse global economic all non-essential activities, initially in rr ing faff cilities located in these areas implemented measures designed to minimize the ions adversely impacted our sales and r Beginning late in the fiff rst 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 manufaff cturt impacts of any shutdowns. Despite these measures, industry-rr wide production interrupt profiff tabia lity beginning at the end of the fiff rst quarter and continuing throughout much of the second quarter. 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 forff revenue as a result of these lockdowns during 2022 was appr oximately $270 million. 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 effff eff cts 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 flff ows in futff urt e periods. Other than these production interrupt prolonged shutdowns directly resulting frff om the COVID-19 pandemic in 2022. th quarter of 2022. Estimated total indirect and direct adverse impacts to ing faff cilities were not impacted by ions in China, our manufaff cturt portions of the four a ff rr Due to the continuing uncertainties of the COVID-19 pandemic, including potential futff urt e governmental actions and ther adverse impacts on our futff urt e adversely affff eff ct our business, fiff nancial economic impacts, it is possible that these adverse impacts could reoccur, resulting in furff operating earnings and cash flff ows. In addition, to the extent the faff ctors indicated above condition, results of operations and cash flff ows, they may also have the effff eff ct of heightening many of the other risk faff ctors in this section. a ThTT e cyc clill cal nature of automtt otitt ve salell s and productitt on can adversrr elyll affff eff ct our businii ess. 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 faff ctors, such as consumer confiff dence and consumer prefeff rences. Lower global automotive sales would be expected to result in substantially all of our automotive OEM customers lowering vehicle production schedules, which has a direct impact on our earnings and cash flff ows. In addition, automotive sales and production can be affff eff cted by labor agreements, the availabia lity of consumer fiff nancing, inflff ationaryrr pressures, interest rate volatility, supply chain disrupt other faff ctors, including global health crises, such as the COVID-19 pandemic. Economic declines that result in a signififf cant reduction in automotive sales and production by our customers have in the past had, and may in the futff urt e have, an adverse effff eff ct on our business, results of operations and fiff nancial condition. requirements, trade r relations issues, regulatoryrr ions and a Our sales are also affff eff cted by inventoryrr levels and OEMs’ production levels. We cannot predict when OEMs will decide to increase or decrease inventoryrr Uncertainty and other unexpected flff uctuat levels or whether new inventoryrr levels will appr a oximate historical inventoryrr levels. tions could have a material adverse effff eff ct on our business and fiff nancial condition. A prolonll additii itt onal sources of fff iff nii ancinii g, which may not be availii abl ll ell .ee ged economic downturn or economic uncertaitt nii tytt couldll adversrr elyll affff eff ct our businii ess and cause us tott requirii e Our sensitivity to economic cycles and any related flff uctuat tion in the businesses of our customers or potential customers c regions in which the Company generates its revenue) frff om 2021 to 2022, reflff ecting increased vehicle production of may have a material adverse effff eff ct on our fiff nancial condition, results of operations or cash flff ows. Global automotive vehicle production increased 5% (5% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographi a 10% in North America, 3% in China and 8% in South America, our smallest region, and a decrease of 1% in Europe. Uncertainty relating to global or regional economic conditions may have an adverse impact on our business. A prolonged downturt n in the global or regional automotive industry,rr require us to shut down plants or result in impairment charges, restrucrr or a signififf cant change in product mix due to consumer demand, could ing actions or changes in our valuation allowances turt 17 against defeff rred tax assets, which could be material to our fiff nancial condition and results of operations. If global economic conditions deteriorate or economic uncertainty increases, our customers and potential customers may experience deterioration of their businesses, which may result in the delay or cancellation of plans to purchase our products. If vehicle production were to remain at low levels forff adversely impacted, which could result in our needing to seek additional fiff nancing to continue our operations. There can be no assurance that we would be abla e to secure such fiff nancing on terms acceptabla e to us, or at all. an extended period of time or if cash losses forff customer defaff ults rise, our cash flff ow could be A drop inii thtt e markerr t share and changes inii product mixii offff eff red by our customtt ersrr can imii pacm t our revenues. We are dependent on the continued growth, viabia lity and fiff nancial stabia lity of our customers. Our customers generally are OEMs in the automotive industry.rr This industryrr is subject to rapia d technological change, vigorous competition, cyclical and short product lifeff cycles, reduced consumer demand patterns and industryrr consolidation. When our customers are adversely affff eff cted by these faff ctors, we may be similarly affff eff cted to the extent that our customers reduce the volume of orders forff our products. As a result of changes impacting our customers, sales mix can shiftff which may have either faff vorabla e or unfaff vorabla e impacts on our revenues and would include shiftff s in regional growth, shiftff s in OEM sales demand, as well as shiftff s in consumer demand related to vehicle segment purchases and content penetration. For instance, a shiftff in sales demand faff voring a particular OEMs’ vehicle model forff which we do not have a supply contract may negatively impact our revenue. A shiftff in regional sales demand toward certain markets could faff vorabla y impact the sales of those of our customers that have a large market share in those regions, which in turt n would be expected to have a faff vorabla e impact on our revenue. The mix of vehicle offff eff rings by our OEM customers also impacts our sales. A decrease in consumer demand forff types of vehicles where we have traditionally provided signififf cant content could have a signififf cant effff eff ct on our business and fiff nancial condition. Our sales of products in the regions in which our customers operate also depend on the success of these customers in those regions. specififf c WeWW operatett acceptee antt thtt e highi lyll compem titt tii itt ve automtt ce of new product inii trtt oductitt ons forff inii contitt nii ued growthtt . otitt ve tett chnology ll yll and componm ent supplu inii dustrtt yr ,yy and are depeee ndent on thtt e The global automotive technology and component supply industryrr r particularly in countries such as China or in areas of evolving vehicle technologies such as automated driving is highly competitive. Competition is based primarily on price, technology, quality, deliveryrr and overall customer service. There can be no assurance that our products will be abla e to ly with the products of our competitors. Furthermore, the rapia dly evolving naturt e of the markets in which we compete successfulff compete has attracted, and may continue to attract, new and disrupt industry,rr technologies and advanced softff ware. These entrants may seek to gain access to certain vehicle technology and component markets. Any of these new competitors may develop and introduce technologies that gain greater customer or consumer acceptance, which could adversely affff eff ct the futff urt e growth of the Company. Additionally, consolidation in the automotive industryrr may lead to decreased product purchases frff om us. As a result, our sales levels and margins could be adversely affff eff cted by pricing pressures frff om OEMs and pricing actions of competitors. These faff ctors led to selective resourcing of business to competitors in the past and may also do so in the futff urt e. ive entrants frff om outside the traditional automotive supply In addition, any of our competitors may forff esee the course of market development more accurately than us, develop products that are superior to our products, have the abia lity to produce similar products at a lower cost than us, adapta more quickly than us to new technologies or evolving customer requirements or develop or introduce new products or solutions beforff e we do, particularly related to potential transforff mative technologies such as autonomous driving solutions. As a result, our products may not be abla e to compete successfulff the profiff t margins on our products. If we do not continue to innovate to develop or acquire new and compelling products that capia talize upon new technologies, this could have a material adverse impact on our results of operations. ly with their products. These trends may adversely affff eff ct our sales as well as IfII we do not respons on demand services couldll adversrr elyll affff eff ct our businii ess. d appropriatett lyll ,yy thtt e evolutitt on of thtt e automtt otitt ve inii dustrtt yr towtt ards autontt omous vehiclell s and mobilii ill tii ytt The automotive industryrr is increasingly focff used on the development of advanced driver assistance technologies, with the ly automated driving experience. The high development cost of goal of developing and introducing a commercially-viabla e, fulff active safeff ty and autonomous driving technologies may result in a higher risk of exposure to the success of new or disrupt ive technologies diffff eff rent than those being developed by us. There has also been an increase in consumer prefeff rences forff mobility on demand services, such as car- and ride-sharing, as opposed to automobile ownership, which may result in a long-term reduction in the number of vehicles per capia ta. These evolving areas have also attracted increased competition frff om entrants outside the traditional automotive industry.rr our results of operations could be adversely impacted. If we do not continue to respond quickly and effff eff ctively to this evolutionaryrr process r 18 WeWW have inii vestett d substantt titt mii elyll altll ett r our strtt atett gie es shouldll such expe titt al resources inii markerr tstt and tett chnologi itt ons not be realill zii ed. ctattt ee ll es where we expe ee ct growthtt and we may be unablell tott Our futff urt e growth is dependent on our making the right investments at the right time to support product development and a ing capaa city in geographi c areas where we can support our customer base and in product areas of evolving vehicle c market, and have manufaff cturt technologies. We have identififf ed the Asia Pacififf c region, and more specififf cally China, as a key geographi identififf ed intelligent systems softff ware, advanced driver assistance systems, autonomous driving technologies, mobility solutions and high voltage electrififf cation systems as key product markets. We believe these markets are likely to experience substantial long-term growth, and accordingly have made and expect to continue to make substantial investments, both directly and through participation in various partnerships and joint venturt es, in numerous manufaff cturt research and development activities and other infrff astrucr turt e to support anticipated growth in these areas. If we are unabla e to deepen existing and develop additional customer relationships in the Asia Pacififf c region, or if we are unabla e to develop and introduce market-relevant advanced driver assistance or autonomous driving technologies, we may not only faff il to realize expected rates of returt n on our existing investments, but we may incur losses on such investments and be unabla e to timely redeploy the invested capia tal to take advantage of other markets or product categories, potentially resulting in lost market share to our competitors. Our results will also suffff eff r if these areas do not grow as quickly as we anticipate. ing operations, technical centers, a WeWW may not be ablell developll our inii tett llll ell ctual propertytt tott respons d quicklyll enoughu latll inii tott commerciallll yll viablell productstt . tott changes inii regue itt ons,s tett chnology ll and tett chnologi ll cal risii ks,s and tott Changes in legislative, regulatoryrr or industryrr requirements or in competitive technologies may render certain of our products obsolete or less attractive. Our abia lity to anticipate changes in technology and regulatoryrr standards and to successfulff ly develop and introduce new and enhanced products on a timely basis are signififf cant faff ctors in our abia lity to remain competitive and to maintain or increase our revenues. For example, the evolving sector of automated driver assistance and autonomous driving technologies has led to guidance issued by the U.S. Department of Transportation (“DOT”) regarding best practices forff the testing and deployment of automated driving systems, and outlining feff deral and state roles in the regulation of these systems, including providing state legislaturt es with best practices on how to safeff ly fosff automated driving technologies onto public roads. There remains potential forff regulations in this space, including potential requirements forff other regulatoryrr agencies prior to commercial introduction. It is also possible that regulations in this space may diverge among jurisdictions, leading to increased compliance costs. ter the development and introduction of the continued introduction of new and expanded oval frff om the DOT or a autonomous vehicle systems to receive appr We cannot provide assurance that certain of our products will not become obsolete or that we will be abla e to achieve the us to remain competitive and maintain or increase our revenues in the futff urt e. ications, including lack of market a technological advances that may be necessaryrr We are also subject to the risks generally associated with new product introductions and appl acceptance, delays in product development or production and faff ilure of products to operate properly. The pace of our development and introduction of new and improved products depends on our abia lity to implement improved technological innovations in design, engineering and manufaff cturt cuts in these areas that we may determine to implement in the futff urt e to reduce costs and conserve cash could reduce our abia lity to develop and implement improved technological innovations, which may materially reduce demand forff ing, which requires extensive capia tal investment. Any capia tal expenditurt e our products. forff To compete effff eff ctively in the automotive technology and components industry,rr we must be abla e to launch new products to meet changing consumer prefeff rences and our customers’ demand in a timely and cost-effff eff ctive manner. Our abia lity to respond to competitive pressures and react quickly to other maja or changes in the marketplt ace, including the potential introduction of disrupt with advanced driver assistance technologies or which use alternative fueff ive technologies such as autonomous driving solutions or consumer desire forff ls is also a risk to our futff urt e fiff nancial perforff mance. and availabia lity of vehicles r We cannot provide assurance that we will be abla e to install and certifyff the equipment needed to produce products forff new ing faff cilities and resources to the start of production, or that the transitioning of our manufaff cturt l production under new product programs will not impact production rates or other operational effff iff ciency measures at our product programs in time forff fulff faff cilities. Development and manufaff cturt customers will execute on schedule the launch of their new product programs, forff which we might supply products. Our faff ilure to successfulff ly launch new programs, could adversely affff eff ct our results. ing schedules are diffff iff cult to predict, and we cannot provide assurance that our ly launch new producd ts, or a faff ilure by our customers to successfulff CeCC rtaitt nii of our businii esses relyll on relatll certaitt nii productstt and potett ntitt al productstt ,s and such collll abor sufu fff iff cientltt yll .yy itt onshipsii witii htt collll abor ll ll atitt ve partntt ersrr and othtt er thtt irii d-par - titt es forff titt es couldll atitt ve partntt ersrr or othtt er thtt irii d-par - developmll lii tott perfr orff mrr faiff ent of We believe that forff certain of our businesses, success in developing market-relevant products depends in part on our abia lity to develop and maintain collabor success of our relationship with Hyundai, our joint venturt e partner. There are certain risks involved in such relationships, as our a collabor ative relationships with other companies. In particular, Motional is dependent on the ative partners may not devote suffff iff cient resources to the success of our collabor ations; may be acquired by other a a 19 a ative relationship; or may not agree to renew existing collabor companies and subsequently terminate our collabor details of the collabor and other faff ctors may be beyond our control, the development or commercialization of our products involved in collabor partnerships may be delayed or otherwise adversely affff eff cted. If we or any of our collabor ative a arrangement, we may be required to devote additional resources to product development and commercialization or may need to cancel certain development programs, which could adversely affff eff ct our business and operational results. ations on acceptabla e terms. Because these ative ative arrangement; may compete with us; may not agree with us on key ative partners terminate a collabor a a a a Declill nii es inii lii ill tii ytt .yy tt profiff tii abi thtt e markerr t share or businii ess of our fiff ve larll ger st customtt ersrr may adversrr elyll imii pacm t our revenues and a appr oximately 39% of our total net sales forff Our fiff ve largest customers accounted forff the year ended December 31, 2022. Accordingly, our revenues may be adversely affff eff cted by decreases in any of their businesses or market share. For instance, the COVID-19 pandemic and the worldwide semiconductor shortage have adversely impacted the automotive industryrr years resulting in reduced vehicle production schedules and sales frff om historical levels, which adversely impacted our fiff nancial condition, operating results and cash flff ows forff because our customers typically have no obligation to purchase a specififf c quantity of parts, a decline in the production levels of any of our maja or customers, particularly with respect to models forff which we are a signififf cant supplier, could reduce our sales and thereby adversely affff eff ct our fiff nancial condition, operating results and cash flff ows. portions of the years ended December 31, 2022, 2021 and 2020. Furthermore, in recent Our businii ess inii ChCC inii a isii subject tott aggressive compem titt tii itt on and isii sensitii itt ve tott economic and markerr t conditii itt ons. Maintaining a strong position in the Chinese market is a key component of our global growth strategy. The automotive technology and components market in China is highly competitive, with competition frff om many of the largest global manufaff cturt ers and numerous smaller domestic manufaff cturt ers. As the size of the Chinese market continues to increase over the long-term, we anticipate that additional competitors, both international and domestic, will seek to enter the Chinese market and that existing market participants will act aggressively to increase their market share. Increased competition may result in price reductions, reduced margins and our inabia lity to gain or hold market share. Additionally, there have been periods of increased market volatility and moderations in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously experienced. Our business in China is sensitive to economic and market conditions that drive automotive sales volumes in China and may be impacted if there are reductions in vehicle demand in China. For example, in 2022, 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, which resulted in industry-rr wide production interrupt these lockdowns during 2022 was appr or if vehicle sales in China continue to experience minimal growth or decrease, our business and fiff nancial results could be materially adversely affff eff cted. ions during portions of the year. Estimated total indirect and direct adverse impacts to revenue as a result of oximately $270 million. If we are unabla e to maintain our position in the Chinese market a r WeWW may not realill zii e salell s repree esentett d by awarded businii ess. We estimate awarded business using certain assumptions, including projected futff urt e sales volumes. Our customers generally do not guarantee volumes. In addition, awarded business may include business under arrangements that our customers have the right to terminate without penalty. Thereforff e, our actuat we derive frff om such sales, are not committed. If actuat projections we use in calculating the amount of our awarded business, we could realize substantially less revenue over the lifeff of these projects than the currently projected estimate. l production orders frff om our customers are not consistent with the l sales volumes, and thus the ultimate amount of revenue that ConCC titt nii ued pricinii g pressures,s OEOO MEE cost reductitt on inii itii itt atitt ves and thtt e abilii ill tii ytt of OEOO MEE sMM tott re-source or cancel vehiclell programs may resultll inii businii ess. ses,s which may have a signi ett d margir nii s,s or losll er thtt an antitt cipat ifi iff cant negat itt ve imii pacm t on our lowll e ii Cost-cutting initiatives adopted by our customers result in increased downward pressure on pricing. Our customer supply agreements generally require step-downs in component pricing over the period of production, typically one to three percent per convenience, which enhances their year. In addition, our customers oftff en reserve the right to terminate their supply contracts forff abia lity to obtain price reductions. OEMs have also possessed signififf cant leverage over their suppliers, including us, because the automotive technology and component supply industryrr is highly competitive, serves a limited number of customers, has a high fiff xed cost base and historically has had excess capaa programs typically last a number of years and are anticipated to encompass large volumes, our customers are abla e to negotiate faff vorabla e pricing. Accordingly, as a Tier I supplier, we are subject to substantial continuing pressure frff om OEMs to reduce the price of our products. For example, our customer supply agreements generally provide forff annual reductions in pricing of our products over the period of production. It is possible that pricing pressures beyond our expectations could intensifyff as OEMs ing and cost-cutting initiatives. If we are unabla e to generate suffff iff cient production cost savings in the futff urt e to pursue restrucrr offff sff et price reductions, our gross margin and profiff tabia lity would be adversely affff eff cted. See Item 1. Supply Relationships with Our Customers forff city. Based on these faff ctors, and the faff ct that our customers’ product a detailed discussion of our supply agreements with our customers. turt 20 Our supplu requirii ementstt of anyn of our customtt and profiff tii abi lii ill tii ytt .yy tt yll agreementstt witii htt our OEOO MEE customtt ersrr are generallll yll requirii ementstt contrtt actstt ,s and a declill nii e inii thtt e productitt on ersrr ,s and inii partitt cularll our larll ger st customtt ersrr ,s couldll adversrr elyll imii pacm t our revenues specififf c components supplied forff particular vehicles. In most instances our OEM We receive OEM purchase orders forff customers agree to purchase their requirements forff specififf c products but are not required to purchase any minimum amount of products frff om us. The contracts we have entered into with most of our customers have terms ranging frff om one year to the lifeff convenience). Thereforff e, of the model (usually three to seven years, although customers oftff en reserve the right to terminate forff a signififf cant decrease in demand forff abia lity of a manufaff cturt er to re-source and discontinue purchasing frff om us, forff have a material adverse effff eff ct on us. To the extent that we do not maintain our existing level of business with our largest customers because of a decline in their production requirements or because the contracts expire or are terminated forff convenience, we will need to attract new customers or win new business with existing customers, or our results of operations and fiff nancial condition will be adversely affff eff cted. See Item 1. Supply Relationships with Our Customers forff discussion of our supply agreements with our customers. certain key models or group of related models sold by any of our maja or customers or the a particular model or group of models, could a detailed Adversrr e developmll entstt affff eff ctitt nii g one or more of our supplu ill ersrr couldll harmrr our profiff tii abi tt lii ill tii ytt .yy Any signififf cant disrupt r ion in our supplier relationships, particularly relationships with sole-source suppliers, could harm our profiff tabia lity. Furthermore, some of our suppliers may not be abla e to handle commodity cost volatility and/or sharplr y changing volumes while still perforff ming as we expect. To the extent our suppliers experience supply disrupt forff these risks do not materialize, we may incur costs as we tryrr ions, there is a risk deliveryrr delays, production delays, production issues or deliveryrr of non-conforff ming products by our suppliers. Even where to make contingency plans forff such risks. r ThTT e losll signi s of businii ess witii htt respes ct to,tt or thtt e lacll k of commercial success offf a vehiclell model forff which we are a ifi iff cant supplu ill er couldll adversrr elyll affff eff ct our fiff nii ancial perfr orff mrr ance.ee Although we receive purchase orders frff om our customers, these purchase orders generally provide forff the supply of a customer’s requirements forff a particular vehicle model and assembly plant, rather than forff products. The loss of business with respect to, or the lack of commercial success of,ff a vehicle model forff which we are a signififf cant supplier could reduce our sales and thereby adversely affff eff ct our fiff nancial condition, operating results and cash flff ows. the purchase of a specififf c quantity of InII creases inii coststt of thtt e matett rialsll and othtt er supplu businii ess. ill es thtt at we use inii our productstt may have a negat e itt ve imii pacm t on our Signififf cant changes in the markets where we purchase materials, components and supplies forff the production of our products may adversely affff eff ct our profiff tabia lity, particularly in the event of signififf cant increases in demand where there is not a corresponding increase in supply, inflff ation or other pricing increases. In recent periods there have been signififf cant flff uctuat tions l charges, which have had and may in the global prices of copper, petroleum-based resin products, semiconductors and fueff continue to have an unfaff vorabla e impact on our business, results of operations or fiff nancial condition. We will continue effff orff pass some supply and material cost increases onto our customers, although competitive and market pressures have limited our abia lity to do that, particularly with U.S. OEMs, and may prevent us frff om doing so in the futff urt e, because our customers are generally not obligated to accept price increases that we may desire to pass along to them. Even where we are abla e to pass price increases through to the customer, in some cases there is a lapsa price increases to our customers when raw material prices increase rapia dly or to signififf cantly higher than historic levels could adversely affff eff ct our operating margins and cash flff ow, possibly resulting in lower operating income and profiff tabia lity. We expect to be continually challenged as demand forff signififf cantly impacted by demand in key growth markets, particularly in China. We cannot provide assurance that flff uctuat in commodity prices will not otherwise have a material adverse effff eff ct on our fiff nancial condition or results of operations, or cause signififf cant flff uctuat our principal raw materials and other supplies, including electronic components, is tions e of time beforff e we are abla e to do so. The inabia lity to pass on tions in quarterly and annual results of operations. ts to Our hedginii g actitt vitii itt es tott address commoditii ytt price flff uctuatitt ons may not be successfs uff l inii offff sff etttt itt nii g fuff ture inii creases inii thtt ose coststt or may reduce or elill mii thtt e benefe iff tii stt of anyn decreases inii thtt ose coststt . inii atett In order to mitigate short-term volatility in operating results due to the aforff ementioned commodity price flff uctuat tions, we hedge a portion of near-term exposure to certain raw materials used in production. The results of our hedging practice could be positive, neutral or negative in any period depending on price changes in the hedged exposures. Our hedging activities are not designed to mitigate long-term commodity price flff uctuat tions and, thereforff e, will not protect frff om long-term commodity price increases. Our futff urt e hedging positions may not correlate to actuat recognition of unrealized gains and losses on hedging positions in operating results. l raw material costs, which could cause acceleration in the 21 WeWW may encountett r manufu acff turinii g challll ell nges. The volume and timing of sales to our customers may varyrr due to: variation in demand forff customers’ attempts to manage their inventory;rr customers’ production schedules; acquisitions of or consolidations among customers; and disrupt materials or other supplies used in our customers’ products. Due in part to these faff ctors, many of our customers do not commit to long-term production schedules. Our inabia lity to forff ecast the level of customer orders with certainty makes it diffff iff cult to schedule production and maximize utilization of manufaff cturt design changes; changes in our customers’ manufaff cturt ing capaa city. r our customers’ products; our ing strategy; our ions in the supply of raw We rely on third-party suppliers forff components used in our products, and we rely on third-party manufaff cturt ers to manufaff cturt e certain of our assemblies and fiff nished products. Our results of operations, fiff nancial condition and cash flff ows could be adversely affff eff cted if our third-party suppliers lack suffff iff cient quality control or if there are signififf cant changes in their fiff nancial or business condition. If our third-party manufaff cturt ers faff il to deliver products, parts and components of suffff iff cient quality on time and at reasonabla e prices, we could have diffff iff culties fulff commercial reputation could be damaged. fiff lling our orders, sales and profiff ts could decline, and our ilized our manufaff cturt From time to time, we have underutr city means we incur increased fiff xed costs in our products relative to the net revenue we generate, which could have an adverse effff eff ct on our results of operations, particularly during economic downturt ns. If we are unabla e to improve utilization levels forff correctly manage capaa results of operations. In addition, some of our manufaff cturt number of additional risks and uncertainties, including increasing labor faff ctors, and political, social and economic instabia lity. ing lines are located in China or other countries that are subject to a costs, which may result frff om market demand or other city, the increased expense levels will have an adverse effff eff ct on our business, fiff nancial condition and ing lines. This excess capaa these manufaff cturt ing lines and a ChCC anges inii facff tortt srr thtt at imii pacm t thtt e detett rmrr inii atitt on of our non-U.SUU .SS pension lill abilii ill tii itt es may adversrr elyll affff eff ct us. Certain of our non-U.S. subsidiaries sponsor defiff ned benefiff t pension plans, which generally provide benefiff ts based on ff ff ff funde each year of service. Our primaryrr ng requirements of these benefiff t plans, and the d by $73 million as of December 31, 2022. The fundi d non-U.S. plans are located in Mexico and the United Kingdom negotiated amounts forff and were underfunde related expense reflff ected in our fiff nancial statements, are affff eff cted by several faff ctors that are subject to an inherent degree of uncertainty and volatility, including governmental regulation. In addition to the defiff ned benefiff t pension plans, we have retirement obligations driven by requirements in many of the countries in which we operate. These legally required plans require payments at the time benefiff ts are due. Obligations, net of plan assets, related to these non-U.S. defiff ned benefiff t pension plans and statutt orily required retirement obligations totaled $344 million at December 31, 2022, of which $18 million is included in accruerr d liabia lities, $351 million is included in long-term liabia lities and $25 million is included in long-term assets in our consolidated balance sheets. Key assumptions used to value these benefiff t obligations and the cost of providing such benefiff ts, fundi pension assets. If the actuat our results of operations and fiff nancial condition. ng requirements and expense recognition include the discount rate and the expected long-term rate of returt n on l trends in these faff ctors are less faff vorabla e than our assumptions, this could have an adverse effff eff ct on ff WeWW may sufu fff eff r fuff ture asset imii paim rii mrr ent and othtt er restrtt ucturinii g charger goodwilii lll ,ll or inii tantt gibli ell assetstt . s,s inii cludinii g writii ett downs of lonll g-lill ved assetstt ,s We have taken, are taking, and may take futff urt e restrucr turt e to meet current and projected operational and market requirements. Charges related to these actions or any further ing actions to realign and resize our production capaa turt city and cost ing actions may have a material adverse effff eff ct on our results of operations and fiff nancial condition. We cannot ensure strucr restrucr that any current or futff urt e restrucrr turt turt ing actions will be completed as planned or achieve the desired results. Additionally, frff om time to time, we have recorded asset impairment losses relating to specififf c plants and operations. Generally, we record asset impairment losses when we determine that our estimates of the futff urt e undiscounted cash flff ows frff om an operation will not be suffff iff cient to recover the carryirr ng value of that faff cility’s building, fiff xed assets and production tooling. For goodwill, we perforff m a qualitative assessment of whether it is more likely than not that a reporting unit’s value is less than its carryirr ng amount. If the qualitative assessment is not met, the Company then perforff ms a quantitative assessment by comparing the estimated faff ir value of each reporting unit to its carryirr ng value, including goodwill. If the faff ir value of the reporting unit is less than its carryirr ng amount, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill allocated to the reporting unit. It is possible that we could incur such charges in the futff urt e as changes in economic or operating conditions impacting the estimates and assumptions could result in additional impairment. ee strtt ikeii EmEE plm oyll adversrr elyll affff eff ct our operatitt ons. ll s and labor -rr relatll ett d disii ruptu itt ons inii volvll inii g us or one or more of our customtt ersrr or supplu ill ersrr may Our business is labor a strike or other forff m of signififf cant work disrupt operate our business. A labor a rr -intensive and we have a number of unions, works councils and other represented employees. A ion by our employees would likely have an adverse effff eff ct on our abia lity to dispute involving us or one or more of our customers or suppliers or that could otherwise affff eff ct 22 our operations could reduce our sales and harm our profiff tabia lity. A labor that results in a slowdown or a closure of our customers’ assembly plants where our products are included in the assembled parts or vehicles could also adversely affff eff ct our business and harm our profiff tabia lity. In addition, our inabia lity or the inabia lity of any of our customers, our suppliers or our customers’ suppliers to negotiate an extension of a collective bargaining agreement upon its expiration could reduce our sales and harm our profiff tabia lity. Signififf cant increases in labor renegotiation of collective bargaining agreements could also adversely affff eff ct our business and harm our profiff tabia lity. dispute involving another supplier to our customers costs as a result of the a a ee WeWW are expos fiff nii ancial resultll stt . ed tott forff eigni currencyc flff uctuatitt ons as a resultll of our substantt ll titt al global operatitt ons,s which may affff eff ct our We have currency exposures related to buying, selling and fiff nancing in currencies other than the local currencies of the the year ended December 31, 2022 came frff om sales countries in which we operate. Approximately 64% of our net revenue forff outside the U.S., which were primarily invoiced in currencies other than the U.S. dollar, and we expect net revenue frff om non- U.S. markets to continue to represent a signififf cant portion of our net revenue. Accordingly, signififf cant changes in currency exchange rates, particularly the Euro and Chinese Yuan (Renminbi), could cause flff uctuat tions in the reported results of our businesses’ operations that could negatively affff eff ct our results of operations. Price increases caused by currency exchange rate tions may make our products less competitive or have an adverse effff eff ct on our margins. Currency exchange rate flff uctuat flff uctuat tions may also disrupt diffff iff cult to fiff nance. the business of our suppliers by making their purchases of raw materials more expensive and more rr Historically, we have reduced our currency exposure by aligning our costs in the same currency as our revenues or, if that is impracticabla e, through fiff nancial instrumr underlying transactions. However, any measures that we may implement to reduce the effff eff ct of volatile currencies and other risks of our global operations may not be effff eff ctive. ents that provide offff sff ets or limits to our exposures, which are opposite to the WeWW facff e risii ks associatett d witii htt doinii g businii ess inii various natitt onal and locll al jurisii dictitt ons. The maja ority of our manufaff cturt ing and distribution faff cilities are in Mexico, China and other countries in Asia Pacififf c, Eastern and Western Europe, South America and Northern Afrff ica. We also purchase raw materials and other supplies frff om many diffff eff rent countries around the world. For the year ended December 31, 2022, appr frff om sales outside the U.S. International operations are subject to certain risks inherent in doing business globally, including: oximately 64% of our net revenue came a • • • • • • • • • • • exposure to local economic, political and labor a conditions; unexpected changes in laws, regulations, economic and trade sanctions, trade or monetaryrr or fiff scal policy, including interest rates, forff eign currency exchange rates and changes in the rate of inflff ation in the U.S. and other countries; tariffff sff , quotas, customs and other import or export restrictions and other trade barriers; expropriation and nationalization; diffff iff culty of enforff cing agreements, collecting receivabla es and protecting assets through certain non-U.S. legal systems; reduced technology, data or intellectuat l 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 conflff ict between Ukraine and RusRR sia; and compliance with the requirements of an increasing body of appl r Corrupt Practices Act, the U.K. Briberyrr Act and similar laws of various other countries. icabla e anti-briberyrr a laws, including the U.S. Foreign Additionally, our global operations may also be adversely affff eff cted by political events, terrorist events and hostilities, complications due to naturt al, nuclear or other disasters or the spread of an infeff ctious disease, virusr or other widespread illness. For instance, the conflff ict between Ukraine and RusRR sia caused the U.S., European Union and other nations to implement broad economic sanctions against RusRR sia. These countries may impose furff continues. While the sanctions announced to date have not had a material adverse impact on us, any furff or actions taken by these countries, and any retaliatoryrr measures by RusRR sia in response, including restrictions on energy supplies frff om RusRR sia to countries in the region and asset expropriations, could increase our costs, reduce our sales and earnings or otherwise have an adverse effff eff ct on our operations. ther sanctions and take other actions as the situat ther sanctions imposed tion Ukraine and RusRR sia are signififf cant global producers of raw materials used in our supply chain, including copper, aluminum, palladium and neon gases. Disrupt produced by Ukraine or RusRR sia, including increased logistics costs and longer transit times, could adversely impact our business and results of operations. In addition, in July 2022, the E.U. introduced an emergency naturt al gas rationing plan to reduce the ions in the supply and volatility in the price of these materials and other inputs r 23 use of naturt al gas by businesses and in public buildings in E.U. member states frff om August 2022 through March 2023 in order to replenish gas reserves. Among other impacts, this may cause widespread economic disrupt including potential shutdowns at our suppliers’ or customers’ faff cilities in the region. The conflff ict has also increased the possibility of cyberattacks occurring, which could either directly or indirectly impact our operations. ions during this time period, r We do not have a material physical presence in either Ukraine or RuRR ssia, with less than 1% of our workforff ce located in the year ended December 31, 2022 generated frff om ing faff cilities in those countries. However, the impacts of the conflff ict have adversely impacted, and may continue to the countries as of December 31, 2022 and less than 1% of our net sales forff manufaff cturt adversely impact, global economies, and in particular, the European economy, a region which accounted forff 31% of our net sales forff the year ended December 31, 2022. a appr oximately We continue to monitor the situat tion and will seek to minimize its impact to our business, while prioritizing the safeff ty and icabla e laws and regulations in the locations well-being of our employees located in both countries and our compliance with appl where we operate. Any of the impacts mentioned above opportuni ties, results of operations, fiff nancial condition and cash flff ows. a a t , among others, could adversely affff eff ct our business, business In addition, 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, caused certain governmental authorities worldwide to initiate “lockdown” orders forff all non-essential activities, which at times, included extended shutdowns of businesses in the impacted regions. This includes the lockdowns in China that occurred in 2022, as discussed furff developments or health concerns in China or Mexico and other countries in which we operate could result in social, economic and labor instabia lity. These uncertainties could have a material adverse effff eff ct on the continuity of our business and our results a of operations and fiff nancial condition. ther political or governmental . This or any furff a ther above Existing frff ee trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain benefiff cial qualifyiff ng imports and exports, subject to compliance with the appl duties and tariffff sff forff requirements. Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffff sff or taxes on imports frff om countries where we manufaff cturt e products, such as China and Mexico, could have a material adverse effff eff ct on our business and fiff nancial results. For example, in October 2022, the U.S. government imposed additional export control restrictions targeting the export, re-export or transfeff r of,ff among other products, certain advanced computing semiconductors, semiconductor manufaff cturt and adversely impact our business. Furthermore, management continues to monitor the volatile geopolitical environment to identify,ff quantifyff and assess threatened duties, taxes or other business restrictions which could adversely affff eff ct our business and fiff nancial results. ing items and related technology to China, which could furff icabla e classififf cation and other ther disrupt a rr supply chains Increasing our manufaff cturt ff ing foot prt int in Asian markets, including China, and our business relationships with Asian automotive manufaff cturt ers are important elements of our long-term strategy. In addition, our strategy includes increasing revenue and expanding our manufaff cturt may be greater in the futff urt e. The likelihood of such occurrences and their potential impact on us varyrr and are unpredictabla e. int in lower-cost regions. As a result, our exposure to the risks described above frff om countryrr to countryrr ff ing foot prt a lii tott manage our growthtt efe fff eff ctitt velyll or tott IfII we faiff acquisii itii itt ons or strtt atett gie c allll ill ance inii tott our businii ess,s our businii ess couldll be matett riallll yll adversrr elyll harmrr ed. InII additii itt on, thtt e faiff ctett d benefe iff tii stt of anyn past or fuff ture acquisii itii itt on couldll adversrr elyll affff eff ct our businii ess. inii tett gre atett successfs uff llll yll anyn new or fuff ture businii ess ventures,s lii ure tott realill zii e thtt e expe ee a c penetration and scale to complement our We have completed a number of acquisitions in recent years, including the acquisitions of Wind River and Intercabla e Automotive Solutions S.r.l. in 2022. We expect to continue to pursue business venturt es, acquisitions, and strategic alliances that leverage our technology capaa bia lities and enhance our customer base, geographi current businesses and we regularly evaluate potential opportuni t such transactions are an integral part of our long-term strategy, there are risks and uncertainties related to these activities. Assessing a potential growth opportuni a potential growth opportuni a about and strategic alliances will positively affff eff ct our fiff nancial perforff mance or will perforff m as planned. For instance, our acquisition of Wind River, is subject to numerous risks and uncertainties, which may result in the faff ilure to realize the expected benefiff ts of the transaction. We expect Wind River to become a founda industry-rr smart architecturt es and we intend to establa ish Wind River as the cornerstone of our softff ware strategy. If we are not successfulff in establa ishing Wind River in this regard, the anticipated benefiff ts of the acquisition may not be realized fulff take longer to realize than expected. t ty may be limited, and we can give no assurance that new business venturt es, acquisitions, tional element of executing our business strategy as Wind River’s io of softff ware solutions, advanced compute and ff leading softff ware services are complementaryrr ty involves extensive due diligence. However, the amount of inforff mation we can obtain ties, some of which could be material. While we believe that to our existing portfolff ly or at all or may t Furthermore, we may not be successfulff in fulff ly or partially integrating companies that we acquire, including their personnel, fiff nancial systems, distribution, operations and general operating procedures. We may also encounter challenges in achieving appr opriate internal control over fiff nancial reporting in connection with the integration of an acquired company. If we a 24 faff il to assimilate or integrate acquired companies successfulff ly, our business, reputation and operating results could be materially impacted. Likewise, our faff ilure to integrate and manage acquired companies profiff tabla y may lead to futff urt e impairment of any associated goodwill and intangible asset balances. Furthermore, if the benefiff ts of an acquisition do not meet the expectations of investors or securities analysts, the market price of our ordinaryrr shares prior to the closing of the acquisition may decline. es are inii creasinii glyll crucial tott our productstt and our businii ess. Anyn signi ifi iff cant disii ruptu itt ons such as ll tii altt tett chnologi Digii disii ruptu itt ons caused by cyc ber-rr atttt actt ks tott our inii fn orff mrr atitt on tett chnology do businii ess,s couldll adversrr elyll autontt imii pacm t our businii ess. SiSS mii ilii arll omous,s vehiclell s inii creasinii glyll depeee nd on thtt e proper fuff nctitt oninii g of thtt eirii softff wtt are and micro-elell ctrtt onics. ll capabilii ill tii itt es,s or thtt ose of thtt irii d partitt es witii htt which we lyll ,yy as mobilii ill tii ytt becomes inii creasinii glyll connectett d, elell ctrtt ic and ff r ions (including those caused by systems faff ilures, cyber- l property. These capaa bia lities are also susceptible to interrupt Our abia lity to keep our business operating effff eff ctively depends on the func tional and effff iff cient operation of inforff mation technology capaa bia lities, both internally and externally. Our capaa bia lities, as well as those of our customers, suppliers, partners and service providers, are crucr ial to operations and contain confiff dential personal inforff mation, business-related inforff mation or intellectuat attacks and other naturt al or man-made incidents or disasters), which may be prolonged or go undetected. Cyber-attacks are continually increasing in their frff equency, sophistication and intensity. Although we have and continue to employ capaa bia lities, processes and other security and privacy measures designed to prevent, detect and mitigate the risk of such events, including turt e, third-party risk management and the implementation of but not limited to geographi proactive security and privacy measures, a signififf cant or large-scale interrupt ion of our inforff mation technology capaa bia lities could result in a confiff dentiality, integrity or availabia lity data breach, and adversely affff eff ct our abia lity to manage and keep operations runni Incidents that result in a wider or sustained disrupt have a material adverse effff eff ct on our business, reputation, fiff nancial condition and results of operations. In addition, some of our employees work frff om home on a fulff inforff mation technology risks. l-time or part-time basis, which may increase our vulnerabia lity to cyber and other ng effff iff ciently and effff eff ctively, and could result in signififf cant costs, regulatoryrr ion to our business or products, or result in a personal data breach, could cally diverse and resilient infrff astrucr investigations, fiff nes or litigation. a r r r Some of our products, including but not limited to safeff ty-critical products, contain complex digital technologies designed to support today’s increasingly connected vehicles. Although we continue to employ capaa bia lities, processes and other security and privacy measures designed to reduce risks of cyber-attacks against our products, such measures may not provide absa olute security (and, in turt n, privacy) and may not suffff iff ciently mitigate all potential risks under all scenarios. Failure of such products to effff eff ctively protect against attacks targeted at our products can negatively affff eff ct our brand and harm our business, prospects, customers, fiff nancial condition and operating results. Further, engineering and maintaining security forff our systems and products may require signififf cant costs. However, faff iling to properly respond to and invest in inforff mation technology and cybersecurity advancements may limit our abia lity to attract and retain customers, prevent us frff om offff eff ring similar products and services as those offff eff red by our competitors or inhibit our abia lity to meet regulatory,rr industryrr or other compliance requirements. To date, we have not experienced a system faff ilure, cyber-attack or security breach that has resulted in a material ion in our operations or material adverse effff eff ct on our fiff nancial condition. Our Board of Directors regularly reviews interrupt r relevant inforff mation technology and cybersecurity matters and receives periodic updates frff om inforff mation technology and cybersecurity subject matter experts as part of its risk assessment procedures, including analysis of existing and emerging risks, as well as plans and strategies to address those risks. While we continuously seek to expand and improve our inforff mation technology systems and maintain adequate disclosure controls and procedures, there can be no assurance that we can adequately anticipate all trends of the market, technology landscapea rr measures will prevent interrupt ions or security breaches that could adversely affff eff ct our business. s, and there can be no assurance that such s, and threat landscapea Risks Related to Legal, Regulatory, Tax and Accounting Matters WeWW may inii cur matett rial losll propertytt inii fn rff inii gement actitt ons thtt at may be broughu t againii st us. ses and coststt as a resultll of warrantytt claill mii s,s product recallll sll ,s product lill abilii ill tii ytt and inii tett llll ell ctual We faff ce an inherent business risk of exposure to warranty claims and product liabia lity in the event that our products faff il to perforff m as expected and, in the case of product liabia lity, such faff ilure of our products results in bodily injuryrr and/or property damage. The faff bra ication of the products we manufaff cturt e is a complex and precise process. Our customers specifyff quality, perforff mance and reliabia lity standards. If flff aws in either the design or manufaff cturt e of our products were to occur, we could experience a rate of faff ilure in our products that could result in signififf cant delays in shipment and product re-work or replacement costs. Although we engage in extensive product quality programs and processes, these may not be suffff iff cient to avoid product faff ilures, which could cause us to: 25 • • • • • lose net revenue; incur increased costs such as warranty expense and costs associated with customer support; experience delays, cancellations or rescheduling of orders forff our products; experience increased product returt ns or discounts; or damage our reputation, all of which could negatively affff eff ct our fiff nancial condition and results of operations. ff tions, OEMs continue to look to their suppliers forff If any of our products are or are alleged to be defeff ctive, we may be required to participate in a recall involving such products. Each vehicle manufaff cturt er has its own practices regarding product recalls and other product liabia lity actions relating to its suppliers. However, as suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly func contribution when faff ced with recalls and product liabia lity claims. A recall claim brought against us, or a product liabia lity claim brought against us in excess of our availabla e insurance, may have a material adverse effff eff ct on our business. OEMs also require their suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which we supply products to a vehicle manufaff cturt er, a vehicle manufaff cturt er may attempt to hold us responsible forff or all of the repair or replacement costs of products under new vehicle warranties when the OEM asserts that the product supplied did not perforff m as warranted. Although we cannot ensure that the futff urt e costs of warranty claims by our customers will not be material, we believe our establa ished reserves are adequate to cover potential warranty settlements. Our warranty to settle futff urt e and existing claims. We regularly evaluate the reserves are based on our best estimates of amounts necessaryrr level of these reserves and adjust them when appr opriate. However, the fiff nal amounts determined to be due related to these matters could diffff eff r materially frff om our recorded estimates. a some In addition, as we adopt new technology, we faff ce an inherent risk of exposure to the claims of others that we have l property rights. We cannot ensure that we will not experience any material warranty, l property claim losses in the futff urt e or that we will not incur signififf cant costs to defeff nd such allegedly violated their intellectuat product liabia lity or intellectuat claims. WeWW may be adversrr elyll affff eff ctett d by lawll regue itt on or othtt er lill abilii ill tii itt es. itt on, lill tii itt gat latll i sw or regue latll itt ons,s inii cludinii g envirii onmentaltt ,ll healtll htt and safeff tytt and clill mii atett change,e We are subject to various U.S. feff deral, state and local, and non-U.S., laws and regulations, including those related to environmental, health and safeff ty, fiff nancial and other matters. We cannot predict the substance or impact of pending or futff urt e legislation or regulations, or the appl ication thereof.ff The introduction of new laws or regulations or changes in existing laws or regulations, or the interprrr etations thereof,ff could increase the costs of doing business forff condition, operating results and cash flff ows. us or our customers or suppliers or restrict our actions and adversely affff eff ct our fiff nancial a We are subject to laws and regulations governing, among other things: • • • • • the generation, storage, handling, use, transportation, presence of,ff or exposure to hazardous materials; the emission and discharge of hazardous materials into the ground, air or water; climate change; the incorpor rr ation of certain chemical substances into our products, including electronic equipment; and the health and safeff ty of our employees. We are also required to obtain permits frff om governmental authorities forff certain operations. We cannot assure you that we have been or will be at all times in complete compliance with such laws, regulations and permits. If we violate or faff il to comply with these laws, regulations or permits, we could be fiff ned or otherwise sanctioned by regulators. We could also be held liabla e forff any and all consequences arising out of human exposure to hazardous substances or other environmental damage. Certain environmental laws impose liabia lity, sometimes regardless of faff ult, forff investigating or cleaning up contamination ff personal injuryrr arising out of such contamination. Some of these environmental laws may also assess hazardous substances to be sent to third-party disposal or treatment faff cilities when such to be contaminated. At this time, we are involved in various stages of investigation and cleanup related to on or emanating frff om our currently or forff merly owned, leased or operated property, as well as forff naturt al resources and forff liabia lity on persons who arrange forff faff cilities are found environmental remediation matters at a number of present and forff mer faff cilities. The ultimate cost to us of site cleanups is diffff iff cult to predict given the uncertainties regarding the extent of the required cleanup, the potential forff monitoring and maintenance that could be required forff many years, the interprrr etation of appl alternative cleanup methods, and potential agreements that could be reached with governmental and third parties. While we have environmental reserves of appr oximately $2 million at December 31, 2022 forff the cleanup of presently-known icabla e laws and regulations, damages to property or ongoing environmental a a 26 environmental contamination conditions, it cannot be guaranteed that actuat We also could be named as a potentially responsible party at additional sites in the futff urt e and the costs associated with such futff urt e sites may be material. l costs will not signififf cantly exceed these reserves. Environmental laws and regulations are complex, change frff equently and have tended to become more stringent over time. futff urt e capia tal and operating expenditurt es to maintain compliance with environmental Specififf cally, increased public awareness and concern regarding global climate change may continue to result in more international, regional, feff deral, state and local requirements, or pressure frff om key stakeholders, to reduce or mitigate climate change, which could impose signififf cant operational restrictions, costs and compliance burdens upon our business or our products. While we have budgeted forff laws and regulations, we cannot ensure that environmental laws and regulations will not change or become more stringent in the futff urt e. Thereforff e, we cannot ensure that our costs of complying with current and futff urt e environmental, health and safeff ty laws and regulations, and our liabia lities arising frff om past or futff urt e releases of,ff or exposure to, hazardous substances will not adversely affff eff ct our business, results of operations or fiff nancial condition. For example, adoption of GHG or climate change rulr es in jurisdictions in which we operate faff cilities could require installation of emission controls, acquisition of emission credits, emission reductions, or other measures that could be costly, and could also impact utility rates and increase the amount we spend annually forff environment, or if there becomes a public perception that we have faff iled to act responsibly regarding climate change and sustainabia lity, we could be exposed to negative publicity, which could adversely affff eff ct our business and reputation. energy. Furthermore, if we faff il to achieve our sustainabia lity goals and reduce our impact on the WeWW may identitt fi yff divestitt tii ure,e closll ure and decommisii sioninii g actitt vitii itt es. additii itt onal envirii onmentaltt thtt e need forff remediatitt on or demolill tii itt on oblill gat itt ons relatll itt nii g tott i facff ilii ill tii ytt As we sell, close and/or demolish faff cilities around the world, environmental investigations and assessments will need to ther delineate known conditions that may be perforff med. We may identifyff previously unknown environmental conditions or furff require remediation or incur additional costs related to demolition or decommissioning activities, such as abaa containing materials or removal of storage tanks. Such costs could exceed our reserves. tement of asbestos WeWW are inii volvll ed frff om titt mii e tott tt adversrr e imii pacm t on our profiff tii abi lii ill tii ytt and consolill datett d fiff nii ancial positii itt on. titt mii e inii e lell gal proceedinii gs and commercial or contrtt actual disii pus tett s,s which couldll have an We are involved in legal proceedings and commercial or contractuat l disputes that, frff om time to time, are signififf cant. These are typically claims that arise in the normal course of business including, without limitation, commercial or contractuat l disputes, including warranty claims and other disputes with customers and suppliers; intellectuat injuryrr claims; environmental, health and safeff ty issues; tax matters; and employment matters. l property matters; personal While we believe our reserves are adequate, the fiff nal amounts required to resolve these matters could diffff eff r materially frff om our recorded estimates and our results of operations could be materially affff eff cted. For furff ther inforff mation regarding our legal matters, see Item 3. Legal Proceedings. No assurance can be given that such proceedings and claims will not have a material adverse effff eff ct on our profiff tabia lity and consolidated fiff nancial position. Developmll businii ess. entstt or assertitt ons by us or againii st us relatll itt nii g tott inii tett llll ell ctual propertytt righi tstt couldll matett riallll yll imii pacm t our We own signififf cant intellectuat l property, including a large number of patents and trade names, and are involved in numerous licensing arrangements. Our intellectuat number of the markets we serve. Developments or assertions by or against us relating to intellectuat negatively impact our business. Signififf cant technological developments by others also could materially and adversely affff eff ct our business and results of operations and fiff nancial condition. l property plays an important role in maintaining our competitive position in a l property rights could TaxiTT nii g authtt oritii itt es couldll challll ell nge our hisii tortt ical and fuff ture taxtt positii itt ons. Our futff urt e effff eff ctive tax rates could be affff eff cted by changes in the mix of earnings in countries with diffff eff ring statutt oryrr rates and changes in tax laws or their interprrr etation including changes related to tax holidays or tax incentives. Our taxes could icabla e to us in such increase if certain tax holidays or incentives are not renewed upon expiration, or if tax rates or regimes appl jurisdictions are otherwise increased. Existing income tax laws, regulations and related international agreements provide guidance and direction on the allocations of income and appl 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 forff Economic Co-operation and Development). Any changes, especially if made inconsistently, could have a materially adverse impact on our fiff nancial results. icabla e taxing rights among the countries in which we operate. a a The amount of tax we pay is subject to our interprr etation of appl icabla e tax laws in the jurisdictions in which we fiff le. We have taken and will continue to take tax positions based on our interprr etation of such tax laws. Additionally, in determining the adequacy of our provision forff examinations. While it is oftff en diffff iff cult to predict the fiff nal outcome or the timing of the resolution of a tax examination, our income taxes, we regularly assess the likelihood of adverse outcomes resulting frff om tax a 27 uncertain tax benefiff ts reflff ect the outcome of tax positions that are more likely than not to occur. While we believe reserves forff that we have complied with all appl icabla e tax laws, there can be no assurance that a taxing authority will not have a diffff eff rent interprr etation of the law and assess us with additional taxes. Should additional taxes be assessed, this may result in a material adverse effff eff ct on our results of operations and fiff nancial condition. a General Risk Factors Anyn changes inii consumer creditii availii abi lii ill tii ytt or cost of borrowinii g couldll adversrr elyll affff eff ct our businii ess. ll Declines in the availabia lity 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 effff eff ct on our business, results of operations and fiff nancial condition. WeWW may losll e or faiff lii tott atttt rtt act and retaitt nii keye salarll ied emplm oyll ees and management persrr onnel.ll An important aspect of our competitiveness is our abia lity to attract and retain key salaried employees and management personnel. Our abia lity to do so is inflff uenced by a variety of faff ctors, including the compensation we award and the competitive market position of our overall compensation package. We may not be as successfulff 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 effff eff ct on our business. as competitors at recruir ting, assimilating ITEM 1B. UNRESOLVED STAFF COMMENTS We have no unresolved SEC staffff comments to report. ITEM 2. PROPERTIES As of December 31, 2022, we owned or leased 131 maja or manufaff cturt ing sites and 11 maja or technical centers. A ing site may include multiple plants and may be wholly or partially owned or leased. We also have many smaller ing sites, sales offff iff ces, warehouses, engineering centers, joint venturt es and other investments strategically located manufaff cturt manufaff cturt throughout the world. We have a presence in 48 countries. The folff manufaff cturt ing sites by the operating segment that uses such faff cilities: lowing tabla e shows the regional distribution of our maja or Signal and Power Solutions ............................... Advanced Safeff ty and User Experience .............. Total............................................................... North America 45 2 47 Europe, Middle East & Afrff ica Asia Pacififf c 37 5 42 33 4 37 South America 5 Total — 5 120 11 131 In addition to these manufaff cturt ing sites, we had 11 maja or technical centers: four ff in North America; two in Europe, Middle East and Afrff ica; and fiff ve in Asia Pacififf c. Of our 131 maja or manufaff cturt ing sites and 11 maja or technical centers, which include faff cilities owned or leased by our consolidated subsidiaries, 65 are primarily owned and 77 are primarily leased. We frff equently review our real estate portfolff io and develop foot ff prt while at the same time supporting our technical needs and controlling operating expenses. We believe our evolving portfolff will meet current and anticipated futff urt e needs. int strategies to support our customers’ global plans, io ITEM 3. LEGAL PROCEEDINGS We are frff om time to time subject to various actions, claims, suits, government investigations, and other proceedings t matters, l property matters, personal injuryrr claims and employment-related matters. It is our opinion that incidental to our business, including those arising out of alleged defeff cts, breach of contracts, competition and antitrusr product warranties, intellectuat the outcome of such matters will not have a material adverse impact on our consolidated fiff nancial position, results of operations, or cash flff ows. With respect to warranty matters, although we cannot ensure that the futff urt e costs of warranty claims by customers will not be material, we believe our establa ished reserves are adequate to cover potential warranty settlements. However, the fiff nal amounts required to resolve these matters could diffff eff r materially frff om our recorded estimates. 28 Brazil Matters a a Aptiv conducts business operations in Brazil that are subject to the Brazilian feff deral labor ication of these laws to particular circumstances. As of December 31, 2022, the maja ority of claims , social security, environmental, health and safeff ty, tax and customs laws, as well as a variety of state and local laws. While Aptiv believes it complies with such laws, they are complex, subject to varyirr ng interprrr etations, and the Company is oftff en engaged in litigation with government agencies regarding the appl asserted against Aptiv in Brazil relate to such litigation. The remaining claims in Brazil relate to commercial and labor with private parties. As of December 31, 2022, claims totaling appr currency rates) have been asserted against Aptiv in Brazil. As of December 31, 2022, the Company maintains accruar these asserted claims of $5 million (using December 31, 2022 forff eign currency rates). The amounts accruer d represent claims that are deemed probabla e of loss and are reasonabla y estimabla e based on the Company’s analyses and assessment of the asserted claims ls are adequate, the fiff nal amounts required to and prior experience with similar matters. While the Company believes its accruar resolve these matters could diffff eff r materially frff om the Company’s recorded estimates and Aptiv’s results of operations could be materially affff eff cted. The Company estimates the reasonabla y possible loss in excess of the amounts accruerr d related to these claims to be zero to $40 million. oximately $105 million (using December 31, 2022 forff eign litigation ls forff a a ITEM 4. MINE SAFETY DISCLOSURES a Not appl icabla e. 29 PART II ITEM 5. MARKET FOR REGISTRARR NT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s ordinaryrr shares are publicly traded on the New York Stock Exchange under the symbol “APTV.” As of Februarr ryrr 3, 2023, there were 2 shareholders of record of our ordinaryrr shares. The folff lowing grapha reflff ects the comparative changes in the value frff om December 31, 2017 through December 31, 2022, assuming an initial investment of $100 and the reinvestment of dividends, if any in (1) our ordinaryrr shares, (2) the S&P 500 index and (3) the Automotive Peer Group. Historical perforff mance may not be indicative of futff urt e shareholder returt ns. Stock Perforff mance Graph COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN* $300 $250 $200 $150 $100 $50 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Aptiv PLC (1) S&P 500 (2) Automotive Peer Group (3) $100 invested on December 31, 2017 in our stock or in the relevant index, including reinvestment of dividends. Fiscal year ended December 31, 2022. * (1) Aptiv PLC (2) S&P 500 – Standard & Poor’s 500 Total Returt n Index (3) Automotive Peer Group – Adient Plc, American Axle & Manufaff cturt ing Holdings Inc, Aptiv PLC, Borgwarner Inc, Cooper-Standard Holdings Inc, Dana Inc, Dorman Products Inc, Ford Motor Co, General Motors Co, Gentex Corp,rr Gentherm Inc, Genuine Parts Co, Goodyear Tire & Rubbe Corp,rr Lkq Corp,rr Motorcar Parts Of America Inc, Standard Motor Products Inc, Stoneridge Inc, Tesla Inc, Visteon Corprr RR r Co, Lear 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 $ S&P 500 (2).............................................. Automotive Peer Group (3) ...................... 100.00 100.00 95.62 76.47 125.72 94.74 148.85 188.76 191.58 284.00 112.31 156.89 141.98 30 Equity Compensation Plan Inforff mation The tabla e below contains inforff mation about a securities authorized forff issuance under equity compensation plans. The feff aturt es of these plans are discussed furff statements. ther in Note 21. Share-Based Compensation to our audited consolidated fiff nancial Equity compensation plans appr Plan Category a oved by security holders............................................. 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 forff Future Issuance Under Equity Compensation Plans (excluding securities reflff ected in column (a)) (c) 1,566,458 (1) $ — (2) 12,742,596 (3) Equity compensation plans not appr a oved 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 perforff mance-based restricted stock units granted to our employees. All grants were made under the Aptiv PLC Long Term Incentive Plan, as amended and restated effff eff ctive April 23, 2015 (the “PLC LTIP”). Includes accruerr d dividend equivalents. (2) The restricted stock units have no exercise price. (3) Remaining shares availabla e under the PLC LTIP. Repurchase of Equity Securities There were no repurchases of equity securities during the quarter ended December 31, 2022. In Januaryrr 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion. This program will commence folff completion of the previously announced share repurchase program of $1.5 billion, which was appr Directors in April 2016. As of December 31, 2022, appr to these programs. oximately $2,013 million remained availabla e forff a a lowing the oved by the Board of repurchases pursuant ITEM 6. [RESERVR ED] a Not appl icabla e. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERARR TIONS The folff lowing management’s discussion and analysis of fiff nancial condition and results of operations (“MD&A”) is intended to help you understand the business operations and fiff nancial condition of the Company forff December 31, 2022. This discussion should be read in conjunction with Item 8. Financial Statements and Supplementaryrr Data. Our MD&A is presented in seven sections: the year ended • • • • • • • Executive Overview Consolidated Results of Operations Results of Operations by Segment Liquidity and Capia tal Resources Offff -ff Balance Sheet Arrangements Signififf cant Accounting Policies and Critical Accounting Estimates Recently Issued Accounting Pronouncements Executive Overview Our Businii ess We are a leading global technology and mobility architecturt e company primarily serving the automotive sector. We deliver end-to-end mobility solutions enabla ing our customers' transition to more electrififf ed, softff ware-defiff ned vehicles. We design and manufaff cturt e vehicle components and provide electrical, electronic and active safeff ty technology solutions to the vehicle feff aturt es and global automotive and commercial vehicle markets, creating the softff ware and hardware founda ff func tionality. Our Advanced Safeff ty and User Experience segment is focff used on providing the necessaryrr softff ware and advanced tion forff ff 31 computing platforff ms, and our Signal and Power Solutions segment is focff used on providing the requisite networking architecturt e required to support the integrated systems in today’s complex vehicles. 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. Businii ess StSS rtt atett gye We believe the Company is well-positioned forff growth frff om increasing global vehicle production volumes, as well as the s accelerating transition to softff ware-defiff ned vehicles, the commercialization of active safeff ty, autonomous driving, industry’rr enhanced user experiences and connected services, and providing the softff ware, advanced computing platforff ms and networking architecturt e required to do so. We have successfulff development to grow our product offff eff rings, which are aligned with the high-growth industryrr mega-trends, and re-aligned our manufaff cturt int into an effff iff cient, low-cost regional service model, focff used on increasing our profiff t margins. turt e while investing in research and ly created a competitive cost strucr ff ing foot prt Our 2022 perforff mance reflff ects increasing global vehicle production and our solid execution despite continued global supply chain disrupt folff lowing: r ions and the global inflff ationaryrr environment. Our recent fiff nancial and business achievements include the • Generating record new business awards of appr a validating our industryrr leading portfolff oximately $32 billion, based on expected volumes and prices, io of advanced technologies tied to the accelerating megatrends in our industryrr • Delivering strong revenue growth over the prior year, represented by above a -market sales growth of 11% despite adverse impacts frff om the global supply chain disrupt r ions and COVID-19 pandemic • Producing $1,263 million of operating income or $1,585 million of adjusted operating income and cash flff ow frff om operations of $1.3 billion, demonstrating strong operating execution in the faff ce of ongoing disrupt material cost inflff ation r ions and signififf cant • Continuing our relentless focff us on cost strucr turt e and operational optimization ◦ Maximizing our operational flff exibility and profiff tabia lity at all points in the normal automotive business cycle, oximately 24% oximately 97% of our hourly workforff ce based in best cost countries, and appr by having appr of our hourly workforff ce composed of contingent employees. a a • Enhancing our optimized fulff l system, edge-to-cloud capaa bia lities ◦ Advancing our softff ware capaa bia lities with the acquisition of Wind River Systems, Inc. (“Wind River”), a the intelligent edge; global leader in delivering softff ware forff ◦ Broadening our portfolff io of high-voltage system and interconnect solutions with the acquisition of Intercabla e Automotive Solutions S.r.l., an industryrr leader in high-voltage busbars and interconnect solutions; and ◦ Strengthening our portfolff io of power electronics and batteryrr management systems with new product offff eff rings. • Leveraging our investment grade credit metrics to successfulff ly issue $700 million of 3-year, 2.396% senior unsecured notes, $800 million of 10-year, 3.25% senior unsecured notes and $1.0 billion of 30-year, 4.15% senior unsecured the acquisition of Wind River notes, which we utilized to partially fund ff • Meeting the sustainabia lity-linked targets forff greenhouse gas emissions and workplace safeff ty within our Credit Agreement. Our strategy is to build on these accomplishments and continue to develop and manufaff cturt e innovative market-relevant a diverse base of customers around the globe and leverage our lean and flff exible cost strucr products forff disciplined earnings growth and returt ns on invested capia tal. Through our culturt e of innovation and world class engineering capaa bia lities we intend to employ our rigorous, forff ward-looking product development process to deliver new technologies that provide solutions to our customers. We are committed to creating value forff include: our shareholders. Our key strategic priorities turt e to achieve strong and ComCC mercializii ing thett i high- tech evolution of thett automotive industrtt yr . The automotive industryrr towards the implementation of softff ware-dependent components and solutions. In particular, the industryrr development of advanced driver assistance technologies, with the goal of developing and introducing a commercially-viabla e, fulff ly automated driving experience. We expect automated driving technologies will provide strong societal benefiff t as well as the opportuni our product offff eff rings in this space. We are focff used on enabla ing and delivering end-to- end smart mobility solutions, enabla ing our customers' transition to more electrififf ed, softff ware-defiff ned vehicles, accelerating the commercialization of active safeff ty and autonomous driving technologies and providing enhanced user experience and connected services. long-term growth forff ty forff t is increasingly evolving is focff used on the 32 As part of our strategy to harness the fulff l potential of connected intelligent systems across industries, strengthen our capaa bia lities in softff ware-defiff ned mobility and to enabla e advanced smart vehicle architecturt e changes, we acquired Wind River the intelligent edge. Systems, Inc. (“Wind River”) in December 2022. Wind River is a global leader in delivering softff ware forff Previously, in 2021, we executed a strategic collabor various automotive appl ation agreement with Wind River to develop a softff ware toolchain forff ications. a a We are also continuing to invest in the automated driving space, and have continued to develop market-leading automated driving platforff m solutions such as automated driving softff ware, key active safeff ty sensing technologies and our multi- domain controller, which fusff decisions. We believe we are well-aligned with industryrr technology trends that will result in sustainabla e futff urt e growth in this space, and have partnered with leaders in their respective fiff elds to advance the pace of development and commercialization of these emerging technologies. es inforff mation frff om sensing systems as well as mappi ng and navigation data to make driving a In March 2020, to furff ther our leadership position in the automated driving space, we completed a transaction with Hyundai Motor Group to forff m Motional, AD LLC (“Motional”), a joint venturt e focff used on the design, development and commercialization of autonomous driving technologies. Motional brings together one of the industry’rr 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 forff commercialization in the new mobility space. s most innovative vehicle We believe that substantial strategic value will be created frff om our partnership with Hyundai through our commitment to a shared mission of making driverless vehicles a safeff , reliabla e, and accessible reality. 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 platforff m, as well as to faff cilitate mobility infrff astrucrr advancements. turt e Motional began testing fulff ly driverless systems in 2020 and began testing a production-ready autonomous driving robotaxi providers, meal deliveryrr providers, flff eet operators and automotive manufaff cturt ers at prototype platforff m availabla e forff scale in 2022, with higher volume production deployments anticipated in late 2023. In addition, Motional is involved in collabor a a Singapor ative arrangements with mobility providers and with smart cities such as Boston, Las Vegas, Los Angeles and the evolving naturt e of the mobility industry.rr e as solutions are developed forff As a result of our substantial investments and strategic partnerships, we believe we are well-aligned with industryrr technology trends that will result in sustainabla e futff urt e growth in these evolving areas. However, there are many risks associated with these evolving areas, including the high development costs of active safeff ty and autonomous driving technologies, the uncertain timing of customer and consumer adoption of these technologies, increased competition frff om entrants outside the traditional automotive industryrr and evolving regulations, such as the guidance forff U.S. Department of Transportation. While we believe we are well-positioned in these markets, the high development cost of active safeff ty and autonomous driving technologies may result in a higher risk of exposure to the success of new or disrupt ive technologies diffff eff rent than those being developed by us or our partners and ultimately there can be no assurance that we will be successfulff automated driving systems published by the ts to develop these technologies. in our effff orff r Leveraging our engineering and technological capabilities. We seek to leverage our strong product portfolff io tied to the s key mega-trends with our global foot industry’rr investment in research and development to maintain and enhance our leadership in new mobility solutions across each of our product lines. int to increase our revenues, as well as committing to substantial annual prt ff i right TarTT ger ting thett business withtt thett i right a customers in order to achieve disciplined, above trends by region in order to prioritize research, development and engineering spend forff successfulff product solutions designed to meet their needs. As more OEMs design vehicles forff architecturt e is shared among diffff eff rent regions, we are well suited to provide global design and engineering support while manufaff cturt customersrr . We intend to be strategic in our pursuit of new business and -market growth. We conduct in-depth analysis of market share and product the customers that we believe will be ation with customers in our 11 maja or technical centers around the world helps us develop innovative global platforff ms, where the same vehicle a specififf c regional market. ing these products forff a . Collabor ff prtt CapiCC talizii ing on our scale, global foot sustained growth by capia talizing on the breadth and scale of our operating capaa bia lities. Our global foot important proximity to our customers’ manufaff cturt operate. We anticipate that we will continue to build upon our extensive geographi markets, particularly in China. In addition, our presence in best cost countries positions us to realize incremental margin improvements as the global balance of automotive production shiftff s towards key growth markets. ff ing faff cilities and allows us to serve them in everyrr int and establisii hed position in kekk ye growthtt markrr ekk tstt . We intend to generate int provides us region in which they c reach to capia talize on growing automotive prt a Leveraging our lean and flff exee ible cost strt ucture to deliver profiff tabilitytt and cash flff ow. We recognize the importance of maintaining a lean and flff exible cost strucrr turt e in order to deliver stabla e earnings and cash flff ow in a cyclical industry.rr Our focff us 33 is on maximizing and optimizing manufaff cturt our fiff xed-cost base. Additionally, we are continuing to use a meaningfulff a appr increase or contract. ing output t to meet increasing production requirements with minimal additions to amount of temporaryrr workers to ensure we have the opriate operational flff exibility to scale our operations so that we can maintain our profiff tabia lity as industryrr production levels Advancing and maintaining an efe fff iff cient capital strt ucture. We actively manage our capia tal strucr turt e in order to maintain an investment grade credit rating and healthy capia tal ratios to support our business and maximize shareholder value. We will ties arise to continue to make adjustments to our capia tal strucr provide us with additional fiff nancial flff exibility to invest in our business and execute our strategic objectives going forff ward. turt e in light of changes in economic conditions or as opportuni t Pursrr uing selected acquisii itions and strtt ategie c investmtt entstt . In 2022, we continued to complete selected acquisitions and strategic investments in order to continue to leverage our technology capaa bia lities and enhance and expand our commercialization of new mobility solutions, product offff eff rings, customer base, geographi complement our current businesses, while continuing to enhance our product offff eff rings and competitive position in growing market segments. c penetration and scale to a For example, in December 2022, we acquired Wind River forff a appr oximately $3.5 billion. With Aptiv and Wind River’s synergistic technologies and decades of experience delivering safeff ty critical systems, the Company believes this acquisition will In addition, in March 2022, Aptiv invested $220 accelerate the journey to a softff ware-defiff ned futff urt e of the automotive industry.rr million in TTTech Auto AG, a leading provider of safeff ty-critical middleware solutions forff advanced driver-assistance systems and autonomous driving appl technology solutions and enabla e us to capia talize on opportuni ications. Together, these actions accelerate our softff ware strategy, broaden our portfolff ties requiring comprehensive softff ware solutions. io of a t Furthermore, in November 2022, we acquired 85% of Intercabla e Automotive Solutions S.r.l. forff a appr oximately $606 million. As an industryrr to enhance Aptiv’s position as a leader in vehicle architecturt e systems. leader in high voltage power distribution and interconnect technology, we expect Intercabla e Automotive Accelerating an electrtt ic, zero-emisii sions futff ure. We are committed to becoming carbon- neutral in our global operations by 2030 and to achieving net carbonr intensive energy and processes in our global operations. We also continue to focff us on minimizing the overall environmental impact of vehicles as a key part of our overall business strategy. We believe that this strong, founda forff operate. our employees and a valued contributor to the communities in which we tional focff us on sustainabia lity makes Aptiv a partner of choice neutrality by 2040 as we transition away frff om carbon- our customers, a desirabla e place to work forff ff r r TrTT ends,s UnUU certaitt nii titt es and Oppor OO tunitii itt es UkUU rkk aine/ee R// ussia conflff ict. The conflff ict between Ukraine and RusRR sia, which began in Februar ryrr 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 conflff ict, the European Union (the “E.U.”), United States (the “U.S.”) and other nations implemented broad economic sanctions against RusRR sia. These countries may impose furff continues. ther sanctions and take other actions as the situat tion Given the sanctions put in place by the E.U., U.S. and other governments, which restrict our abia lity to conduct business in RusRR sia, we initiated a plan to exit our maja ority owned subsidiaryrr Company determined that this subsidiary,rr which is reported within the Signal and Power Solutions segment, met the held forff sale criteria as of December 31, 2022. Consequently, forff the year ended December 31, 2022, the Company recorded a pre-tax charge of $51 million to impair the carryirr ng value of the RusRR sian subsidiary’rr primarily within cost of sales in the consolidated statement of operations. Approximately $25 million of these charges were attributabla e to the noncontrolling interest based on the noncontrolling shareholder’s economic interest. The remaining assets and liabia lities, which are de minimis, were reclassififf ed to other current assets and other current liabia lities, respectively, in the consolidated balance sheet as of December 31, 2022. in RusRR sia in the second quarter of 2022. As a result, the s net assets to faff ir value, which was recorded Ukraine and RusRR sia are also signififf cant global producers of raw materials used in our supply chain, including copper, r ions in the supply and volatility in the price of these materials and other inputs aluminum, palladium and neon gases. Disrupt produced by Ukraine or RusRR sia, including increased logistics costs and longer transit times, could adversely impact our business and results of operations. In addition, in July 2022, the E.U. introduced an emergency naturt al gas rationing plan to reduce the use of naturt al gas by businesses and in public buildings in E.U. member states frff om August 2022 through March 2023 in order to replenish gas reserves. Among other impacts, this may cause widespread economic disrupt including potential shutdowns at our suppliers’ or customers’ faff cilities in the region. The conflff ict has also increased the possibility of cyberattacks occurring, which could either directly or indirectly impact our operations. Furthermore, the conflff ict has caused our customers to analyze their continued presence in the region and futff urt e customer production plans in the region remain uncertain. ions during this time period, r 34 We do not have a material physical presence in either Ukraine or RusRR sia, with less than 1% of our workforff ce located in the year ended December 31, 2022. We have incurred costs (including capia tal expenditurt es), to relocate certain customers out of Ukraine and to duplicate such production in other countries, which we substantially the year ended December 31, 2022 generated frff om ing faff cilities in those countries. However, the impacts of the conflff ict have adversely impacted, and may continue to the countries as of December 31, 2022 and less than 1% of our net sales forff manufaff cturt adversely impact, global economies, and in particular, the European economy, a region which accounted forff 31% of our net sales forff production forff completed in the second quarter of 2022. We have recovered substantially all of the costs related to this relocation frff om impacted customers as of December 31, 2022. Aggregate costs and recoveries related to this process were not signififf cant forff year ended December 31, 2022. However, the Company recorded asset impairments and other related charges of appr $8 million during the year ended December 31, 2022, primarily forff These charges were primarily recorded within cost of sales in the statement of operations. Furthermore, as a result of the conflff ict, we estimate that the adverse impacts to revenue frff om RusRR sia operations were appr year ended December 31, 2022. the a oximately certain sites in Ukraine. oximately $65 million during the long-lived assets and inventoryrr oximately a appr forff a We continue to monitor the situat tion and will seek to minimize its impact to our business, while prioritizing the safeff ty and icabla e laws and regulations in the locations a well-being of our employees located in both countries and our compliance with appl where we operate. Any of the impacts mentioned above opportuni ties, results of operations, fiff nancial condition and cash flff ows. a t , among others, could adversely affff eff ct our business, business COVIVV DII -19 pandemic. 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, disrupt signififf cant volatility in global fiff nancial markets in 2020 with various adverse impacts continuing to date. r ed supply chains and created The direct adverse impacts of the COVID-19 pandemic on Aptiv, which primarily affff eff cted us in the fiff rst half of 2020, included extended work stoppages and travel restrictions at our faff cilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disrupt impacts, particularly those resulting frff om temporaryrr governmental “lockdown” orders forff the fiff rst quarter of 2020 in China and subsequently in Europe, North America and South America. During the second half of 2020, many of these impacts abaa ted, resulting in increased sales and profiff tabia lity frff om the levels observed earlier in 2020. In 2021, our manufaff cturt ing faff cilities were not impacted by prolonged shutdowns directly resulting frff om the COVID-19 pandemic. ions to our supply chain and other adverse global economic all non-essential activities, initially in rr ing faff cilities located in these areas implemented measures designed to minimize the ions adversely impacted our sales and r Beginning late in the fiff rst 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 manufaff cturt impacts of any shutdowns. Despite these measures, industry-rr wide production interrupt profiff tabia lity beginning at the end of the fiff rst quarter and continuing throughout much of the second quarter. 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 forff revenue as a result of these lockdowns during 2022 was appr oximately $270 million. 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 effff eff cts 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 flff ows in futff urt e periods. Other than these production interrupt prolonged shutdowns directly resulting frff om the COVID-19 pandemic in 2022. th quarter of 2022. Estimated total indirect and direct adverse impacts to ing faff cilities were not impacted by ions in China, our manufaff cturt portions of the four a ff rr Certain direct and indirect adverse impacts of the COVID-19 pandemic have persisted to date and are expected to continue in 2023, including the worldwide semiconductor supply shortage and global supply chain disrupt to the continuing uncertainties surrounding of the COVID-19 pandemic, including potential futff urt e governmental actions and economic impacts, it is possible that these adverse impacts could reoccur, resulting in furff operating earnings and cash flff ows. We will continue to actively monitor all direct and indirect potential impacts of the COVID-19 pandemic, and will seek to aggressively mitigate and minimize their impact on our business. ther adverse impacts on our futff urt e ions. As a result, due r r r ions will persist in 2023. We, along with most automotive component manufaff cturt ers that use Global supplyll chain disii ruptions. Due to various faff ctors that are beyond our control, there are currently global supply chain disrupt ions, including a worldwide semiconductor supply shortage. 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 disrupt semiconductors, have been unabla e to fulff our control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, fiff res in our suppliers’ faff cilities, unprecedented weather events in the southwestern United States, and other extraordinaryrr events. 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 forff their lost production and other costs. While no assurances can be made as to the ultimate outcome of these customer expectations or any other futff urt e claims, we do not ly meet the vehicle production demands of OEMs because of events which are outside 35 currently believe a loss is probabla e. We will continue to actively monitor all direct and indirect potential impacts of these supply chain disrupt ions, and will seek to aggressively mitigate and minimize their impact on our business. r In addition, we are carryirr ng critical inventoryrr items and key components, and we continue to procure productive, raw material and non-critical inventoryrr components in order to satisfyff our customers’ vehicle production schedules. However, as a result of our customers’ recent production volatility and cancellations, our balance of productive, raw and component material levels as of December 31, 2022 and 2021. We will continue to actively inventories has increased substantially frff om customaryrr types in order to maximize both supply continuity and the effff iff cient monitor and manage inventoryrr use of working capia tal. levels across all inventoryrr Economic conditions. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales depend on a number of faff ctors, including global and regional economic conditions. Global automotive vehicle production increased 5% (5% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographi reflff ecting increased vehicle producd tion of 10% in North America, 3% in China and 8% in South America, our smallest region, and a decrease of 1% in Europe. Refeff r to Note 22. Segment Reporting of the notes to the audited consolidated fiff nancial statements, included in Item 8. Financial Statements and Supplementaryrr Data of this Annual Report forff concerning principal geographi c regions in which the Company generates its revenue, “AWM”) frff om 2021 to 2022, fiff nancial inforff mation c areas. a a Economic volatility or weakness in North America, Europe, China or, to a lesser extent, South America, could result in a signififf cant reduction in automotive sales and production by our customers, which would have an adverse effff eff ct on our business, results of operations and fiff nancial condition. In 2022, global inflff ationaryrr pressures both reduced consumer demand forff automotive vehicles and increased the price of inputs to our products, which has adversely impacted our profiff tabia lity and this trend is expected to continue in 2023. There is also potential that geopolitical faff ctors could adversely impact the U.S. and other economies, and specififf cally the automotive sector. In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement or other political pressures could affff eff ct the operations of our OEM customers, resulting in reduced automotive production in certain regions or shiftff s in the mix of production to higher cost regions. Increases in interest rates could also negatively impact automotive production as a result of increased consumer borrowing costs or reduced credit availabia lity. Additionally, economic weakness may result in shiftff s in the mix of futff urt e automotive sales (frff om vehicles with more content such as luxuryrr vehicles, trucr ks and sport utility vehicles toward smaller passenger cars). While our diversififf ed customer and geographi of industryrr downturt ns and benefiff t frff om industryrr upturt ns, shiftff s in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profiff tabia lity. turt e, have well positioned us to withstand the impact c revenue base, along with our flff exible cost strucr a KeKK ye growthtt markrr ekk tstt . 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 folff 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 establa ished presence in key growth markets, positioning us to benefiff t frff om the expected long-term growth opportuni regions. We are capia talizing on our long-standing relationships with the global OEMs and furff the key growth market OEMs to continue expanding our worldwide leadership. We continue to build upon our extensive geographi c reach to capia talize on faff st-growing automotive markets. We believe that our presence in best cost countries a positions us to realize incremental margin improvements as the global balance of automotive production shiftff s towards the key growth markets. -market growth rates over the long-term. We continue to expand our ties in these ther enhancing our positions with lows growth of 2% in 2021. Despite a t We have a strong local presence in China, including a maja or manufaff cturt ing base and well-establa ished customer relationships. Each of our business segments have operations and sales in China. Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China, and may be affff eff cted if the pace of growth slows as the Chinese market maturt es 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. However, we continue to believe this market will benefiff t frff om long-term demand forff including accelerated demand foff r electrififf ed vehicles. new vehicles and stringent governmental regulation driving increased vehicle content, MarMM krr ekk t driven productstt . Our product offff eff rings satisfyff the OEMs’ needs to meet increasingly stringent government regulations and meet consumer prefeff rences forff products that address the mega-trends of Safeff , Green and Connected, leading to increased content per vehicle, greater profiff tabia lity and higher margins. With these offff eff rings, we believe we are well-positioned to benefiff t frff om the growing demand forff connectivity to the global inforff mation network and automated driving technologies. We are benefiff ting frff om the substantial increase in vehicle content, softff ware and electrififf cation that requires a complex and reliabla e electrical architecturt e and systems to operate, such as automated advanced driver assistance technologies, electrical vehicle monitoring, active safeff ty systems, lane vehicle content and technology related to safeff ty, electrififf cation, high speed data, 36 departurt e warning systems, integrated vehicle cockpit displays, navigation systems and technologies that enabla e connected infotff ainment in vehicles. Our abia lity to design a reliabla e electrical architecturt e that optimizes power distribution and/or consumption is key to satisfyiff ng the OEMs’ needs to reduce emissions while continuing to meet consumer demand forff increased vehicle content and technology. Global capabilities. Many OEMs are continuing to adopt global vehicle platforff ms to increase standardization, reduce per unit cost and increase capia tal effff iff ciency and profiff tabia lity. As a result, OEMs are selecting suppliers that have the capaa bia lity to manufaff cturt e products on a worldwide basis, as well as the flff exibility to adapta and strong design, engineering and manufaff cturt foot ff This regional model is strucr frff om Brazil, the European market frff om Eastern Europe and North Afrff ica, and the Asia Pacififf c market frff om China, and we have continued to rotate our manufaff cturt int enabla es us to serve the global OEMs on a worldwide basis as we gain market share with key growth market OEMs. turt ed primarily to service the North American market frff om Mexico, the South American market ing capaa bia lities, are best positioned to benefiff t frff om this trend. Our global to regional variations. Suppliers with global scale int to best cost locations within these regions. ff ing foot prt prt Our operations are subject to certain risks inherent in doing business globally, including militaryrr conflff icts in regions in which we operate, unexpected changes in laws or regulations governing trade, or other monetaryrr or tax fiff scal policy changes, including tariffff sff , quotas, customs and other import or export restrictions or trade barriers. We are also subject to risks associated with actions taken by governmental authorities to impose changes in laws or regulations that restrict certain business operations, trade or travel in response to a pandemic or widespread outbrt eak of an illness. For instance, as described above between Ukraine and RusRR sia has created numerous economic uncertainties, including the potential forff as well as increased logistics costs RusRR sia, the impact on the global supply chain forff and transit times, the impact of the E.U. naturt al gas rationing plan and the actions of automotive OEMs and suppliers as they relate to production plans in each country.rr The impacts of any of these faff ctors mentioned above affff eff ct our business, business opportuni ties, results of operations, fiff nancial condition and cash flff ows. a , the conflff ict ther sanctions against furff raw materials produced in each country,rr , among others, could adversely a t In addition, the global spread of the COVID-19 pandemic and variants thereof in recent years, has had various direct and ted during the second half of 2020, other direct and indirect adverse impacts indirect adverse impacts on our global operations, the automotive industryrr and economies around the world. Although certain of the adverse impacts of the pandemic abaa continued throughout 2021 and 2022, such as the overall supply chain disrupt shortage and the regional lockdowns imposed by governmental authorities in China during portions of 2022. These impacts continue to negatively affff eff ct the global economy and automotive industry,rr 2023. As a result, we are unabla e to predict the ultimate impact to our business due to a number of evolving faff ctors, including the duration and spread of the pandemic, the impact of the pandemic on economic activity, our supply chain, consumer demand and vehicle production schedules, and the actions of governmental authorities across the globe. and we anticipate that certain impacts will persist in ions, including the global semiconductor supply rr Furthermore, existing frff ee trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide qualifyiff ng imports and exports, subject to compliance with the appl certain benefiff cial duties and tariffff sff forff icabla e classififf cation and other requirements. Changes in laws or policies governing the terms of trade, and in particular increased trade restrictions, tariffff sff or taxes on imports frff om countries where we manufaff cturt e products, such as China and Mexico, could have a material adverse effff eff ct on our business and fiff nancial results. For example, in October 2022, the U.S. government imposed additional export control restrictions targeting the export, re-export or transfeff r of,ff among other products, certain advanced computing semiconductors, semiconductor manufaff cturt and adversely impact our business. Furthermore, management continues to monitor the volatile geopolitical environment to identify,ff quantifyff and assess threatened duties, taxes or other business restrictions which could adversely affff eff ct our business and fiff nancial results. ing items and related technology to China, which could furff ther disrupt a rr supply chains Product development. The automotive technology and components industryrr is highly competitive and is characterized by rapia dly changing technology, evolving industryrr standards and changes in customer needs. Our abia lity to anticipate changes in technology and regulatoryrr standards and to successfulff competitive basis will be a signififf cant faff ctor in our abia lity to remain competitive. To compete effff eff ctively in the automotive technology and components industry,rr we must be abla e to develop and launch new products to meet our customers’ demands in a timely manner. Our innovative technologies and robust global engineering and development capaa bia lities have us well positioned to meet the increasingly stringent vehicle manufaff cturt er demands and consumer prefeff rences forff content in automobiles. ly develop and introduce new and enhanced products on a timely and cost high-technology OEMs are increasingly looking to their suppliers to simplifyff vehicle design and assembly processes to reduce costs and weight. As a result, suppliers that sell vehicle components directly to manufaff cturt ers (Tier I suppliers) have assumed many of the design, engineering, research and development and assembly func tions traditionally perforff med by vehicle manufaff cturt ers. Suppliers that can provide fulff positioned to leverage the trend toward system sourcing. ly-engineered solutions, systems and pre-assembled combinations of component parts are ff 37 a oximately 22,000 scientists, engineers and technicians focff used on developing leading and development. Our historyrr and culturt e of innovation have enabla ed us to develop signififf cant our key markets, located at 11 maja or technical centers in China, Germany, India, Mexico, Poland, e and the United States. Our total investment in research and development, including engineering, was appr neering, designi l property and design and development expertise to provide advanced technology solutions that meet the demands of EngiEE intellectuat our customers. We have a team of appr product solutions forff Singapor a $1.5 billion, $1.4 billion and $1.3 billion forff a appr we share some engineering expenses with OEMs and government agencies which generally ranges frff om 20% to 30% of engineering expenses. This level of co-investment supports product development, accelerates the pace of innovation and reduces the risk associated with successfulff commercialization of technological breakthroughs. We also encourage “open a innovation” and collabor oximately the years ended December 31, 2022, 2021 and 2020, respectively, which includes oximately $379 million, $320 million and $303 million of co-investment by customers and government agencies. Each year government agencies and academic institutt ate extensively with peers in the industry,rr ions. a In the past, suppliers oftff en incurred the initial cost of engineering, designing and developing automotive component parts, and recovered their investments over time by including a cost recoveryrr component in the price of each part based on expected volumes. Recently, we and many other suppliers have negotiated forff trend reduces our economic risk. cost recoveryrr payments independent of volumes. This ter innovation. This independent perspective assists Aptiv in pursuing We utilize a Technology Advisoryrr Council, a panel of prominent global technology thought leaders, which helps us anticipate cutting-edge technology trends and guides our product strategies and investments in technology with a focff us on developing advanced technologies to drive growth and fosff investments in the right technologies that create the most value forff technical expertise, together with our emphasis on continuing research and development, allow us to use the latest technologies, materials and processes to solve problems forff continued engineering activities are critical to maintaining our pipeline of technologically advanced products. Given our strong fiff nancial discipline, we seek to effff eff ctively manage fiff xed costs and effff iff ciently rationalize capia tal spending by critically evaluating the profiff t potential of new and existing customer programs, including investment in innovation and technology. We maintain our engineering activities around our focff used product portfolff with distinctive technologies. We expect expenditurt es forff investment, to be appr result of our acquisition of Wind River. io and allocate our capia tal and resources to those products research and development activities, including engineering, net of co- the year ended December 31, 2023, which includes increased expenditurt es as a our customers and to bring new, innovative products to market. We believe that all of its stakeholders. We believe that our engineering and oximately $1.2 billion forff a We maintain a large portfolff a io of appr oximately 9,500 patents and protective rights in the operation of our business as of December 31, 2022. While no individual patent or group of patents, taken alone, is considered material to our business, taken in the aggregate, these patents provide meaningfulff trademarks are important to identifyff our position in the industry,rr we do not believe that any of these are individually material to our business. We are actively pursuing marketing opportuni ties to commercialize and license our technology to both automotive and non-automotive industries and we have selectively taken licenses frff om others to support our business interests. These activities fosff our products and technical innovations. Similarly, while our ter optimization of intellectuat l property rights. protection forff t Pricing. Cost-cutting initiatives adopted by our customers result in increased downward pressure on pricing. Our customer supply agreements generally require step-downs in component pricing over the periods of production and OEMs have historically possessed signififf cant leverage over their outside suppliers because the automotive component supply industryrr frff agmented and serves a limited number of automotive OEMs. Our profiff tabia lity depends in part on our abia lity to generate suffff iff cient production cost savings in the futff urt e to offff sff et price reductions. In addition, during recent years, global economies and our industryrr were subjected to signififf cant inflff ationaryrr cost pressures, and these pressures are expected to continue in 2023. We continue to work with our customers, both through price recoveries and adjustments as well as futff urt e pricing adjustments as contracts renew, to mitigate the impact of these inflff ationaryrr pressures on our results of operations. is a turt e and optimize our manufaff cturt oximately 97% of our hourly workforff ce is located in best cost turt e that provides us flff exibility to remain profiff tabla e at all points of oximately 24% of the hourly workforff ce as of December 31, 2022. However, we will continue to adjust We are focff used on maintaining a low fiff xed cost strucr the traditional vehicle industryrr production cycle. As a result, appr a countries. Furthermore, we have substantial operational flff exibility by leveraging a large workforff ce of contingent workers, which represented appr our cost strucrr markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restrucr prt ff foot global and regional economies, we continually evaluate opportuni t product mix and pricing, based on our 2022 results, we estimate that our EBITDA breakeven level would be reached if we experienced a 45% downturt n to current product volumes. turt int to best cost locations in Europe. As we continue to operate in a cyclical industryrr ing programs focff used on reducing our global overhead costs and on the continued rotation of our manufaff cturt int in response to changes in the global and regional automotive that is impacted by movements in the ther refiff ne our cost strucr turt e. Assuming constant ties to furff ff ing foot ing prt We have a strong balance sheet with gross debt of appr a oximately $6.5 billion and substantial availabla e liquidity of a appr oximately $4.0 billion consisting of cash and cash equivalents, and availabla e fiff nancing under our Revolving Credit Facility 38 and committed European accounts receivabla e faff ctoring faff cility (as defiff ned below in Liquidity and Capia tal Resources) as of December 31, 2022, and no signififf cant U.S. defiff ned benefiff t or workforff ce postretirement health care benefiff ts and employer-paid insurance benefiff ts liabia lities. We intend to maintain strong fiff nancial discipline by targeting industry-rr postretirement basic lifeff leading earnings growth, cash flff ow generation and returt n on invested capia tal and to maintain suffff iff cient liquidity to sustain our fiff nancial flff exibility throughout the industryrr cycle. OEOO MEE product recallsll . The number of vehicles recalled globally by OEMs has increased above a historical levels. These recalls can either be initiated by the OEMs or inflff uenced by regulatoryrr agencies. Although there are diffff eff ring rulrr es and regulations across countries governing recalls forff contribute to increased recalls outside of the U.S., as automotive components are increasingly standardized across regions. Given the sensitivity to safeff ty issues in the automotive industry,rr anticipate the number of automotive recalls may remain above extensive product quality programs and processes, it is possible that we may be adversely affff eff cted in the futff urt e if the pace of these recalls continues. historical levels in the near futff urt e. Although we engage in safeff ty issues, the overall transition towards global vehicle platforff ms may also including increased focff us frff om regulators and consumers, we a EfE fff iff cient use of capital. The global vehicle components industryrr is generally capia tal intensive and a portion of a supplier’s capia tal equipment is frff equently utilized forff long and typically exceed start of production by one to two years. Substantial advantages exist forff their prior investments in capia tal equipment or amortize the investment over higher volume global customer programs. procurement of capia tal equipment are suppliers that can leverage specififf c customer programs. Lead times forff II Indus trt yr consolidation and disii ruptive new entrt antstt . Consolidation among worldwide OEMs and suppliers is expected to continue as these companies seek to achieve operating synergies and value stream effff iff ciencies, acquire complementaryrr technologies and build stronger customer relationships. Additionally, the rise of advanced softff ware and technologies in vehicles has attracted new and disrupt ive entrants frff om outside the traditional automotive supply industry.rr These entrants may seek to gain access to certain vehicle technology and component markets. Any of these new competitors may develop and introduce technologies that gain greater customer or consumer acceptance, which could adversely affff eff ct the futff urt e growth of the Company. We believe companies with strong balance sheets and fiff nancial discipline are in the best position to take advantage of these trends. rr Consolidated Results of Operations Our total net sales during the year ended December 31, 2022 were $17.5 billion, an increase of appr a oximately 12% compared to 2021. Our overall volumes increased 14%, which was driven, in part, by increased global automotive production of 5% (5% on an AWM basis) forff caused by the global supply chain disrupt market sales growth in all regions, has enabla ed us to achieve strong levels of operating income, while continuing to strategically invest in the futff urt e. the year ended December 31, 2022, compared to 2021 production rates. Despite the volatility ions throughout 2022, our overall lean cost strucr - turt e, along with continued above a r Aptiv typically experiences flff uctuat tions in revenue due to changes in OEM production schedules, vehicle sales mix and recoveryrr of increased commodity costs (which we refeff r to as commodity pass-through), flff uctuat the net of new and lost business (which we refeff r to collectively as volume), increased prices attributabla e to escalation clauses in our supply contracts forff tions in forff eign currency exchange rates (which we refeff r to as “FX”), contractuat l price reductions) and engineering changes. Changes in sales mix can have either faff vorabla e or unfaff vorabla e refeff r to as contractuat impacts on revenue. Such changes can be the result of shiftff s in regional growth, shiftff s in OEM sales demand, as well as shiftff s in consumer demand related to vehicle segment purchases and content penetration. For instance, a shiftff in sales demand faff voring a particular OEM’s vehicle model forff which we do not have a supply contract may negatively impact our revenue. A shiftff in regional sales demand toward certain markets could faff vorabla y impact the sales of those of our customers that have a large market share in those regions, which in turt n would be expected to have a faff vorabla e impact on our revenue. l reductions of the sales price to the OEM (which we We typically experience (as described below) flff uctuat tions in operating income due to: • • • Volume, net of contractuat typically range frff om 1% to 3% of net sales) and changes in mix; l price reductions—changes in volume offff sff et by contractuat l price reductions (which Operational perforff mance—changes to costs forff materials and commodities or manufaff cturt variances; and ing and engineering ncluding restrucr rr Other—i reductions or Operational perforff mance. turt ing costs and any remaining variances not included in Volume, net of contractuat l price The automotive technology and component supply industryrr is traditionally subject to inflff ationaryrr pressures with respect which may place operational and profiff tabia lity burdens on the entire supply chain. For instance, the to raw materials and labor industryrr has recently been subjected to increased pricing pressures, specififf cally in relation to copper and petroleum-based resin products, which have experienced signififf cant volatility in price. We have also been impacted globally by increased overall a 39 inflff ation as a result of a variety of global trends. Due to various faff ctors, the industryrr logistics challenges frff om certain global supply chain disrupt ions, including a worldwide semiconductor supply shortage. This shortage has resulted in increased pricing pressures on semiconductors as well. In addition, we expect semiconductor supply cost and commodity cost volatility to have a continual impact on futff urt e earnings and/or operating cash flff ows. As such, we continually seek to mitigate both inflff ationaryrr pressures and our material-related cost exposures using a number of appr including combining purchase requirements with customers and/or other suppliers, using alternate suppliers or product designs, negotiating cost reductions and/or commodity cost contract escalation clauses into our vehicle manufaff cturt er supply contracts and hedging. We have also negotiated, and will continue to negotiate, price increases with our customers in response to the aforff ementioned global supply chain disrupt is also faff cing increased operating and oaches, ions. a r r This section discusses our consolidated results of operations and results of operations by segment forff the years ended December 31, 2022 versus 2021. A detailed discussion of our consolidated results of operations and results of operations by segment forff Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K forff December 31, 2021, which was fiff led with the SEC on Februarr the years ended December 31, 2021 versus 2020 can be found under Item 7. Management’s Discussion and the year ended ryrr 7, 2022. ff 2022 versrr us 2021 The results of operations forff the years ended December 31, 2022 and 2021 were as folff lows: Net sales .............................................................................................................. $ Cost of sales ........................................................................................................ Year Ended December 31, 2022 2021 17,489 14,854 (dollars in millions) $ 15,618 13,182 Favorable/ ff (unfavor able) $ 1,871 (1,672) Gross margin ....................................................................................................... 2,635 15.1% 2,436 15.6% Selling, general and administrative ................................................................ Amortization................................................................................................... Restrucrr turt ing .................................................................................................. Operating income ................................................................................................ Interest expense .............................................................................................. Other expense, net .......................................................................................... Income beforff e income taxes and equity loss....................................................... Income tax expense ........................................................................................ Income beforff e equity loss ................................................................................... Equity loss, net of tax..................................................................................... Net income .......................................................................................................... Net (loss) income attributabla e to noncontrolling interest.................................... Net loss attributabla e to redeemabla e noncontrolling interest................................ Net income attributabla e to Aptiv......................................................................... Mandatoryr convertible prefeff rred share dividends............................................... Net income attributabla e to ordinaryrr shareholders ............................................... $ 1,138 149 85 1,263 (219) (54) 990 (121) 869 (279) 590 (3) (1) 594 (63) 531 1,075 148 24 1,189 (150) (129) 910 (101) 809 (200) 609 19 — 590 (63) 527 $ 199 (63) (1) (61) 74 (69) 75 80 (20) 60 (79) (19) (22) (1) 4 — 4 $ 40 TotTT al NeNN t Sales Below is a summaryrr of our total net sales forff the years ended December 31, 2022 versus 2021. Year Ended December 31, Variance Due To: 2022 2021 (in millions) Favorable/ ff (unfavor able) Volume, net of contractual price reductions FX Commodity pass- through (in millions) Other Total Total net sales.................. $ 17,489 $ 15,618 $ 1,871 $ 2,458 $ (676) $ 45 $ 44 $ 1,871 the year ended December 31, 2022 increased 12% compared to the year ended December 31, 2021. Total net sales forff Our volumes increased 14% forff the period, which reflff ects increased global automotive production of 5% (5% on an AWM basis), which was partially offff sff et by unfaff vorabla e forff eign currency impacts, primarily related to the Euro and Chinese Yuan Renminbi. The increase in volumes is primarily attributabla e to increases in all regions. Our total net sales also reflff ect the faff vorabla e impact of price recoveries, net of contractuat acquisitions of Wind River and Intercabla e Automotive of $44 million, which is reflff ected in Other above Acquisitions and Divestiturt es to the audited consolidated fiff nancial statements included herein forff Company’s business acquisitions. l price reductions of $327 million, and net sales as a result of our . Refeff r to Note 20. ther detail of the a furff f CosCC t of Sales Cost of sales is primarily comprised of material, labor a , manufaff cturt ing overhead, frff eight, flff uctuat tions in forff eign currency exchange rates, product engineering, design and development expenses, depreciation and amortization, warranty costs and other operating expenses. Gross margin is revenue less cost of sales and gross margin percentage is gross margin as a percentage of net sales. Cost of sales increased $1,672 million forff 2021, as summarized below. The Company’s material cost of sales was appr ended December 31, 2022 and 2021, respectively. a the year ended December 31, 2022 compared to the year ended December 31, the years oximately 55% and 50% of net sales forff Year Ended December 31, 2022 2021 Favorable/ ff (unfavor able) Volume (a) FX Variance Due To: Operational perforff mance (in millions) Other Total Cost of sales .................... $14,854 Gross margin ................... $ 2,635 (dollars in millions) $13,182 $ 2,436 $ $ (1,672) $ (1,481) $ 588 $ (620) $ (159) $ (1,672) 199 $ 977 $ (88) $ (620) $ (70) $ 199 Percentage of net sales .... 15.1 % 15.6 % (a) Presented net of contractuat l price reductions forff gross margin variance. The increase in cost of sales reflff ects increased volumes, the impacts frff om currency exchange and operational perforff mance. Our operational perforff mance forff increased costs forff the year ended December 31, 2022 includes appr semiconductors and commodities. Cost of sales was also impacted by the folff a oximately $565 million of : lowing items in Other above a • • • $59 million of charges, primarily to impair the carryirr ng value of our maja ority owned RusRR sian subsidiary’rr to faff ir value; s net assets $45 million of increased commodity pass-through costs; and Increased costs of $26 million resulting frff om the operations of the businesses acquired during the year ended ther described in Note 20. Acquisitions and Divestiturt es to the audited consolidated December 31, 2022, as furff fiff nancial statements included herein. 41 Selling, General and Adminisii trtt ative ExEE pex nse g, p Year Ended December 31, 2022 2021 (dollars in millions) Favorable/ ff (unfavor able) Selling, general and administrative expense ............................................................... $ 1,138 $ 1,075 $ (63) Percentage of net sales ................................................................................................ 6.5 % 6.9 % Selling, general and administrative expense (“SG&A”) includes administrative expenses, inforff mation technology costs and incentive compensation related costs. SG&A decreased as a percentage of net sales forff as compared to 2021, primarily due to increased sales in 2022, partially offff sff et by increased incentive compensation costs. the year ended December 31, 2022 Amortizii ation Amortization................................................................................................................ $ 149 $ 148 $ (1) Year Ended December 31, 2022 2021 (in millions) Favorable/ ff (unfavor able) Amortization expense reflff ects the non-cash charge related to defiff nite-lived intangible assets. The consistency in amortization during the year ended December 31, 2022 compared to 2021 primarily reflff ects the continued amortization of our defiff nite-lived intangible assets, which resulted primarily frff om our acquisitions, over their estimated usefulff lives. Refeff r to Note 20. Acquisitions and Divestiturt es to the audited consolidated fiff nancial statements included herein forff business acquisitions, including details of the intangible assets recorded in each transaction. ther detail of our furff In 2023, we expect to incur non-cash amortization charges of appr oximately $230 million, an increase frff om the year ended December 31, 2022 as a result of charges expected to be incurred frff om the acquisitions of Wind River and Intercabla e Automotive in the four th quarter of 2022. a ff Restrt ucturingg Restrucrr turt ing ............................................................................................................... $ 85 $ 24 $ (61) Percentage of net sales ................................................................................................ 0.5 % 0.2 % Year Ended December 31, 2022 2021 (dollars in millions) Favorable/ ff (unfavor able) The Company recorded employee-related and other restrucr year ended December 31, 2022, of which $61 million was recognized forff $23 million was recognized forff a appr oximately $65 million in 2023 pursuant to currently implemented restrucr turt turt ing programs. ing charges totaling appr oximately $85 million during the programs implemented in the European region and a programs implemented in the North America region. We expect to make cash payments of The Company recorded employee-related and other restrucr turt ing charges related to these programs totaling a appr oximately $24 million during the year ended December 31, 2021. We expect to continue to incur additional restrucr turt ing expense in 2023 and beyond, primarily related to programs a a oximately $10 million (of which appr oximately $5 million relates to the Signal and Power Solutions segment) forff focff used on reducing global overhead costs and the continued rotation of our manufaff cturt Europe, which includes appr Experience segment and appr of December 31, 2022. Additionally, as we continue to operate in a cyclical industryrr global and regional economies, we continually evaluate opportuni manufaff cturt ff ing foot to align manufaff cturt the effff iff ciency and utilization of other locations and in order to increase investment in advanced technologies and engineering. ing actions are dependent on market conditions, customer actions and other faff ctors. Such futff urt e restrucr in order turt city and other costs with prevailing regional automotive production levels and locations, to improve prt oximately $5 million relates to the Advanced Safeff ty and User oved as that is impacted by movements in the turt e and optimize our int. The Company plans to implement additional restrucrr ing activities in the futff urt e, if necessary,rr int to best cost locations in ther adjust our cost strucr prt ing capaa programs appr ties to furff ff ing foot turt a a t 42 Refeff r to Note 10. Restrucrr turt ing to the audited consolidated fiff nancial statements included herein forff additional inforff mation. IntII erest ExEE pex nse p Year Ended December 31, 2022 2021 (in millions) Favorable/ ff (unfavor able) Interest expense ........................................................................................................... $ 219 $ 150 $ (69) The increase in interest expense during the year ended December 31, 2022 compared to 2021 reflff ects the issuance of $2.5 ryrr 2022 (the “2022 Senior Notes”), partially offff sff et by billion in aggregate principal amount of senior unsecured notes in Februar the issuance of $1.5 billion in aggregate principal amount of 3.10% senior unsecured notes due 2051, which were utilized to redeem $700 million in aggregate principal amount of 4.15% senior unsecured notes due 2024 (the “2014 Senior Notes”) and $650 million in aggregate principal amount of 4.25% senior unsecured notes due 2026 (the “4.25% Senior Notes”). Refeff r to Note 11. Debt to the audited consolidated fiff nancial statements included herein forff additional inforff mation. Othett r IncII ome, NeNN t , Other expense, net ....................................................................................................... $ 54 $ 129 $ 75 Other expense, net forff the year ended December 31, 2022 includes $61 million in transaction costs, primarily related to Year Ended December 31, 2022 2021 (in millions) Favorable/ ff (unfavor able) the acquisitions of Wind River and Intercabla e Automotive, as furff audited consolidated fiff nancial statements included herein. During the year ended December 31, 2022, the Company also the change in faff ir value of publicly recognized interest income of $86 million, partially offff sff et by losses of $52 million forff traded equity securities. The Company also recorded $15 million during the year ended December 31, 2022 related to the components of net periodic pension and postretirement benefiff t cost other than service costs, as furff Pension Benefiff ts to the audited consolidated fiff nancial statements included herein. ther discussed in Note 20. Acquisitions and Divestiturt es to the ther described in Note 12. As furff ther discussed in Note 11. Debt to the audited consolidated fiff nancial statements included herein, during the year ended December 31, 2021, Aptiv redeemed forff cash the entire $700 million aggregate principal amount outstanding of the 2014 Senior Notes and the entire $650 million aggregate principal amount outstanding of the 4.25% Senior Notes, resulting in a loss on debt extinguishment of appr ther discussed in Note 5. Investments in Affff iff liates to the audited consolidated fiff nancial statements included herein, during the year ended December 31, 2021, Aptiv recorded a pre-tax unrealized gain of $9 million related to increases in faff ir value of its equity investments without readily determinabla e faff ir values. The Company also recorded $21 million during the year ended December 31, 2021 related to the components of net periodic pension and postretirement benefiff t cost other than service costs. oximately $126 million. As furff a Refeff r to Note 19. Other Income, Net to the audited consolidated fiff nancial statements included herein forff additional inforff mation. IncII ome TaxTT es Year Ended December 31, 2022 2021 (in millions) Favorable/ ff (unfavor able) Income tax expense ..................................................................................................... $ 121 $ 101 $ (20) The Company’s tax rate is affff eff cted by the faff ct 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 forff which no tax benefiff t or expense was recognized due to a valuation allowance. The Company’s 43 effff eff ctive tax rate is also impacted by the receipt of certain tax incentives and holidays that reduce the effff eff ctive tax rate forff certain subsidiaries below the statutt oryrr rate. The Company’s effff eff ctive tax rate was 12% and 11% forff the years ended December 31, 2022 and 2021, respectively. The effff eff ctive tax rate in the year ended December 31, 2022 was impacted by faff vorabla e changes in valuation allowances offff sff et by changes in reserves and provision to returt n adjustments. The effff eff ctive tax rate was also impacted by impairments and charges related to our planned exit frff om our maja ority owned RusRR sian subsidiaryrr and other charges in Ukraine forff which no tax benefiff t was recognized. The effff eff ctive tax rate forff the year ended December 31, 2021 was impacted by faff vorabla e provision to returt n adjustments as well as releases of valuation allowances as a result of the Company’s determination that it was more likely than not that certain defeff rred tax assets would be realized. The Company also accruerr d $19 million of reserve adjustments forff positions during the year ended December 31, 2021. uncertain tax Refeff r to Note 14. Income Taxes to the audited consolidated fiff nancial statements included herein forff additional inforff mation. y Equitytt Loss q Equity loss, net of tax .................................................................................................. $ 279 $ 200 $ (79) Year Ended December 31, 2022 2021 (in millions) Favorable/ ff (unfavor able) Equity loss, net of tax reflff ects the Company’s interest in the results of ongoing operations of entities accounted forff as each period presented are primarily attributabla e to the equity method investments. The equity losses recognized by Aptiv forff Motional autonomous driving joint venturt e. Results of Operations by Segment We operate our core business along the folff lowing operating segments, which are grouped on the basis of similar product, market and operating faff ctors: • • • Signal and Power Solutions, which includes complete electrical architecturt e and component products. Advanced Safeff ty and User Experience, which includes vehicle technology and services in advanced safeff ty, user experience and connectivity and security solutions, as well as cloud-native softff ware platforff ms, 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 naturt e. Generally, Aptiv evaluates segment perforff mance based on stand-alone segment net income beforff e interest expense, other income (expense), net, income tax (expense) benefiff t, equity income (loss), net of tax, amortization, restrucrr acquisition and portfolff product portfolff other related charges and gains (losses) on business divestiturt es and other transactions (“Adjusted Operating Income”) and accounts forff io project costs (which includes costs incurred to integrate acquired businesses and to plan and execute io transforff mation actions, including business and product acquisitions and divestiturt es), asset impairments and inter-segment sales and transfeff rs as if the sales or transfeff rs were to third parties, at current market prices. ing, other turt Effff eff ctive on Januaryrr 1, 2022, the Company now excludes amortization expense of intangible assets frff om the calculation of Adjusted Operating Income, as reflff ected in the defiff nition below. The Company’s management believes that the updated calculation of this fiff nancial measure will be more usefulff to both management and investors in their analysis of the Company’s results of operations due to recent acquisitions. Amortization of intangible assets generally results frff om a write-up in the value of assets in connection with an acquisition. The Company believes that exclusion of amortization expense will faff cilitate more comparabla e operating results of the Company over time, between periods when the Company is more or less acquisitive and allows forff Adjusted Operating Income in the tabla es below has been revised to be consistent with this updated calculation. improved comparison with both acquisitive and non-acquisitive peer companies. The historical presentation of Our management utilizes segment Adjusted Operating Income as the key perforff mance measure of segment income or loss to evaluate segment perforff mance, and forff management believes this measure is most reflff ective of the operational profiff tabia lity or loss of our operating segments. Segment es to allocate resources to the segments, as planning and forff ecasting purpos rr 44 Adjusted Operating Income should not be considered a substitutt e forff should not be considered an alternative to net income attributabla e to Aptiv, which is the most directly comparabla e fiff nancial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies. results prepared in accordance with U.S. GAAP and The reconciliation of Adjusted Operating Income to operating income includes, as appl turt io project costs (which includes costs incurred to integrate acquired businesses and to plan and other acquisition and portfolff execute product portfolff impairments and other related charges and gains (losses) on business divestiturt es and other transactions. The reconciliations of Adjusted Operating Income to net income attributabla e to Aptiv forff io transforff mation actions, including business and product acquisitions and divestiturt es), asset the years ended December 31, 2022 and 2021 are as folff icabla e, amortization, restrucr a lows: ing, Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total For the Year Ended December 31, 2022: Adjusted operating income ............................................................................. $ 1,441 $ 144 $ Amortization.............................................................................................. Restrucrr turt ing ............................................................................................. Other acquisition and portfolff io project costs............................................. Asset impairments ..................................................................................... Other charges related to Ukraine/RusRR sia conflff ict (1) ................................ (139) (30) (15) (8) (54) Operating income............................................................................................ $ 1,195 $ (10) (55) (11) — — 68 Interest expense............................................................................................... Other expense, net........................................................................................... Income beforff e income taxes and equity loss .................................................. Income tax expense......................................................................................... Equity loss, net of tax ..................................................................................... Net income...................................................................................................... Net loss attributabla e to noncontrolling interest............................................... Net loss attributabla e to redeemabla e noncontrolling interest ........................... Net income attributabla e to Aptiv .................................................................... $ 1,585 (149) (85) (26) (8) (54) 1,263 (219) (54) 990 (121) (279) 590 (3) (1) 594 (1) Primarily consists of charges related to the designation of our maja ority owned RusRR sian subsidiaryrr as held forff 20. Acquisitions and Divestiturt es to the audited consolidation fiff nancial statements included herein forff furff ther inforff mation. sale as of December 31, 2022. Refeff r to Note 45 Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total For the Year Ended December 31, 2021: Adjusted operating income ............................................................................. $ 1,225 $ 153 $ Amortization.............................................................................................. Restrucrr turt ing ............................................................................................. Other acquisition and portfolff io project costs............................................. Asset impairments ..................................................................................... (141) (8) (11) (1) Operating income............................................................................................ $ 1,064 $ (7) (16) (4) (1) 125 Interest expense............................................................................................... Other expense, net........................................................................................... Income beforff e income taxes and equity loss .................................................. Income tax expense......................................................................................... Equity loss, net of tax ..................................................................................... Net income...................................................................................................... Net income attributabla e to noncontrolling interest ......................................... Net income attributabla e to Aptiv .................................................................... $ 1,378 (148) (24) (15) (2) 1,189 (150) (129) 910 (101) (200) 609 19 590 Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment forff the years ended December 31, 2022 and 2021 are as folff lows: NeNN t Sales by Segme ent Year Ended December 31, Variance Due To: 2022 2021 (in millions) Favorable/ ff (unfavor able) Volume, net of contractual price reductions FX Commodity Pass- through (in millions) Other Total $ 11,598 $ 1,345 $ 1,908 $ (626) $ 45 $ 18 $ 1,345 Signal and Power Solutions..... $ 12,943 Advanced Safeff ty and User Experience ........................... 4,587 Eliminations and Other............ (41) 4,056 (36) 531 (5) 558 (8) (53) 3 — — 45 $ 26 — 44 531 (5) $ 1,871 Year Ended December 31, 2022 2021 17.2 % 8.9 % 15.1 % 17.6 % 9.8 % 15.6 % Total .................................... $ 17,489 $ 15,618 $ 1,871 $ 2,458 $ (676) $ Gross MarMM gir n Percentage by Segme ent Signal and Power Solutions.................................................................................................................. Advanced Safeff ty and User Experience ................................................................................................ Total ................................................................................................................................................. 46 Adjusted OpeO rating IncII ome by Segme ent Year Ended December 31, Variance Due To: Favorable/ ff (unfavor able) Volume, net of contractual price reductions 2022 2021 (in millions) Operational perforff mance (in millions) Other Total 1,441 $ 1,225 $ 216 $ 712 $ (304) $ (192) $ 216 Signal and Power Solutions ....... $ Advanced Safeff ty and User Experience.............................. Total ...................................... $ 1,585 $ 1,378 $ 207 $ 144 153 (9) 265 977 (316) 42 (9) $ (620) $ (150) $ 207 As noted in the tabla e above a , Adjusted Operating Income forff the year ended December 31, 2022 as compared to the year ended December 31, 2021 was impacted by volume, including product mix, and the faff vorabla e impact of price recoveries, net of the year ended December 31, 2022 contractuat includes appr semiconductors and commodities. Adjusted Operating Income was a also impacted by the folff l price reductions, and operational perforff mance. Our operational perforff mance forff : lowing items included within Other in the tabla e above oximately $565 million of increased costs forff a • • $42 million of increased SG&A expense, not including the impact of other acquisition and portfolff which includes increased incentive compensation costs; and io project costs, $41 million of unfaff vorabla e forff eign currency impacts, primarily related to the Chinese Yuan Renminbi. Liquidity and Capital Resources Overview of CapiCC tii altt StSS rtt ucture Our liquidity requirements are primarily to fundff ff capia tal requirements, as well as to fund debt service requirements, operational restrucr outstanding prefeff rred shares. Our primaryrr sources of liquidity are cash flff ows frff om operations, our existing cash balance, and as necessaryrr and availabla e, borrowings under credit faff cilities and issuance of long-term debt and equity. To the extent we generate discretionaryrr cash flff ow we may consider using this additional cash flff ow forff strategic acquisitions or investments, and/or general corpor capia tal strucr es. We also continually explore ways to enhance our optional prepayments of existing indebtedness, ate purpos turt e. turt rr r our business operations, including capia tal expenditurt es and working ing activities and dividends on our As of December 31, 2022, we had cash and cash equivalents of $1.5 billion and net debt (defiff ned as outstanding debt less cash and cash equivalents) of $5.0 billion. We also have access to additional liquidity pursuant to the terms of the $2.0 billion Revolving Credit Facility and the committed European accounts receivabla e faff ctoring faff cility, as described below. The folff tabla e summarizes our availabla e liquidity, which includes cash, cash equivalents and funds availabla e under our signififf cant committed credit faff cilities, as of December 31, 2022. ff lowing Cash and cash equivalents ...................................................................................................................................... $ Revolving Credit Facility, unutilized portion (1) ................................................................................................... Committed European accounts receivabla e faff ctoring faff cility, unutilized portion (2).............................................. Total availabla e liquidity ..................................................................................................................................... $ (1) Availabia lity reduced by less than $1 million in letters of credit issued under the Credit Agreement as of December 31, 2022. (2) Based on December 31, 2022 forff eign currency rates, subject to the availabia lity of eligible accounts receivabla e. December 31, 2022 (in millions) 1,531 2,000 482 4,013 Despite the current global economic impacts and uncertainties resulting frff om the conflff ict between Ukraine and RusRR sia, ions, the COVID-19 pandemic and the resulting direct and indirect impacts on global the ongoing global supply chain disrupt vehicle production, we currently expect existing cash, availabla e liquidity and cash flff ows frff om operations to continue to be suffff iff cient to fund Credit Agreement as described below, dividends on prefeff rred shares and capia tal expenditurt es. our global operating activities, including restrucrr ing payments, any mandatoryrr payments required under the turt rr ff We also continue to expect to be abla e to move funds ff between diffff eff rent countries to manage our global liquidity needs without material adverse tax implications, subject to current monetaryrr policies. We utilize a combination of strategies, including 47 to meet our global liquidity needs. There are no signififf cant restrictions on the abia lity of our subsidiaries to pay dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessaryrr dividends or make other distributions to Aptiv. As of December 31, 2022, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled appr may be required to accruer however, based on our current liquidity needs and strategies, we do not anticipate a need to accruer amounts. frff om non-U.S. subsidiaries to the U.S.; and pay such additional oximately $1.4 billion. If additional non-U.S. cash was needed forff and pay withholding if we were to distribute such funds our U.S. operations, we a ff ff Based on these faff ctors, we believe we possess suffff iff cient liquidity to fund ff our global operations and capia tal investments in 2023 and beyond. 2020 Publill c Equitii ytt OfO fff eff rinii g In June 2020, the Company completed the underwritten public offff eff ring of appr a oximately 15.1 million ordinaryrr shares at a price of $75.91 per share, resulting in net proceeds of appr underwriters’ discount of $35 million. Simultaneously, the Company completed the underwritten public offff eff ring of 11.5 million 5.50% Mandatoryrr Convertible Prefeff rred Shares, Series A, $0.01 par value per share (the “MCPS”) with a liquidation prefeff rence of $100 per share, resulting in net proceeds of appr oximately $1,115 million, aftff er deducting expenses and the underwriters’ discount of $35 million. Each share of MCPS will convert on the mandatoryrr conversion date of June 15, 2023, into between 1.0754 and 1.3173 shares of the Company’s ordinaryrr shares, subject to customaryrr anti-dilution adjustments. oximately $1,115 million, aftff er deducting expenses and the a a Holders of the MCPS will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the annual rate of 5.50% of the liquidation prefeff rence of $100 per share (equivalent to $5.50 annually per share), payabla e in cash or, subject to certain limitations, by deliveryrr of the Company’s ordinaryrr shares or any combination of cash and the Company’s ordinaryrr shares, at the Company’s election. If declared, dividends on the MCPS are payabla e quarterly on March 15, June 15, September 15 and December 15 of each year (commencing on September 15, 2020 to, and including June 15, 2023), to the holders of record of the MCPS as they appe ar on the Company’s share register at the close of business on the immediately preceding March 1, June 1, September 1 or December 1, respectively. Refeff r to Note 15. Shareholders’ Equity and Net Income Per Share to the audited consolidated fiff nancial statements included herein forff ther detail on the June 2020 public equity offff eff ring. furff a ShSS are Repuee rchases In April 2016, the Board of Directors authorized a share repurchase program of up to $1.5 billion of ordinaryrr shares, which commenced in September 2016. This share repurchase program provides forff privately negotiated transactions, depending on share price, market conditions and other faff ctors, as determined by the Company. share purchases in the open market or in There were no shares repurchased during the years ended December 31, 2022 and 2021. A summaryrr of the ordinaryrr shares repurchased during the year ended December 31, 2020 is as folff lows: Total number of shares repurchased ....................................................................................................................... 1,059,075 Average price paid per share................................................................................................................................... $ Total (in millions)............................................................................................................................................... $ 53.73 57 a As of December 31, 2022, appr oximately $13 million of share repurchases remained availabla e under the April 2016 share repurchase program, which is in addition to the share repurchase program of up to $2.0 billion that was previously announced in Januaryrr 2019. This program, which will commence folff provides forff conditions and other faff ctors, as determined by the Company. All previously repurchased shares were retired, and are reflff ected as a reduction of ordinaryrr share capia tal forff ied as reductions to additional paid- in-capia tal and retained earnings. share purchases in the open market or in privately negotiated transactions, depending on share price, market lowing the completion of the April 2016 share repurchase program, the par value of the shares, with the excess appl a PrPP efe eff rred Dividends In the four ff th quarter of 2022, the Board of Directors declared and paid a quarterly cash dividend of appr a oximately $1.375 per mandatoryrr convertible prefeff rred share outstanding. Dividends frff om Equitii ytt InII vestmtt entstt During the years ended December 31, 2022, 2021 and 2020, Aptiv received dividends of $5 million, $6 million and $9 million, respectively, frff om its equity method investments. The dividends were recognized as a reduction to the investment and represented a returt n on investment included in cash flff ows frff om operating activities. 48 Acquisii itii itt ons and Othtt er TrTT ansactitt ons the intelligent edge, forff n December 23, 2022, Aptiv acquired 100% of the equity interests of Wind River, a global leader in WiWW nd River—Orr oximately $3.5 billion, instead of the initial purchase delivering softff ware forff price of $4.3 billion agreed to in Januaryrr 2022. Aptiv and the seller agreed to the amended purchase price, in part, as a result of certain changes in Wind River's current operating strucrr conclusion. The results of operations of Wind River are reported within the Advanced Safeff ty and User Experience segment frff om the date of acquisition. The Company acquired Wind River utilizing cash on hand, which included proceeds frff om the 2022 Senior Notes. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling appr million, which were recorded within other expense, net in the statement of operations. turt e required to bring the regulatoryrr appr oval process to a satisfaff ctoryrr total consideration of appr oximately $43 a a a IntII ercable Automotive—On November 30, 2022, Aptiv acquired 85% of the equity interests of Intercabla e Automotive Solutions S.r.l. (“Intercabla e Automotive”), a manufaff cturt er of high-voltage busbars and interconnect solutions, forff consideration of $606 million. The results of operations of Intercabla e Automotive are reported within the Signal and Power Solutions segment frff om the date of acquisition. The Company acquired its interest in Intercabla e Automotive utilizing cash on hand. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling appr which were recorded within other expense, net in the statement of operations. oximately $10 million, total a Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 15% of Intercabla e Automotive forff defiff ned and will be determined based on Intercabla e Automotive’s 2025 operating results. cash of up to €155 million, beginning in 2026. The fiff nal purchase price is contractuat lly El-ComCC —On December 30, 2021, Aptiv acquired 100% of the equity interests of El-Com, Inc. (“El-Com”), a manufaff cturt er of custom wire harnesses and cabla e assemblies forff total consideration of up to $88 million. The total consideration includes a cash payment of up to $10 million, contingent upon the achievement of certain perforff mance metrics over a one-year period folff as a business combination, with the operating results of El-Com included within the Company’s Signal and Power Solutions segment frff om the date of acquisition. The Company acquired El-Com utilizing cash on hand. lowing the acquisition. The acquisition was accounted forff high-reliabia lity products and industries, forff KrKK ono-Safeff Automotive—On November 9, 2021, Aptiv acquired 100% of the equity interests of KrKK ono-Safeff Automotive, SAS (“KrK ono-Safeff Automotive”), a leading softff ware developer of safeff ty-critical real-time embedded systems, forff consideration of $13 million, which was comprised of Aptiv’s previous investment of $6 million in KrK ono-Safeff , SAS and $7 million of cash. The acquisition was accounted forff Automotive included within the Company’s Advanced Safeff ty and User Experience segment frff om the date of acquisition. as a business combination, with the operating results of KrK ono-Safeff total UlUU ti-MatMM e—On April 30, 2021, Aptiv acquired certain assets of Ulti-Mate Connector, Inc. (“Ulti-Mate”), a manufaff cturt er total consideration of $45 million. The acquisition was of miniaturt e and micro-miniaturt e connectors and cabla e assemblies, forff accounted forff Power Solutions segment frff om the date of acquisition. The Company acquired Ulti-Mate utilizing cash on hand. as a business combination, with the operating results of Ulti-Mate included within the Company’s Signal and DyD nawave—On August 4, 2020, Aptiv acquired 100% of the equity interests of Dynawave Inc. (“Dynawave”), a specialized manufaff cturt er of custom-engineered interconnect solutions forff as a business combination, with the operating results of Dynawave included $22 million. The acquisition was accounted forff within the Company’s Signal and Power Solutions segment frff om the date of acquisition. The Company acquired Dynawave utilizing cash on hand. a wide range of industries, forff total consideration of Planned ExEE it frff om MajMM oritytt Owned Russian Subsidiaryr —Gyy iven the sanctions put in place by the E.U., U.S. and other governments, which restrict our abia lity to conduct business in RusRR sia, we initiated a plan to exit our maja ority owned subsidiaryrr in RusRR sia in the second quarter of 2022. As a result, the Company determined that this subsidiary,rr which is reported within the Signal and Power Solutions segment, met the held forff the year ended December 31, 2022, the Company recorded a pre-tax charge of $51 million to impair the carryirr ng value of the RusRR sian s net assets to faff ir value, which was recorded primarily within cost of sales in the consolidated statement of subsidiary’rr operations. Approximately $25 million of these charges were attributabla e to the noncontrolling interest based on the noncontrolling shareholder’s economic interest. The remaining assets and liabia lities, which are de minimis, were reclassififf ed to other current assets and other current liabia lities, respectively, in the consolidated balance sheet as of December 31, 2022. sale criteria as of December 31, 2022. Consequently, forff Refeff r to Note 20. Acquisitions and Divestiturt es to the audited consolidated fiff nancial statements included herein forff furff ther detail of the Company’s business acquisitions. 49 InvII estmtt ent in TTTT TTT eTT ch Auto AG—OGG n March 15, 2022, Aptiv acquired appr a oximately 20% of the equity interests of TTTech Auto AG (“TTTech Auto”), a leading provider of safeff ty-critical middleware solutions forff a systems and autonomous driving appl the investment date). The Company made the investment in TTTech Auto utilizing cash on hand. The Company’s investment in TTTech Auto is accounted forff advanced driver-assistance oximately $220 million, using forff eign currency rates on using the equity method of accounting folff lowing the date of the investment. €200 million (appr ications, forff a TeTT chnology InvII estmtt entstt —In May 2022, the Company’s Advanced Safeff ty and User Experience segment made an investment totaling 50 billion South Korean Won (appr date) in StradVision, Inc., a provider of deep learning-based camera perception softff ware forff a oximately $40 million, using forff eign currency rates on the investment automotive appl a ications. In Februar e acquisition ryrr 2022, Quanergy Systems, Inc. (“Quanergy”) merged with a publicly traded special purpos company (“SPAC”) and shares of Quanergy began trading on the New York Stock Exchange (“NYSE”) under the symbol QNGY. As part of the SPAC merger, our prefeff rred shares in Quanergy were converted into Quanergy ordinaryrr shares. During the remainder of 2022, the Company sold all of its Quanergy ordinaryrr shares forff oximately $3 million. The Company’s Advanced Safeff ty and User Experience segment had previously made a $3 million investment in Quanergy during 2016, which was in addition to the Company’s $3 million investment made during 2015. net proceeds of appr a r In September 2021, Valens Semiconductor Ltd. (“Valens”) merged with a publicly traded SPAC and shares of Valens began trading on the NYSE under the symbol VLN. As part of the SPAC merger, our prefeff rred shares in Valens were converted into Valens ordinaryrr shares. In August 2021, Otonomo Technologies Ltd. (“Otonomo”) merged with a publicly traded SPAC and shares of Otonomo began trading on the Nasdaq Capia tal Market under the symbol OTMO. As part of the SPAC merger, our prefeff rred shares in Otonomo were converted into Otonomo ordinaryrr shares. During the second half of 2021, the Company sold a portion of its Otonomo ordinaryrr shares forff segment had previously made a $3 million investment in Otonomo during 2019, which was in addition to the Company’s $15 million investment made during 2017. oximately $3 million. The Company’s Advanced Safeff ty and User Experience net proceeds of appr a In June 2021, Affff eff ctiva, Inc. (“Affff eff ctiva”) was acquired by Smart Eye AB (“Smart Eye”), which is publicly traded on the Nasdaq Stockholm AB stock exchange. As part of the acquisition, Aptiv received shares of Smart Eye in exchange forff Aptiv’s Affff eff ctiva prefeff rred shares. In April 2021, Innoviz Technologies (“Innoviz”) merged with a publicly traded SPAC and shares of Innoviz began trading on the Nasdaq Capia tal Market under the symbol INVZ. As part of the SPAC merger, our prefeff rred shares in Innoviz were converted into Innoviz ordinaryrr shares. During the second half of 2021, the Company sold all of its Innoviz ordinaryrr shares forff oximately $18 million. The Company’s Advanced Safeff ty and User Experience segment had previously made a $15 million investment in Innoviz during 2017. net proceeds of appr a Following each of the transactions described above a forff Quanergy, Valens, Otonomo, Smart Eye and Innoviz, the faff ir value of each respective investment is measured on a recurring basis, with changes in faff ir value recorded to other income (expense), net. Refeff r to Note 5. Investments in Affff iff liates to the audited consolidated fiff nancial statements included herein forff furff ther detail of the Company’s technology investments. Autontt omous Drivinii g Joinii t VeVV nture a l property forff l property and appr a 50% ownership oximately 700 employees forff oximately $1.6 billion in cash, along with vehicle engineering On March 26, 2020, Aptiv completed a transaction with Hyundai to forff m Motional, a joint venturt e focff used on the design, development and commercialization of autonomous driving technologies. Under the terms of the agreement, Aptiv contributed to Motional autonomous driving technology, intellectuat interest in Motional. Hyundai contributed to Motional appr a services, research and development resources and access to intellectuat a 50% ownership interest in Motional. As a result, Motional is expected to fuff nd all of its futff urt e operating expenses and investments in autonomous driving technologies forff the forff eseeabla e futff urt e. Consequently, Aptiv is not required to fund million forff the year ended December 31, 2019 prior to Motional’s forff mation. Upon closing of the transaction, Aptiv deconsolidated the carryirr ng value of the associated assets and liabia lities contributed to Motional, previously classififf ed as held forff oximately $2 billion within investments in affff iff liates in the consolidated balance sheet, based on the preliminaryrr $1.4 billion in the consolidated statement of operations (appr the year ended December 31, 2020), net of transaction costs of $22 million, based on the diffff eff rence between the carryirr ng value of its contribution to Motional and the preliminaryrr faff ir value of its investment in Motional. The estimated faff ir value of Aptiv’s ownership interest in Motional was determined primarily based on third-party valuations and management estimates, generally utilizing income and market appr a involved signififf cant estimates and assumptions with respect to the timing and amount of futff urt e cash flff ows, market rate oaches. Determining the faff ir value of Motional and the underlying assets required the use of management’s judgment and faff ir value of its investment in Motional. The Company recognized a pre-tax gain of appr these investments and expenses, which appr oximately $5.32 per diluted share forff sale, and recognized an asset of appr oximated $180 oximately a a a a ff 50 assumptions, projected growth rates and margins, and appr was determined on a preliminaryrr basis using inforff mation availabla e in the fiff rst quarter of 2020 and was fiff nalized in the fiff rst any period quarter of 2021. The effff eff cts of this transaction would not materially impact the Company’s reported results forff presented, and the transaction did not meet the criteria to be reflff ected as a discontinued operation. opriate discount rates, among other items. The estimated faff ir value a The Company’s investment in Motional is accounted forff using the equity method of accounting and Aptiv recognized an equity loss of $291 million, $215 million and $98 million, net of tax, during the years ended December 31, 2022, 2021 and 2020, respectively. CrCC editii Agreement Aptiv PLC and its wholly-owned subsidiary,rr Aptiv Corpor r with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit faff cilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit faff cility of $2 billion (the “Revolving Credit Facility”). Subsequently, Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiaryrr 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. ation, entered into a credit agreement (the “Credit Agreement”) 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 June 2021 amendment, among other things, (1) refiff nanced and replaced the existing term loan A and revolver with a new term loan A that maturt es in 2026, and a new fiff ve-year revolving credit faff cility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainabia lity-linked metrics and commitments, that, if achieved, would change the faff cility feff e and interest rate margins as described below, and (3) establa ished the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the fulff ff four Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 forff acquisitions, as defiff ned in the Credit Agreement) and allowed forff modififf cation of debt totaled $1 million and $4 million during the years ended December 31, 2021 and 2020, respectively, related to the June 2021 amendment and May 2020 amendment. Aptiv paid amendment feff es of $6 million and $18 million during the years ended December 31, 2021 and 2020, respectively, which are reflff ected as fiff nancing activities in the consolidated statements of cash flff ows. l fiff scal quarters folff dividends and other payments on equity. Losses on lowing completion of material The Tranche A Term Loan and the Revolving Credit Facility maturt e on June 24, 2026. Beginning in the third quarter of 2022, Aptiv was obligated to begin making quarterly principal payments on the Tranche A Term Loan according to the amortization schedule in the Credit Agreement. The Credit Agreement also contains an accordion feff aturt e that permits Aptiv to increase, frff om time to time, the aggregate borrowing capaa upon Aptiv’s request, the agreement of the lenders participating in the increase, and the appr city under the Credit Agreement by up to an additional $1 billion oval of the Administrative Agent. a 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 availabia lity under the Revolving Credit Facility. No amounts were drawn on the Revolving Credit Facility during the year ended December 31, 2022. Loans under the Credit Agreement bear interest, at Aptiv’s option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as defiff ned in the Credit Agreement) or (b) the London Interbar nk Offff eff red Rate (the “Adjusted LIBO Rate” as defiff ned in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forff th in the tabla e below (the “Applicabla e Rate”). The June 2021 amendment also contains provisions to faff cilitate the replacement of the LIBOR-based rate with a Secured Overnight Financing Rate (“SOFR”) based rate upon the discontinuation or unavailabia lity of LIBOR. The Applicabla e Rates under the Credit Agreement on the specififf ed dates are set forff th below: Revolving Credit Facility ..................................................... Tranche A Term Loan .......................................................... 1.06 % 1.105 % 0.06 % 0.105 % 1.10 % 1.125 % 0.10 % 0.125 % December 31, 2022 December 31, 2021 LIBOR plus ABR plus LIBOR plus ABR plus Under the June 2021 amendment, the Applicabla e Rate under the Credit Agreement, as well as the faff cility feff e, may increase or decrease frff om time to time based on changes in the Company’s credit ratings and whether the Company achieves or faff ils to achieve certain sustainabia lity-linked targets with respect to greenhouse gas emissions and workplace safeff ty. 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 faff cility feff e. Accordingly, the interest rate is subject to flff uctuat Company’s corpor ate credit ratings or whether the Company achieves or faff ils to achieve its sustainabia lity-linked targets. The tion during the term of the Credit Agreement based on changes in the ABR, LIBOR, changes in the r 51 Credit Agreement also requires that Aptiv pay certain faff cility feff es on the Revolving Credit Facility, which are also subject to adjustment based on the sustainabia lity-linked targets as described above As a result of meeting the sustainabia lity-linked targets forff reduced by the amounts specififf ed above the 2021 calendar year, the interest rate margins and faff cility feff es were , and certain letter of credit issuance and frff onting feff es. , effff eff ctive in the third quarter of 2022. a a The interest rate period with respect to LIBOR interest rate options can be set at one-, three-, or six-months as selected by icabla e lenders). Aptiv Aptiv in accordance with the terms of the Credit Agreement (or other period as may be agreed by the appl may elect to change the selected interest rate option in accordance with the provisions of the Credit Agreement. As of December 31, 2022, Aptiv selected the one-month LIBOR interest rate option on the Tranche A Term Loan, and the rate effff eff ctive as of December 31, 2022, as detailed in the tabla e below, was based on the Company’s current credit rating and the Applicabla e Rate forff the Credit Agreement: a Tranche A Term Loan ................................................................... LIBOR plus 1.105% $ 309 5.48 % Borrowings under the Credit Agreement are prepayabla e at Aptiv’s option without premium or penalty. The Credit Agreement contains certain covenants that limit, among other things, the Company’s (and the Company’s Borrowings as of December 31, 2022 Rates effff eff ctive as of Applicable Rate (in millions) December 31, 2022 subsidiaries’) abia lity to incur certain additional indebtedness or liens or to dispose of substantially all of its assets. 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 defiff ned in the Credit Agreement) of not more than 3.5 to 1.0 (or 4.0 to 1.0 forff Agreement). Following completion of the acquisition of Wind River in December 2022, the Company elected to increase the ratio of Consolidated Total Indebtedness to Consolidated EBITDA to 4.0 to 1.0 commencing with the fiff scal quarter ending December 31, 2022. Refeff r to Note 20. Acquisitions and Divestiturt es to the audited consolidated fiff nancial statements included herein forff lowing completion of material acquisitions, as defiff ned in the Credit ther inforff mation on this acquisition. l fiff scal quarters folff ff four furff fulff The Credit Agreement also contains events of defaff ult customaryrr compliance with the Credit Agreement covenants as of December 31, 2022. forff fiff nancings of this type. The Company was in As of December 31, 2022, all obligations under the Credit Agreement were borrowed by Aptiv Corpor rr ation and jointly and severally guaranteed by AGFL and Aptiv PLC, subject to certain exceptions set forff th in the Credit Agreement. SeSS nior UnUU secured NotNN ett s As of December 31, 2022, the Company had the folff lowing senior unsecured notes issued and outstanding: Aggregate Principal Amount (in millions) Stated Coupon Rate Issuance Date Maturity Date Interest Payment Date $ 700 749 535 300 800 300 350 1,500 1,000 2.396% 1.50% 1.60% 4.35% 3.25% 4.40% 5.40% 3.10% 4.15% ryrr 2022 Februar March 2015 ryrr 2025 Februar March 2025 September 2016 September 2028 March 2019 Februar ryrr 2022 September 2016 March 2019 November 2021 Februar ryrr 2022 March 2029 March 2032 October 2046 March 2049 December 2051 May 2052 Februar ryrr 18 and August 18 March 10 September 15 March 15 and September 15 March 1 and September 1 April 1 and October 1 March 15 and September 15 June 1 and December 1 May 1 and November 1 Although the specififf c terms of each indenturt e governing each series of senior notes vary,rr the indenturt es contain certain restrictive covenants, including with respect to Aptiv’s (and Aptiv’s subsidiaries) abia lity to incur liens, enter into sale and leaseback transactions and merge with or into other entities. As of December 31, 2022, the Company was in compliance with the provisions of all series of the outstanding senior notes. Refeff r to Note 11. Debt to the audited consolidated fiff nancial statements included herein forff additional inforff mation. 52 Guarantortt Summarizii ed FiFF nii ancial InII fn orff mrr atitt on ther described in Note 11. Debt to the audited consolidated fiff nancial statements included herein, Aptiv PLC, Aptiv As furff ation and AGFL are each potential borrowers under the Credit Agreement, under which such borrowings would be r Corpor guaranteed by each of the other two entities. Aptiv PLC issued the 2015 Euro-denominated Senior Notes, 2016 Euro- denominated Senior Notes, 2016 Senior Notes, 2019 Senior Notes and 2021 Senior Notes. In Februar ryrr 2022, Aptiv Corpor and AGFL were added as guarantors on each series of outstanding senior notes previously issued by Aptiv PLC. AGFL was added as a joint and several co-issuer of the 2021 Senior Notes in December 2021, effff eff ctive as of the date of issuance. Aptiv ation jointly issued the 2022 Senior Notes, which are guaranteed by AGFL. Together, Aptiv PLC, Aptiv PLC and Aptiv Corpor Corpor ation and AGFL comprise the “Obligor Group.” All other consolidated direct and indirect subsidiaries of Aptiv PLC are r not subject to any guarantee under any series of notes outstanding (the “Non-Guarantors”). The guarantees rank equally in right of payment with all of the guarantors’ existing and futff urt e senior indebtedness, are effff eff ctively subordinated to any of their existing and futff urt e secured indebtedness to the extent of the value of the collateral securing such indebtedness and are turt ally subordinated to the indebtedness of each of their existing and futff urt e subsidiaries that is not a guarantor. strucr r r ation The below summarized fiff nancial inforff mation is presented on a combined basis aftff er the elimination of intercompany balances and transactions among the Obligor Group and equity in earnings frff om and investments in the Non-Guarantors. The below summarized fiff nancial inforff mation should be read in conjunction with the Company’s audited consolidated fiff nancial statements included herein, as the fiff nancial inforff mation may not necessarily be indicative of results of operations or fiff nancial position had the subsidiaries operated as independent entities. The historical presentation of the summarized fiff nancial inforff mation has been revised to be consistent with the presentation of the entities that comprise the strucrr turt e of the Obligor Group as of December 31, 2022. Year Ended December 31, 2022 Net sales ................................................................................................................................................................ $ Gross margin ......................................................................................................................................................... $ Operating loss ....................................................................................................................................................... $ Net loss.................................................................................................................................................................. $ Net loss attributabla e to Aptiv ................................................................................................................................ $ As of December 31, 2022 Current assets (1)................................................................................................................................................... $ Long-term assets (2).............................................................................................................................................. $ Current liabia lities (3) ............................................................................................................................................. $ Long-term liabia lities (3) ........................................................................................................................................ $ Noncontrolling interest.......................................................................................................................................... $ As of December 31, 2021 Current assets (1)................................................................................................................................................... $ Long-term assets ................................................................................................................................................... $ Current liabia lities (3) ............................................................................................................................................. $ Long-term liabia lities (3) ........................................................................................................................................ $ Noncontrolling interest.......................................................................................................................................... $ Obligor Group (in millions) — — (67) (299) (299) 5,340 516 7,372 6,668 — 6,432 14 6,572 4,276 — (1) (2) (3) Includes current assets of $4,763 million and $4,136 million due frff om Non-Guarantors as of December 31, 2022 and December 31, 2021, respectively, which includes amounts due frff om affff iff liates of $1 million and $5 million, respectively. Includes long-term assets of $507 million due frff om Non-Guarantors as of December 31, 2022. Includes current liabia lities of $7,261 million and $6,530 million, and long-term liabia lities of $226 million and $226 million, due to Non-Guarantors as of December 31, 2022 and December 31, 2021, respectively. 53 Othtt er FiFF nii ancinii g toring—Agg Receivable facff ptiv maintains a €450 million European accounts receivabla e faff ctoring faff cility that is availabla e on faff ctoring of receivabla es denominated in both Euros and U.S. dollars (“USD”). This faff cility is a committed basis and allows forff accounted forff as short-term debt and borrowings are subject to the availabia lity of eligible accounts receivabla e. Collateral is not required related to these trade accounts receivabla e. This faff cility became effff eff ctive on Januaryrr 1, 2021 and has an initial term of three years, subject to Aptiv’s right to terminate at any time with three months’ notice. Aftff er expiration of the three-year term, either party can terminate with three months’ notice. Borrowings denominated in Euros under the faff cility bear interest at the three-month Euro Interbar nk Offff eff red Rate (“EURIBOR”) plus 0.50% and USD borrowings bear interest at two-month LIBOR plus 0.50%, with borrowings under either denomination carryirr ng a minimum interest rate of 0.20%. As of December 31, 2022 and 2021, Aptiv had no amounts outstanding under the European accounts receivabla e faff ctoring faff cility. No amounts were drawn under this faff cility during the year ended December 31, 2022. FiFF nance leases and othett s of December 31, 2022 and 2021, appr of other debt primarily issued by certain non-U.S. subsidiaries and fiff nance lease obligations were outstanding. oximately $38 million and $14 million, respectively, r—Arr a Letter of credit facff ilities—In addition to the letters of credit issued under the Credit Agreement, Aptiv had appr a oximately $3 million and $3 million outstanding through other letter of credit faff cilities as of December 31, 2022 and 2021, respectively, primarily to support arrangements and other obligations at certain of its subsidiaries. ConCC trtt actual ComCC mitii mtt entstt The folff lowing tabla e summarizes our expected cash outflff ows resulting frff om fiff nancial contracts and commitments as of December 31, 2022, with amounts denominated in forff eign currencies translated using forff eign currency rates as of December 31, 2022. We have not included inforff mation on our recurring purchases of materials forff ing operations. These amounts are generally consistent frff om year to year, closely reflff ect our levels of production, and are not long-term in naturt e. The amounts below exclude the gross liabia lity forff expect a signififf cant payment related to these obligations to be made within the next twelve months. We are not abla e to provide a reasonabla y reliabla e estimate of the timing of futff urt e payments relating to the non-current portion of obligations associated with uncertain tax positions. For more inforff mation, refeff r to Note 14. Income Taxes to the audited consolidated fiff nancial statements included herein. uncertain tax positions of $224 million as of December 31, 2022. We do not use in our manufaff cturt Payments due by Period Total 2023 2024 & 2025 2026 & 2027 Thereaftff er 6,581 $ 31 $ 1,501 $ 264 $ 4,785 (in millions) Debt and fiff nance lease obligations (excluding interest)......... $ Estimated interest costs related to debt and fiff nance lease obligations .......................................................................... Operating lease obligations .................................................... Contractuat Other contractuat l commitments forff capia tal expenditurt es................ l purchase commitments, including 3,868 514 253 inforff mation technology....................................................... Total................................................................................... $ 421 11,637 $ 217 121 253 259 881 407 173 — 147 2,228 $ $ 344 114 — 10 732 $ 2,900 106 — 5 7,796 ff In addition to the obligations discussed above d. We have minimum fundi , certain of our non-U.S. subsidiaries sponsor defiff ned benefiff t pension plans, ng requirements with respect to certain of our pension obligations and may some of which are funde periodically elect to make discretionaryrr contributions to the plans in support of risk management initiatives. We will also have payments due with respect to our other postretirement benefiff t obligations. We do not fund obligations and payments are made as costs are incurred by covered retirees. Refeff r to Note 12. Pension Benefiff ts to the audited consolidated fiff nancial statements included herein forff and expected distributions to participants in futff urt e periods. additional detail regarding our expected contributions to our pension plans our other postretirement benefiff t a ff ff CapiCC tii altt ExpeEE nditii ures Supplier selection in the automotive industryrr is generally fiff nalized several years prior to the start of production of the vehicle. Thereforff e, current capia tal expenditurt es are based on customer commitments entered into previously, generally several years ago when the customer contract was awarded. As of December 31, 2022, we had appr outstanding cancellabla e and non-cancellabla e capia tal commitments. Capia tal expenditurt es by operating segment and geographi c region forff the periods presented were: oximately $253 million in a a 54 Year Ended December 31, 2022 2021 (in millions) 2020 Signal and Power Solutions............................................................................. $ Advanced Safeff ty and User Experience ........................................................... Other (1) .......................................................................................................... Total capia tal expenditurt es ........................................................................... $ North America................................................................................................. $ Europe, Middle East & Afrff ica......................................................................... Asia Pacififf c...................................................................................................... South America................................................................................................. $ $ $ 573 196 75 844 312 271 249 12 $ $ $ 434 124 53 611 218 233 149 11 Total capia tal expenditurt es ........................................................................... $ 844 $ 611 $ 355 173 56 584 235 212 129 8 584 (1) Other includes capia tal expenditurt es attributabla e to corpor rr ate administrative and support func ff tions, including corpor rr ate headquarters and certain technical centers. sw CasCC h FlFF owll Intra-month cash flff ow cycles varyrr by region, but in general we are users of cash through the fiff rst half of a typical month and we generate cash during the latter half of a typical month. Due to this cycle of cash flff ows, we may utilize short-term fiff nancing, including our Revolving Credit Facility and European accounts receivabla e faff ctoring faff cility, to manage our intra- month working capia tal needs. Our cash balance typically peaks at month end. We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan strucr turt es and other distributions and advances to provide the funds pooling arrangement to consolidate and manage our global cash balances, which enabla es us to effff iff ciently move cash into and out of a number of the countries in which we operate. to meet our global liquidity needs. We utilize a global cash necessaryrr ff OpeO rating activities—Net cash provided by operating activities totaled $1,263 million and $1,222 million forff the years ended December 31, 2022 and 2021, respectively. Cash flff ows provided by operating activities forff 2022 consisted primarily of net earnings of $590 million, increased by $792 million forff depreciation, amortization and pension costs, partially offff sff et by $409 million related to changes in operating assets and liabia lities, net of the year ended December 31, 2021 restrucr consisted primarily of net earnings of $609 million, increased by $938 million forff amortization, pension costs and extinguishment of debt, partially offff sff et by $567 million related to changes in operating assets and liabia lities, net of restrucr ing and pension contributions. Cash flff ows provided by operating activities forff ing and pension contributions. non-cash charges forff non-cash charges forff depreciation, the year ended December 31, turt turt InvII esting activities—Net cash used in investing activities totaled $5,182 million and $729 million forff December 31, 2022 and 2021, respectively. The increase in usage is primarily attributabla e to $4,310 million paid forff acquisitions and other transactions, principally Wind River and Intercabla e Automotive, as compared to $130 million during the year ended December 31, 2021. Additionally, capia tal expenditurt es increased $233 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021. the years ended business FiFF nancing activities—Net cash provided by fiff nancing activities totaled $2,359 million forff the year ended December 31, the year ended December 31, 2021. Cash flff ows provided the year ended December 31, 2022 primarily included net proceeds of $2,472 million received frff om 2022 and net cash used in fiff nancing activities totaled $191 million forff by fiff nancing activities forff the issuance of the 2022 Senior Notes, partially offff sff et by $63 million of MCPS dividend payments. Cash flff ows used in fiff nancing activities forff the 2021 Senior Notes, which were utilized to redeem the $700 million 2014 Senior Notes and $650 million 4.25% Senior Notes, and $63 million of MCPS dividend payments. the year ended December 31, 2021 included proceeds of $1,450 million received frff om the issuance of Offff -ff Balance Sheet Arrangements We do not engage in any offff -ff balance sheet fiff nancial arrangements that have or are reasonabla y likely to have a material current or futff urt e effff eff ct on our fiff nancial condition, changes in fiff nancial condition, revenues or expenses, results of operations, liquidity, capia tal expenditurt es or capia tal resources. 55 Signififf cant Accounting Policies and Critical Accounting Estimates Our signififf cant accounting policies are described in Note 2. Signififf cant Accounting Policies to the audited consolidated fiff nancial statements included herein. Certain of our accounting policies require the appl calculating fiff nancial estimates. By their naturt e, these judgments are management in selecting the appr opriate assumptions forff subject to an inherent degree of uncertainty, which is furff ther exacerbar and severity of the impacts of the ongoing global supply chain disrupt judgments are based on our historical experience, terms of existing contracts, our evaluation of trends in the industry,rr inforff mation provided by our customers and inforff mation availabla e frff om other outside sources, as appr ted by, among other faff ctors, the unknown futff urt e duration ions and the conflff ict between Ukraine and RusRR sia. These ication of signififf cant judgment by opriate. a a a r We consider an accounting estimate to be critical if:ff • • It requires us to make assumptions about a matters that were uncertain at the time we were making the estimate, and Changes in the estimate or diffff eff rent estimates that we could have selected would have had a material impact on our fiff nancial condition or results of operations. Acquisii itii itt ons and Othtt er TrTT ansactitt ons In accordance with the accounting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codififf cation (“ASC”) Topic 805, Business ComCC binations, we allocate the purchase price of an acquired business to its identififf abla e assets and liabia lities based on estimated faff ir values. The excess of the purchase price over the amount allocated to the assets and liabia lities, if any, is recorded as goodwill. The process to estimate faff ir value described herein is generally appl icabla e to other transactions, including the faff ir value estimates used in establa ishing the identififf abla e assets, liabia lities and a goodwill recorded upon forff mation of Motional, Aptiv’s autonomous driving joint venturt e, and the resulting equity method investment recorded on Aptiv’s balance sheet. An acquisition may include a contingent consideration component. The faff ir value of the contingent consideration is estimated as of the date of the acquisition and is recorded as part of the purchase price. This estimate is updated in futff urt e periods and any changes in the estimate, which are not considered an adjustment to the purchase price, are recorded in our consolidated statements of operations. a An acquisition may also include a redeemabla e noncontrolling interest component. The faff ir value of the noncontrolling interest is recorded to temporaryrr equity in the consolidated balance sheet and is estimated as of the date of acquisition using a Monte Carlo simulation appr volatility rate and risk frff ee rate. The redeemabla e noncontrolling interest is then adjusted each reporting period forff (loss) attributabla e to the noncontrolling interest, and forff redeemabla e noncontrolling interest at the higher of its redemption value, assuming it was redeemabla e at the reporting date, or its carryirr ng value. Any measurement period adjustments are recorded to retained earnings, with a corresponding increase or reduction to net income attributabla e to Aptiv. oach, which includes several assumptions including estimated futff urt e profiff tabia lity, expected any measurement period adjustments necessaryrr to record the the income We use all availabla e inforff mation to estimate faff ir values. We typically engage outside appr a aisal fiff rms to assist in the faff ir value determination of identififf abla e intangible assets and any other signififf cant assets or liabia lities. We adjust the preliminaryrr purchase price allocation, as necessary,rr regarding asset valuations and liabia lities assumed. up to one year aftff er the acquisition closing date as we obtain more inforff mation Our purchase price allocation methodology contains uncertainties because it requires management to make assumptions a y judgment to estimate the faff ir value of acquired assets and liabia lities. Management estimates the faff ir value of assets and to appl and liabia lities based upon quoted market prices, the carryirr ng value of the acquired assets and widely accepted valuation techniques, including discounted cash flff ows and market multiple analyses. Unanticipated events or circumstances may occur which could affff eff ct the accuracy of our faff ir value estimates, including assumptions regarding industryrr economic faff ctors and business strategies. Other estimates used in determining faff ir value include, but are not limited to, futff urt e cash flff ows or income related to opriate discount rates. Our estimates of intangibles, market rate assumptions, actuat faff ir value are based upon assumptions believed to be reasonabla e, but that are inherently uncertain, and thereforff e, may not be realized. Accordingly, there can be no assurance that the estimates, assumptions, and values reflff ected in the valuations will be realized, and actuat l results could varyrr materially. benefiff t plans and appr rial assumptions forff a WarWW rantytt Oblill gat i itt ons and PrPP oduct Recallll CosCC tstt Estimating warranty obligations requires us to forff ecast the resolution of existing claims and expected futff urt e claims on products sold. We base our estimate on historical trends of units sold and payment amounts, combined with our current understanding of the statust 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 forff of existing claims and discussions with our customers. The key faff ctors which impact our estimates product warranties. These estimates are re-evaluated on an ongoing basis. 56 Actuat l warranty obligations could diffff eff r frff om the amounts estimated requiring adjustments to existing reserves in futff urt e periods. Due to the uncertainty and potential volatility of the faff ctors contributing to developing these estimates, changes in our assumptions could materially affff eff ct our results of operations. In addition to our ordinaryrr warranty provisions with customers, we are also at risk forff product recall costs, which are costs incurred when a customer or the Company recalls a product through a forff mal campaign soliciting returt n of that product. In addition, the National Highway Traffff iff c Safeff ty Administration (“NHTSA”) has the authority, under certain circumstances, to require recalls to remedy safeff ty concerns. Product recall costs typically include the cost of the product being replaced as well as the customer’s cost of the recall, including labor costs related to product recalls as part of our warranty accruarr Actuat possible that changes in our assumptions or futff urt e product recall issues could materially affff eff ct our fiff nancial position, results of operations or cash flff ows. to remove and replace the recalled part. The Company accruer l at the time an obligation becomes probabla e and can be reasonabla y estimated. l costs incurred could diffff eff r frff om the amounts estimated, requiring adjustments to these reserves in futff urt e periods. It is s forff a e Legal and Othtt er ConCC titt nii gencies We are involved frff om time to time in various legal proceedings and claims, including commercial or contractuat product liabia lity claims, government investigations, product warranties and environmental and other matters, that arise in the normal course of business. We routinely assess the likelihood of any adverse judgments or outcomes related to these matters, as well as ranges of probabla e losses, by consulting with internal personnel involved with such matters as well as with outside legal those matters where we believe that the likelihood of a estimated losses forff counsel handling such matters. We have accruerr d forff loss has occurred, is probabla e and the amount of the loss is reasonabla y estimabla e. 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 futff urt e due to new developments or changes in circumstances. The inherent uncertainty related to the outcome of these matters can result in amounts materially diffff eff rent frff om any provisions made with respect to their resolution. Refeff r to Note 13. additional inforff mation. Commitments and Contingencies to the audited consolidated fiff nancial statements included herein forff l disputes, Restrtt ucturinii g Accruar ls have been recorded in conjunction with our restrucr ls include estimates primarily related to employee termination costs, contract termination costs and other related exit costs in conjunction with workforff ce reduction and programs related to the rationalization of manufaff cturt these estimates. These accruar recognized when identififf ed. ls are reviewed on a quarterly basis and changes to restrucrr ing and engineering processes. Actuat l costs may varyrr a ing actions. These accruar ing actions are appr opriately turt turt frff om PePP nsions ries and asset managers. Refeff r to Note 12. Pension Benefiff ts to the audited rial estimates and related actuat rial methods to calculate our obligation and expense. We are required to rial assumptions, which are determined based on current market conditions, historical inforff mation and We use actuat select certain actuat consultation with and input frff om our actuat consolidated fiff nancial statements included herein forff (1) discount rates; (2) asset returt n assumptions; and (3) actuat rial assumptions on an annual basis and make determined as of the current year measurement date. We review our actuat modififf cations to the assumptions based on current rates and trends when appr a the effff eff cts of changes in actuat actuat the average futff urt e service period of the employees in that plan. rial assumptions and plan provisions are recognized in other comprehensive income. Cumulative a particular plan are amortized over rial gains and losses in excess of 10% of the projected benefiff t obligation (“PBO”) forff additional details. The key faff ctors which impact our estimates are rial assumptions such as retirement age and mortality which are opriate. Experience gains and losses, as well as The principal assumptions used to determine the pension expense and the actuat rial value of the projected benefiff t obligation forff the U.S. and non-U.S. pension plans were: Assumptions used to determine benefiff t obligations at December 31: Weighted-average discount rate .................................................................................. 5.20 % 1.90 % 5.95 % 3.09 % Weighted-average rate of increase in compensation levels ......................................... N/A N/A 2.82 % 2.47 % Pension Benefiff ts U.S. Plans Non-U.S. Plans 2022 2021 2022 2021 57 Assumptions used to determine net expense forff years ended December 31: Pension Benefiff ts U.S. Plans Non-U.S. 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...... Weighted-average expected long-term rate of returt n on plan assets ..................................................................................... N/A N/A N/A N/A N/A 2.47 % 3.64 % 3.69 % N/A 4.46 % 4.29 % 4.68 % We select discount rates by analyzing the results of matching each plan’s projected benefiff t obligations with a portfolff io of high-quality fiff xed income investments rated AA or higher by Standard and Poor’s or Moody’s. Aptiv does not have any U.S. pension assets; thereforff e no U.S. asset rate of returt n calculation was necessary.rr The primaryrr d non-U.S. plans are in the U.K. and Mexico. For the determination of 2022 expense, we assumed a long-term expected the U.K. and Mexico, respectively. We evaluated input frff om local funde ff asset rate of returt n of appr actuat term rate of returt n assumptions. The assumptions forff rates. To determine the expected returt n on plan assets, the market-related value of our plan assets is actuat the U.K. and Mexico are primarily conservative long-term, prospective ries and asset managers, including consideration of recent fund perforff mance and historical returt ns, in developing the long- oximately 3.75% and 7.50% forff l faff ir value. a ff Our pension expense forff 2023 is determined at the December 31, 2022 measurement date. For purpos rr es of analysis, the folff lowing tabla e highlights the sensitivity of our pension obligations and expense attributabla e 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 ....................................................................... 25 bp decrease in long-term expected returt n on assets .................................. 25 bp increase in long-term expected returt n on assets................................... ‘- $1 million ‘+ $1 million ‘- $1 million ‘- $15 million — — a The above sensitivities reflff ect the effff eff ct of changing one assumption at a time. It should be noted that economic faff ctors and conditions oftff en affff eff ct multiple assumptions simultaneously and the effff eff cts of changes in key assumptions are not necessarily linear. The above programs. sensitivities also assume no changes to the design of the pension plans and no maja or restrucrr a turt ing Based on inforff mation provided by our actuat ries and asset managers, we believe that the assumptions used are reasonabla e; however, changes in these assumptions could impact our fiff nancial position, results of operations or cash flff ows. Refeff r to Note 12. Pension Benefiff ts to the audited consolidated fiff nancial statements included herein forff additional inforff mation. ValVV uatitt on of Long-L- ived Assetstt ,s InII tantt gibli ell Assetstt and InII vestmtt entstt inii AfA fff iff lii ill atett s and ExpeEE ctett d UsUU efe uff l Lives We monitor our long-lived and defiff nite-lived assets, including our investments in affff iff liates, the most signififf cant of which impairment indicators on an ongoing basis based on projections of anticipated ing sites when events and circumstances is our investment in Motional AD LLC, forff futff urt e cash flff ows, including futff urt e profiff tabia lity assessments of various manufaff cturt warrant such a review. If impairment indicators exist, we perforff m the required impairment analysis by comparing the undiscounted cash flff ows expected to be generated frff om the long-lived assets to the related net book values. If the net book value exceeds the undiscounted cash flff ows, an impairment loss is measured and recognized. An impairment loss is measured as the diffff eff rence between the net book value and the estimated faff ir value of the long-lived assets. Even if an impairment charge is not required, a reassessment of the usefulff opriate based on our assessment of the recoverabia lity of these assets. We estimate cash flff ows and faff ir value using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments and review of appr aisals. The key faff ctors which impact our estimates are (1) futff urt e production estimates; (2) customer prefeff rences and a ing and material cost estimates; and (5) product lifeff decisions; (3) product pricing; (4) manufaff cturt l results frff om the estimates could result in faff ir values diffff eff rent frff om the estimated faff ir values, which could diffff eff rences in actuat materially impact our futff urt e results of operations and fiff nancial condition. We believe that the projections of anticipated futff urt e cash flff ows and faff ir value assumptions are reasonabla e; however, changes in assumptions underlying these estimates could affff eff ct our valuations. lives over which depreciation or amortization is being recognized may be appr / business retention. Any a 58 G Goodw ilii lll and InII tantt gibli ell Assetstt We periodically review goodwill forff impairment indicators. We review goodwill forff impairment annually in the four ff th quarter or more frff equently if events or changes in circumstances indicate that goodwill might be impaired. The Company perforff ms the goodwill impairment review at the reporting unit level. We perforff m a qualitative assessment (step 0) of whether it is more likely than not that a reporting unit’s faff ir value is less than its carryirr ng amount. If not, no furff ther goodwill impairment testing is perforff med. If so, we perforff m the step 1 test discussed hereaftff er. Our qualitative assessment involves signififf cant estimates, assumptions, and judgments, including, but not limited to, macroeconomic conditions, industryrr and market conditions, fiff nancial perforff mance of the Company, reporting unit specififf c events and changes in the Company’s share price. If the faff ir value of the reporting unit is greater than its carryirr ng amount (step 1), goodwill is not considered to be a appr impaired. We estimate the faff ir value of our reporting units using a combination of a futff urt e discounted cash flff ow valuation model and, if possible, a comparabla e market transaction model. Estimating faff ir value requires the Company to make judgments about opriate discount rates, growth rates, relevant comparabla e company earnings multiples and the amount and timing of a expected futff urt e cash flff ows. If the faff ir value of the reporting unit is less than its carryirr ng amount, an entity must record an impairment charge based on the amount by which a reporting unit’s carryirr ng value exceeds its estimated faff ir value, limited to the amount of goodwill allocated to that reporting unit. We review indefiff nite-lived intangible assets forff impairment annually or more frff equently if events or changes in circumstances indicate the assets might be impaired. Similar to the goodwill assessment described above , the Company fiff rst perforff ms a qualitative assessment of whether it is more likely than not that an indefiff nite-lived intangible asset is impaired. If necessary,rr upon its forff ecasted cash flff ows, to its carryirr ng value. Other intangible assets with defiff nite lives are amortized over their usefulff lives and are subject to impairment testing only if events or circumstances indicate that the asset might be impaired, as . described above the Company then perforff ms a quantitative impairment test by comparing the estimated faff ir value of the asset, based a a s InII come TaxeTT Defeff rred tax assets and liabia lities reflff ect temporaryrr diffff eff rences between the amount of assets and liabia lities forff fiff nancial r es. Such amounts are adjusted, as appr and tax reporting purpos when the temporaryrr diffff eff rences reverse. A valuation allowance is recorded to reduce our defeff rred tax assets to the amount that is more likely than not to be realized. Changes in tax laws or accounting standards and methods may affff eff ct recorded defeff rred taxes in futff urt e periods. opriate, to reflff ect changes in tax rates expected to be in effff eff ct a When establa ishing a valuation allowance, we consider futff urt e sources of taxabla e income such as “futff urt e reversals of existing taxabla e temporaryrr diffff eff rences, futff urt e taxabla e income exclusive of reversing temporaryrr diffff eff rences and carryfrr orff wards” and “tax planning strategies.” A tax planning strategy is defiff ned as “an action that: is prude ordinarily might not take, but would take to prevent an operating loss or tax credit carryfrr orff ward frff om expiring unused; and would result in realization of defeff rred tax assets.” In the event we determine it is more likely than not that the defeff rred tax assets will not be realized in the futff urt e, the valuation adjustment to the defeff rred tax assets will be charged to earnings in the period in which we make such a determination. The valuation of defeff rred tax assets requires judgment and accounting forff defeff rred tax effff eff ct of events that have been recorded in the fiff nancial statements or in tax returt ns and our futff urt e projected profiff tabia lity. Changes in our estimates, due to unforff eseen events or otherwise, could have a material impact on our fiff nancial condition and results of operations. nt and feff asible; an enterprr the ise rr l We calculate our current and defeff rred tax provision based on estimates and assumptions that could diffff eff r frff om the actuat results reflff ected in income tax returt ns fiff led in subsequent years. Adjustments based on fiff led returt ns are recorded when identififf ed. The amount of income taxes we pay is subject to ongoing audits by feff deral, state and forff eign tax authorities. Our estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, faff cts, and circumstances existing at that time. We use a more-likely-than-not threshold forff measurement of tax positions taken or expected to be taken in a tax returt n. We record a liabia lity forff benefiff t recognized and measured and tax position taken or expected to be taken on our tax returt n. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made. We report tax-related interest and penalties as a component of income tax expense. We do not believe there is a reasonabla e 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 diffff eff rent frff om the current estimate. Refeff r to Note 14. Income Taxes to the audited consolidated fiff nancial statements included herein forff fiff nancial statement recognition and the diffff eff rence between the additional inforff mation. 59 Recently Issued Accounting Pronouncements Refeff r to Note 2. Signififf cant Accounting Policies to the audited consolidated fiff nancial statements included herein forff a complete description of recent accounting standards which we have not yet been required to implement which may be appl a December 31, 2022 are described. icabla e to our operations. Additionally, the signififf cant accounting standards that have been adopted during the year ended ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks frff om changes in currency exchange rates and certain commodity prices. In order to manage these risks, we operate a centralized risk management program that consists of entering into a variety of derivative tions in currency exchange rates and commodity prices. We do not contracts with the intent of mitigating our risk to flff uctuat enter into derivative transactions forff speculative or trading purpos es. r A discussion of our accounting policies forff derivative instrumrr to the audited consolidated fiff nancial statements included herein and furff Hedging Activities to the audited consolidated fiff nancial statements included herein. We maintain risk management control systems to monitor exchange and commodity risks and related hedge positions. Positions are monitored using a variety of analytical techniques including market value and sensitivity analysis. The folff lowing analyses are based on sensitivity tests, which assume instantaneous, parallel shiftff s in currency exchange rates and commodity prices. For options and instrumr non-linear returt ns, appr opriate models are utilized to determine the impact of shiftff s in rates and prices. a ents with ents is included in Note 2. Signififf cant Accounting Policies ther disclosure is provided in Note 17. Derivatives and We have currency exposures related to buying, selling and fiff nancing in currencies other than the local currencies in which we operate. Historically, we have reduced our exposure through fiff nancial instrumr our exposures, which are opposite to the underlying transactions. We also faff ce an inherent business risk of exposure to commodity prices risks, and have historically offff sff et our exposure, particularly to changes in the price of various non-feff rrous metals used in our manufaff cturt We continue to manage our exposures to changes in currency rates and commodity prices using these derivative instrumrr ing operations, through fiff xed price purchase agreements, commodity swapsa ents (hedges) that provide offff sff ets or limits to and option contracts. ents. CuCC rrencyc ExcEE hange Ratett Risii k Currency exposures may impact futff urt e earnings and/or operating cash flff ows. We have currency exposures related to ff buying, selling and fiff nancing in currencies other than the local func exposure”). We also have currency exposures related to the translation of the fiff nancial statements of our forff eign subsidiaries that use the local currency as their func exposure”). The impact of translational exposure is recorded within currency translation adjustment in the consolidated statements of comprehensive income. During the year ended December 31, 2022, the forff eign currency translation adjustment loss of $198 million was primarily due to the impact of a strengthening U.S. dollar, which increased appr relation to the Euro and 8% in relation to the Chinese Yuan Renminbi frff om December 31, 2021. tional currency into U.S. dollars, the Company’s reporting currency (“translational tional currencies in which we operate (“transactional oximately 5% in a ff As described in Note 17. Derivatives and Hedging Activities to the audited consolidated fiff nancial 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 forff eign currency exposure of our investments in certain Euro-denominated subsidiaries. We have also entered into forff ward contracts designated as net investment hedges of the forff eign currency exposure of our investments in certain Chinese Yuan Renminbi-denominated subsidiaries. The effff eff ctive portion of the gains or losses on instrumr ents designated as net investment hedges are recognized within the cumulative translation adjustment component in the consolidated statements of comprehensive income to offff sff et changes in the value of the net investment in these forff eign currency-denominated operations. In some instances, we choose to reduce our transactional exposures through fiff nancial instrumrr ents (hedges) that provide a ents, including hedges and underlying transactions, with exposure to currency risk was offff sff ets or limits to our exposures. Currently, our most signififf cant hedged currency exposures relate to the Mexican Peso, Chinese Yuan Renminbi, Polish Zloty, Euro and Hungarian Forint. As of December 31, 2022 and 2021 the net faff ir value liabia lity of all fiff nancial instrumr oximately $446 million and $876 million, respectively. The potential change in faff ir value forff appr a frff om a hypothetical 10% adverse change in quoted currency exchange rates would be a gain of appr a loss of appr hypothetical 10% faff vorabla e change in quoted currency exchange rates would be a loss of appr of appr a value diffff eff rs frff om a 10% change in the net faff ir value liabia lity due to the existence of hedges. The model assumes a parallel shiftff in currency exchange rates; however, currency exchange rates rarely move in the same direction. The assumption that currency exchange rates change in a parallel faff shion may overstate the impact of changing currency exchange rates on assets and liabia lities denominated in currencies other than the U.S. dollar. oximately $34 million as of December 31, 2022 and 2021, respectively. The potential change in faff ir value frff om a oximately $6 million and a gain oximately $43 million as of December 31, 2022 and 2021, respectively. The impact of a 10% change in rates on faff ir oximately $17 million and a such fiff nancial instrumrr ents a 60 ComCC moditii ytt PrPP ice Risii k Commodity swapsa various non-feff rrous metals used in the manufaff cturt /average rate forff ward contracts are executed to offff sff et a portion of our exposure to the potential change ing of automotive components, primarily copper. The net in prices mainly forff faff ir value of our contracts was a liabia lity of $35 million and an asset of $34 million as of December 31, 2022 and 2021, respectively. If the price of the commodities that are being hedged by our commodity swapsa changed adversely or faff vorabla y by 10%, the faff ir value of our commodity swapsa /average rate forff ward contracts would decrease or increase by $37 million and $36 million as of December 31, 2022 and 2021, respectively. A 10% change in the net faff ir value asset diffff eff rs frff om a 10% change in rates on faff ir value due to the relative diffff eff rences between the underlying commodity prices and the prices in place in our commodity swapsa /average rate forff ward contracts. These amounts exclude the offff sff etting impact of the price risk inherent in the physical purchase of the underlying commodities. /average rate forff ward contracts InII tett rest Ratett Risii k a Our exposure to market risk associated with changes in interest rates relates primarily to our debt obligations. We do not tions in interest rates. As of December 31, oximately $309 million of flff oating rate debt, related to the Credit Agreement. The Credit Agreement carries use interest rate swapa or other derivative contracts to manage our exposure to flff uctuat 2022, we had appr 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 frff om the Company having met the sustainabia lity-linked targets forff the 2021 calendar year. 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 appl icabla e lenders), but payabla e no less than quarterly. We may elect to change the selected interest rate option over the term of the credit faff cilities in the Revolving Credit a accordance with the provisions of the Credit Agreement. The appl Facility and the Tranche A Term Loan may increase or decrease frff om time to time in increments of 0.01% to 0.25%, up to a maximum of 0.50% based on changes to our corpor achieve certain sustainabia lity-linked targets with respect to greenhouse gas emissions and workplace safeff ty, as furff in Note 11. Debt to the audited consolidated fiff nancial statements included herein. Accordingly, the interest rate will flff uctuat during the term of the Credit Agreement based on changes in the Alternate Base Rate, LIBOR, futff urt e changes in our corpor . credit ratings or the sustainabia lity-linked targets as discussed above a ate credit ratings or based on whether the Company achieves or faff ils to icabla e interest rates listed above forff a a rr r te ate ther discussed The tabla e below indicates interest rate sensitivity on interest expense to flff oating rate debt based on amounts outstanding as of December 31, 2022. Change in Rate Credit Agreement (impact to annual interest expense, in millions) 25 bps decrease ....................................................................................................................................... 25 bps increase ........................................................................................................................................ - $1 +$1 61 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARYR DATA Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Aptiv PLC Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Aptiv PLC (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, redeemabla e noncontrolling interest and shareholders’ equity and cash flff ows forff and fiff nancial statement schedule listed in the Index at Item 15(a)(2) (collectively refeff rred to as the “consolidated fiff nancial statements”). In our opinion, the consolidated fiff nancial statements present faff irly, in all material respects, the fiff nancial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flff ows forff each of the three years in the period ended December 31, 2022, in conforff mity with U.S. generally accepted accounting principles. each of the three years in the period ended December 31, 2022, and the related notes We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over fiff nancial reporting as of December 31, 2022, based on criteria establa ished in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 frff amework), and our report dated Februar ryrr 8, 2023 expressed an unqualififf ed opinion thereon. Basis forff Opinion These fiff nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s fiff nancial statements based on our audits. We are a public accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. feff deral securities laws and the appl icabla e rulr es and regulations of the Securities and Exchange Commission and the PCAOB. a We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m the audit to obtain reasonabla e assurance about error or frff aud. Our audits included perforff ming procedures to assess the risks of material misstatement of the fiff nancial statements, whether due to error or frff aud, and perforff ming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the fiff nancial statements. Our audits also included evaluating the accounting principles used and signififf cant estimates made by management, as well as evaluating the overall presentation of the fiff nancial statements. We believe that our audits provide a reasonabla e basis forff whether the fiff nancial statements are frff ee of material misstatement, whether due to our opinion. a Critical Audit Matters The critical audit matters communicated below are matters arising frff om the current period audit of the consolidated fiff nancial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the fiff nancial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated fiff nancial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ion Descripti of thett MatMM ter Uncertain Tax Positions As described in Notes 2 and 14, the Company establa ishes reserves forff positions that are taken on their income tax returt ns that might not be sustained upon examination by the taxing authorities. At oximately $224 million relating to uncertain tax positions. December 31, 2022, the Company has recorded appr uncertain tax positions forff a In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefiff t is measured on a cumulative probabia lity basis that is more likely than not to be realized upon the ultimate settlement. The Company identififf es its certain and uncertain tax positions and then evaluates the recognition and measurement steps to determine the amount that should be recognized. The Company then evaluates uncertain tax positions in subsequent periods forff or when effff eff ctive settlement or expiration of the statutt e of limitations occurs. recognition, de-recognition or re-measurement if changes have occurred, 62 Auditing the uncertain tax positions is complex because of the judgmental naturt e of the tax accruar ls and various other tax returt n positions that might not be sustained upon review by taxing authorities. The Company fiff les tax returt ns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world due to its complex global foot Ireland, Luxembourg, Mexico, South Korea, the U.K. and the U.S. int. Taxing jurisdictions signififf cant to Aptiv include Barbar dos, China, Germany, prt ff HowHH WeWW Addressed thett MatMM ter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effff eff ctiveness of controls related to the recognition, measurement and the evaluation of changes in uncertain tax positions. This included testing controls over management’s review of the tax positions, their evaluation of whether they met the measurement threshold and then recalculating the amounts recognized based upon a cumulative probabia lity assessment perforff med by management. t Our audit procedures to test the Company’s uncertain tax positions included, among others, involvement of our tax profeff ssionals, including transfeff r pricing profeff ssionals. This included evaluating tax opinions and third-party transfeff r pricing studi relevant tax authorities. We analyzed the Company’s assumptions and data used to determine the amount of tax benefiff t to recognize and tested the accuracy of the calculations. Our testing also included the evaluation of the ongoing positions and consideration of changes, the recording of penalties and interest and the ultimate settlement and payment of certain tax matters. es obtained by the Company and assessing the Company’s correspondence with the ion Descripti of thett MatMM ter price reductions, some of which are conditional upon achieving certain joint cost saving targets. In Revenue Recognition As described in Notes 2 and 24, Aptiv occasionally enters into pricing agreements with its customers that provide forff addition, frff om time to time, Aptiv makes payments to customers in conjunction with ongoing business. Revenue is recognized based on the agreed-upon price at the time of shipment, and sales incentives, allowances and certain customer payments are recognized as a reduction to revenue at the time of the commitment to provide such incentives or make these payments. Certain other customer payments or upfrff ont feff es are considered to be a cost to obtain a contract as they are directly attributabla e to a contract, are incremental and management expects the payments to be recoverabla e. In these cases, the customer payment is capia talized and amortized to revenue based on the transfeff r of goods and services to the customer forff which the upfrff ont payment relates. As of December 31, 2022, Aptiv has recorded $78 million related to these capia talized upfrff ont payments. Auditing the accounting forff allowances and customer payments, including the appr as well as costs to obtain a contract is judgmental due to the unique faff cts and circumstances involved in each revenue arrangement, as well as on-going commercial negotiations with customers. and completeness of arrangements containing elements such as sales incentives, opriate timing and presentation of adjustments to revenue a HowHH WeWW Addressed thett MatMM ter in Our Audit We obtained an understanding, evaluated the design and tested the operating effff eff ctiveness of controls over the review of customer contracts. This included testing controls over management’s process to identifyff and evaluate customer contracts that contain sales incentives, allowances and customer payments that impact revenue recognition. Our audit procedures to test the completeness of the Company’s identififf cation of such contracts included, among others, interviewing sales representatives who are responsible forff negotiations with customers and testing cash payments and credit memos issued to customers. To test management’s assessment of customer contracts containing sales incentives, allowances and customer payments, our procedures included, among others, selecting a sample of customer agreements, obtaining and reviewing source documentation, including master agreements, and other documents that were part of the agreement, and evaluating the contract terms to determine the appr opriateness of the accounting treatment. a 63 ion Descripti of thett MatMM ter Acquisition of Wind River - Valuation of Intangible Assets As described in Note 20, Aptiv completed the acquisition of Wind River Systems, Inc. (“Wind River”) on as December 23, 2022, forff a business combination and, as such, the Company measured the assets acquired and liabia lities assumed at their acquisition-date faff ir values, including the estimated faff ir values of the technology-related and customer-based intangible assets of $750 million and $630 million, respectively. The estimated faff ir value of these assets was based on third-party valuations and management’s estimates, generally utilizing income and market appr oximately $3.5 billion. The acquisition was accounted forff total consideration of appr a a oaches. Auditing the Company's valuation of technology-related and customer-based intangible assets was complex and required signififf cant auditor judgment due to the high degree of subjectivity in evaluating certain assumptions required to estimate the faff ir value of these intangible assets. The faff ir value measurement was sensitive to underlying assumptions including discount rates, and management’s estimate of projected revenue growth rates and profiff t margins. These assumptions relate to the futff urt e perforff mance of the acquired business, are forff ward- looking and could be affff eff cted by futff urt e economic and market conditions. HowHH WeWW Addressed thett MatMM ter in Our Audit We obtained an understanding, evaluated the design and tested the operating effff eff ctiveness of controls over the valuation of the technology-related and customer-based intangible assets. This included testing controls over management’s review of the signififf cant assumptions and other inputs used in the valuation of these intangible assets, and review of the valuation model. Our audit procedures to test the estimated faff ir value of the acquired technology-related and customer-based intangible assets included, among others, evaluating the Company's use of valuation methodologies, evaluating the prospective fiff nancial inforff mation and testing the completeness and accuracy of the underlying data supporting the signififf cant assumptions and estimates. We involved our valuation specialists to review the valuation model and assist in testing the signififf cant assumptions used to value the technology-related and customer-based intangible assets. Our testing also included comparing signififf cant management assumptions to current industryrr and market trends, historical results of the acquired business and to other relevant faff ctors. We also perforff med sensitivity analyses of the signififf cant assumptions to evaluate the change in the faff ir value resulting frff om changes in the assumptions. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2006 Detroit, Michigan ryrr 8, 2023 Februar 64 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Aptiv PLC Opinion on Internal Control Over Financial Reporting We have audited Aptiv PLC’s internal control over fiff nancial reporting as of December 31, 2022, based on criteria establa ished in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 frff amework) (the COSO criteria). In our opinion, Aptiv PLC (the Company) maintained, in all material respects, effff eff ctive internal control over fiff nancial reporting as of December 31, 2022, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effff eff ctiveness of internal control over fiff nancial reporting did not include the internal controls of Wind River Systems, Inc. or Intercabla e Automotive Solutions S.r.l, which are included in the 2022 consolidated fiff nancial statements of the Company and constitutt ed 23% of total assets as of December 31, 2022 and less than 1% of net sales and net income forff include an evaluation of the internal control over fiff nancial reporting of Wind River Systems, Inc. or Intercabla e Automotive Solutions S.r.l. the year then ended. Our audit of internal control over fiff nancial reporting of the Company also did not We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flff ows forff ended December 31, 2022, and the related notes and fiff nancial statement schedule and our report dated Februarr expressed an unqualififf ed opinion thereon. each of the three years in the period ryrr 8, 2023 Basis forff Opinion The Company’s management is responsible forff maintaining effff eff ctive internal control over fiff nancial reporting and forff assessment of the effff eff ctiveness of internal control over fiff nancial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over fiff nancial reporting based on our audit. We are a public accounting fiff rm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. feff deral securities laws and the appl regulations of the Securities and Exchange Commission and the PCAOB. icabla e rulr es and its a We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m the audit to obtain reasonabla e assurance about material respects. whether effff eff ctive internal control over fiff nancial reporting was maintained in all a Our audit included obtaining an understanding of internal control over fiff nancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effff eff ctiveness of internal control based on the assessed risk, and perforff ming such other procedures as we considered necessaryrr reasonabla e basis forff in the circumstances. We believe that our audit provides a our opinion. Defiff nition and Limitations of Internal Control Over Financial Reporting A company’s internal control over fiff nancial reporting is a process designed to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff es in accordance with generally accepted accounting principles. A company’s internal control over fiff nancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonabla e detail, accurately and faff irly reflff ect the transactions and dispositions of the assets of the company; (2) provide reasonabla e assurance that transactions are recorded as necessaryrr preparation of fiff nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditurt es of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effff eff ct on the fiff nancial statements. external purpos r to permit 65 Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Detroit, Michigan ryrr 8, 2023 Februar 66 APTIV PLC CONSOLIDATED STATEMENTS OF OPERARR TIONS Year Ended December 31, 2022 2021 2020 (in millions, except per share amounts) Net sales ...................................................................................................................... $ 17,489 $ 15,618 $ 13,066 Operating expenses: Cost of sales ............................................................................................................ Selling, general and administrative......................................................................... Amortization ........................................................................................................... Restrucrr turt ing (Note 10) .......................................................................................... Gain on autonomous driving joint venturt e (Note 20)............................................. Total operating expenses ............................................................................................. Operating income ........................................................................................................ Interest expense....................................................................................................... Other expense, net (Note 19) .................................................................................. Income beforff e income taxes and equity loss............................................................... Income tax expense................................................................................................. Income beforff e equity loss............................................................................................ Equity loss, net of tax.............................................................................................. Net income .................................................................................................................. Net (loss) income attributabla e to noncontrolling interest ............................................ Net loss attributabla e to redeemaba le noncontrolling interest ........................................ Net income attributabla e to Aptiv ................................................................................. Mandatoryrr convertible prefeff rred share dividends (Note 15) ...................................... 14,854 1,138 149 85 — 16,226 1,263 (219) (54) 990 (121) 869 (279) 590 (3) (1) 594 (63) 13,182 1,075 148 24 — 14,429 1,189 (150) (129) 910 (101) 809 (200) 609 19 — 590 (63) 11,126 976 144 136 (1,434) 10,948 2,118 (164) — 1,954 (49) 1,905 (83) 1,822 18 — 1,804 (35) Net income attributabla e to ordinaryrr shareholders ....................................................... $ 531 $ 527 $ 1,769 Basic net income per share: Basic net income per share attributabla e to ordinaryrr shareholders .......................... $ 1.96 $ 1.95 $ Weighted average number of basic shares outstanding .......................................... 270.90 270.46 6.72 263.43 Diluted net income per share (Note 15): Diluted net income per share attributabla e to ordinaryrr shareholders ....................... $ Weighted average number of diluted shares outstanding ....................................... $ 1.96 271.18 $ 1.94 271.22 6.66 270.70 See notes to consolidated fiff nancial statements. 67 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME APTIV PLC Year Ended December 31, 2022 2021 2020 (in millions) Net income .................................................................................................................. $ 590 $ 609 $ 1,822 Other comprehensive (loss) income: Currency translation adjustments............................................................................ Net change in unrecognized gain (loss) on derivative instrumr ents, net of tax (Note 17)........................................................................................................ Employee benefiff t plans adjustment, net of tax (Note 12)....................................... Other comprehensive (loss) income ........................................................................... Comprehensive income ............................................................................................... Comprehensive (loss) income attributabla e to noncontrolling interest......................... Comprehensive income attributabla e to redeemabla e noncontrolling interest ............... (198) 24 59 (115) 475 (1) 1 (143) (57) 73 (127) 482 19 — 154 27 (5) 176 1,998 20 — Comprehensive income attributabla e to Aptiv.............................................................. $ 475 $ 463 $ 1,978 See notes to consolidated fiff nancial statements. 68 APTIV PLC CONSOLIDATED BALANCE SHEETS ASSETS Current assets: Cash and cash equivalents ............................................................................................................................... $ Accounts receivabla e, net of allowance forff accounts of $52 million and $37 million, respectively (Note 2)............................................................................................................................................................ Inventories (Note 3)......................................................................................................................................... Other current assets (Note 4) ........................................................................................................................... Total current assets .................................................................................................................................... doubtfulff Long-term assets: Property, net (Note 6) ...................................................................................................................................... Operating lease right-of-ff use assets (N(( ote 25).................................................................................................. Investments in affff iff liates (Note 5) .................................................................................................................... Intangible assets, net (Note 7) ......................................................................................................................... Goodwill (Note 7)............................................................................................................................................ Other long-term assets (Note 4)....................................................................................................................... Total long-term assets................................................................................................................................ Total assets ................................................................................................................................................ $ LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY Current liabia lities: Short-term debt (Note 11)................................................................................................................................ $ Accounts payabla e............................................................................................................................................. Accruerr d liabia lities (Note 8) ............................................................................................................................. Total current liabia lities............................................................................................................................... Long-term liabia lities: Long-term debt (Note 11)................................................................................................................................ Pension benefiff t obligations (Note 12) ............................................................................................................. Long-term operating lease liabia lities (N(( ote 25)............................................................................................... Other long-term liabia lities (N(( ote 8) ................................................................................................................. Total long-term liabia lities .......................................................................................................................... Total liabia lities........................................................................................................................................... Commitments and contingencies (Note 13) Redeemabla e noncontrolling interest (N(( ote 2)....................................................................................................... Shareholders’ equity: Prefeff rred shares, $0.01 par value per share, 50,000,000 shares authorized; 11,500,000 shares of 5.50% Mandatoryr Convertible Prefeff rred Shares, Series A, issued and outstanding as of December 31, 2022 and 2021 ...................................................................................................................................................... Ordinaryr shares, $0.01 par value per share, 1,200,000,000 shares authorized, 270,949,579 and 270,514,140 issued and outstanding as of December 31, 2022 and 2021, respectively.............................. Additional paid-in-capia tal................................................................................................................................ Retained earnings ............................................................................................................................................ Accumulated other comprehensive loss (N(( ote 16).......................................................................................... Total Aptiv shareholders’ equity ..................................................................................................................... Noncontrolling interest ......................................................................................................................................... Total shareholders’ equity ......................................................................................................................... Total liabia lities, redeemabla e noncontrolling interest and shareholders’ equity............................................... $ See notes to consolidated fiff nancial statements. December 31, 2022 2021 (in millions) 1,531 $ 3,139 $ $ 3,433 2,340 480 7,784 3,495 451 1,723 2,585 5,106 740 14,100 21,884 31 3,150 1,684 4,865 6,460 354 361 750 7,925 12,790 96 — 2,784 2,014 499 8,436 3,294 383 1,797 964 2,511 622 9,571 18,007 8 2,953 1,246 4,207 4,059 440 304 436 5,239 9,446 — — 3 3,989 5,608 (791) 8,809 189 8,998 21,884 $ 3 3,939 5,077 (672) 8,347 214 8,561 18,007 69 APTIV PLC CONSOLIDATED STATEMENTS OF CASH FLOWS 2022 Year Ended December 31, 2021 (in millions) 2020 Cash flff ows frff om operating activities: Net income ............................................................................................................................ $ Adjustments to reconcile net income to net cash provided by operating activities: 590 $ 609 $ 1,822 turt Depreciation .................................................................................................................... Amortization.................................................................................................................... Amortization of defeff rred debt issuance costs ................................................................. Restrucrr ing expense, net of cash paid .......................................................................... Defeff rred income taxes..................................................................................................... Pension and other postretirement benefiff t expenses......................................................... Loss frff om equity method investments, net of dividends received .................................. Loss on modififf cation of debt........................................................................................... Loss on extinguishment of debt ...................................................................................... Loss on sale of assets ...................................................................................................... Share-based compensation .............................................................................................. Gain on autonomous driving joint venturt e, net............................................................... Other charges related to Ukraine/RusRR sia conflff ict............................................................ Changes in operating assets and liabia lities: Accounts receivabla e, net ................................................................................................. Inventories....................................................................................................................... Other assets ..................................................................................................................... Accounts payabla e ............................................................................................................ Accruerr d and other long-term liabia lities........................................................................... Other, net......................................................................................................................... Pension contributions ............................................................................................................ Net cash provided by operating activities .................................................................................. Cash flff ows frff om investing activities: Capia tal expenditurt es.............................................................................................................. Proceeds frff om sale of property.............................................................................................. Cost of business acquisitions and other transactions, net of cash acquired .......................... Proceeds frff om sale of technology investments ..................................................................... Cost of technology investments ............................................................................................ Settlement of derivatives....................................................................................................... Net cash used in investing activities .......................................................................................... Cash flff ows frff om fiff nancing activities: Net repayments under other short-term debt agreements...................................................... Net repayments under other long-term debt agreements ...................................................... Repayment of senior notes .................................................................................................... Proceeds frff om issuance of senior notes, net of issuance costs.............................................. Fees related to modififf cation of debt agreements................................................................... Proceeds frff om the public offff eff ring of ordinaryrr shares, net of issuance costs ........................ Proceeds frff om the public offff eff ring of prefeff rred shares, net of issuance costs ....................... Contingent consideration payments ...................................................................................... Dividend payments of consolidated affff iff liates to minority shareholders ............................... Repurchase of ordinaryr shares .............................................................................................. Distribution of mandatoryr convertible prefeff rred share cash dividends ................................ Distribution of ordinaryrr share cash dividends....................................................................... Taxes withheld and paid on employees’ restricted share awards.......................................... Net cash provided by (used in) fiff nancing activities ................................................................... Effff eff ct of exchange rate flff uctuat tions on cash, cash equivalents and restricted cash................... (Decrease) increase in cash, cash equivalents and restricted cash ............................................. Cash, cash equivalents and restricted cash at beginning of the year.......................................... Cash, cash equivalents and restricted cash at end of the year .................................................... $ 613 149 9 18 (144) 30 284 — — 1 86 — 54 (497) (258) 66 137 142 7 (24) 1,263 (844) 4 (4,310) 3 (42) 7 (5,182) (1) (4) — 2,472 — — — — (9) — (63) — (36) 2,359 (24) (1,584) 3,139 1,555 $ 625 148 8 (56) (60) 39 206 1 126 — 87 — — 37 (710) 61 265 (110) (26) (28) 1,222 (611) 9 (130) 22 (2) (17) (729) (22) (8) (1,473) 1,450 (6) — — (24) — — (63) — (45) (191) (16) 286 2,853 3,139 $ 620 144 9 (15) (52) 38 92 4 — 3 60 (1,434) — (243) (8) 78 186 173 (31) (33) 1,413 (584) 10 (49) — (2) (1) (626) (372) (39) — — (18) 1,115 1,115 — (10) (57) (32) (56) (33) 1,613 24 2,424 429 2,853 70 Reconciliation of cash, cash equivalents and restricted cash and cash classififf ed as assets held forff sale: Cash, cash equivalents and restricted cash................................................................................. $ Cash classififf ed as assets held forff Total cash, cash equivalents and restricted cash ........................................................................ $ sale ........................................................................................ See notes to consolidated fiff nancial statements. December 31, 2022 2021 2020 (in millions) 3,139 $ — 3,139 $ $ $ 1,531 24 1,555 2,853 — 2,853 71 (cid:22)(cid:37)(cid:41)(cid:30)(cid:43) (cid:37)(cid:33)(cid:24) (cid:24)(cid:36)(cid:35)(cid:40)(cid:36)(cid:33)(cid:30)(cid:25)(cid:22)(cid:41)(cid:26)(cid:25) (cid:40)(cid:41)(cid:22)(cid:41)(cid:26)(cid:34)(cid:26)(cid:35)(cid:41)(cid:40) (cid:36)(cid:27) (cid:39)(cid:26)(cid:25)(cid:26)(cid:26)(cid:34)(cid:22)(cid:23)(cid:33)(cid:26) (cid:35)(cid:36)(cid:35)(cid:24)(cid:36)(cid:35)(cid:41)(cid:39)(cid:36)(cid:33)(cid:33)(cid:30)(cid:35)(cid:28) (cid:30)(cid:35)(cid:41)(cid:26)(cid:39)(cid:26)(cid:40)(cid:41) (cid:22)(cid:35)(cid:25) (cid:40)(cid:29)(cid:22)(cid:39)(cid:26)(cid:29)(cid:36)(cid:33)(cid:25)(cid:26)(cid:39)(cid:40)(cid:75) (cid:26)(cid:38)(cid:42)(cid:30)(cid:41)(cid:46) (cid:36)(cid:66)(cid:52)(cid:57)(cid:62)(cid:49)(cid:66)(cid:73) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:37)(cid:66)(cid:53)(cid:54)(cid:53)(cid:54)(cid:54) (cid:66)(cid:66)(cid:53)(cid:52) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:46)(cid:53)(cid:49)(cid:66) (cid:26)(cid:62)(cid:52)(cid:53)(cid:52) (cid:25)(cid:53)(cid:51)(cid:53)(cid:61)(cid:50)(cid:53)(cid:66) (cid:14)(cid:12)(cid:7) (cid:39)(cid:53)(cid:52)(cid:53)(cid:53)(cid:61)(cid:49)(cid:50)(cid:60)(cid:53) (cid:35)(cid:63)(cid:62)(cid:51)(cid:63)(cid:62)(cid:68)(cid:66)(cid:63)(cid:60)(cid:60)(cid:57)(cid:62)(cid:55) (cid:30)(cid:62)(cid:68)(cid:53)(cid:66)(cid:53)(cid:67)(cid:68) (cid:35)(cid:69)(cid:61)(cid:50)(cid:53)(cid:66) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:61)(cid:63)(cid:69)(cid:62)(cid:68) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:35)(cid:69)(cid:61)(cid:50)(cid:53)(cid:66) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:61)(cid:63)(cid:69)(cid:62)(cid:68) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:52)(cid:52)(cid:57)(cid:68)(cid:57)(cid:63)(cid:62)(cid:49)(cid:60) (cid:37)(cid:49)(cid:57)(cid:52) (cid:57)(cid:62) (cid:24)(cid:49)(cid:64)(cid:57)(cid:68)(cid:49)(cid:60) (cid:39)(cid:53)(cid:68)(cid:49)(cid:57)(cid:62)(cid:53)(cid:52) (cid:26)(cid:49)(cid:66)(cid:62)(cid:57)(cid:62)(cid:55)(cid:67) (cid:22)(cid:51)(cid:51)(cid:69)(cid:61)(cid:69)(cid:60)(cid:49)(cid:68)(cid:53)(cid:52) (cid:36)(cid:68)(cid:56)(cid:53)(cid:66) (cid:24)(cid:63)(cid:61)(cid:64)(cid:66)(cid:53)(cid:56)(cid:53)(cid:62)(cid:67)(cid:57)(cid:70)(cid:53) (cid:33)(cid:63)(cid:67)(cid:67) (cid:41)(cid:63)(cid:68)(cid:49)(cid:60) (cid:22)(cid:64)(cid:68)(cid:57)(cid:70) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:56)(cid:63)(cid:60)(cid:52)(cid:53)(cid:66)(cid:67)(cid:75) (cid:26)(cid:65)(cid:69)(cid:57)(cid:68)(cid:73) (cid:35)(cid:63)(cid:62)(cid:51)(cid:63)(cid:62)(cid:68)(cid:66)(cid:63)(cid:60)(cid:60)(cid:57)(cid:62)(cid:55) (cid:30)(cid:62)(cid:68)(cid:53)(cid:66)(cid:53)(cid:67)(cid:68) (cid:41)(cid:63)(cid:68)(cid:49)(cid:60) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:56)(cid:63)(cid:60)(cid:52)(cid:53)(cid:66)(cid:67)(cid:75) (cid:26)(cid:65)(cid:69)(cid:57)(cid:68)(cid:73) (cid:13)(cid:11)(cid:13)(cid:13) (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:31)(cid:49)(cid:62)(cid:69)(cid:49)(cid:66)(cid:73) (cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:13)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ Net income .......................................... Other comprehensive loss ................... Net loss attributaba le to noncontrolling interest............................................. Other comprehensive income attributaba le to noncontrolling interest............................................. Dividend payments of consolidated affff iff liates to minority shareholders .. Mandatoryrr convertible prefeff rred share cumulative dividends............. Taxes withheld on employees’ restricted share award vestings ....... Share-based compensation .................. Acquired redeemaba le noncontrolling interest (Note 20) ............................ (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:25)(cid:53)(cid:51)(cid:53)(cid:61)(cid:50)(cid:53)(cid:66) (cid:14)(cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:13)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ (cid:13)(cid:11)(cid:13)(cid:12) (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:31)(cid:49)(cid:62)(cid:69)(cid:49)(cid:66)(cid:73) (cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:12)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ Net income .......................................... Other comprehensive loss ................... Net income attributaba le to noncontrolling interest .................... Mandatoryr convertible prefeff rred share cumulative dividends............. Taxes withheld on employees’ restricted share award vestings ....... Share-based compensation .................. (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:25)(cid:53)(cid:51)(cid:53)(cid:61)(cid:50)(cid:53)(cid:66) (cid:14)(cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:12)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ — — — (1) 2 — — — — 95 96 — — — — — — — — $ 271 — — — — — — — — — 271 270 — — — — — 1 271 $ $ $ 3 — — — — — — — — — 3 3 — — — — — — 3 $ — $ — — $ 3,939 — — (cid:4)(cid:57)(cid:62) (cid:61)(cid:57)(cid:60)(cid:60)(cid:57)(cid:63)(cid:62)(cid:67)(cid:5) $ 5,077 594 — (672) $ — (119) $ 8,347 594 (119) — — — — — — — — — — (36) 86 $ $ — — $ — 3,989 — $ — — — — 3,897 — — — — — — — (63) — — — 5,608 4,550 590 — — (63) $ $ — — — — — — — — — (63) (36) 86 $ $ — (791) $ — 8,809 (545) $ — (127) — — 7,905 590 (127) — (63) — — — $ (45) 87 3,939 $ — — 5,077 $ — — (672) $ (45) 87 8,347 $ $ $ $ 12 — — — — — — — — — 12 12 — — — — — — 12 See notes to consolidated fiff nancial statements. 214 — — (3) 2 (24) — — — — 189 195 — — 19 — — — 214 $ $ $ $ 8,561 594 (119) (3) 2 (24) (63) (36) 86 — 8,998 8,100 590 (127) 19 (63) (45) 87 8,561 72 (cid:22)(cid:37)(cid:41)(cid:30)(cid:43) (cid:37)(cid:33)(cid:24) (cid:24)(cid:36)(cid:35)(cid:40)(cid:36)(cid:33)(cid:30)(cid:25)(cid:22)(cid:41)(cid:26)(cid:25) (cid:40)(cid:41)(cid:22)(cid:41)(cid:26)(cid:34)(cid:26)(cid:35)(cid:41)(cid:40) (cid:36)(cid:27) (cid:39)(cid:26)(cid:25)(cid:26)(cid:26)(cid:34)(cid:22)(cid:23)(cid:33)(cid:26) (cid:35)(cid:36)(cid:35)(cid:24)(cid:36)(cid:35)(cid:41)(cid:39)(cid:36)(cid:33)(cid:33)(cid:30)(cid:35)(cid:28) (cid:30)(cid:35)(cid:41)(cid:26)(cid:39)(cid:26)(cid:40)(cid:41) (cid:22)(cid:35)(cid:25) (cid:40)(cid:29)(cid:22)(cid:39)(cid:26)(cid:29)(cid:36)(cid:33)(cid:25)(cid:26)(cid:39)(cid:40)(cid:75) (cid:26)(cid:38)(cid:42)(cid:30)(cid:41)(cid:46) (cid:4)(cid:24)(cid:63)(cid:62)(cid:68)(cid:57)(cid:62)(cid:69)(cid:53)(cid:52)(cid:5) (cid:36)(cid:66)(cid:52)(cid:57)(cid:62)(cid:49)(cid:66)(cid:73) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:37)(cid:66)(cid:53)(cid:54)(cid:53)(cid:54)(cid:54) (cid:66)(cid:66)(cid:53)(cid:52) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:46)(cid:53)(cid:49)(cid:66) (cid:26)(cid:62)(cid:52)(cid:53)(cid:52) (cid:25)(cid:53)(cid:51)(cid:53)(cid:61)(cid:50)(cid:53)(cid:66) (cid:14)(cid:12)(cid:7) (cid:39)(cid:53)(cid:52)(cid:53)(cid:53)(cid:61)(cid:49)(cid:50)(cid:60)(cid:53) (cid:35)(cid:63)(cid:62)(cid:51)(cid:63)(cid:62)(cid:68)(cid:66)(cid:63)(cid:60)(cid:60)(cid:57)(cid:62)(cid:55) (cid:30)(cid:62)(cid:68)(cid:53)(cid:66)(cid:53)(cid:67)(cid:68) (cid:35)(cid:69)(cid:61)(cid:50)(cid:53)(cid:66) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:61)(cid:63)(cid:69)(cid:62)(cid:68) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:35)(cid:69)(cid:61)(cid:50)(cid:53)(cid:66) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:61)(cid:63)(cid:69)(cid:62)(cid:68) (cid:63)(cid:54) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:67) (cid:22)(cid:52)(cid:52)(cid:57)(cid:68)(cid:57)(cid:63)(cid:62)(cid:49)(cid:60) (cid:37)(cid:49)(cid:57)(cid:52) (cid:57)(cid:62) (cid:24)(cid:49)(cid:64)(cid:57)(cid:68)(cid:49)(cid:60) (cid:39)(cid:53)(cid:68)(cid:49)(cid:57)(cid:62)(cid:53)(cid:52) (cid:26)(cid:49)(cid:66)(cid:62)(cid:57)(cid:62)(cid:55)(cid:67) (cid:22)(cid:51)(cid:51)(cid:69)(cid:61)(cid:69)(cid:60)(cid:49)(cid:68)(cid:53)(cid:52) (cid:36)(cid:68)(cid:56)(cid:53)(cid:66) (cid:24)(cid:63)(cid:61)(cid:64)(cid:66)(cid:53)(cid:56)(cid:53)(cid:62)(cid:67)(cid:57)(cid:70)(cid:53) (cid:33)(cid:63)(cid:67)(cid:67) (cid:41)(cid:63)(cid:68)(cid:49)(cid:60) (cid:22)(cid:64)(cid:68)(cid:57)(cid:70) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:56)(cid:63)(cid:60)(cid:52)(cid:53)(cid:66)(cid:67)(cid:75) (cid:26)(cid:65)(cid:69)(cid:57)(cid:68)(cid:73) (cid:35)(cid:63)(cid:62)(cid:51)(cid:63)(cid:62)(cid:68)(cid:66)(cid:63)(cid:60)(cid:60)(cid:57)(cid:62)(cid:55) (cid:30)(cid:62)(cid:68)(cid:53)(cid:66)(cid:53)(cid:67)(cid:68) (cid:41)(cid:63)(cid:68)(cid:49)(cid:60) (cid:40)(cid:56)(cid:49)(cid:66)(cid:53)(cid:56)(cid:63)(cid:60)(cid:52)(cid:53)(cid:66)(cid:67)(cid:75) (cid:26)(cid:65)(cid:69)(cid:57)(cid:68)(cid:73) (cid:13)(cid:11)(cid:13)(cid:11) (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:31)(cid:49)(cid:62)(cid:69)(cid:49)(cid:66)(cid:73) (cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:11)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ Net income .......................................... Other comprehensive income.............. Net income attributaba le to noncontrolling interest .................... Other comprehensive income attributaba le to noncontrolling interest............................................. Dividends on ordinaryrr shares .............. Dividend payments of consolidated affff iff liates to minority shareholders .. Mandatoryrr convertible prefeff rred share cumulative dividends............. Taxes withheld on employees’ restricted share award vestings ....... Repurchase of ordinaryrr shares ............ Issuance of ordinaryrr shares ................. Issuance of mandatoryrr convertible prefeff rred shares............................... Share-based compensation .................. Adjd ustment foff r recently adopted accounting pronouncements............ (cid:23)(cid:49)(cid:60)(cid:49)(cid:62)(cid:51)(cid:53) (cid:49)(cid:68) (cid:25)(cid:53)(cid:51)(cid:53)(cid:61)(cid:50)(cid:53)(cid:66) (cid:14)(cid:12)(cid:7) (cid:13)(cid:11)(cid:13)(cid:11)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9)(cid:9) $ — — — — — — — — — — — — — — — $ 255 — — — — — — — — (1) 15 — 1 — 270 $ 3 — — — — — — — — — — — — — 3 — $ — — — $ — — $ 1,645 — — — — — — — — — — 12 — — 12 — — — — — — — — — — — — $ $ — — 1 — — (33) (6) 1,115 1,115 60 — 3,897 (cid:4)(cid:57)(cid:62) (cid:61)(cid:57)(cid:60)(cid:60)(cid:57)(cid:63)(cid:62)(cid:67)(cid:5) $ 2,890 1,804 — — — (57) — (35) — (51) — — — (719) $ — 174 — — — — — — — — — — $ 3,819 1,804 174 — — (56) — (35) (33) (57) 1,115 1,115 60 $ 192 — — 18 2 — (17) — — — — — — (1) 4,550 $ $ — (545) $ (1) 7,905 $ — 195 $ 4,011 1,804 174 18 2 (56) (17) (35) (33) (57) 1,115 1,115 60 (1) 8,100 See notes to consolidated fiff nancial statements. 73 1. GENERARR L APTIV PLC NOTES TO CONSOLIDATED FINANCIAL STATEMENTS General and basis of presentation—“Aptiv,” the “Company,” “we,” “us” and “our” refeff r to Aptiv PLC (forff merly known as Delphi Automotive PLC), a public limited company forff med under the laws of Jersey on May 19, 2011, which completed an initial public offff eff ring on November 22, 2011, and its consolidated subsidiaries. The Company’s ordinaryrr shares are publicly traded on the New York Stock Exchange under the symbol “APTV.” The consolidated fiff nancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Nature of operations—Aptiv is a leading global technology and mobility architecturt e company primarily serving the automotive sector. We deliver end-to-end mobility solutions enabla ing our customers' transition to more electrififf ed, softff ware- defiff ned vehicles. We design and manufaff cturt e vehicle components and provide electrical, electronic and active safeff ty technology solutions to the global automotive and commercial vehicle markets. Aptiv is one of the largest vehicle technology suppliers and our customers include the 25 largest automotive original equipment manufaff cturt ers (“OEMs”) in the world. Aptiv operates 131 maja or manufaff cturt Company to effff iff ciently and effff eff ctively serve its global customers frff om best cost countries. Aptiv has a presence in 48 countries and has appr oximately 22,000 scientists, engineers and technicians focff used on developing market relevant product solutions forff its customers. ing faff cilities and 11 maja or technical centers utilizing a regional service model that enabla es the a 2. SIGNIFICANT ACCOUNTING POLICIES Consolidation—The consolidated fiff nancial statements include the accounts of Aptiv and the subsidiaries in which Aptiv holds a controlling fiff nancial or management interest and variabla e interest entities of which Aptiv has determined that it is the primaryrr benefiff ciary.rr Aptiv’s share of the earnings or losses of non-controlled affff iff liates, over which Aptiv exercises signififf cant inflff uence (generally a 20% to 50% ownership interest), is included in the consolidated operating results using the equity method of accounting. When Aptiv does not have the abia lity to exercise signififf cant inflff uence (generally when ownership interest is less than 20%), investments in non-consolidated affff iff liates without readily determinabla e faff ir value are measured at cost, less impairments, adjusted forff issuer, while investments in publicly traded equity securities are measured at faff ir value based on quoted prices forff indicators assets on active market exchanges as of each reporting date. The Company monitors its investments in affff iff liates forff of other-than-temporaryrr declines in value on an ongoing basis. If the Company determines that such a decline has occurred, an impairment loss is recorded, which is measured as the diffff eff rence between carryirr ng value and estimated faff ir value. Estimated oach based on discounted cash flff ows or negotiated transaction values. faff ir value is generally determined using an income appr identical or similar investments of the same identical observabla e price changes in orderly transactions forff a Intercompany transactions and balances between consolidated Aptiv businesses have been eliminated. During the years ended December 31, 2022, 2021 and 2020, Aptiv received dividends of $5 million, $6 million and $9 million, respectively, frff om one of its equity method investments. The dividends were recognized as a reduction to the investment and represented a returt n on investment in cash flff ows frff om operating activities. Aptiv's equity investments without readily determinabla e faff ir value totaled $67 million and $30 million as of December 31, 2022 and 2021, respectively, and are classififf ed within other long-term assets in the consolidated balance sheets. Aptiv's investments in publicly traded equity securities totaled $17 million and $66 million as of December 31, 2022 and 2021, respectively, and are classififf ed within other long-term assets in the consolidated balance sheet. Refeff r to Note 5. Investments in Affff iff liates forff ther inforff mation regarding Aptiv's equity investments. furff In 2022, the Company acquired 85% of the equity interests of Intercabla e Automotive Solutions (“Intercabla e Automotive”). Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 15% of Intercabla e Automotive forff redemption feff aturt e, the Company recorded the redeemabla e noncontrolling interest at its acquisition-date faff ir value to temporaryrr equity in the consolidated balance sheet. The redeemabla e noncontrolling interest is adjusted each reporting period forff income (loss) attributabla e to the noncontrolling interest, and forff redeemabla e noncontrolling interest at the higher of its redemption value, assuming it was redeemabla e at the reporting date, or its carryirr ng value. Any measurement period adjustments are recorded to retained earnings, with a corresponding increase or reduction to net income attributabla e to Aptiv. Refeff r to Note 20. Acquisitions and Divestiturt es forff this acquisition and the redeemabla e noncontrolling interest. lly defiff ned value beginning in 2026. As a result of this any measurement period adjustments necessaryrr the to record the ther inforff mation regarding cash at a contractuat furff 74 Use of estimates—Preparation of consolidated fiff nancial statements in conforff mity with U.S. GAAP requires the use of estimates and assumptions that affff eff ct amounts reported therein. Generally, matters subject to estimation and judgment include amounts related to accounts receivabla e realization, inventoryrr obsolescence, asset impairments, usefulff fiff xed assets, defeff rred tax asset valuation allowances, income taxes, pension benefiff t plan assumptions, accruar litigation, warranty costs, environmental remediation costs, contingent consideration arrangements, redeemabla e noncontrolling interest, worker’s compensation accruar ls. Due to the inherent uncertainty involved in making estimates, including the duration and severity of the impacts of the ongoing global supply chain disrupt Ukraine and RusRR sia, actuat ions and the conflff ict between l results reported in futff urt e periods may be based upon amounts that diffff eff r frff om those estimates. ls and healthcare accruar lives of intangible and ls related to rr Revenue recognition—Revenue is measured based on consideration specififf ed in a contract with a customer. Customer production parts generally are represented by a combination of a current purchase order and a current production contracts forff softff ware licenses are generally represented by a sales contract or schedule issued by the customer. Customer contracts forff purchase order. The Company recognizes revenue when it satisfiff es a perforff mance obligation by transfeff rring control over a product or service to a customer. Revenue frff om softff ware licenses is generally recognized at a point in time upon deliveryrr while revenue frff om post deliveryrr support and maintenance forff softff ware contracts are recognized over time on a ratabla e basis over the contract term. From time to time, Aptiv enters into pricing agreements with its customers that provide forff some of which are conditional upon achieving certain joint cost saving targets. In these instances, revenue is recognized based on the agreed-upon price at the time of shipment. price reductions, Sales incentives and allowances are recognized as a reduction to revenue at the time of the related sale. In addition, frff om time to time, Aptiv makes payments to customers in conjunction with ongoing business. These payments to customers are generally recognized as a reduction to revenue at the time of the commitment to make these payments. However, certain other payments to customers, or upfrff ont feff es, meet the criteria to be considered a cost to obtain a contract as they are directly attributabla e to a contract, are incremental and management expects the feff es to be recoverabla e. Aptiv collects and remits taxes assessed by diffff eff rent governmental authorities that are both imposed on and concurrent with a revenue-producing transaction between the Company and the Company’s customers. These taxes may include, but are not limited to, sales, use, value-added, and some excise taxes. Aptiv reports the collection of these taxes on a net basis (excluded frff om revenues). Shipping and handling feff es billed to customers are included in net sales, while costs of shipping and handling are included in cost of sales. Refeff r to Note 24. Revenue forff ther inforff mation. furff Net income per share—Basic net income per share is computed by dividing net income attributabla e to ordinaryrr shareholders by the weighted average number of ordinaryrr shares outstanding during the period. Diluted net income per share reflff ects the weighted average dilutive impact of all potentially dilutive securities frff om the date of issuance and is computed using the treasuryrr stock and if-ff converted methods. The if-ff converted method is used to determine if the impact of conversion of the 5.50% Mandatoryrr Convertible Prefeff rred Shares, Series A, $0.01 par value per share (the “MCPS”) into ordinaryrr shares is more dilutive than the MCPS dividends to net income per share. If so, the MCPS are assumed to have been converted at the later of the beginning of the period or the time of issuance, and the resulting ordinaryrr shares are included in the denominator and the MCPS dividends are added back to the numerator. Unless otherwise noted, share and per share amounts included in these notes are on a diluted basis. Refeff r to Note 15. Shareholders’ Equity and Net Income Per Share forff including the calculation of basic and diluted net income per share. additional inforff mation Research and development—Costs are incurred in connection with research and development programs that are expected to contribute to futff urt e earnings. Such costs are charged against income as incurred. Total research and development expenses, including engineering, net of customer reimbursements, were appr $1,024 million forff the years ended December 31, 2022, 2021 and 2020, respectively. oximately $1,120 million, $1,030 million and a Cash and cash equivalents—Cash and cash equivalents are defiff ned as short-term, highly liquid investments with original maturt ities of three months or less, forff which the book value appr a oximates faff ir value. Accounts receivable—Aptiv enters into agreements to sell certain of its accounts receivabla e, primarily in Europe. Sales in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 860, of receivabla es are accounted forff TrTT ansfs eff rsrr and Servicing (“ASC 860”). Agreements which result in truerr 860, which occur when receivabla es are transfeff rred without recourse to the Company, are excluded frff om amounts reported in the consolidated balance sheets. Cash proceeds received frff om such sales are included in operating cash flff ows. Agreements that allow Aptiv to maintain effff eff ctive control over the transfeff rred receivabla es and which do not qualifyff as a sale, as defiff ned in ASC 860, are accounted forff and short-term debt. The expenses associated with receivabla es faff ctoring are recorded in the consolidated statements of operations within interest expense. as secured borrowings and recorded in the consolidated balance sheets within accounts receivabla e, net sales of the transfeff rred receivabla es, as defiff ned in ASC The Company exchanges certain amounts of accounts receivabla e, primarily in the Asia Pacififf c region, forff bank notes with original maturt the substance of the underlying transactions, which are operating in naturt e. Bank notes held by the Company with original ities greater than three months. The collection of such bank notes are included in operating cash flff ows based on 75 ities of three months or less are classififf ed as cash and cash equivalents within the consolidated balance sheets, and those ities of greater than three months are classififf ed as notes receivabla e within other current assets. The Company ity, exchange them with suppliers to settle liabia lities, or sell them to third-party fiff nancial maturt with original maturt may hold such bank notes until maturt institutt ions in exchange forff cash. Credit losses—Aptiv is exposed to credit losses primarily through the sale of vehicle components and services. Aptiv payment, as well as the counterparr rty by conducting ongoing credit reviews, which considers the Company’s expected assesses the creditworthiness of a counterpar billing exposure and timing forff availabla e, the Company’s assessment is based on an analysis of the counterpar rty’s fiff nancial statements. Aptiv also considers contract terms and conditions, countryrr and political risk, and business strategy in its evaluation. Based on the outcome of this review, the Company establa ishes a credit limit forff exposure through active review of counterpar reconciliation, payment confiff rmation and dispute resolution. The Company may also employ collection agencies and legal counsel to pursue recoveryrr of defaff ulted receivabla es, if necessary.rr rty balances against contract terms and due dates, which includes timely account rty. The Company continues to monitor its ongoing credit rty’s establa ished credit rating. When a credit rating is not each counterparr Aptiv primarily utilizes historical loss and recoveryrr data, combined with inforff mation on current economic conditions and reasonabla e and supportabla e forff ecasts to develop the estimate of the allowance forff Topic 326, FiFF nancial InsII trtt umentstt – CrCC edit Losses (“ASC 326”). As of December 31, 2022 and December 31, 2021, the Company reported $3,433 million and $2,784 million, respectively, of accounts receivabla e, net of the allowances, which includes the allowance forff was $27 million, $22 million, and $39 million forff changes in the allowance were not material forff accounts of $52 million and $37 million, respectively. The provision forff the years ended December 31, 2022, 2021 and 2020, respectively. Other the year ended December 31, 2022. accounts in accordance with ASC doubtfulff doubtfulff doubtfulff accounts Inventories—As of December 31, 2022 and 2021, inventories are stated at the lower of cost, determined on a fiff rst-in, fiff rst-out basis, or net realizabla e value, including direct material costs and direct and indirect manufaff cturt 3. Inventories forff is identififf ed based on analysis of inventoryrr obsolescence issues, and, generally, the market value of inventoryrr on hand in excess of one year’s supply is fulff additional inforff mation. Obsolete inventoryrr forff known ly-reserved. ing costs. Refeff r to Note From time to time, payments may be received frff om suppliers. These payments frff om suppliers are recognized as a reduction of the cost of the material acquired during the period to which the payments relate. In some instances, supplier rebates are received in conjunction with or concurrent with the negotiation of futff urt e purchase agreements and these amounts are amortized over the prospective agreement period. Property—Maja or improvements that materially extend the usefulff lifeff of property are capia talized. Expenditurt es forff repairs and maintenance are charged to expense as incurred. Depreciation is determined based on a straight-line method over the estimated usefulff of the lease or the lifeff of the property, whichever is shorter. Refeff r to Note 6. Property, Net and Note 25. Leases forff inforff mation. of property. Leasehold improvements under fiff nance leases are depreciated over the period additional lives of groupsu Pre-production costs related to long-term supply agreements—The Company incurs pre-production engineering, development and tooling costs related to products produced forff its customers under long-term supply agreements. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred, unless the costs are reimbursabla e, as specififf ed in a customer contract. As of December 31, 2022 and 2021, $250 million and $286 million of such contractuat term assets in the consolidated balance sheets, as furff lly reimbursabla e costs were capia talized, respectively. These amounts are recorded within other current and other long- ther detailed in Note 4. Assets. Special tools represent Aptiv-owned tools, dies, jigs and other items used in the manufaff cturt e of customer components that will be sold under long-term supply arrangements, the costs of which are capia talized within property, plant and equipment if the Company has title to the assets. Special tools also include capia talized unreimbursed pre-production tooling costs related to customer-owned tools forff which the customer has provided Aptiv a non-cancellabla e right to use the tool. Aptiv-owned special tool balances are depreciated over the expected lifeff of the special tool or the lifeff of the related vehicle program, whichever is shorter. The unreimbursed costs incurred related to customer-owned special tools that are not subject to reimbursement are capia talized and depreciated over the expected lifeff of the special tool or the lifeff of the related vehicle program, whichever is shorter. At December 31, 2022 and 2021, the special tools balance, net of accumulated depreciation, was $437 million and $405 million, respectively, included within property, net in the consolidated balance sheets. As of December 31, 2022 and 2021, the Aptiv-owned special tools balance was $350 million and $303 million, respectively, and the customer-owned special tools balance was $87 million and $102 million, respectively. Valuation of long-lived assets—The carryirr ng value of long-lived assets held forff use, including defiff nite-lived intangible assets, is periodically evaluated when events or circumstances warrant such a review. The carryirr ng value of a long-lived asset use is considered impaired when the anticipated separately identififf abla e undiscounted cash flff ows frff om the asset are less held forff than the carryirr ng value of the asset. In that event, a loss is recognized based on the amount by which the carryirr ng value exceeds the estimated faff ir value of the long-lived asset. Impairment losses on long-lived assets held forff sale are recognized if the 76 carryirr ng value of the asset is in excess of the asset’s estimated faff ir value, reduced forff of long-lived assets is determined primarily using the anticipated cash flff ows discounted at a rate commensurate with the risk oach). Refeff r to Note 6. involved (an income appr Property, Net and Note 7. Intangible Assets and Goodwill forff the cost to dispose of the asset. Fair value tions Aptiv’s review of appr oach), and in certain situat additional inforff mation. aisals (a market appr a a a Leases—The Company accounts forff leases in accordance with FASB ASC Topic 842, Leases. The Company determines whether an arrangement is a lease at inception. For leases where the Company is the lessee, a lease liabia lity and a right-of-ff use all leases, with the exception of short-term leases with terms of twelve months or less. The lease liabia lity asset is recognized forff represents the lessee’s obligation to make lease payments arising frff om a lease, and is measured as the present value of the lease payments. As the rate implicit in the lease is usually not known at lease commencement, the Company uses its incremental borrowing rate to discount the lease obligation. The right-of-ff use asset represents the lessee’s right to use a specififf ed asset forff lease term, and is measured at the lease liabia lity amount, adjusted forff Company’s initial direct costs. lease prepayment, lease incentives received and the the The Company appl a term, generally on a straight-line basis, forff consolidated balance sheets. Additionally, the Company appl non-lease components and instead accounts forff forff additional inforff mation. a ies the short-term lease exception, which results in a single lease cost being allocated over the lease leases with a term of twelve months or less. These leases are not presented in the both as a single lease component forff ies the practical expedient to not separate lease components frff om all asset classes. Refeff r to Note 25. Leases Assets and liabilities held forff sale—The Company considers assets to be held forff sale when management, having the a opriate authority, appr oves and commits to a forff mal plan to actively market the assets forff appr a relation to their estimated faff ir value, the assets are availabla e forff immediate sale in their present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the assets is probabla e and expected to be completed within one year and it is unlikely that signififf cant changes will be made to the plan. Upon designation as held forff sale, the Company records the assets at the lower of their carryirr ng value or their estimated faff ir value, less cost to sell, and ceases to record depreciation expense on the assets. sale at a price reasonabla e in Assets and liabia lities of a discontinued operation are reclassififf ed as held forff sale forff all comparative periods presented in the consolidated balance sheets. For assets that meet the held forff operation, the Company reclassififf es the assets and liabia lities in the period in which the held forff not reclassifyff prior period amounts. sale criteria but do not meet the defiff nition of a discontinued sale criteria are met, but does Intangible assets—The Company amortizes defiff nite-lived intangible assets over their estimated usefulff lives. The ts. Upon completion of the projects, the assets will be amortized over the expected Company has defiff nite-lived intangible assets related to patents and developed technology, customer relationships and trade names. Indefiff nite-lived in-process research and development intangible assets are not amortized, but are tested forff annually, or more frff equently when indicators of potential impairment exist, until the completion or abaa ndonment of the associated research and development effff orff economic lifeff of the asset, which will be determined on that date. Should the project be determined to be abaa ndoned, and if the asset developed has no alternative use, the fulff l value of the asset will be charged to expense. The Company also has intangible assets related to acquired trade names that are classififf ed as indefiff nite-lived when there are no forff eseeabla e limits on the periods of time over which they are expected to contribute cash flff ows. These indefiff nite-lived trade name assets are tested forff impairment annually, or more frff equently when indicators of potential impairment exist. Costs to renew or extend the term of acquired intangible assets are recognized as expense as incurred. No intangible asset impairment charges were recorded during the years ended December 31, 2022, 2021 and 2020. Refeff r to Note 7. Intangible Assets and Goodwill forff inforff mation. impairment additional Goodwill—Goodwill is the excess of the purchase price over the estimated faff ir value of identififf abla e net assets acquired in business combinations. The Company tests goodwill forff th quarter, or more frff equently when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiff scal year. The Company tests forff goodwill impairment at the reporting unit level. Our reporting units are the components of operating segments which constitutt e businesses forff which discrete fiff nancial inforff mation is availabla e and is regularly reviewed by segment management. impairment annually in the four ff The impairment test involves fiff rst qualitatively assessing goodwill forff impairment. If the qualitative assessment is not met the Company then perforff ms a quantitative assessment by comparing the estimated faff ir value of each reporting unit to its carryirr ng value, including goodwill. Fair value reflff ects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the estimated faff ir value exceeds carryirr ng value, then we conclude that no goodwill impairment has occurred. If the carryirr ng value of the reporting unit exceeds its estimated faff ir value, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill allocated to the reporting unit. Refeff r to Note 20. Acquisitions and Divestiturt es, forff ther inforff mation on the goodwill attributabla e to the Company’s acquisitions. furff 77 Goodwill impairment—In the four ff th quarter of 2022, 2021 and 2020, the Company completed a qualitative goodwill impairment assessment, and aftff er evaluating the results, events and circumstances of the Company, we concluded that suffff iff cient evidence existed to assert qualitatively that it was more likely than not that the estimated faff ir value of each reporting unit remained in excess of its carryirr ng values. Thereforff e, a quantitative impairment assessment was not necessary.rr No goodwill impairments were recorded in 2022, 2021 or 2020. Refeff r to Note 7. Intangible Assets and Goodwill forff additional inforff mation. Warranty and product recalls—Expected warranty costs forff products sold are recognized at the time of sale of the product based on an estimate of the amount that eventuat on faff ctors such as past experience, production changes, industryrr developments and various other considerations. Costs of product recalls, which may include the cost of the product being replaced as well as the customer’s cost of the recall, including labor a probabla e and can be reasonabla y estimated. These estimates are adjusted frff om time to time based on faff cts and circumstances that impact the statust to remove and replace the recalled part, are accruer d as part of our warranty accruarr of existing claims. Refeff r to Note 9. Warranty Obligations forff lly will be required to settle such obligations. These accruar l at the time an obligation becomes additional inforff mation. ls are based Income taxes—Defeff rred tax assets and liabia lities reflff ect temporaryrr diffff eff rences between the amount of assets and r a fiff nancial and tax reporting purpos opriate, to reflff ect changes in tax rates es. Such amounts are adjusted, as appr liabia lities forff expected to be in effff eff ct when the temporaryrr diffff eff rences reverse. The effff eff ct on defeff rred tax assets and liabia lities of a change in tax rates is recognized in earnings in the period that includes the enactment date. A valuation allowance is recorded to reduce defeff rred tax assets to the amount that is more likely than not to be realized. In the event the Company determines it is more likely than not that the defeff rred tax assets will not be realized in the futff urt e, the valuation allowance adjustment to the defeff rred tax assets will be charged to earnings in the period in which the Company makes such a determination. In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefiff t is measured on a cumulative probabia lity basis that is more likely than not to be realized upon the ultimate settlement. In determining the provision forff statement purpos defeff rred tax assets, as well as its calculation of certain tax liabia lities. As it relates to changes in accumulated other comprehensive income (loss), the Company’s policy is to release tax effff eff cts frff om accumulated other comprehensive income (loss) when the underlying components affff eff ct earnings. Refeff r to Note 14. Income Taxes forff es, the Company makes certain estimates and judgments which affff eff ct its evaluation of the carryirr ng value of its additional inforff mation. income taxes forff fiff nancial r ff Foreign currency translation—Assets and liabia lities of non-U.S. subsidiaries that use a currency other than U.S. dollars tional currency are translated to U.S. dollars at end-of-ff period currency exchange rates. The consolidated statements as their func of operations of non-U.S. subsidiaries are translated to U.S. dollars at average-period currency exchange rates. The effff eff ct of translation forff non-U.S. subsidiaries is generally reported in other comprehensive income (“OCI”). The accumulated forff eign is reclassififf ed to net income upon sale or upon currency translation adjustment related to an investment in a forff eign subsidiaryrr complete or substantially complete liquidation of the respective entity. The effff eff ct of remeasurement of assets and liabia lities of non-U.S. subsidiaries that use the U.S. dollar as their func cost of sales are gains and losses arising frff om transactions denominated in a currency other than the func particular entity. Net forff eign currency transaction losses of $30 million were included in the consolidated statements of operations forff ended December 31, 2021. Net forff eign currency transaction losses of $20 million were included in the consolidated statements of operations forff the year ended December 31, 2022. There were no net forff eign currency transaction gains or losses forff tional currency is primarily included in cost of sales. Also included in the year ended December 31, 2020. tional currency of a the year ff ff Restructuring—Aptiv continually evaluates alternatives to align the business with the changing needs of its customers city, faff cility closures, or similar ing programs. These actions may result in and to lower operating costs. This includes the realignment of its existing manufaff cturt actions, either in the normal course of business or pursuant to signififf cant restrucr employees receiving voluntaryrr or involuntaryrr employee termination benefiff ts, which are mainly pursuant to union or other contractuat related offff eff r. Involuntaryrr arrangement is communicated to affff eff cted employees, or when liabia lities are determined to be probabla e and estimabla e, depending on the existence of a substantive plan forff termination lease costs are recorded when contracts are terminated. All other exit costs are expensed as incurred. Refeff r to Note 10. Restrucr termination benefiff ts are accruer d when an employee accepts the termination benefiff ts are accruerr d upon the commitment to a termination plan and when the benefiff t severance or termination. Contract termination costs and certain early l agreements or statutt oryrr requirements. Voluntaryrr additional inforff mation. ing capaa ing forff turt turt 78 Customer concentrations—As reflff ected in the tabla e below, net sales to General Motors (“GM”), Stellantis N.V. largest customers, totaled (“Stellantis”), Ford Motor Company (“Ford”) and Volkswagen Group (“VW”), Aptiv’s four a appr Both of Aptiv’s operating segments recognized net sales to these customers during each period presented. oximately 34%, 35% and 38% of our total net sales forff the years ended December 31, 2022, 2021 and 2020, respectively. ff Percentage of Total Net Sales Year Ended December 31, 2022 2021 2020 Accounts Receivable December 31, 2022 December 31, 2021 GM.................................................................... Stellantis (1)...................................................... Ford................................................................... VW.................................................................... 9 % 9 % 8 % 8 % 8 % 11 % 7 % 9 % 9 % $ 12 % 7 % 10 % (in millions) $ 231 325 250 186 208 317 220 163 (1) On Januaryrr 16, 2021, Fiat Chrysrr ler Automobiles N.V. (“FCA”) and Peugeot Citroën (“PSA”) merged to forff m Stellantis. Net sales to FCA and PSA beforff e the date of the merger are included in net sales to Stellantis in the tabla e above a forff the years ended December 31, 2021 and 2020. Derivative fiff nancial instruments—All derivative instrumr ents are required to be reported on the balance sheet at faff ir value unless the transactions qualifyff and are designated as normal purchases or sales. Changes in faff ir value are reported currently through earnings unless they meet hedge accounting criteria. Exposure to flff uctuat es. As part of the hedging program appr tions in currency exchange rates, interest rates and certain commodity prices are managed by entering rties. Such fiff nancial exposures are managed in into a variety of forff ward and option contracts and swapsa with various counterpar accordance with the policies and procedures of Aptiv. Aptiv does not enter into derivative transactions forff oval process, Aptiv identififf es the specififf c fiff nancial risk which the derivative rr purpos ent to be used to reduce the risk and the correlation between the transaction will minimize, the appr ent. Purchase orders, sales contracts, letters of intent, capia tal planning forff ecasts and fiff nancial risk and the hedging instrumr historical data are used as the basis forff determining the anticipated values of the transactions to be hedged. Aptiv does not enter into derivative transactions that do not have a high correlation with the underlying fiff nancial risk. Hedge positions, as well as the correlation between the transaction risks and the hedging instrumr ents, are reviewed on an ongoing basis. opriate hedging instrumr speculative or trading a a Foreign exchange forff ward contracts are accounted forff as hedges of fiff rm or forff ecasted forff eign currency commitments or forff eign currency exposure of the net investment in certain forff eign operations to the extent they are designated and assessed as are accounted forff highly effff eff ctive. All forff eign exchange contracts are marked to market on a current basis. Commodity swapsa as hedges of fiff rm or anticipated commodity purchase contracts to the extent they are designated and assessed as effff eff ctive. All other commodity derivative contracts that are not designated as hedges are either marked to market on a current basis or are exempted frff om mark to market accounting as normal purchases. At December 31, 2022 and 2021, the Company’s exposure to ents. Refeff r to Note 17. Derivatives and Hedging Activities movements in interest rates was not hedged with derivative instrumr and Note 18. Fair Value of Financial Instrumr additional inforff mation. ents forff Extended disability benefiff ts—Costs associated with extended disabia lity benefiff ts provided to inactive employees are accruer d throughout the duration of their active employment. Workforff ce demographi to develop projections of time frff ames and related expense forff post-employment benefiff ts. a c data and historical experience are utilized Workers’ compensation benefiff ts—Workers’ compensation benefiff t accruar ls are actuat rially determined and are subject to the existing workers’ compensation laws that varyrr by location. Accruar ls forff workers’ compensation benefiff ts represent the discounted futff urt e cash expenditurt es expected during the period between the incidents necessitating the employees to be idled and the time when such employees returt n to work, are eligible forff retirement or otherwise terminate their employment. Share-based compensation—The Company’s share-based compensation arrangements consist of the Aptiv PLC Long Term Incentive Plan, as amended and restated effff eff ctive April 23, 2015 (the “PLC LTIP”), under which grants of restricted stock units (“RSUs”) have been made each year. The RSU awards include a time-based vesting portion and a perforff mance-based vesting portion. The perforff mance-based vesting portion includes perforff mance and market conditions in addition to service conditions. The grant date faff ir value of the RSUs is determined based on the closing price of the Company’s ordinaryrr shares on the date of the grant of the award, including an estimate forff forff independent valuation specialist with respect to awards with market conditions. Compensation expense is recognized based upon the grant date faff ir value of the awards appl respective targets on a straight-line basis over the requisite vesting period of the awards. The perforff mance conditions require management to make assumptions regarding the likelihood of achieving certain perforff mance goals. Changes in these perforff mance assumptions, as well as diffff eff rences in actuat actuat inforff mation. l values diffff eff rent frff om previously estimated faff ir values. Refeff r to Note 21. Share-Based Compensation forff ied to the Company’s best estimate of ultimate perforff mance against the l results frff om management’s estimates, could result in estimated or feff iturt es, or a contemporaneous valuation perforff med by an additional a 79 Business combinations—The Company accounts forff its business combinations in accordance with the accounting guidance in FASB ASC 805, Business ComCC binations. The purchase price of an acquired business is allocated to its identififf abla e assets and liabia lities based on estimated faff ir values. The excess of the purchase price over the amount allocated to the assets and liabia lities, if any, is recorded as goodwill. Determining the faff ir values of assets acquired and liabia lities assumed requires management’s judgment, the utilization of independent appr assumptions with respect to the timing and amount of futff urt e cash flff ows, market rate assumptions, actuat opriate discount rates, among other items. Refeff r to Note 20. Acquisitions and Divestiturt es forff a appr aisal fiff rms and oftff en involves the use of signififf cant estimates and rial assumptions, and additional inforff mation. a Government incentives—From time to time, Aptiv receives government incentives in the forff m of cash grants and other past or futff urt e compliance with certain conditions. The Company accounts forff incentives in returt n forff received frff om government grants that are not in the forff m of an income tax credit, revenue frff om a contract with a customer or a loan, by analogy to International Accounting Standards 20, Accounting forff Government Grantstt and Disii closure of Government Assisii tance. Accordingly, we recognize funds we receive frff om government grants in the consolidated statement of operations when there is reasonabla e assurance that Aptiv will comply with the conditions associated with the grant and the grants will be received. Recognition occurs on a systematic basis over the periods in which Aptiv recognizes, as expenses, the related costs forff which the grants are intended to defrff ay. ff funds ff Aptiv is eligible to receive certain government grants because we engage in qualifyiff ng capia tal investments and other activities as defiff ned by the relevant governmental entities awarding the grants. Typically, grant agreements require that Aptiv complies with certain conditions, including committing to minimum levels of capia tal investment and maintenance of a minimum level of headcount at the impacted manufaff cturt naturt e as a reduction to operating expenses (primarily cost of sales) in the consolidated statements of operations. During the year ended December 31, 2022, government grants were recognized as reductions to operating expenses of appr million. ing site. Aptiv generally recognizes government grants of an operating oximately $20 a Aptiv records capia tal-related grants as a reduction to property, plant and equipment, net in the consolidated balance sheets, which ultimately results in a reduction to depreciation expense over the usefulff grants reduced gross property, plant and equipment by appr Amounts recorded as due frff om and due to governmental entities in the consolidated balance sheets were not signififf cant forff period presented. lifeff of the corresponding asset. Capia tal-related oximately $10 million during the year ended December 31, 2022. a any Our agreements with governmental entities have an average duration of fiff ve years and certain of these agreements include provisions forff the recapta urt e of fundi ff ng if the Company faff ils to comply with various aspects of the agreement. Recently adopted accounting pronouncements—In June 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-03, FaiFF r ValVV ue MeMM asurement (T(( opiTT Sale Restrt ictions. The amendments in this update clarifyff subject to contractuat l sale restrictions that are measured at faff ir value in accordance with Topic 820. As equity securities subject to contractuat permitted, the Company elected to early adopt this guidance effff eff ctive in the second quarter of 2022. The adoption of this guidance resulted in incremental disclosures in the Company’s fiff nancial statements. c 820): FaiFF r ValVV ue MeMM asurement of Equitytt Securities Subject to ContCC rt actual the guidance when measuring the faff ir value of an equity security l restrictions that prohibit the sale of an equity security and introduces new disclosure requirements forff Aptiv adopted ASU 2021-10, Government Assisii tance (T(( opiTT c 832): Disii closures by Business EntEE ities about Government Assisii tance in the fiff rst quarter of 2022. This guidance is intended to improve the transparency of government assistance received by most business entities by requiring disclosure of:ff (1) the types of government assistance received; (2) the accounting forff such assistance; and (3) the effff eff ct of the assistance on the registrant’s fiff nancial statements. The adoption of this guidance resulted in insignififf cant incremental disclosures in the Company’s fiff nancial statements. In October 2021, the FASB issued ASU 2021-08, Business ComCC binations (T(( opiTT c 805): Accounting forff ContCC rtt act Assetstt and ContCC rt act Liabilities frff om ContCC rtt actstt withtt CusCC tomersrr . This guidance requires that an acquirer recognize and measure contract assets and contract liabia lities acquired in a business combination in accordance with ASC Topic 606, Revenue frff om the related revenue contracts in ContCC rt actstt withtt CusCC tomersrr (“ASC 606”). At the acquisition date, an acquirer should account forff accordance with ASC 606 as if it had originated the contracts. As permitted, the Company elected to early adopt this guidance effff eff ctive Januaryrr 1, 2022. This guidance was appl ied to any business combinations that occur in futff urt e periods. ied to the Company’s 2022 business combinations and will be appl a a Recently issued accounting pronouncements not yet adopted—In September 2022, the FASB issued ASU 2022-04, (( Liabilities - Supplier FiFF nance Programs (Subt amendments in this update intend to improve the transparency of supplier fiff nance programs by requiring a buyer in a supplier fiff nance program to disclose suffff iff cient inforff mation about the program to allow a user of the fiff nancial statements to understand the program’s naturt e, key terms, outstanding balances and activity during the period. The new guidance will be appl retrospectively and is effff eff ctive forff inforff mation, which is to be appl opic 405-50): Disii closure of Supplier FiFF nance Program Obligat fiff scal years beginning aftff er December 15, 2022, except forff fiff scal years beginning aftff er December 15, 2023. Early ied prospectively and is effff eff ctive forff the amendment on rollforff ward ions. The ied a a a i 80 adoption is permitted. The adoption of this guidance is not expected to have a signififf cant impact on Aptiv’s consolidated fiff nancial statements. 3. INVENTORIES Inventories are stated at the lower of cost, determined on a fiff rst-in, fiff rst-out basis, or net realizabla e value, including direct material costs and direct and indirect manufaff cturt ing costs. A summaryrr of inventories is shown below: Productive material ..................................................................................................................... $ 1,570 $ Work-in-process.......................................................................................................................... Finished goods ............................................................................................................................ 164 606 Total........................................................................................................................................ $ 2,340 $ 1,311 172 531 2,014 December 31, 2022 December 31, 2021 (in millions) 4. ASSETS Other current assets consisted of the folff lowing: Value added tax receivabla e ......................................................................................................... $ Prepaid insurance and other expenses......................................................................................... Reimbursabla e engineering costs.................................................................................................. Notes receivabla e.......................................................................................................................... Income and other taxes receivabla e .............................................................................................. Deposits to vendors..................................................................................................................... Derivative fiff nancial instrumr ents (Note 17)................................................................................. Capia talized upfrff ont feff es (Note 24).............................................................................................. Contract assets (Note 24) ............................................................................................................ Other ........................................................................................................................................... December 31, 2022 December 31, 2021 (in millions) 167 $ 75 90 8 40 7 44 17 24 8 178 63 110 16 54 6 38 34 — — Total........................................................................................................................................ $ 480 $ 499 Other long-term assets consisted of the folff lowing: Defeff rred income taxes, net (Note 14) ......................................................................................... $ Unamortized Revolving Credit Facility debt issuance costs ...................................................... Income and other taxes receivabla e .............................................................................................. Reimbursabla e engineering costs.................................................................................................. Value added tax receivabla e ......................................................................................................... Equity investments (Note 5) ....................................................................................................... Derivative fiff nancial instrumr ents (Note 17)................................................................................. Capia talized upfrff ont feff es (Note 24).............................................................................................. Contract assets (Note 24) ............................................................................................................ Other ........................................................................................................................................... December 31, 2022 December 31, 2021 (in millions) 259 $ 8 30 160 2 84 14 61 43 79 159 11 28 176 20 96 3 58 — 71 Total........................................................................................................................................ $ 740 $ 622 81 5. INVESTMENTS IN AFFILIATES Equity Method Investments As part of Aptiv’s operations, it has investments in fiff ve non-consolidated affff iff liates accounted forff under the equity method a of accounting. These affff iff liates are not publicly traded companies and are located primarily in North America, Europe and Asia Pacififf c. Aptiv’s ownership percentages varyrr generally frff om appr oximately 20% to 50%, with the most signififf cant investments a being in Motional AD LLC (“Motional”) (of which Aptiv owns 50%), TTTech Auto AG (“TTTech Auto”) (of which Aptiv owns appr oximately 20%) and in Promotora de Partes Electricas Automotrices, S.A. de C.V. (of which Aptiv owns appr a The Company’s aggregate investments in affff iff liates was $1,723 million and $1,797 million at December 31, 2022 and 2021, respectively. Dividends of $5 million, $6 million and $9 million forff respectively, have been received frff om these non-consolidated affff iff liates. No impairment charges were recorded forff ended December 31, 2022, 2021 and 2020. oximately 40%). Refeff r to Note 20. Acquisitions and Divestiturt es forff additional inforff mation on the forff mation of Motional. the years ended December 31, 2022, 2021 and 2020, the years Motional was deemed a signififf cant equity investee under RulRR e 3-09 of Regulation S-X forff the year ended December 31, 2022. Accordingly, separate audited fiff nancial statements of Motional have been included as Exhibit 99.1 in Part IV Item 15 of this Annual Report on Form 10-K. The folff lowing is a summaryrr of the combined fiff nancial inforff mation of signififf cant affff iff liates accounted forff under the equity method as of December 31, 2022 and 2021 and forff the years ended December 31, 2022, 2021 and 2020: December 31, 2022 2021 (in millions) Current assets .............................................................................................................................. $ Non-current assets....................................................................................................................... Total assets ............................................................................................................................. $ Current liabia lities......................................................................................................................... $ Non-current liabia lities ................................................................................................................. Shareholders’ equity ................................................................................................................... $ $ $ 1,059 2,672 3,731 252 87 3,392 Total liabia lities and shareholders’ equity................................................................................ $ 3,731 $ 794 3,163 3,957 194 112 3,651 3,957 Year Ended December 31, 2022 2021 (in millions) 2020 Net sales .......................................................................................................... $ 761 $ 599 $ Gross loss ........................................................................................................ Net loss ............................................................................................................ (357) (589) (244) (393) 553 (71) (154) A summaryrr of transactions with affff iff liates is shown below: Sales to affff iff liates ............................................................................................. $ Purchases frff om affff iff liates ................................................................................. $ 35 18 $ 30 19 7 32 A summaryrr of amounts recorded in the Company’s consolidated balance sheets related to its affff iff liates is shown below: Year Ended December 31, 2022 2021 (in millions) 2020 Receivabla es due frff om affff iff liates ................................................................................................... $ Payabla es due to affff iff liates............................................................................................................. 82 December 31, 2022 2021 (in millions) $ 8 18 11 20 MotMM ional CyCC bersrr ecuritytt IncII ident In October 2022, Motional experienced a cybersecurity incident involving unauthorized access to, and theftff of data frff om, certain Motional systems. Upon discovering the unauthorized activity, Motional took immediate action, including terminating the unauthorized access and pausing certain operations. With assistance frff om forff ensic inforff mation technology fiff rms and legal counsel, Motional conducted an investigation of the incident, communicated with law enforff cement authorities regarding this matter, subsequently resumed its testing operations and determined that the incident did not have a material impact to its operations or fiff nancial results and fiff nancial condition. InvII estmtt ent in TTTT TTT eTT ch Auto AG On March 15, 2022, Aptiv acquired appr a safeff ty-critical middleware solutions forff million (appr in TTTech Auto utilizing cash on hand. a oximately 20% of the equity interests of TTTech Auto, a leading provider of €200 advanced driver-assistance systems and autonomous driving appl ications, forff a oximately $220 million, using forff eign currency rates on the investment date). The Company made the investment The carryirr ng value of the Company’s investment in TTTech Auto was $205 million as of December 31, 2022, which is included in the Advanced Safeff ty and User Experience segment. As of December 31, 2022, the diffff eff rence between the amount at which the Company’s investment is carried and the amount of the Company’s share of the underlying equity in net assets of TTTech Auto was appr associated with the investment, which is not amortized. oximately $151 million. The basis diffff eff rence is primarily attributabla e to equity method goodwill a Technology Investments The Company has made technology investments in certain non-consolidated affff iff liates forff ownership interests of less than 20% (where Aptiv does not have the abia lity to exercise signififf cant inflff uence) as described in Note 2. Signififf cant Accounting Policies. Certain of these investments do not have readily determinabla e faff ir values and are measured at cost, less impairments, adjusted forff Company also holds technology investments in publicly traded equity securities. These investments are measured at faff ir value based on quoted prices forff identical or similar investments of the same issuer. The observabla e price changes in orderly transactions forff identical assets on active market exchanges. The folff lowing is a summaryrr of technology investments, which are classififf ed within other long-term assets in the consolidated balance sheets, as of December 31, 2022 and 2021: Investment Name Segment December 31, 2022 2021 (in millions) Equity investments without readily determinable faiff r values: StradVision, Inc. ........................................ Advanced Safeff ty and User Experience $ 40 $ LeddarTech, Inc......................................... Advanced Safeff ty and User Experience Quanergy Systems, Inc (1) ........................ Advanced Safeff ty and User Experience Other investments ...................................... Various Total equity investments without readily determinabla e faff ir values................................... Publicly traded equity securities: Smart Eye AB ........................................... Advanced Safeff ty and User Experience Otonomo Technologies Ltd. ...................... Advanced Safeff ty and User Experience Valens Semiconductor Ltd. ....................... Signal and Power Solutions Total publicly traded equity securities .............................................................................. 19 — 8 67 2 4 11 17 Total investments............................................................................................................ $ 84 $ — 19 6 5 30 11 39 16 66 96 (1) Quanergy Systems, Inc. experienced a change in measurement basis due to an underlying transaction during the year ended December 31, 2022 and we liquidated our entire investment in the company aftff er the transaction during the year ended December 31, 2022. See below forff transaction. furff ther details on the In May 2022, the Company’s Advanced Safeff ty and User Experience segment made an investment totaling 50 billion oximately $40 million, using forff eign currency rates on the investment date) in StradVision, Inc., a a South Korean Won (appr provider of deep learning-based camera perception softff ware forff automotive appl a ications. 83 In Februar ryrr 2022, Quanergy Systems, Inc. (“Quanergy”) merged with a publicly traded special purpos e acquisition company (“SPAC”) and shares of Quanergy began trading on the NYSE under the symbol QNGY. As part of the SPAC merger, our prefeff rred shares in Quanergy were converted into Quanergy ordinaryrr shares. During the remainder of 2022, the Company sold all of its Quanergy ordinaryrr shares forff oximately $3 million. The Company’s Advanced Safeff ty and User Experience segment had previously made a $3 million investment in Quanergy during 2016, which was in addition to the Company’s $3 million investment made during 2015. net proceeds of appr a r In September 2021, Valens Semiconductor Ltd. (“Valens”) merged with a publicly traded SPAC and shares of Valens began trading on the NYSE under the symbol VLN. As part of the SPAC merger, our prefeff rred shares in Valens were converted into Valens ordinaryrr shares. In August 2021, Otonomo Technologies Ltd. (“Otonomo”) merged with a publicly traded SPAC and shares of Otonomo began trading on the Nasdaq Capia tal Market under the symbol OTMO. As part of the SPAC merger, our prefeff rred shares in Otonomo were converted into Otonomo ordinaryrr shares. During the second half of 2021, the Company sold a portion of its Otonomo ordinaryrr shares forff segment had previously made a $3 million investment in Otonomo during 2019, which was in addition to the Company’s $15 million investment made during 2017. oximately $3 million. The Company’s Advanced Safeff ty and User Experience net proceeds of appr a In June 2021, Affff eff ctiva, Inc. (“Affff eff ctiva”) was acquired by Smart Eye AB (“Smart Eye”), which is publicly traded on the Nasdaq Stockholm AB stock exchange. As part of the acquisition, Aptiv received shares of Smart Eye in exchange forff Aptiv’s Affff eff ctiva prefeff rred shares. In April 2021, Innoviz Technologies (“Innoviz”) merged with a publicly traded SPAC and shares of Innoviz began trading on the Nasdaq Capia tal Market under the symbol INVZ. As part of the SPAC merger, our prefeff rred shares in Innoviz were converted into Innoviz ordinaryrr shares. During the second half of 2021, the Company sold all of its Innoviz ordinaryrr oximately $18 million. The Company’s Advanced Safeff ty and User Experience segment had shares forff previously made a $15 million investment in Innoviz during 2017. net proceeds of appr a Following each of the transactions described above a forff Quanergy, Valens, Otonomo, Smart Eye and Innoviz, the faff ir value of each respective investment is measured on a recurring basis, with changes in faff ir value recorded to other income (expense), net. Certain of the equity securities measured at faff ir value disclosed above a oximately $1 million as of December 31, 2022. These contractuat l sale restrictions which lly defiff ned periods of time. The faff ir value of equity securities with contractuat l ly expire l sale restrictions will fulff are subject to contractuat prohibit the sale of the security over contractuat sale restrictions was appr during the next twelve months as of December 31, 2022. a During the year ended December 31, 2021, the Company’s investment in LeddarTech, Inc., was remeasured to a faff ir value of $19 million, based on a subsequent round of fiff nancing observed forff As a result, the Company recorded a pre-tax unrealized gain of $9 million to other income, net during the year ended December 31, 2021. identical or similar investments of the same issuer. During the year ended December 31, 2020, the Company’s investment in Innoviz, while being classififf ed as an equity investment without readily determinabla e faff ir value, was remeasured to a faff ir value of $25 million, based on a subsequent round of fiff nancing observed forff unrealized gain of $10 million to other income, net during the year ended December 31, 2020. identical or similar investments of the same issuer. As a result, the Company recorded a pre-tax There were no other material transactions, events or changes in circumstances requiring an impairment or an observabla e price change adjustment to our investments without readily determinabla e faff ir value. The Company continues to monitor these investments to identifyff potential transactions which may indicate an impairment or an observabla e price change requiring an adjustment to its carryirr ng value. 84 6. PROPERTY, NET Property, net consisted of:ff Estimated Usefuff l Lives (Years) Land................................................................................................................. Land and leasehold improvements .................................................................. Buildings ......................................................................................................... Machinery,rr equipment and tooling.................................................................. Furniturt e and offff iff ce equipment ....................................................................... Construcr tion in progress.................................................................................. Total ............................................................................................................ Less: accumulated depreciation....................................................................... — 3-20 40 3-20 3-10 — December 31, 2022 2021 $ (in millions) 79 $ 200 699 5,263 871 463 7,575 (4,080) 82 186 679 4,899 802 365 7,013 (3,719) 3,294 Total property, net....................................................................................... $ 3,495 $ For the years ended December 31, 2022, 2021 and 2020, Aptiv recorded non-cash asset impairment charges of $8 million, $2 million and $10 million, respectively, in cost of sales related to declines in the faff ir values of certain fiff xed assets. As of December 31, 2022, 2021 and 2020, capia tal expenditurt es recorded in accounts payabla e totaled $300 million, $280 million and $164 million, respectively. 7. INTANGIBLE ASSETS AND GOODWILL The changes in the carryirr ng amount of intangible assets and goodwill were as folff lows as of December 31, 2022 and 2021. ther description of the goodwill and intangible assets resulting frff om Aptiv’s See Note 20. Acquisitions and Divestiturt es forff acquisitions in 2022 and 2021. a furff As of December 31, 2022 As of December 31, 2021 Estimated Usefuff l Lives (Years) Gross Carrying Amount Accumulated Amortization (in millions) Net Carrying Amount Gross Carrying Amount Net Carrying Amount Accumulated Amortization (in millions) Amortized intangible assets: Patents and developed technology........ Customer relationships ......................... Trade names.......................................... Total .................................................... 3-16 9-22 15-20 Unamortized intangible assets: In-process research and development... — Trade names.......................................... — Goodwill ............................................... — $ 1,504 $ 1,981 206 3,691 4 154 5,106 551 661 52 1,264 — — — $ 953 $ 673 $ 1,320 154 2,427 4 154 1,186 75 1,934 4 160 5,106 2,511 $ 506 578 50 1,134 — — — 167 608 25 800 4 160 2,511 Total .................................................... $ 8,955 $ 1,264 $ 7,691 $ 4,609 $ 1,134 $ 3,475 Estimated amortization expense forff the years ending December 31, 2023 through 2027 is presented below: Estimated amortization expense......................... $ 230 $ 210 $ 210 $ 210 $ 195 2023 2024 2025 2026 2027 Year Ending December 31, (in millions) 85 A roll-forff ward of the gross carryirr ng amounts of intangible assets forff the years ended December 31, 2022 and 2021 is presented below. Balance at Januaryrr 1 ................................................................................................................... $ 4,609 $ Acquisitions (1) ........................................................................................................................ Foreign currency translation and other..................................................................................... 4,434 (88) Balance at December 31 ............................................................................................................. $ 8,955 $ 4,675 132 (198) 4,609 (1) Primarily attributabla e to the 2022 acquisitions of Wind River and Intercabla e Automotive and the 2021 acquisitions of El-Com, KrKK ono-Safeff and Ulti- Mate, as furff ther described in Note 20. Acquisitions and Divestiturt es. A roll-forff ward of the accumulated amortization forff the years ended December 31, 2022 and 2021 is presented below: 2022 2021 (in millions) Balance at Januaryrr 1 ................................................................................................................... $ 1,134 $ 1,004 Amortization............................................................................................................................. Foreign currency translation and other..................................................................................... 149 (19) 148 (18) Balance at December 31 ............................................................................................................. $ 1,264 $ 1,134 A roll-forff ward of the carryirr ng amount of goodwill, by operating segment, forff the years ended December 31, 2022 and 2021 is presented below: 2022 2021 (in millions) Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total Balance at Januaryrr 1, 2021.............................................................................. $ 2,553 $ Acquisitions (1) ............................................................................................ Foreign currency translation and other ......................................................... Balance at December 31, 2021........................................................................ $ Acquisitions (2) ............................................................................................ $ Foreign currency translation and other ......................................................... 65 (143) 2,475 357 (76) Balance at December 31, 2022........................................................................ $ 2,756 $ $ $ 27 9 — 36 2,302 12 2,350 $ $ $ $ 2,580 74 (143) 2,511 2,659 (64) 5,106 (1) Primarily attributabla e to the acquisitions of El-Com, KrKK ono-Safeff and Ulti-Mate, as furff ther described in Note 20. Acquisitions and Divestiturt es. (2) Primarily attributabla e to the acquisitions of Wind River and Intercabla e Automotive, as furff ther described in Note 20. Acquisitions and Divestiturt es. 86 8. LIABILITIES Accruer d liabia lities consisted of the folff lowing: December 31, 2022 December 31, 2021 Payroll-related obligations .......................................................................................................... $ Employee benefiff ts, including current pension obligations ......................................................... Income and other taxes payabla e .................................................................................................. Warranty obligations (Note 9) .................................................................................................... Restrucrr turt ing (Note 10) .............................................................................................................. Customer deposits ....................................................................................................................... Derivative fiff nancial instrumr ents (Note 17)................................................................................. Accruer d interest .......................................................................................................................... MCPS dividends payabla e ............................................................................................................ Contract liabia lities (Note 24)....................................................................................................... Operating lease liabia lities (Note 25) ........................................................................................... Other ........................................................................................................................................... (in millions) $ 330 151 188 43 65 82 29 51 3 90 109 543 Total........................................................................................................................................ $ 1,684 $ Other long-term liabia lities consisted of the folff lowing: 286 83 157 41 42 83 13 30 3 — 92 416 1,246 December 31, 2022 December 31, 2021 (in millions) Environmental (Note 13) ............................................................................................................ $ Extended disabia lity benefiff ts ........................................................................................................ Warranty obligations (Note 9) .................................................................................................... Restrucrr turt ing (Note 10) .............................................................................................................. Payroll-related obligations .......................................................................................................... Accruer d income taxes ................................................................................................................. Defeff rred income taxes, net (Note 14) ......................................................................................... Contract liabia lities (Note 24)....................................................................................................... Derivative fiff nancial instrumr ents (Note 17)................................................................................. Other ........................................................................................................................................... Total........................................................................................................................................ $ 1 4 9 18 10 161 481 9 7 50 750 $ $ 4 5 8 21 11 153 153 — 7 74 436 9. WARRARR NTY OBLIGATIONS Expected warranty costs forff products sold are recognized principally at the time of sale of the product based on an lly will be required to settle such obligations. These accruar estimate of the amount that eventuat ls are based on faff ctors such as past experience, production changes, industryrr developments and various other considerations. The estimated costs related to product recalls based on a forff mal campaign soliciting returt n of that product are accruer d at the time an obligation becomes probabla e and can be reasonabla y estimated. These estimates are adjusted frff om time to time based on faff cts and circumstances that impact the statust product recall costs, across all of its operating segments as of December 31, 2022. The Company estimates the reasonabla y possible amount to ultimately resolve all matters in excess of the recorded reserves as of December 31, 2022 to be zero to $10 million. of existing claims. Aptiv has recognized its best estimate forff its total aggregate warranty reserves, including 87 The tabla e below summarizes the activity in the product warranty liabia lity forff the years ended December 31, 2022 and 2021: Accruar l balance at beginning of year.......................................................................................... $ Provision forff estimated warranties incurred during the year.................................................. Changes in estimate forff pre-existing warranties..................................................................... Settlements made during the year (in cash or in kind) ........................................................... Foreign currency translation and other................................................................................... $ 49 44 3 (43) (1) Accruar l balance at end of year.................................................................................................... $ 52 $ 59 36 15 (59) (2) 49 Year Ended December 31, 2022 2021 (in millions) 10. RESTRUCTURING Aptiv’s restrucrr turt ing activities are undertaken as necessaryrr to implement management’s strategy, streamline operations, city and resources, and ultimately achieve net cost reductions. These activities generally relate take advantage of availabla e capaa to the realignment of existing manufaff cturt executing Aptiv’s strategy, either in the normal course of business or pursuant to signififf cant restrucrr ing capaa city and closure of faff cilities and other exit or disposal activities, as it relates to turt ing programs. As part of the Company’s continued effff orff ts to optimize its cost strucr turt e, it has undertaken several restrucr turt ing programs ff ing foot oximately $85 million, of which $61 million was recognized forff which include workforff ce reductions as well as plant closures. These programs are primarily focff used on reducing global overhead costs and the continued rotation of our manufaff cturt December 31, 2022, the Company recorded employee-related and other restrucrr appr a million was recognized forff restrucr have resulted (or are expected to result) in a material change to our restrucrr additional restrucrr oximately $10 million (of which appr turt and User Experience segment and appr a appr oved as of December 31, 2022, which are expected to be incurred within the next twelve months. programs implemented in the North America region. None of the Company’s individual oximately $5 million relates to the Signal and Power Solutions segment) forff ing costs of appr a ing costs. The Company expects to incur turt oximately $5 million relates to the Advanced Safeff ty int to best cost locations in Europe. During the year ended ing charges related to these programs totaling ing programs initiated during 2022 were material and there have been no changes in previously initiated programs that programs implemented in the European region and $23 programs prt turt turt a a During the year ended December 31, 2021, the Company recorded employee-related and other restrucr turt ing charges a ing charges totaling appr oximately $24 million. During the year ended December 31, 2020, the Company recorded employee-related and turt totaling appr other restrucrr implemented in the North America region and $57 million was recognized forff The charges recorded during the year ended December 31, 2020 included the recognition of appr employee-related and other costs related to actions taken as a result of the global impacts of the COVID-19 pandemic. oximately $136 million, of which $62 million was recognized forff programs implemented in the European region. oximately $90 million of programs a a Restrucr turt ing charges forff lump sum in accordance with either statutt oryrr to its restrucr ing programs of appr 2022, 2021 and 2020, respectively. turt a employee separation and termination benefiff ts are paid either over the severance period or in a requirements or individual agreements. Aptiv incurred cash expenditurt es related oximately $67 million, $80 million and $151 million in the years ended December 31, The folff lowing tabla e summarizes the restrucr turt ing charges recorded forff 2020 by operating segment: the years ended December 31, 2022, 2021 and Year Ended December 31, 2022 2021 (in millions) 2020 Signal and Power Solutions............................................................................. $ Advanced Safeff ty and User Experience ........................................................... Total ............................................................................................................ $ 30 55 85 $ $ 8 16 24 $ $ 90 46 136 88 The tabla e below summarizes the activity in the restrucrr turt ing liabia lity forff the years ended December 31, 2022 and 2021: Employee Termination Benefiff ts Liability Other Exit Costs Liability (in millions) Employee Termination Benefiff ts Accruar l balance at Januaryrr 1, 2021 ................................................................. $ 125 $ — $ Provision forff estimated expenses incurred during the year......................... Payments made during the year .................................................................. Foreign currency and other ......................................................................... Accruar l balance at December 31, 2021 ........................................................... $ Provision forff estimated expenses incurred during the year......................... $ Payments made during the year .................................................................. Foreign currency and other ......................................................................... Accruar l balance at December 31, 2022 ........................................................... $ 24 (80) (6) 63 85 (67) 2 83 $ $ $ — — — — $ — $ — — — $ 125 24 (80) (6) 63 85 (67) 2 83 11. DEBT The folff lowing is a summaryrr of debt outstanding, net of unamortized issuance costs and discounts, as of December 31, 2022 and 2021: December 31, 2022 2021 (in millions) 697 $ 747 533 298 790 296 345 — 790 563 298 — 296 345 1,452 1,450 987 308 38 6,491 (31) — 311 14 4,067 (8) 4,059 2.396%, senior notes, due 2025 (net of $3 and $0 unamortized issuance costs, respectively)... $ 1.50%, Euro-denominated senior notes, due 2025 (net of $1 and $2 unamortized issuance costs and $1 and $1 discount, respectively)................................................................................ 1.60%, Euro-denominated senior notes, due 2028 (net of $2 and $3 unamortized issuance costs, respectively) ...................................................................................................................... 4.35%, senior notes, due 2029 (net of $2 and $2 unamortized issuance costs, respectively)..... 3.25%, senior notes, due 2032 (net of $7 and $0 unamortized issuance costs and $3 and $0 discount, respectively) ................................................................................................................ 4.40%, senior notes, due 2046 (net of $3 and $3 unamortized issuance costs and $1 and $1 discount, respectively) ................................................................................................................ 5.40%, senior notes, due 2049 (net of $4 and $4 unamortized issuance costs and $1 and $1 discount, respectively) ................................................................................................................ 3.10%, senior notes, due 2051 (net of $16 and $17 unamortized issuance costs and $32 and $33 discount, respectively) ......................................................................................................... 4.15%, senior notes, due 2052 (net of $11 and $0 unamortized issuance costs and $2 and $0 discount, respectively) ................................................................................................................ Tranche A Term Loan, due 2026 (net of $1 and $2 unamortized issuance costs, respectively). Finance leases and other ............................................................................................................. Total debt................................................................................................................................ Less: current portion ................................................................................................................... Long-term debt ....................................................................................................................... $ 6,460 $ 89 The principal maturt ities of debt, at nominal value, are as folff lows: Debt and Finance Lease Obligations (in millions) 2023 ........................................................................................................................................................................ $ 2024 ........................................................................................................................................................................ 2025 ........................................................................................................................................................................ 2026 ........................................................................................................................................................................ 2027 ........................................................................................................................................................................ Thereaftff er................................................................................................................................................................ Total ................................................................................................................................................................... $ 31 32 1,469 262 2 4,785 6,581 Credit Agreement Aptiv PLC and its wholly-owned subsidiaryrr Aptiv Corpor rr with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit faff cilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit faff cility of $2 billion (the “Revolving Credit Facility”). Subsequently, Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiaryrr 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. ation entered into a credit agreement (the “Credit Agreement”) 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 June 2021 amendment, among other things, (1) refiff nanced and replaced the existing term loan A and revolver with a new term loan A that maturt es in 2026, and a new fiff ve-year revolving credit faff cility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainabia lity-linked metrics and commitments, that, if achieved, would change the faff cility feff e and interest rate margins as described below, and (3) establa ished 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 forff fulff ff four acquisitions, as defiff ned in the Credit Agreement) and allowed forff modififf cation of debt totaled $1 million and $4 million during the years ended December 31, 2021 and 2020, respectively, related to the June 2021 amendment and May 2020 amendment. Aptiv paid amendment feff es of $6 million and $18 million during the years ended December 31, 2021 and 2020, respectively, which are reflff ected as fiff nancing activities in the consolidated statements of cash flff ows. l fiff scal quarters folff dividends and other payments on equity. Losses on lowing completion of material The Tranche A Term Loan and the Revolving Credit Facility maturt e on June 24, 2026. Beginning in the third quarter of 2022, Aptiv was obligated to begin making quarterly principal payments on the Tranche A Term Loan according to the amortization schedule in the Credit Agreement. The Credit Agreement also contains an accordion feff aturt e that permits Aptiv to increase, frff om time to time, the aggregate borrowing capaa upon Aptiv’s request, the agreement of the lenders participating in the increase, and the appr city under the Credit Agreement by up to an additional $1 billion oval of the Administrative Agent. a As of December 31, 2022, Aptiv had 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 availabia lity under the Revolving Credit Facility. Loans under the Credit Agreement bear interest, at Aptiv’s option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as defiff ned in the Credit Agreement) or (b) the London Interbar nk Offff eff red Rate (the “Adjusted LIBO Rate” as th in the tabla e below (the defiff ned in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forff “Applicabla e Rate”). The June 2021 amendment also contains provisions to faff cilitate the replacement of the LIBOR-based rate with a Secured Overnight Financing Rate (“SOFR”) based rate upon the discontinuation or unavailabia lity of LIBOR. The Applicabla e Rates under the Credit Agreement on the specififf ed dates are set forff th below: Revolving Credit Facility ..................................................... Tranche A Term Loan .......................................................... 1.06 % 1.105 % 0.06 % 0.105 % 1.10 % 1.125 % 0.10 % 0.125 % December 31, 2022 December 31, 2021 LIBOR plus ABR plus LIBOR plus ABR plus 90 Under the June 2021 amendment, the Applicabla e Rate under the Credit Agreement, as well as the faff cility feff e, may increase or decrease frff om time to time based on changes in the Company’s credit ratings and whether the Company achieves or faff ils to achieve certain sustainabia lity-linked targets with respect to greenhouse gas emissions and workplace safeff ty. 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 faff cility feff e. Accordingly, the interest rate is subject to flff uctuat ate credit ratings or whether the Company achieves or faff ils to achieve its sustainabia lity-linked targets. The Company’s corpor Credit Agreement also requires that Aptiv pay certain faff cility feff es on the Revolving Credit Facility, which are also subject to adjustment based on the sustainabia lity-linked targets as described above The Company achieved the sustainabia lity-linked targets forff feff es were reduced by the amounts specififf ed above tion during the term of the Credit Agreement based on changes in the ABR, LIBOR, changes in the the 2021 calendar year, and the interest rate margins and faff cility , and certain letter of credit issuance and frff onting feff es. , effff eff ctive in third quarter of 2022. a a r The interest rate period with respect to LIBOR interest rate options can be set at one-, three-, or six-months as selected by icabla e lenders). Aptiv Aptiv in accordance with the terms of the Credit Agreement (or other period as may be agreed by the appl may elect to change the selected interest rate option in accordance with the provisions of the Credit Agreement. As of December 31, 2022, Aptiv selected the one-month LIBOR interest rate option on the Tranche A Term Loan, and the rate effff eff ctive as of December 31, 2022, as detailed in the tabla e below, was based on the Company’s current credit rating and the Applicabla e Rate forff the Credit Agreement: a Borrowings as of December 31, 2022 Rates effff eff ctive as of Applicable Rate (in millions) December 31, 2022 Tranche A Term Loan ................................................................... LIBOR plus 1.105% $ 309 5.48 % Borrowings under the Credit Agreement are prepayabla e at Aptiv’s option without premium or penalty. The Credit Agreement contains certain covenants that limit, among other things, the Company’s (and the Company’s subsidiaries’) abia lity to incur certain additional indebtedness or liens or to dispose of substantially all of its assets. 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 defiff ned in the Credit Agreement) of not more than 3.5 to 1.0 (or 4.0 to 1.0 forff Agreement). Following completion of the acquisition of Wind River in December 2022, the Company elected to increase the ratio of Consolidated Total Indebtedness to Consolidated EBITDA to 4.0 to 1.0 commencing with the fiff scal quarter ending December 31, 2022. Refeff r to Note 20. Acquisitions and Divestiturt es forff lowing completion of material acquisitions, as defiff ned in the Credit ther inforff mation on this acquisition. l fiff scal quarters folff ff four furff fulff The Credit Agreement also contains events of defaff ult customaryrr compliance with the Credit Agreement covenants as of December 31, 2022. forff fiff nancings of this type. The Company was in As of December 31, 2022, all obligations under the Credit Agreement were borrowed by Aptiv Corpor rr ation and jointly and severally guaranteed by AGFL and Aptiv PLC, subject to certain exceptions set forff th in the Credit Agreement. Senior Unsecured Notes On March 10, 2015, Aptiv PLC issued €700 million in aggregate principal amount of 1.50% Euro-denominated senior unsecured notes due 2025 (the “2015 Euro-denominated Senior Notes”) in a transaction registered under the Securities Act of 1933, as amended (the “Securities Act”). The 2015 Euro-denominated Senior Notes were priced at 99.54% of par, resulting in a yield to maturt ity of 1.55%. The proceeds were primarily utilized to redeem $500 million of 6.125% senior unsecured notes due 2021, and to fund ff issuance costs in connection with the 2015 Euro-denominated Senior Notes. Interest is payabla e annually on March 10. The Company has designated the 2015 Euro-denominated Senior Notes as a net investment hedge of the forff eign currency exposure of its investments in certain Euro-denominated wholly-owned subsidiaries. Refeff r to Note 17. Derivatives and Hedging Activities forff growth initiatives, such as acquisitions, and share repurchases. Aptiv incurred appr oximately $5 million of ther inforff mation. furff a On September 15, 2016, Aptiv PLC issued €500 million in aggregate principal amount of 1.60% Euro-denominated senior unsecured notes due 2028 (the “2016 Euro-denominated Senior Notes”) in a transaction registered under the Securities Act. The 2016 Euro-denominated Senior Notes were priced at 99.881% of par, resulting in a yield to maturt ity of 1.611%. The proceeds, together with proceeds frff om the 2016 Senior Notes described below, were utilized to redeem $800 million of 5.00% senior unsecured notes due 2023. Aptiv incurred appr oximately $4 million of issuance costs in connection with the 2016 Euro- denominated Senior Notes. Interest is payabla e annually on September 15. The Company has designated the 2016 Euro- denominated Senior Notes as a net investment hedge of the forff eign currency exposure of its investments in certain Euro- denominated wholly-owned subsidiaries. Refeff r to Note 17. Derivatives and Hedging Activities forff ther inforff mation. furff a 91 On September 20, 2016, Aptiv PLC issued $300 million in aggregate principal amount of 4.40% senior unsecured notes due 2046 (the “2016 Senior Notes”) in a transaction registered under the Securities Act. The 2016 Senior Notes were priced at 99.454% of par, resulting in a yield to maturt denominated Senior Notes, were utilized to redeem $800 million of 5.00% senior unsecured notes due 2023. Aptiv incurred appr a 1 and October 1 of each year to holders of record at the close of business on March 15 or September 15 immediately preceding the interest payment date. oximately $3 million of issuance costs in connection with the 2016 Senior Notes. Interest is payabla e semi-annually on April ity of 4.433%. The proceeds, together with proceeds frff om the 2016 Euro- On March 14, 2019, Aptiv PLC issued $650 million in aggregate principal amount of senior unsecured notes in a transaction registered under the Securities Act, comprised of $300 million of 4.35% senior unsecured notes due 2029 (the “4.35% Senior Notes”) and $350 million of 5.40% senior unsecured notes due 2049 (the “5.40% Senior Notes”) (collectively, ity of 4.365%, the “2019 Senior Notes”). The 4.35% Senior Notes were priced at 99.879% of par, resulting in a yield to maturt and the 5.40% Senior Notes were priced at 99.558% of par, resulting in a yield to maturt utilized to redeem $650 million of 3.15% senior unsecured notes due 2020. Aptiv incurred appr costs in connection with the 2019 Senior Notes. Interest on the 2019 Senior Notes is payabla e semi-annually on March 15 and September 15 of each year to holders of record at the close of business on March 1 or September 1 immediately preceding the interest payment date. ity of 5.430%. The proceeds were oximately $7 million of issuance a On November 23, 2021, Aptiv PLC issued $1.5 billion in aggregate principal amount of 3.10% senior unsecured notes due 2051 (the “2021 Senior Notes”) in a transaction registered under the Securities Act. The 2021 Senior Notes were priced at ity of 3.214%. The proceeds were utilized to redeem the $700 million of 4.15% 97.814% of par, resulting in a yield to maturt senior unsecured notes due 2024 (the “2014 Senior Notes”) and $650 million of 4.25% senior unsecured notes due 2026 (the “4.25% Senior Notes”). As a result of the redemption of the 2014 Senior Notes and the 4.25% Senior Notes, Aptiv recognized a loss on debt extinguishment of appr oximately $126 million during the year ended December 31, 2021 within other expense, net a a in the consolidated statement of operations. Aptiv incurred appr 2021 Senior Notes. Interest on the 2021 Senior Notes is payabla e semi-annually on June 1 and December 1 of each year (commencing on June 1, 2022) to holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date. On December 27, 2021, Aptiv PLC entered into a supplemental indenturt e to add AGFL as a joint and several co-issuer of the 2021 Senior Notes effff eff ctive as of the date of issuance. oximately $17 million of issuance costs in connection with the On Februarr ryrr 18, 2022, Aptiv PLC and Aptiv Corpor r ation (together, the “Issuers”) issued $2.5 billion in aggregate principal amount of senior unsecured notes in a transaction registered under the Securities Act, comprised of $700 million of 2.396% senior unsecured notes due 2025 (the “2.396% Senior Notes”), $800 million of 3.25% senior unsecured notes due 2032 (the “3.25% Senior Notes”) and $1.0 billion of 4.15% senior unsecured notes due 2052 (the “4.15% Senior Notes”) (collectively, the “2022 Senior Notes”). The 2022 Senior Notes are guaranteed by AGFL. The 2.396% Senior Notes were priced at 100% of par, resulting in a yield to maturt ity of 2.396%; the 3.25% Senior Notes were priced at 99.600% of par, resulting in a yield to maturt maturt their principal amount plus accrur ed and unpaid interest thereon. The proceeds frff om the 2022 Senior Notes were utilized to fund a portion of the cash consideration payabla e in connection with the acquisition of Wind River. ity of 3.297%; and the 4.15% Senior Notes were priced at 99.783% of par, resulting in a yield to ryrr 18, 2023, the 2.396% Senior Notes may be optionally redeemed at a price equal to ff ity of 4.163%. On or aftff er Februar Aptiv incurred appr a oximately $22 million of issuance costs in connection with the 2022 Senior Notes. Interest on the 2.396% Senior Notes, 3.25% Senior Notes and 4.15% Senior Notes is payabla e semi-annually on Februarr (commencing August 18, 2022), March 1 and September 1 (commencing September 1, 2022) and May 1 and November 1 (commencing May 1, 2022), respectively, of each year to holders of record at the close of business on Februar Februar ryrr 15 or August 15, April 15 or October 15, respectively, immediately preceding the interest payment date. ryrr 18 and August 18 ryrr 3 or August 3, Although the specififf c terms of each indenturt e governing each series of senior notes vary,rr the indenturt es contain certain restrictive covenants, including with respect to Aptiv’s (and Aptiv’s subsidiaries’) abia lity to incur liens, enter into sale and leaseback transactions and merge with or into other entities. In Februar guarantors on each series of outstanding senior notes previously issued by Aptiv PLC. As of December 31, 2022, the Company was in compliance with the provisions of all series of the outstanding senior notes. ation and AGFL were added as ryrr 2022, Aptiv Corpor rr Other Financing toring—Agg Receivable facff ptiv maintains a €450 million European accounts receivabla e faff ctoring faff cility that is availabla e on faff ctoring of receivabla es denominated in both Euros and U.S. dollars (“USD”). This faff cility is a committed basis and allows forff accounted forff as short-term debt and borrowings are subject to the availabia lity of eligible accounts receivabla e. Collateral is not required related to these trade accounts receivabla e. This faff cility became effff eff ctive on Januaryrr 1, 2021 and has an initial term of three years, subject to Aptiv’s right to terminate at any time with three months’ notice. Aftff er expiration of the three-year term, either party can terminate with three months’ notice. Borrowings denominated in Euros under the faff cility bear interest at the three-month Euro Interbar nk Offff eff red Rate (“EURIBOR”) plus 0.50% and USD borrowings bear interest at two-month LIBOR 92 plus 0.50%, with borrowings under either denomination carryirr ng a minimum interest rate of 0.20%. As of December 31, 2022 and 2021, Aptiv had no amounts outstanding under the European accounts receivabla e faff ctoring faff cility. FiFF nance leases and othett s of December 31, 2022 and 2021, appr of other debt primarily issued by certain non-U.S. subsidiaries and fiff nance lease obligations were outstanding. oximately $38 million and $14 million, respectively, r—Arr a IntII erest—Ctt ash paid forff interest related to debt outstanding totaled $190 million, $159 million and $154 million forff the years ended December 31, 2022, 2021 and 2020, respectively. Letter of credit facff ilities—In addition to the letters of credit issued under the Credit Agreement, Aptiv had appr a oximately $3 million and $3 million outstanding through other letter of credit faff cilities as of December 31, 2022 and 2021, respectively, primarily to support arrangements and other obligations at certain of its subsidiaries. 12. PENSION BENEFITS Certain of Aptiv’s non-U.S. subsidiaries sponsor defiff ned benefiff t pension plans, which generally provide benefiff ts based l and the United Kingdom (“U.K.”). The U.K. and certain Mexican plans are funde each year of service. Aptiv’s primaryrr non-U.S. plans are located in France, Germany, Mexico, on negotiated amounts forff Portuga t benefiff t plans in South Korea, Turkey and Italy forff which amounts are payabla e to employees immediately upon separation. The obligations forff these plans are recorded over the requisite service period. d. In addition, Aptiv has defiff ned ff Aptiv sponsors a Supplemental Executive Retirement Program (“SERP”) forff those employees who were U.S. executives of the forff mer Delphi Corpor 2009, the effff eff ctive date of the program. This program is unfunde involuntaryrr or voluntaryrr separation frff om Aptiv. The SERP is closed to new members. r ff ation prior to September 30, 2008 and were still U.S. executives of the Company on October 7, d. Executives receive benefiff ts over fiff ve years aftff er an Funded Status The amounts shown below reflff ect the change in the U.S. defiff ned benefiff t pension obligations during 2022 and 2021. Benefiff t obligation at beginning of year....................................................................................... $ Actuat rial gain ......................................................................................................................... Benefiff ts paid........................................................................................................................... Benefiff t obligation at end of year................................................................................................. $ Change in plan assets: Year Ended December 31, 2022 2021 (in millions) 5 $ (1) (1) 3 $ Fair value of plan assets at beginning of year ........................................................................ $ — $ Aptiv contributions............................................................................................................ Benefiff ts paid...................................................................................................................... Fair value of plan assets at end of year................................................................................... $ ff Underfunde d statust ................................................................................................................. $ Amounts recognized in the consolidated balance sheets consist of:ff Current liabia lities .................................................................................................................... $ Long-term liabia lities ............................................................................................................... Total .................................................................................................................................. $ Amounts recognized in accumulated other comprehensive loss consist of (pre-tax): Actuat rial loss .......................................................................................................................... $ Total .................................................................................................................................. $ 1 (1) — $ (3) $ (1) $ (2) (3) $ 4 4 $ $ 8 — (3) 5 — 3 (3) — (5) (1) (4) (5) 6 6 93 The amounts shown below reflff ect the change in the non-U.S. defiff ned benefiff t pension obligations during 2022 and 2021. Year Ended December 31, 2022 2021 Benefiff t obligation at beginning of year....................................................................................... $ Service cost............................................................................................................................. Interest cost............................................................................................................................. Actuat rial gain ......................................................................................................................... Benefiff ts paid........................................................................................................................... Impact of curtailments............................................................................................................ Exchange rate movements and other ...................................................................................... Benefiff t obligation at end of year................................................................................................. $ Change in plan assets: Fair value of plan assets at beginning of year ........................................................................ $ Actuat l returt n on plan assets .............................................................................................. Aptiv contributions............................................................................................................ Benefiff ts paid...................................................................................................................... Exchange rate movements and other................................................................................. (in millions) 861 $ 15 23 (171) (35) — (42) 651 438 (89) 23 (35) (30) $ $ Fair value of plan assets at end of year................................................................................... $ ff Underfunde d statust ................................................................................................................. $ 307 $ (344) $ Amounts recognized in the consolidated balance sheets consist of:ff Long-term assets..................................................................................................................... $ 25 $ Current liabia lities .................................................................................................................... Long-term liabia lities ............................................................................................................... (18) (351) Total .................................................................................................................................. $ (344) $ Amounts recognized in accumulated other comprehensive loss consist of (pre-tax): Actuat rial loss .......................................................................................................................... $ Total .................................................................................................................................. $ 17 17 $ $ The benefiff t obligations were impacted by actuat rial gains of $172 million and $62 million during the years ended December 31, 2022 and 2021, respectively, primarily due to changes in the discount rates used to measure the benefiff t obligation. 977 18 19 (62) (36) (3) (52) 861 438 23 25 (36) (12) 438 (423) 29 (17) (435) (423) 101 101 94 The projected benefiff t obligation (“PBO”), accumulated benefiff t obligation (“ABO”), and faff ir value of plan assets forff pension plans with accumulated benefiff t obligations in excess of plan assets and with plan assets in excess of accumulated benefiff t obligations are as folff lows: U.S. Plans Non-U.S. Plans 2022 2021 2022 2021 (in millions) Plans with ABO in Excess of Plan Assets PBO...................................................................................... $ ABO ..................................................................................... Fair value of plan assets at end of year................................ $ 3 3 — $ 5 5 — 449 398 80 Plans with Plan Assets in Excess of ABO PBO...................................................................................... $ — $ — $ ABO ..................................................................................... Fair value of plan assets at end of year................................ PBO...................................................................................... $ ABO ..................................................................................... Fair value of plan assets at end of year................................ — — 3 3 — $ — — Total $ 5 5 — 202 193 227 651 591 307 $ $ $ 445 405 7 416 393 431 861 798 438 Benefiff t costs presented below were determined based on actuat rial methods and included the folff lowing: Amortization of actuat rial losses ...................................................................... $ Net periodic benefiff t cost ............................................................................. $ 1 1 $ $ 1 1 $ $ 1 1 U.S. Plans Year Ended December 31, 2022 2021 (in millions) 2020 Non-U.S. Plans Year Ended December 31, 2022 2021 (in millions) 2020 Service cost...................................................................................................... $ Interest cost...................................................................................................... Expected returt n on plan assets ........................................................................ Settlement loss................................................................................................. Curtailment loss .............................................................................................. Amortization of actuat rial losses ...................................................................... Other................................................................................................................ Net periodic benefiff t cost ............................................................................. $ 15 23 (17) — — 8 — 29 $ $ 18 19 (17) 1 3 14 — 38 $ $ 18 20 (17) 1 — 14 1 37 Other postretirement benefiff t obligations were appr a oximately $1 million and $1 million at December 31, 2022 and 2021, respectively. Experience gains and losses, as well as the effff eff cts of changes in actuat rial assumptions and plan provisions are recognized in other comprehensive income. Cumulative gains and losses in excess of 10% of the PBO forff over the average futff urt e service period of the employees in that plan. a particular plan are amortized 95 The principal assumptions used to determine the pension expense and the actuat rial value of the projected benefiff t obligation forff the U.S. and non-U.S. pension plans were: Assumptions used to determine benefiff t obligations at December 31: Pension Benefiff ts U.S. Plans Non-U.S. Plans 2022 2021 2022 2021 Weighted-average discount rate................................................................... 5.20 % 1.90 % Weighted-average rate of increase in compensation levels ......................... N/A N/A 5.95 % 2.82 % 3.09 % 2.47 % Assumptions used to determine net expense forff years ended December 31: Weighted-average discount rate ....................... Weighted-average rate of increase in compensation levels ...................................... Weighted-average expected long-term rate of returt n on plan assets...................................... Pension Benefiff ts U.S. Plans Non-U.S. Plans 2022 2021 2020 2022 2021 2020 1.90 % 1.20 % 2.40 % 3.09 % 2.21 % 2.87 % N/A N/A N/A N/A N/A 2.47 % 3.64 % 3.69 % N/A 4.46 % 4.29 % 4.68 % Aptiv selects discount rates by analyzing the results of matching each plan’s projected benefiff t obligations with a portfolff io of high-quality fiff xed income investments rated AA or higher by Standard and Poor’s or Moody’s. Aptiv does not have any U.S. pension assets; thereforff e no U.S. asset rate of returt n calculation was necessary.rr The primaryrr d non-U.S. plans are in the U.K. and Mexico. For the determination of 2022 expense, Aptiv assumed a long-term expected the U.K. and Mexico, respectively. Aptiv evaluated input frff om local perforff mance and historical returt ns, in developing the long- funde ff asset rate of returt n of appr actuat term rate of returt n assumptions. The assumptions forff determine the expected returt n on plan assets, the market-related value of our plan assets is actuat the U.K. and Mexico are primarily long-term, prospective rates. To ries and asset managers, including consideration of recent fund oximately 3.75% and 7.50% forff l faff ir value. a ff Aptiv’s pension expense forff es of analysis, the lowing tabla e highlights the sensitivity of the Company’ pension obligations and expense to changes in key assumptions: 2023 is determined at the 2022 year end measurement date. For purpos r folff 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 ....................................................................... 25 bp decrease in long-term expected returt n on assets .................................. 25 bp increase in long-term expected returt n on assets................................... ‘- $1 million ‘+ $1 million ‘- $1 million ‘- $15 million — — a The above sensitivities reflff ect the effff eff ct of changing one assumption at a time. It should be noted that economic faff ctors and conditions oftff en affff eff ct multiple assumptions simultaneously and the effff eff cts of changes in key assumptions are not necessarily linear. The above programs. sensitivities also assume no changes to the design of the pension plans and no maja or restrucrr a turt ing 96 Pension Funding The folff lowing benefiff t payments, which reflff ect expected futff urt e service, as appr a opriate, are expected to be paid: Projected Pension Benefiff t Payments U.S. Plans Non-U.S. Plans (in millions) 2023 .................................................................................................................................... $ 2024 .................................................................................................................................... 2025 .................................................................................................................................... 2026 .................................................................................................................................... 2027 .................................................................................................................................... 2028 – 2032 ........................................................................................................................ $ 1 1 1 — — — 49 41 43 49 53 285 Aptiv anticipates making pension contributions and benefiff t payments of appr a oximately $36 million in 2023. Aptiv sponsors defiff ned contribution plans forff certain hourly and salaried employees. Expense related to the contributions these plans was $39 million, $37 million, and $17 million forff forff respectively. the years ended December 31, 2022, 2021 and 2020, Plan Assets Certain pension plans sponsored by Aptiv invest in a diversififf ed portfolff io consisting of an array of asset classes that attempts to maximize returt ns while minimizing volatility. These asset classes include developed market equities, emerging market equities, private equity, global high quality and high yield fiff xed income, real estate and absa olute returt n strategies. The faff ir values of Aptiv’s pension plan assets weighted-average asset allocations at December 31, 2022 and 2021, by asset category,rr are as folff lows: Fair Value Measurements at December 31, 2022 Quoted Prices in Active Markets forff Identical Assets (Level 1) Signififf cant Observable Inputs (Level 2) Signififf cant Unobservable Inputs (Level 3) Asset Category Total Cash and cash equivalents.......................... $ Time deposits ............................................. Equity mutuat l funds ff ................................... Bond mutuat l funds ff ..................................... ff Real estate trusr Private debt funds ff ................................. ....................................... t funds Insurance contracts ..................................... Debt securities ............................................ Equity securities ......................................... $ 12 28 6 110 36 17 2 59 37 (in millions) $ 4 — — — — — — 59 37 $ 8 28 6 110 — — — — — Total ....................................................... $ 307 $ 100 $ 152 $ 97 — — — — 36 17 2 — — 55 Fair Value Measurements at December 31, 2021 Quoted Prices in Active Markets forff Identical Assets (Level 1) Signififf cant Observable Inputs (Level 2) Signififf cant Unobservable Inputs (Level 3) (in millions) — — — — 35 11 4 — — 50 Asset Category Total Cash and cash equivalents.......................... $ Time deposits ............................................. Equity mutuat l funds ff ................................... Bond mutuat l funds ff ..................................... Real estate trusr t funds ff ................................. ff Hedge funds ................................................ Insurance contracts ..................................... Debt securities ............................................ Equity securities ......................................... $ 13 29 33 216 35 11 4 56 41 13 — — — — — — 56 41 $ — $ 29 33 216 — — — — — Total ....................................................... $ 438 $ 110 $ 278 $ Following is a description of the valuation methodologies used forff pension assets measured at faff ir value. TiTT me depos e of similar remaining maturt ities. itstt —The faff ir value of fiff xed-maturt ity certififf cates of deposit was estimated using the rates offff eff red forff deposits Equitytt mutual funds ff —The faff ir value of the equity mutuat regulated fiff nancial exchanges of the underlying investments included in the fund. l funds ff ff is determined by the indirect quoted market prices on Bond mutual funds ff —The faff ir value of the bond mutuat regulated fiff nancial exchanges of the underlying investments included in the fund. l funds ff ff is determined by the indirect quoted market prices on Real estate—The faff ir value of real estate properties is estimated using an annual appr a aisal provided by the administrator of the property investment. Management believes this is an appr a opriate methodology to obtain the faff ir value of these assets. Private debt funds ff —The faff ir value of the private debt funds market quotes on the subject securities or an income appr this is an appr opriate methodology to obtain the faff ir value of these assets. a a ff administrator based on availabla e oach valuation in order to estimate faff ir value. Management believes is determined by the fund ff ff —The faff ir value of the hedge funds HeHH dge funds the underlying hedge fund not have suffff iff cient trading activity to derive prices. Management and the custodian review the methods used by the underlying opriate methodology to obtain the faff ir value of these assets. a managers to value the assets. Management believes this is an appr by a custodian. The custodian obtains valuations frff om the most liquid assets and alternative methods forff managers based on market quotes forff is accounted forff assets that do ff ff InsII urance contrt actstt —The insurance contracts are invested in a fund ff with guaranteed minimum returt ns. The faff ir values of these contracts are based on the net asset value underlying the contracts. Debt securities—The faff ir value of debt securities is determined by direct quoted market prices on regulated fiff nancial exchanges. Equitytt securities—The faff ir value of equity securities is determined by direct quoted market prices on regulated fiff nancial exchanges. 98 Fair Value Measurements Using Signififf cant Unobservable Inputs (Level 3) Real Estate Trust Fund Hedge Funds Insurance Contracts Private Lending Funds Beginning balance at Januaryrr 1, 2021.......................................... $ 34 $ Actuat l returt n on plan assets: Relating to assets still held at the reporting date ................ Purchases, sales and settlements .............................................. Foreign currency translation and other .................................... Ending balance at December 31, 2021 ......................................... $ Actuat l returt n on plan assets: Relating to assets still held at the reporting date ................ $ Purchases, sales and settlements .............................................. Foreign currency translation and other .................................... 3 (1) (1) 35 5 — (4) $ $ (in millions) 9 $ 2 — — 11 1 (10) (2) $ $ Ending balance at December 31, 2022 ......................................... $ 36 $ — $ 7 $ — (3) — 4 $ — $ — (2) 2 $ — — — — — (2) 19 — 17 13. COMMITMENTS AND CONTINGENCIES Ordinary Business Litigation Aptiv is frff om time to time subject to various legal actions and claims incidental to its business, including those arising out of alleged defeff cts, alleged breaches of contracts, product warranties, intellectuat matters. It is the opinion of Aptiv that the outcome of such matters will not have a material adverse impact on the consolidated fiff nancial position, results of operations, or cash flff ows of Aptiv. With respect to warranty matters, although Aptiv cannot ensure that the futff urt e costs of warranty claims by customers will not be material, Aptiv believes its establa ished reserves are adequate to cover potential warranty settlements. l property matters, and employment-related Matters Related to Global Supply Chain Disruptions Due to various faff ctors that are beyond our control, there are currently global supply chain disrupt rr ions, including a worldwide semiconductor supply shortage. 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 disrupt ions will persist in 2023. We, along with most automotive component manufaff cturt ers that use semiconductors, have been unabla e to fulff 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, fiff res in our suppliers’ faff cilities, unprecedented weather events in the southwestern United States, and other extraordinaryrr events. 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 forff of these customer expectations or any other futff urt e claims, we do not currently believe a loss is probabla e, and accordingly, no reserve has been made as of December 31, 2022. We will continue to actively monitor all direct and indirect potential impacts of these supply chain disrupt their lost production and other costs. While no assurances can be made as to the ultimate outcome ions, and will seek to aggressively mitigate and minimize their impact on our business. ly meet rr r Brazil Matters a Aptiv conducts business operations in Brazil that are subject to the Brazilian feff deral labor ication of these laws to particular circumstances. As of December 31, 2022, the maja ority of claims , social security, environmental, health and safeff ty, tax and customs laws, as well as a variety of state and local laws. While Aptiv believes it complies with such laws, they are complex, subject to varyirr ng interprrr etations, and the Company is oftff en engaged in litigation with government agencies regarding the appl asserted against Aptiv in Brazil relate to such litigation. The remaining claims in Brazil relate to commercial and labor with private parties. As of December 31, 2022, claims totaling appr currency rates) have been asserted against Aptiv in Brazil. As of December 31, 2022, the Company maintains accruar these asserted claims of $5 million (using December 31, 2022 forff eign currency rates). The amounts accruer d represent claims that are deemed probabla e of loss and are reasonabla y estimabla e based on the Company’s analyses and assessment of the asserted claims ls are adequate, the fiff nal amounts required to and prior experience with similar matters. While the Company believes its accruar resolve these matters could diffff eff r materially frff om the Company’s recorded estimates and Aptiv’s results of operations could be oximately $105 million (using December 31, 2022 forff eign litigation ls forff a a a 99 materially affff eff cted. The Company estimates the reasonabla y possible loss in excess of the amounts accruerr d related to these claims to be zero to $40 million. Environmental Matters Aptiv is subject to the requirements of U.S. feff deral, state, local and non-U.S. environmental, health and safeff ty laws and regulations. As of December 31, 2022 and 2021, the undiscounted reserve forff recorded in other liabia lities was appr requirements will not change or become more stringent over time or that its eventuat liabia lities will not exceed the amount of its current reserves. In the event that such liabia lities were to signififf cantly exceed the amounts recorded, Aptiv’s results of operations could be materially affff eff cted. At December 31, 2022 the diffff eff rence between the recorded liabia lities and the reasonabla y possible range of potential loss was not material. oximately $2 million and $4 million, respectively. Aptiv cannot ensure that environmental environmental investigation and remediation l environmental remediation costs and a 14. INCOME TAXES Income beforff e income taxes and equity income forff U.S. and non-U.S. operations are as folff lows: U.S. income (loss) ................................................................................................. $ Non-U.S. income................................................................................................... Income beforff e income taxes and equity loss ...................................................... $ 24 966 990 $ $ (2) $ 912 910 $ (65) 2,019 1,954 The provision (benefiff t) forff income taxes is comprised of:ff Year Ended December 31, 2022 2021 2020 (in millions) Year Ended December 31, 2022 2021 2020 (in millions) Current income tax expense (benefiff t): U.S. feff deral ......................................................................................................... $ 45 $ 1 $ Non-U.S. ............................................................................................................. U.S. state and local ............................................................................................. Total current...................................................................................................... Defeff rred income tax expense (benefiff t), net: U.S. feff deral ......................................................................................................... Non-U.S. ............................................................................................................. U.S. state and local ............................................................................................. Total defeff rred.................................................................................................... 205 15 265 (43) (90) (11) (144) 156 4 161 (17) (43) — (60) Total income tax provision............................................................................. $ 121 $ 101 $ (53) 154 — 101 (14) (37) (1) (52) 49 Cash paid or withheld forff income taxes was $194 million, $172 million and $106 million forff the years ended December 31, 2022, 2021 and 2020, respectively. 100 For purpos r es of comparabia lity and consistency, the Company uses the notional U.S. feff deral income tax rate when presenting the Company’s reconciliation of the income tax provision. The Company is an Irish resident taxpayer. A reconciliation of the provision foff r income taxes compared with the amounts at the notional U.S. feff deral statutt oryrr rate was: Notional U.S. feff deral income taxes at statutt oryrr rate ............................................. $ Income taxed at other rates.................................................................................... Change in valuation allowance.............................................................................. Other change in tax reserves.................................................................................. Intragroup reorganizations .................................................................................... Withholding taxes.................................................................................................. Tax credits ............................................................................................................. Change in tax law .................................................................................................. Other adjustments.................................................................................................. Year Ended December 31, 2022 2021 2020 (in millions) $ 208 (61) (63) 10 — 38 (19) — 8 $ 191 (81) (17) 19 (7) 37 (23) (7) (11) 410 (339) 10 30 (49) 26 (16) (2) (21) Total income tax expense.................................................................................. $ 121 $ Effff eff ctive tax rate ................................................................................................... 12 % $ 101 11 % 49 3 % The Company’s tax rate is affff eff cted by 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 forff which no tax benefiff t or expense was recognized due to a valuation allowance. Included in the non-U.S. income taxed at other rates are tax incentives obtained in various non-U.S. countries, primarily the High and New Technology Enterprr in China and a Free Trade Zone exemption in Honduras which totaled $12 million in 2022, $10 million in 2021 and $5 million in 2020, as well as tax benefiff t forff recorded. The Company currently benefiff ts frff om tax holidays in various non-U.S. jurisdictions with expiration dates frff om 2023 through 2041. The income tax benefiff ts attributabla e to these tax holidays are appr $1 million (less than $0.01 per share) in 2021 and $1 million (less than $0.01 per share) in 2020. losses incurred, in jurisdictions where a valuation allowance has been oximately $3 million ($0.01 per share) in 2022, income earned, and no tax benefiff t forff ise (“HNTE”) statust a The effff eff ctive tax rate in the year ended December 31, 2022 was impacted by faff vorabla e changes in valuation allowances offff sff et by changes in reserves and provision to returt n adjustments. The effff eff ctive tax rate was also impacted by impairments and charges related to our planned exit frff om our maja ority owned RusRR sian subsidiaryrr and other charges in Ukraine forff which no tax benefiff t was recognized. The effff eff ctive tax rate in the year ended December 31, 2021 was impacted by faff vorabla e provision to returt n adjustments as well as releases of valuation allowances as a result of the Company’s determination that it was more likely than not that certain uncertain tax positions. defeff rred tax assets would be realized. The Company also accruer d $19 million of reserve adjustments forff The effff eff ctive tax rate in the year ended December 31, 2020 was impacted by changes in reserves, provision to returt n the Company’s operating and legal strucr adjustments, changes in valuation allowances and the tax impact of certain intragroup reorganizations meant to streamline and simplifyff tax rate was also impacted by the benefiff cial impact frff om the gain on the forff mation of the Motional autonomous driving joint venturt e. The tax expense associated with the gain was insignififf cant as Aptiv’s aggregate autonomous driving assets were exempt frff om capia tal gains tax in the jurisdiction frff om which they were sold. The aggregate autonomous driving assets had been acquired, purchased or developed in taxabla e transactions in prior periods and reflff ect changes made to the corpor lowing the separation of its forff mer Powertrain Systems segment. operating strucr turt e, which resulted in the recognition of losses forff l property folff es. The effff eff ctive tax purpos intellectuat ate entity turt e forff r r On August 16, 2022, the Inflff ation Reduction Act (“IRARR ”) was signed into law in the U.S. Among other provisions, the ate stock IRARR includes a 15% corpor repurchases made aftff er December 31, 2022. The IRARR is not expected to have a signififf cant impact on Aptiv’s consolidated fiff nancial statements. ations and a 1% excise tax on corpor ate minimum tax rate appl ied to certain large corpor a r r r The Tax Cuts and Jobs Act, which was enacted in the U.S. in 2017, created a provision known as Global Intangible Low- Taxed Income (“GILTI”) that imposes a tax on certain earnings of forff eign subsidiaries. U.S. GAAP allows companies to make an accounting policy election to either recognize defeff rred taxes forff temporaryrr basis diffff eff rences expected to reverse as GILTI in futff urt e years or to provide forff GILTI in the year the tax is incurred. the tax expense related to GILTI in the year the tax is incurred. We have elected to account forff 101 As described above a result of their HNTE statust believes each of the appl total income tax expense. a , certain of the Company’s Chinese subsidiaries benefiff t frff om a reduced corpor ications to reappl icabla e entities will continue to renew HNTE statust . Aptiv regularly submits appl y forff HNTE statust a a r ate income tax rate as a as they expire. The Company going forff ward and has reflff ected this in calculating Defeff rred Income Taxes The Company accounts forff income taxes and the related accounts under the liabia lity method. Defeff rred income tax assets and liabia lities reflff ect the impact of temporaryrr diffff eff rences between amounts of assets and liabia lities forff purpos rr and liabia lities are as folff es and the bases of such assets and liabia lities as measured by tax laws. Signififf cant components of the defeff rred tax assets fiff nancial reporting lows: December 31, 2022 2021 (in millions) Defeff rred tax assets: Pension............................................................................................................................................ $ Employee benefiff ts........................................................................................................................... Net operating loss carryfrr orff wards .................................................................................................... Warranty and other liabia lities.......................................................................................................... Operating lease liabia lities................................................................................................................ Capia talized R&D............................................................................................................................. Other ............................................................................................................................................... Total gross defeff rred tax assets ........................................................................................................ Less: valuation allowances ............................................................................................................. Total defeff rred tax assets (1) ......................................................................................................... $ Defeff rred tax liabilities: Fixed assets ..................................................................................................................................... $ Tax on unremitted profiff ts of certain forff eign subsidiaries............................................................... Intangibles....................................................................................................................................... Operating lease right-of-ff use assets ................................................................................................. Total gross defeff rred tax liabia lities................................................................................................ $ $ $ 56 26 735 85 98 111 222 1,333 (756) 577 45 69 588 97 799 Net defeff rred tax (liabia lities) assets ............................................................................................. $ (222) $ (1) Reflff ects gross amount beforff e jurisdictional netting of defeff rred tax assets and liabia lities. 76 30 699 77 78 — 184 1,144 (766) 378 55 65 174 78 372 6 Defeff rred tax assets and liabia lities are classififf ed as long-term in the consolidated balance sheets. Net defeff rred tax assets and liabia lities are included in the consolidated balance sheets as folff lows: Long-term assets ............................................................................................................................. $ Long-term liabia lities........................................................................................................................ Total defeff rred tax (liabia lity) asset ................................................................................................ $ December 31, 2022 2021 (in millions) 259 $ (481) (222) $ 159 (153) 6 The net defeff rred tax liabia lity of $222 million as of December 31, 2022 is primarily comprised of defeff rred tax liabia lity amounts in the U.S., Italy, Korea and Singapor U.K. a e partially offff sff et by defeff rred tax assets primarily in Luxembourg, Mexico and the 102 Net Operating Loss and Tax Credit Carryforff wards As of December 31, 2022, the Company has gross defeff rred tax assets of appr a oximately $715 million forff non-U.S. net operating loss (“NOL”) carryfrr orff wards with recorded valuation allowances of $596 million. These NOLs are availabla e to offff sff et futff urt e taxabla e income and realization is dependent on generating suffff iff cient taxabla e income prior to expiration of the loss carryfrr orff wards. The NOLs primarily relate to Luxembourg, Poland, Germany, the U.K., France and Ireland. The NOL carryfrr orff wards have expiration dates ranging frff om one year to an indefiff nite period. Defeff rred tax assets include $68 million and $87 million of tax credit carryfrr orff wards with recorded valuation allowances of $61 million and $71 million at December 31, 2022 and 2021, respectively. These tax credit carryfrr orff wards expire at various times frff om 2023 through 2042. Cumulative Undistributed Foreign Earnings No income taxes have been provided on indefiff nitely reinvested earnings of certain forff eign subsidiaries at December 31, 2022. Withholding taxes of $69 million have been accruer d on undistributed earnings that are not indefiff nitely reinvested and are primarily related to China, Honduras, Morocco and Germany. There are no other material liabia lities forff undistributed earnings of forff eign subsidiaries, as the Company has concluded that such earnings are either indefiff nitely reinvested or should not give rise to additional income tax liabia lities as a result of the distribution of such earnings. income taxes on the Uncertain Tax Positions The Company recognizes tax benefiff ts only forff tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefiff t that is greater than 50 percent likely of being realized upon ultimate settlement. Unrecognized tax benefiff ts are tax benefiff ts claimed in the Company’s tax returt ns that do not meet these recognition and measurement standards. A reconciliation of the gross change in the unrecognized tax benefiff ts balance, excluding interest and penalties is as folff lows: Year Ended December 31, 2022 2021 2020 (in millions) Balance at beginning of year ................................................................................. $ 224 $ 231 $ Additions related to current year ........................................................................ Additions related to prior years .......................................................................... Reductions related to prior years ........................................................................ Reductions due to expirations of statutt e of limitations....................................... Settlements.......................................................................................................... Balance at end of year ........................................................................................... $ 12 29 (33) (7) (1) 224 $ 12 20 (36) (3) — 224 $ 217 35 31 (20) (28) (4) 231 A portion of the Company’s unrecognized tax benefiff ts would, if recognized, reduce its effff eff ctive tax rate. The remaining unrecognized tax benefiff ts relate to tax positions that, if recognized, would result in an offff sff etting change in valuation allowance and forff which only the timing of the benefiff t is uncertain. Recognition of these tax benefiff ts would reduce the Company’s effff eff ctive tax rate only through a reduction of accruer d interest and penalties. As of December 31, 2022 and 2021, the amounts of unrecognized tax benefiff t that would reduce the Company’s effff eff ctive tax rate were $214 million and $207 million, respectively. For 2022 and 2021, respectively, $83 million and $105 million of reserves forff write-offff of a related defeff rred tax asset, if recognized. uncertain tax positions would be offff sff et by the The Company recognizes interest and penalties relating to unrecognized tax benefiff ts as part of income tax expense. Total accruer d liabia lities forff Total interest and penalties recognized as part of income tax expense were a benefiff t of $2 million, and expenses of $4 million and $13 million forff interest and penalties were $25 million and $28 million at December 31, 2022 and 2021, respectively. the years ended December 31, 2022, 2021 and 2020, respectively. The Company fiff les tax returt ns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. Taxing jurisdictions signififf cant to Aptiv include Barbar dos, China, Germany, Ireland, Luxembourg, Mexico, South Korea, the U.K. and the U.S. Open tax years related to these taxing jurisdictions remain subject to examination and could result in additional tax liabia lities. In general, the Company’s affff iff liates are no longer subject to income tax examinations by forff eign tax authorities forff years beforff e 2002. It is reasonabla y possible that audit settlements, the conclusion of current examinations or the 103 expiration of the statutt e of limitations in several jurisdictions could impact the Company’s unrecognized tax benefiff ts. A reversal of appr ng of statutt es of limitations in various a taxing jurisdictions. oximately $5 million is reasonabla y possible in the next 12 months, due to the runni r 15. SHAREHOLDERS’ EQUITY AND NET INCOME PER SHARE 2020 Public Equity Offff eff ring In June 2020, the Company completed the underwritten public offff eff ring of appr a oximately 15.1 million ordinaryrr shares at a price of $75.91 per share, resulting in net proceeds of appr underwriters’ discount of $35 million. Simultaneously, the Company completed the underwritten public offff eff ring of 11.5 million 5.50% Mandatoryrr Convertible Prefeff rred Shares, Series A, $0.01 par value per share (the “MCPS”) with a liquidation prefeff rence of $100 per share, resulting in net proceeds of appr discount of $35 million. oximately $1,115 million, aftff er deducting expenses and the underwriters’ oximately $1,115 million, aftff er deducting expenses and the a a Each share of MCPS will convert on the mandatoryrr conversion date of June 15, 2023, into between 1.0754 and 1.3173 shares of the Company’s ordinaryrr shares, subject to customaryrr anti-dilution adjustments, and furff ther adjustment if there are any accumulated and unpaid MCPS dividends at the conversion date. The number of the Company’s ordinaryrr shares issuabla e upon conversion will be determined based on the volume-weighted average price per share of the Company’s ordinaryrr shares over the 20 consecutive trading day period beginning on, and including the 21st scheduled trading day immediately beforff e June 15, 2023. Subject to certain exceptions, at any time prior to June 15, 2023, holders of the MCPS may elect to convert each share into 1.0754 ordinaryrr shares, subject to furff convert at the funda ff funda mental change rates specififf ed in the statement of rights, and the holders of the MCPS would be entitled to a ther anti-dilution adjustments. In the event of a funda mental change make-whole dividend. mental change, the MCPS will ff ff Holders of the MCPS will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the annual rate of 5.50% of the liquidation prefeff rence of $100 per share (equivalent to $5.50 annually per share), payabla e in cash or, subject to certain limitations, by deliveryrr of the Company’s ordinaryrr shares or any combination of cash and the Company’s ordinaryrr shares, at the Company’s election. If declared, dividends on the MCPS are payabla e quarterly on March 15, June 15, September 15 and December 15 of each year (commencing on September 15, 2020 to, and including June 15, 2023), to the holders of record of the MCPS as they appe ar on the Company’s share register at the close of business on the immediately preceding March 1, June 1, September 1 or December 1, respectively. a Net Income Per Share Basic net income per share is computed by dividing net income attributabla e to ordinaryrr shareholders by the weighted average number of ordinaryrr shares outstanding during the period. Diluted net income per share reflff ects the weighted average dilutive impact of all potentially dilutive securities frff om the date of issuance and is computed using the treasuryrr stock and if-ff converted methods. The if-ff converted method is used to determine if the impact of the conversion of the MCPS into ordinaryrr shares is more dilutive than the MCPS dividends to net income per share. If so, the MCPS are assumed to have been converted at the later of the beginning of the period or the time of issuance, and the resulting ordinaryrr shares are included in the denominator and the MCPS dividends are added back to the numerator. For the years ended December 31, 2022 and 2021, the impact of the MCPS calculated under the if-ff converted method was anti-dilutive, and as such 12.37 million and 12.37 million ordinaryrr shares underlying the MCPS, respectively, were excluded frff om the diluted net income per share calculation. For the year ended December 31, 2020, the calculation of net income per share includes the dilutive impacts of the MCPS under the if-ff converted method. For all periods presented, the calculation of net income per share also contemplates the dilutive impacts, if any, of the Company’s share-based compensation plans. Refeff r to Note 21. Share-Based Compensation forff inforff mation. additional 104 i WeWW ight ed Average Shares The folff lowing tabla e illustrates net income per share attributabla e to ordinaryrr shareholders and the weighted average shares outstanding used in calculating basic and diluted income per share: Year Ended December 31, 2022 2021 2020 (in millions, except per share data) Numerator, basic: Net income attributabla e to ordinaryrr shareholders............................................. $ 531 Numerator, diluted: Net income attributabla e to Aptiv....................................................................... $ MCPS dividends (1) ......................................................................................... Numerator, diluted ......................................................................................... $ 594 (63) 531 $ $ $ 527 590 (63) 527 $ $ $ 1,769 1,804 — 1,804 Denominator: Weighted average ordinaryrr shares outstanding, basic ...................................... 270.90 270.46 263.43 Dilutive shares related to RSUs ........................................................................ Weighted average MCPS converted shares (1) ................................................ 0.28 — 0.76 — 0.44 6.83 Weighted average ordinaryrr shares outstanding, including dilutive shares ....... 271.18 271.22 270.70 Net income per share attributabla e to ordinaryrr shareholders: Basic.................................................................................................................. $ Diluted............................................................................................................... $ 1.96 1.96 $ $ 1.95 1.94 $ $ 6.72 6.66 (1) For purpos rr es of calculating net income per share under the if-ff converted method, the Company has included the impact of the MCPS dividends forff the years ended December 31, 2022 and 2021 as the impact was more dilutive to net income per share than the impact of assuming the conversion of the MCPS into ordinaryrr shares on a weighted average basis. The Company has excluded the impact of the MCPS dividends forff the year ended December 31, 2020, as the assumed conversion of the MCPS into ordinaryrr shares on a weighted average basis was more dilutive to net income per share than the impact of the MCPS dividends. Share Repurchase Programs In April 2016, the Board of Directors authorized a share repurchase program of up to $1.5 billion of ordinaryrr shares, which commenced in September 2016. This share repurchase program provides forff privately negotiated transactions, depending on share price, market conditions and other faff ctors, as determined by the Company. share purchases in the open market or in There were no shares repurchased during the years ended December 31, 2022 and 2021. A summaryrr of the ordinaryrr shares repurchased during the year ended December 31, 2020 is as folff lows: Total number of shares repurchased ......................................................................................................................... 1,059,075 Average price paid per share..................................................................................................................................... $ Total (in millions)................................................................................................................................................. $ 53.73 57 a As of December 31, 2022, appr oximately $13 million of share repurchases remained availabla e under the April 2016 share repurchase program, which is in addition to the share repurchase program of up to $2.0 billion that was previously announced in Januaryrr 2019. This program, which will commence folff provides forff conditions and other faff ctors, as determined by the Company. All previously repurchased shares were retired, and are reflff ected as a reduction of ordinaryrr share capia tal forff ied as reductions to additional paid- in-capia tal and retained earnings. share purchases in the open market or in privately negotiated transactions, depending on share price, market lowing the completion of the April 2016 share repurchase program, the par value of the shares, with the excess appl a 105 Prefeff rred Dividends The Company has declared and paid cash dividends per prefeff rred share during the periods presented as folff lows: Dividend Per Share Amount (in millions) 2022: Fourth quarter.............................................................................................................................. $ 1.375 $ Third quarter................................................................................................................................ Second quarter............................................................................................................................. First quarter ................................................................................................................................. Total ........................................................................................................................................ $ 2021: Fourth quarter.............................................................................................................................. $ Third quarter................................................................................................................................ Second quarter............................................................................................................................. First quarter ................................................................................................................................. Total ........................................................................................................................................ $ 1.375 1.375 1.375 5.500 1.375 1.375 1.375 1.375 5.500 $ $ $ 16 15 16 16 63 16 15 16 16 63 106 16. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in accumulated other comprehensive income (loss) attributabla e to Aptiv (net of tax) are shown below. Year Ended December 31, 2022 2021 (in millions) 2020 Foreign currency translation adjd ustments: Balance at beginning of year....................................................................... $ (588) $ (445) $ Aggregate adjustment forff the year (1) ........................................................ Balance at end of year................................................................................. (202) (790) (143) (588) Gains (losses) on derivatives: Balance at beginning of year....................................................................... $ Other comprehensive income beforff e reclassififf cations (net tax effff eff ct of $10, $0 and $0 )....................................................................................... Reclassififf cation to income (net tax effff eff ct of $1, $0 and $0)................... Balance at end of year................................................................................. (17) $ 40 $ 37 (13) 7 8 (65) (17) Pension and postretirement plans: Balance at beginning of year....................................................................... $ (67) $ (140) $ Other comprehensive income (loss) beforff e reclassififf cations (net tax effff eff ct of $(26), $(23) and $7) ................................................................. Reclassififf cation to income (net tax effff eff ct of $(2), $(4) and $(3))........... Balance at end of year................................................................................. 51 8 (8) 57 16 (67) (597) 152 (445) 13 6 21 40 (135) (18) 13 (140) Accumulated other comprehensive loss, end of year ................................. $ (791) $ (672) $ (545) (1) Includes gains of $74 million and $116 million and losses of $132 million forff to non-derivative net investment hedges. Refeff r to Note 17. Derivatives and Hedging Activities forff million of accumulated currency translation adjustment losses reclassififf ed to net income as a result of the liquidation of a forff eign subsidiaryrr ended December 31, 2022. the years ended December 31, 2022, 2021 and 2020, respectively, related ther description of these hedges. Includes $6 forff the year furff 107 Reclassififf cations frff om accumulated other comprehensive income (loss) to income were as folff lows: Reclassififf cation Out of Accumulated Other Comprehensive Income (Loss) Details About Accumulated Other Comprehensive Income Components Foreign currency translation adjd ustments: Year Ended December 31, 2022 2021 2020 Affff eff cted Line Item in the Statement of Operations (in millions) Liquidation of forff eign subsidiaryrr (1) $ (6) $ — $ — Other expense, net (6) — (6) — — — — — — Income beforff e income taxes — Income tax expense — Net income Net (loss) income attributabla e to noncontrolling interest — $ (6) $ — $ — Net income attributabla e to Aptiv Gains (losses) on derivatives: Commodity derivatives ..................... $ Foreign currency derivatives............. (5) $ 19 $ 68 (3) (7) Cost of sales (14) Cost of sales 14 (1) 13 — 13 $ 65 — 65 — 65 $ (21) Income beforff e income taxes — Income tax expense (21) Net income Net (loss) income attributabla e to noncontrolling interest — $ (21) Net income attributabla e to Aptiv Pension and postretirement plans: Actuat rial loss..................................... $ (10) $ (15) $ (16) Other expense, net (2) Curtailment loss ................................ Total reclassififf cations forff the year $ $ — (10) 2 (8) — (5) (20) 4 (16) — — Other expense, net (2) (16) Income beforff e income taxes 3 Income tax expense (13) Net income Net (loss) income attributabla e to noncontrolling interest — (8) $ (16) $ (13) Net income attributabla e to Aptiv (1) $ 49 $ (34) (1) Represents accumulated currency translation adjustment losses reclassififf ed to net income as a result of the liquidation of a forff eign subsidiaryrr during the year ended December 31, 2022. (2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 12. Pension Benefiff ts forff additional details). 17. DERIVATIVES AND HEDGING ACTIVITIES Cash Flow Hedges Aptiv is exposed to market risk, such as flff uctuat tions in forff eign currency exchange rates, commodity prices and changes in interest rates, which may result in cash flff ow risks. To manage the volatility relating to these exposures, Aptiv aggregates the exposures on a consolidated basis to take advantage of naturt al offff sff ets. For exposures that are not offff sff et within its operations, Aptiv enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative fiff nancial instrumr transaction basis to support hedge accounting. The changes in faff ir value of these hedging instrumr es, and designation of derivative instrumr ents are offff sff et in part or in ents is perforff med on a speculative purpos ents forff rr 108 whole by corresponding changes in the faff ir value or cash flff ows of the underlying exposures being hedged. Aptiv assesses the initial and ongoing effff eff ctiveness of its hedging relationships in accordance with its documented policy. As of December 31, 2022, the Company had the folff lowing outstanding notional amounts related to commodity and forff eign currency forff ward and option contracts designated as cash flff ow hedges that were entered into to hedge forff ecasted exposures: Commodity Quantity Hedged Unit of Measure Notional Amount (Approximate USD Equivalent) (in thousands) (in millions) Copper...................................................................................................................... 96,785 pounds $ 365 Foreign Currency Quantity Hedged Unit of Measure Notional Amount (Approximate USD Equivalent) Mexican Peso........................................................................................................... Chinese Yuan Renminbi .......................................................................................... Euro.......................................................................................................................... Polish Zloty.............................................................................................................. 22,516 3,223 128 730 Hungarian Forint...................................................................................................... 24,013 (in millions) MXNX RMB EUR PLN HUF $ 1,155 465 135 165 65 As of December 31, 2022, Aptiv has entered into derivative instrumrr ents to hedge cash flff ows extending out to December 2024. Gains and losses on derivatives qualifyiff ng as cash flff ow hedges are recorded in accumulated OCI, to the extent that hedges are effff eff ctive, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated OCI will te based on changes in the faff ir value of hedge derivative contracts at each reporting period. Net gains on cash flff ow flff uctuat hedges included in accumulated OCI as of December 31, 2022 were $29 million (appr a total, appr appr oximately $14 million of gains are expected to be included in cost of sales in subsequent periods. Cash flff ow hedges are a discontinued when Aptiv determines it is no longer probabla e that the originally forff ecasted transactions will occur. Cash flff ows frff om derivatives used to manage commodity and forff eign exchange risks designated as cash flff ow hedges are classififf ed as operating activities within the consolidated statements of cash flff ows. oximately $15 million of gains are expected to be included in cost of sales within the next 12 months and oximately $40 million, net of tax). Of this a Net Investment Hedges The Company is also exposed to the risk that adverse changes in forff eign currency exchange rates could impact its net ents, including forff eign currency forff ward contracts and forff eign currency-denominated debt, as net investment ents designated as net investment hedges are recognized investment in non-U.S. subsidiaries. To manage this risk, the Company designates certain qualifyiff ng derivative and non- derivative instrumrr hedges of certain non-U.S. subsidiaries. The gains or losses on instrumr within OCI to offff sff et changes in the value of the net investment in these forff eign currency-denominated operations. Gains and losses reported in accumulated OCI are reclassififf ed to earnings only when the related currency translation adjustments are required to be reclassififf ed, usually upon sale or liquidation of the investment. Cash flff ows frff om derivatives designated as net investment hedges are classififf ed as investing activities within the consolidated statements of cash flff ows. The Company has entered into a series of forff ward contracts, each of which have been designated as net investment hedges of the forff eign currency exposure of the Company’s investments in certain Chinese Yuan Renminbi (“RMB”)- denominated subsidiaries. During the years ended December 31, 2022, 2021 and 2020, the Company received $7 million, and made net payments of $17 million and $1 million, respectively, at settlement related to these series of forff ward contracts which maturt ed throughout each respective year. In December 2022, the Company entered into forff ward contracts with a total notional oximately $100 million, using December 31, 2022 forff eign currency rates), which maturt e in amount of 700 million RMB (appr March 2023. Refeff r to the tabla es below forff details of the faff ir value recorded in the consolidated balance sheets and the effff eff cts recorded in the consolidated statements of operations and consolidated statements of comprehensive income related to these derivative instrumrr ents. a 109 The Company has designated the €700 million 2015 Euro-denominated Senior Notes and the €500 million 2016 Euro- ly described in Note 11. Debt, as net investment hedges of the forff eign currency exposure ents designated as net investment hedges, during the years ended December 31, 2022 and 2021, $74 million and $116 denominated Senior Notes, as more fulff of its investments in certain Euro-denominated subsidiaries. Due to changes in the value of the Euro-denominated debt instrumr million of gains, respectively, were recognized within the cumulative translation adjustment component of OCI. Included in accumulated OCI related to these net investment hedges were cumulative gains of $37 million as of December 31, 2022 and losses of $37 million as of December 31, 2021. Derivatives Not Designated as Hedges In certain occasions the Company enters into certain forff eign currency and commodity contracts that are not designated as ied to derivative contracts, gains and losses are recorded to other income (expense), hedges. When hedge accounting is not appl net and cost of sales in the consolidated statements of operations. a Fair Value of Derivative Instruments in the Balance Sheet The faff ir value of derivative fiff nancial instrumr ents recorded in the consolidated balance sheets as of December 31, 2022 and 2021 are as folff lows: Asset Derivatives Liability Derivatives Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet Balance Sheet Location December 31, 2022 Balance Sheet Location (in millions) December 31, 2022 December 31, 2022 Derivatives designated as cash flff ow hedges: Commodity derivatives.............. Other current assets $ — Accruer d liabia lities $ Foreign currency derivatives* ... Other current assets Commodity derivatives.............. Other long-term assets Foreign currency derivatives* ... Other long-term assets Foreign currency derivatives* ... Other long-term liabia lities Derivatives designated as net investment hedges: 54 Other current assets Other long-term liabia lities — 17 Other long-term assets Other long-term liabia lities 1 Foreign currency derivatives ..... Other current assets — Accruer d liabia lities Total derivatives designated as hedges ........................ $ 72 Derivatives not designated: Foreign currency derivatives* ... Other current assets $ Total derivatives not designated as hedges .................. $ 1 Other current assets 1 $ $ $ 28 11 $ 7 3 1 1 51 — — 43 14 — 1 110 Asset Derivatives Liability Derivatives Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet Balance Sheet Location December 31, 2021 Balance Sheet Location (in millions) December 31, 2021 December 31, 2021 Derivatives designated as cash flff ow hedges: Commodity derivatives.............. Other current assets $ 27 Accruer d liabia lities $ Foreign currency derivatives* ... Other current assets 15 Other current assets Foreign currency derivatives* ... Accruer d liabia lities Commodity derivatives.............. Other long-term assets 5 Accruer d liabia lities Other long-term liabia lities 2 Foreign currency derivatives* ... Other long-term assets 2 Other long-term assets Foreign currency derivatives* ... Other long-term liabia lities Derivatives designated as net investment hedges: Foreign currency derivatives ..... Other current assets Total derivatives designated as hedges ........................ $ Other long-term liabia lities 1 — Accruer d liabia lities 52 Derivatives not designated: Commodity derivatives.............. Other current assets $ 5 Accruer d liabia lities Foreign currency derivatives* ... Accruer d liabia lities — Accruer d liabia lities Total derivatives not designated as hedges .................. $ 5 $ $ $ $ — 9 16 — 1 8 1 35 — 1 1 6 (11) 1 (7) (1) * Derivative instrumrr accordance with accounting guidance related to the offff sff etting of amounts related to certain contracts. ents within this categoryrr are subject to master netting arrangements and are presented on a net basis in the consolidated balance sheets in The faff ir value of Aptiv’s derivative fiff nancial instrumrr ents were in a net asset position as of December 31, 2022 and 2021. Effff eff ct of Derivatives on the Statements of Operations and Statements of Comprehensive Income The pre-tax effff eff cts of derivative fiff nancial instrumr ents in the consolidated statements of operations and consolidated statements of comprehensive income forff the years ended December 31, 2022, 2021 and 2020 are as folff lows: Year Ended December 31, 2022 , (Loss) Gain Recognized in OCI (Loss) Gain Reclassififf ed frff om OCI into Income Derivatives designated as cash flff ow hedges: Commodity derivatives ............................................................................................... $ Foreign currency derivatives....................................................................................... Derivatives designated as net investment hedges: Foreign currency derivatives....................................................................................... Total........................................................................................................................ $ (in millions) (70) $ 90 7 27 $ (5) 19 — 14 Loss Recognized in Income (in millions) Derivatives not designated: Foreign currency derivatives .......................................................................................................................... $ Total ........................................................................................................................................................... $ (8) (8) 111 Year Ended December 31, 2021 , Gain (Loss) Recognized in OCI Gain (Loss) Reclassififf ed frff om OCI into Income Derivatives designated as cash flff ow hedges: Commodity derivatives ............................................................................................... $ Foreign currency derivatives....................................................................................... Derivatives designated as net investment hedges: Foreign currency derivatives....................................................................................... Total........................................................................................................................ $ (in millions) 60 $ (35) (17) 8 $ Gain (Loss) Recognized in Income (in millions) Derivatives not designated: Commodity derivatives .................................................................................................................................. $ Foreign currency derivatives .......................................................................................................................... Total ........................................................................................................................................................... $ 68 (3) — 65 3 (5) (2) Year Ended December 31, 2020 , Gain (Loss) Recognized in OCI Loss Reclassififf ed frff om OCI into Income Derivatives designated as cash flff ow hedges: Commodity derivatives ............................................................................................... $ Foreign currency derivatives....................................................................................... Derivatives designated as net investment hedges: Foreign currency derivatives....................................................................................... Total........................................................................................................................ $ (in millions) 31 $ (23) (2) 6 $ (7) (14) — (21) Gain Recognized in Income (in millions) Derivatives not designated: Foreign currency derivatives .......................................................................................................................... $ Total ........................................................................................................................................................... $ — — The gain or loss recognized in income forff designated and non-designated derivative instrumrr ents was recorded to cost of sales and other income (expense), net in the consolidated statements of operations forff and 2020. the years ended December 31, 2022, 2021 18. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defiff ned as the exchange price that would be received to sell an asset or paid to transfeff r a liabia lity (an exit price) in the principal or most advantageous market forff participants on the measurement date. Fair value measurements are based on one or more of the folff techniques: the asset or liabia lity in an orderly transaction between market lowing three valuation a his appr MarMM krr ekk t—Ttt comparabla e assets or liabia lities. oach uses prices and other relevant inforff mation generated by market transactions involving identical or IncII ome—This appr current market expectations. a oach uses valuation techniques to convert futff urt e amounts to a single present value amount based on a his appr CosCC t—Ttt (replacement cost). oach is based on the amount that would be required to replace the service capaa city of an asset 112 Aptiv uses the folff lows: value as folff lowing faff ir value hierarchy prescribed by U.S. GAAP, which prioritizes the inputs used to measure faff ir Level 1—Unadjusted quoted prices in active markets forff identical assets or liabia lities. Level 2—Observabla e inputs other than Level 1 prices, such as quoted prices forff in markets that are not active; or other inputs that are observabla e or can be corroborated by observabla e market data forff substantially the fulff l term of the assets or liabia lities. similar assets or liabia lities; quoted prices Level 3—Unobservabla e inputs that are supported by little or no market activity and that are signififf cant to the faff ir value of the assets or liabia lities. Typically, assets and liabia lities are considered to be faff ir valued on a recurring basis if faff ir value is measured regularly. However, if the faff ir value measurement of an instrumr consolidated balance sheets, assets and liabia lities are considered to be faff ir valued on a nonrecurring basis. This generally occurs when accounting guidance requires assets and liabia lities to be recorded at the lower of cost or faff ir value, or assessed forff impairment. ent does not necessarily result in a change in the amount recorded on the Fair Value Measurements on a Recurring Basis Derivative instrt umentstt —All derivative instrumr ents are required to be reported on the balance sheet at faff ir value unless the transactions qualifyff and are designated as normal purchases or sales. Changes in faff ir value are reported currently through earnings unless they meet hedge accounting criteria. Aptiv’s derivative exposures are with counterparr investment grade credit ratings. Aptiv estimates the faff ir value of its derivative contracts using an income appr valuation techniques to convert futff urt e amounts to a single, discounted amount. Estimates of the faff ir value of forff eign currency and commodity derivative instrumr ents are determined using exchange traded prices and rates. Aptiv also considers the risk of non-perforff mance in the estimation of faff ir value, and includes an adjustment forff value of derivative instrumr net commodity by counterpar position, the counterpar position, estimates of peer companies’ CDS rates are appl ents. The non-perforff mance risk adjustment reflff ects the credit defaff ult spread (“CDS”) appl ied to the net derivative asset position. When Aptiv is in a net derivative liabia lity rty and forff eign currency exposures by counterparr non-perforff mance risk in the measure of faff ir rty. When Aptiv is in a net derivative asset ied to the net derivative liabia lity position. rty CDS rates are appl rties with long-term oach based on ied to the a a a a In certain instances where market data is not availabla e, Aptiv uses management judgment to develop assumptions that are tions of market illiquidity forff a particular currency or commodity or where tions, Aptiv generally surveys investment banks and/or brokers and used to determine faff ir value. This could include situat observabla e market data may be limited. In those situat utilizes the surveyed prices and rates in estimating faff ir value. As of December 31, 2022 and 2021, Aptiv was in a net derivative asset position of $22 million and $21 million, respectively, and no signififf cant adjustments were recorded forff CDS rates, evaluation of our own nonperforff mance risk and because Aptiv’s exposures were to counterparr grade credit ratings. Refeff r to Note 17. Derivatives and Hedging Activities forff nonperforff mance risk based on the appl furff a ther inforff mation regarding derivatives. ication of peer companies’ rties with investment ContCC ingent consideration—The liabia lity forff contingent consideration is estimated as of the date of the acquisition and is a recorded as part of the purchase price, and is subsequently re-measured to faff ir value at each reporting date, based on a probabia lity-weighted analysis using a rate that reflff ects the uncertainty surrounding the expected outcomes, which the Company believes is appr opriate and representative of market participant assumptions. The measurement of the liabia lity forff consideration is based on signififf cant inputs that are not observabla e in the market, and is thereforff e classififf ed as a Level 3 measurement in accordance with ASC Topic 820-10-35. Examples of utilized unobservabla e inputs are estimated futff urt e earnings te if a or milestone achievements of the acquired businesses and appl there are changes in the forff ecast of acquired businesses’ futff urt e earnings or milestone achievements, as a result of actuat l earnings or milestone achievements or in the discount rates used to determine the present value of contingent futff urt e cash flff ows. The Company regularly reviews these assumptions and makes adjustments to the faff ir value measurements as required by faff cts and circumstances. As of December 31, 2022, the Company has determined that all earn-out provisions have been achieved under existing agreements. icabla e discount rates. The estimate of the liabia lity may flff uctuat contingent As of December 31, 2022 and 2021, the liaba ility forff contingent consideration was $10 million (which was classififf ed within other current liabia lities) and $10 million (which was classififf ed within other long-term liabia lities), respectively, representing the maximum required amounts to be paid under existing agreements. Adjustments to this liabia lity forff accretion are recognized in interest expense, and any other changes in the faff ir value of this liabia lity are recognized within other income (expense), net in the consolidated statement of operations. interest 113 The changes in the contingent consideration liabia lity classififf ed as a Level 3 measurement forff the years ended December 31, 2022 and 2021 were as folff lows: Year Ended December 31, 2022 2021 (in millions) Fair value at beginning of year ........................................................................................... $ Additions ........................................................................................................................ Payments ........................................................................................................................ Fair value at end of year...................................................................................................... $ 10 — — 10 $ $ 52 10 (52) 10 During the year ended December 31, 2021, Aptiv recorded liabia lities of $10 million forff the estimated faff ir values of contingent consideration related to our acquisitions, as furff ther described in Note 20. Acquisitions and Divestiturt es. In accordance with previous agreements, the Company was required to deposit a total of $52 million frff om 2019 to 2021 related to the contingent consideration liabia lity into an escrow account, which was classififf ed as restricted cash in the consolidated balance sheet upon deposit. During the year ended December 31, 2021, the Company released $52 million frff om the escrow account which represented the maximum required amount to be paid under these agreements. In accordance with ASC Topic 230-10-45, $24 million of this payment was recorded as a cash outflff ow frff om fiff nancing activities in the consolidated statement of cash flff ows, which represents the acquisition date faff ir value of the contingent consideration liabia lity, with the remaining $28 million recorded as a cash outflff ow frff om operating activities forff year ended December 31, 2021. Publiclyll trt aded equitytt securities—All publicly traded equity securities are reported at faff ir value as of each reporting date. identical assets on active market exchanges. Gains and losses frff om The measurement of the asset is based on quoted prices forff changes in the faff ir value of these securities are recorded within other income (expense), net on the consolidated statement of operations. As of December 31, 2022 and 2021, Aptiv had the folff lowing assets measured at faff ir value on a recurring basis: Total Quoted Prices in Active Markets Level 1 Signififf cant Other Observable Inputs Level 2 Signififf cant Unobservable Inputs Level 3 As of December 31, 2022 Foreign currency derivatives........................... $ Publicly traded equity securities ..................... Total............................................................ $ As of December 31, 2021 Commodity derivatives ................................... $ Foreign currency derivatives........................... Publicly traded equity securities ..................... $ $ $ 58 17 75 34 7 66 Total............................................................ $ 107 $ (in millions) — $ 17 17 $ — $ — 66 66 $ 58 — 58 34 7 — 41 $ $ $ $ — — — — — — — 114 As of December 31, 2022 and 2021, Aptiv had the folff lowing liabia lities measured at faff ir value on a recurring basis: Total Quoted Prices in Active Markets Level 1 Signififf cant Other Observable Inputs Level 2 Signififf cant Unobservable Inputs Level 3 As of December 31, 2022 Commodity derivatives ................................... $ Foreign currency derivatives........................... Contingent consideration ................................ Total............................................................ $ As of December 31, 2021 Foreign currency derivatives........................... $ Contingent consideration ................................ Total............................................................ $ 35 1 10 46 20 10 30 $ $ $ $ (in millions) — $ — — — $ — $ — — $ 35 1 — 36 20 — 20 $ $ $ $ — — 10 10 — 10 10 Non-NN derivative fiff nancial instrtt umentstt —Aptiv’s non-derivative fiff nancial instrumr ents include cash and cash equivalents, accounts and notes receivabla e, accounts payabla e, as well as debt, which consists of its accounts receivabla e faff ctoring arrangement, fiff nance leases and other debt issued by Aptiv’s non-U.S. subsidiaries, the Revolving Credit Facility, the Tranche A Term Loan and all series of outstanding senior notes. The faff ir value of debt is based on quoted market prices forff ents with public market data or signififf cant other observabla e inputs forff As of December 31, 2022 and 2021, total debt was recorded at $6,491 million and $4,067 million, respectively, and had estimated faff ir values of $5,241 million and $4,297 million, respectively. For all other fiff nancial instrumr December 31, 2022 and 2021, faff ir value appr ents without a quoted public market price (Level 2). oximates book value. ents recorded as of instrumrr instrumr a Fair Value Measurements on a Nonrecurring Basis a In addition to items that are measured at faff ir value on a recurring basis, Aptiv also has items in its balance sheet that are measured at faff ir value on a nonrecurring basis. As these items are not measured at faff ir value on a recurring basis, they are not included in the tabla es above . Financial and nonfiff nancial assets and liabia lities that are measured at faff ir value on a nonrecurring basis include certain inventories, long-lived assets, assets and liabia lities held forff without readily determinabla e faff ir values and liabia lities forff recognition. During the year ended December 31, 2022, Aptiv recorded non-cash long-lived asset impairment charges of $8 million and other charges of $3 million. These charges were primarily related to the conflff ict between Ukraine and RusRR sia and were recorded within cost of sales. During the years ended December 31, 2021 and 2020, Aptiv recorded non-cash asset impairment charges totaling $2 million and $10 million, respectively, within cost of sales related to declines in the faff ir values of certain fiff xed assets. In addition, Aptiv determined that our maja ority owned subsidiaryrr sale criteria as of December 31, 2022. Consequently, during the year ended December 31, 2022, the Company recorded a charge of $51 million to reduce the carryirr ng value of the subsidiaryrr of long-lived and other assets is determined primarily using the anticipated cash flff ows discounted at a rate commensurate with the risk involved and a review of appr determined that the faff ir value measurements of long-lived and other assets faff ll in Level 3 of the faff ir value hierarchy. aisals or other market indicators and management estimates. As such, Aptiv has to faff ir value, which was recorded primarily within cost of sales. Fair value exit or disposal activities measured at faff ir value upon initial sale, intangible assets, equity investments in RusRR sia met the held forff a 115 19. OTHER INCOME, NET Other income (expense), net included: Year Ended December 31, 2022 2021 (in millions) 2020 Interest income ................................................................................................ $ Loss on extinguishment of debt (Note 11) ...................................................... Loss on modififf cation of debt........................................................................... Components of net periodic benefiff t cost other than service cost .................... Costs associated with acquisitions and other transactions .............................. Change in faff ir value of equity investments without readily determinabla e faff ir value (Note 5) ........................................................................................... Loss on change in faff ir value of publicly traded equity securities (Note 5)..... Other, net ......................................................................................................... 86 — — (15) (61) — (52) (12) $ 9 $ (126) (1) (21) — 9 — 1 Other expense, net....................................................................................... $ (54) $ (129) $ 8 — (4) (20) — 10 — 6 — During the years ended December 31, 2022 and 2021, Aptiv recognized net unrealized losses of $49 million and gains of publicly traded equity securities still held as of December 31, 2022. As furff $5 million, respectively, forff 20. Acquisitions and Divestiturt es, Aptiv also incurred appr the acquisitions of Wind River and Intercabla e Automotive, respectively, during the year ended December 31, 2022. oximately $43 million and $10 million in transaction costs related to ther discussed in Note a As furff ther discussed in Note 11. Debt, during the year ended December 31, 2021, Aptiv redeemed forff million aggregate principal amount outstanding of the 2014 Senior Notes and the entire $650 million aggregate principal amount outstanding of the 4.25% Senior Notes, resulting in a loss on debt extinguishment of appr furff unrealized gain of $9 million related to increases in faff ir value of its equity investments without readily determinabla e faff ir values. ther discussed in Note 5. Investments in Affff iff liates, during the year ended December 31, 2021, Aptiv recorded a pre-tax oximately $126 million. As cash the entire $700 a As furff ther discussed in Note 5. Investments in Affff iff liates, during the year ended December 31, 2020, Aptiv recorded a pre-tax unrealized gain of $10 million related to increases in faff ir value of its equity investments without readily determinabla e faff ir values. Also, during the year ended December 31, 2020, Aptiv recorded a loss on modififf cation of debt of $4 million, in conjunction with the May 2020 amendment to the Credit Agreement. 20. ACQUISITIONS AND DIVESTITURES Acquisition of Wind River Systems, Inc. On December 23, 2022, Aptiv acquired 100% of the equity interests of Wind River Systems, Inc. (“Wind River”), a the intelligent edge, forff global leader in delivering softff ware forff initial purchase price of $4.3 billion agreed to in Januaryrr 2022. Aptiv and the seller agreed to the amended purchase price, in part, as a result of certain changes in Wind River's current operating strucrr to a satisfaff ctoryrr conclusion. The results of operations of Wind River are reported within the Advanced Safeff ty and User Experience segment frff om the date of acquisition. The Company acquired Wind River utilizing cash on hand, which included proceeds frff om the 2022 Senior Notes. Refeff r to Note 11. Debt forff completion of the acquisition, Aptiv incurred transaction related expenses totaling appr recorded within other expense, net in the statement of operations. turt e required to bring the regulatoryrr appr oximately $43 million, which were additional inforff mation regarding the 2022 Senior Notes. Upon oximately $3.5 billion, instead of the total consideration of appr oval process a a a 116 as a business combination, with the total purchase price allocated on a preliminaryrr The acquisition was accounted forff basis using inforff mation availabla e in the four th quarter of 2022. The preliminaryrr purchase price and related allocation to the ff acquired net assets of Wind River based on their estimated faff ir values is shown below (in millions): Assetstt acquired and liabilities assumed Purchase price, cash consideration, net of cash acquired (1) ................................................................................. $ 3,519 Accounts receivabla e, net......................................................................................................................................... $ Contract assets ........................................................................................................................................................ Property, plant and equipment................................................................................................................................ Intangible assets...................................................................................................................................................... Contract liabia lities................................................................................................................................................... Accruer d liabia lities................................................................................................................................................... Defeff rred tax liabia lities ............................................................................................................................................ Other assets, net...................................................................................................................................................... Identififf abla e net assets acquired .......................................................................................................................... Goodwill resulting frff om purchase .......................................................................................................................... Total purchase price allocation .......................................................................................................................... $ 91 67 14 1,490 (101) (62) (287) 5 1,217 2,302 3,519 (1) Approximately $35 million of the cash consideration was unpaid as of December 31, 2022 and was thereforff e not recognized as a cash outflff ow frff om investing activities forff the year ended December 31, 2022. This amount is expected to be paid during the fiff rst quarter of 2023. Intangible assets primarily include $750 million of technology-related assets with appr the faff ir value of customer-based assets with appr the faff ir value of the acquired trade name with an appr years, $630 million forff two years and $110 million recognized forff years. The estimated faff ir value of these assets was based on third-party valuations and management’s estimates, generally oaches and is sensitive to certain assumptions including discount rates, projected revenue utilizing income and market appr growth rates and profiff t margin. These assumptions are forff ward-looking in naturt e and are dependent on the futff urt e perforff mance of Wind River and could be affff eff cted by futff urt e economic and market conditions. Goodwill recognized in this transaction is primarily attributabla e to expanded market opportuni ties, including integrating Wind River’s product offff eff rings with existing Company offff eff rings, synergies expected to arise aftff er the acquisition and the assembled workforff ce of Wind River and is not deductible forff a lives ranging frff om sixteen to twenty- lives of sixteen oximate usefulff oximate usefulff oximate usefulff tax purpos lifeff of eighteen es. a a a rr t The purchase price and related allocation are preliminaryrr and could be revised as a result of adjustments made to the purchase price, additional inforff mation obtained regarding liabia lities assumed, including, but not limited to, contingent liabia lities, revisions of provisional estimates of faff ir values, including, but not limited to, the completion of independent valuations related to intangible assets and certain tax attributes. The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Acquisition of Controlling Interest in Intercable Automotive Solutions On November 30, 2022, Aptiv acquired 85% of the equity interests of Intercabla e Automotive Solutions S.r.l. (“Intercabla e Automotive”), a manufaff cturt er of high-voltage busbars and interconnect solutions, forff Intercabla e Automotive was forff merly a subsidiaryrr of Intercabla e S.r.l. The results of operations of Intercabla e Automotive are reported within the Signal and Power Solutions segment frff om the date of acquisition. The Company acquired its interest in Intercabla e Automotive utilizing cash on hand. Upon completion of the acquisition, Aptiv incurred transaction related expenses oximately $10 million, which were recorded within other expense, net in the statement of operations. totaling appr total consideration of $606 million. a The acquisition was accounted forff basis using inforff mation availabla e, in the four acquired net assets of Intercabla e Automotive based on their estimated faff ir values is shown below (in millions): as a business combination, with the total purchase price allocated on a preliminaryrr th quarter of 2022. The preliminaryrr purchase price and related allocation to the ff 117 Assetstt acquired and liabilities assumed Purchase price, cash consideration, net of cash acquired ....................................................................................... $ 606 Inventoryrr ................................................................................................................................................................. $ Property, plant and equipment................................................................................................................................ Intangible assets...................................................................................................................................................... Defeff rred tax liabia lities ............................................................................................................................................ Other liabia lities, net ................................................................................................................................................ Identififf abla e net assets acquired .......................................................................................................................... Goodwill resulting frff om purchase .......................................................................................................................... Total ................................................................................................................................................................... Less: redeemabla e noncontrolling interest ............................................................................................................... Total purchase price allocation .......................................................................................................................... $ 77 77 285 (82) (13) 344 357 701 (95) 606 Intangible assets include $201 million recognized forff the faff ir value of customer-based assets with appr a oximate usefulff lives of nineteen years, $63 million of technology-related assets with estimated usefulff $21 million recognized forff estimated faff ir value of these assets was based on third-party valuations and management’s estimates, generally utilizing income and market appr oaches. Goodwill recognized in this transaction is primarily attributabla e to synergies expected to arise aftff er the acquisition and the assembled workforff ce of Intercabla e Automotive and is not deductible forff a lifeff of fiff ftff een years. The the faff ir value of the trade name license with an appr oximately fiff ftff een years and oximate usefulff lives of appr tax purpos es. a a r Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that cash of up to €155 million, beginning in 2026. The fiff nal purchase price is contractuat provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 15% of Intercabla e Automotive forff defiff ned and will be determined based on Intercabla e Automotive’s 2025 operating results. Due to the noncontrolling interest holders’ redemption rights, the noncontrolling interest has been classififf ed as redeemabla e noncontrolling interest in the temporaryrr equity section of the consolidated balance sheet. The faff ir value of the noncontrolling interest was determined using a Monte Carlo simulation appr oach and includes several assumptions including estimated futff urt e profiff tabia lity, expected volatility rate and risk frff ee rate. lly a The purchase price and related allocation are preliminaryrr and could be revised as a result of adjustments made to the purchase price, additional inforff mation obtained regarding liabia lities assumed, including, but not limited to, contingent liabia lities, revisions of provisional estimates of faff ir values, including, but not limited to, the completion of independent valuations related to intangible assets and certain tax attributes. The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Acquisition of El-Com, Inc. On December 30, 2021, Aptiv acquired 100% of the equity interests of El-Com, Inc. (“El-Com”), a manufaff cturt er of custom wire harnesses and cabla e assemblies forff million. high-reliabia lity products and industries, forff total consideration of up to $88 The total consideration includes a cash payment of up to $10 million, contingent upon the achievement of certain perforff mance metrics over a one-year period folff could be required to pay under this arrangement is between zero and $10 million. As of the closing date of the acquisition, the contingent consideration was assigned a faff ir value of appr Instrumr operations of El-Com are reported within the Signal and Power Solutions segment frff om the date of acquisition. The Company acquired El-Com utilizing cash on hand. additional inforff mation regarding the measurement of the contingent consideration liabia lity. The results of lowing the acquisition. The range of the undiscounted amounts the Company oximately $10 million. Refeff r to Note 18. Fair Value of Financial ents forff a th quarter of 2021. The purchase price and related allocation were fiff nalized in the th quarter of 2022, and resulted in minor adjustments frff om the amounts previously disclosed. These adjustments were not as a business combination, with the total purchase price allocated on a preliminaryrr ff The acquisition was accounted forff basis using inforff mation availabla e, in the four four ff signififf cant forff assets of El-Com based on their estimated faff ir values is shown below (in millions): any period presented aftff er the acquisition date. The fiff nal purchase price and related allocation to the acquired net 118 Assetstt acquired and liabilities assumed Purchase price, cash consideration, net of cash acquired ....................................................................................... $ Purchase price, faff ir value of contingent consideration........................................................................................... Total consideration, net of cash acquired........................................................................................................... $ Intangible assets...................................................................................................................................................... $ Other assets, net...................................................................................................................................................... Identififf abla e net assets acquired .......................................................................................................................... Goodwill resulting frff om purchase .......................................................................................................................... Total purchase price allocation .......................................................................................................................... $ 78 10 88 35 10 45 43 88 Intangible assets primarily include amounts recognized forff the faff ir value of customer-based assets, which will be a amortized over their estimated usefulff third-party valuations and management’s estimates, generally utilizing income and market appr this transaction is primarily attributabla e to synergies expected to arise aftff er the acquisition and is expected to be partially deductible forff oximately nine years. The estimated faff ir value of these assets was based on oaches. Goodwill recognized in lives of appr tax purpos es. a rr The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Acquisition of Krono-Safeff Automotive, SAS On November 9, 2021, Aptiv acquired 100% of the equity interests of KrKK ono-Safeff Automotive (“KrK ono-Safeff Automotive”), a leading softff ware developer of safeff ty-critical real-time embedded systems, forff million, which was comprised of Aptiv’s previous investment of $6 million in KrK ono-Safeff , SAS that was previously made in 2019 and $7 million of cash. The results of operations of KrKK ono-Safeff Automotive are reported within the Advanced Safeff ty and User Experience segment frff om the date of acquisition. total consideration of $13 The acquisition was accounted forff basis using inforff mation availabla e, in the four million and intangible assets of $4 million. Goodwill recognized in this transaction is primarily attributabla e to synergies expected to arise aftff er the acquisition and is not deductible forff fiff nalized in the four as a business combination, with the total purchase price allocated on a preliminaryrr ff th quarter of 2021, which primarily resulted in the recognition of goodwill of $9 es. The purchase price and related allocation were th quarter of 2022. tax purpos ff r The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Acquisition of Ulti-Mate Connector, Inc. On April 30, 2021, Aptiv acquired certain assets of Ulti-Mate Connector, Inc. (“Ulti-Mate”), a manufaff cturt er of miniaturt e and micro-miniaturt e connectors and cabla e assemblies, forff total consideration of $45 million. The results of the operations of Ulti-Mate are reported within the Signal and Power Solutions segment frff om the date of acquisition. The Company acquired Ulti-Mate utilizing cash on hand. The acquisition was accounted forff as a business combination, with the total purchase price allocated on a preliminaryrr basis using inforff mation availabla e, in the second quarter of 2021. The purchase price and related allocation were fiff nalized in the second quarter of 2022. The fiff nal purchase price and related allocation to the acquired net assets of Ulti-Mate based on their estimated faff ir values is shown below (in millions): Assetstt acquired and liabilities assumed Purchase price, cash consideration, net of cash acquired ....................................................................................... $ Intangible assets...................................................................................................................................................... $ Other assets, net...................................................................................................................................................... Identififf abla e net assets acquired .......................................................................................................................... Goodwill resulting frff om purchase .......................................................................................................................... Total purchase price allocation .......................................................................................................................... $ 45 17 5 22 23 45 119 Intangible assets primarily include amounts recognized forff the faff ir value of customer-based assets, which will be amortized over their estimated usefulff a third-party valuations and management’s estimates, generally utilizing income and market appr this transaction is primarily attributabla e to synergies expected to arise aftff er the acquisition, and an insignififf cant portion of the goodwill is expected to be deductible forff oximately nine years. The estimated faff ir value of these assets was based on oaches. Goodwill recognized in lives of appr tax purpos es. a r The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Acquisition of Dynawave Inc. On August 4, 2020, Aptiv acquired 100% of the equity interests of Dynawave Inc. (“Dynawave”), a specialized manufaff cturt er of custom-engineered interconnect solutions forff The results of the operations of Dynawave are reported within the Signal and Power Solutions segment frff om the date of the acquisition. The Company acquired Dynawave utilizing cash on hand. a wide range of industries, forff total consideration of $22 million. The acquisition was accounted forff as a business combination, with the total purchase price allocated on a preliminaryrr basis using inforff mation availabla e, in the third quarter of 2020. The purchase price and related allocation were fiff nalized in the third quarter of 2021, and resulted in minor adjustments frff om the amounts previously disclosed. These adjustments were not signififf cant forff assets of Dynawave based on their estimated faff ir values is shown below (in millions): any period presented aftff er the acquisition date. The fiff nal purchase price and related allocation to the acquired net Assetstt acquired and liabilities assumed Purchase price, cash consideration, net of cash acquired ....................................................................................... $ Intangible assets...................................................................................................................................................... $ Other assets, net...................................................................................................................................................... Identififf abla e net assets acquired .......................................................................................................................... Goodwill resulting frff om purchase .......................................................................................................................... Total purchase price allocation .......................................................................................................................... $ Intangible assets primarily include amounts recognized forff the faff ir value of customer-based assets, which will be 22 8 4 12 10 22 amortized over their estimated usefulff a third-party valuations and management’s estimates, generally utilizing income and market appr this transaction is primarily attributabla e to synergies expected to arise aftff er the acquisition and the assembled workforff ce of Dynawave, and an insignififf cant portion of the goodwill is expected to be deductible forff oximately nine years. The estimated faff ir value of these assets was based on oaches. Goodwill recognized in lives of appr tax purpos es. a r The pro forff ma effff eff cts of this acquisition would not materially impact the Company’s reported results forff any period presented, and as a result no pro forff ma fiff nancial statements were presented. Autonomous Driving Joint Venture a l property forff l property and appr a 50% ownership oximately 700 employees forff oximately $1.6 billion in cash, along with vehicle engineering On March 26, 2020, Aptiv completed a transaction with Hyundai to forff m Motional, a joint venturt e focff used on the design, development and commercialization of autonomous driving technologies. Under the terms of the agreement, Aptiv contributed to Motional autonomous driving technology, intellectuat interest in Motional. Hyundai contributed to Motional appr a services, research and development resources and access to intellectuat a 50% ownership interest in Motional. As a result, Motional is expected to fuff nd all of its futff urt e operating expenses and investments in autonomous driving technologies forff the forff eseeabla e futff urt e. Consequently, Aptiv is not required to fund million forff the year ended December 31, 2019 prior to Motional’s forff mation. Upon closing of the transaction, Aptiv deconsolidated the carryirr ng value of the associated assets and liabia lities contributed to Motional, previously classififf ed as held forff oximately $2 billion within investments in affff iff liates in the consolidated balance sheet, based on the preliminaryrr $1.4 billion in the consolidated statement of operations (appr the year ended December 31, 2020), net of transaction costs of $22 million, based on the diffff eff rence between the carryirr ng value of its contribution to Motional and the preliminaryrr faff ir value of its investment in Motional. The estimated faff ir value of Aptiv’s ownership interest in Motional was determined primarily based on third-party valuations and management estimates, generally utilizing income and market a appr involved signififf cant estimates and assumptions with respect to the timing and amount of futff urt e cash flff ows, market rate oaches. Determining the faff ir value of Motional and the underlying assets required the use of management’s judgment and faff ir value of its investment in Motional. The Company recognized a pre-tax gain of appr these investments and expenses, which appr oximately $5.32 per diluted share forff sale, and recognized an asset of appr oximated $180 oximately a a a a ff 120 assumptions, projected growth rates and margins, and appr was determined on a preliminaryrr basis using inforff mation availabla e in the fiff rst quarter of 2020 and was fiff nalized in the fiff rst any period quarter of 2021. The effff eff cts of this transaction would not materially impact the Company’s reported results forff presented, and the transaction did not meet the criteria to be reflff ected as a discontinued operation. opriate discount rates, among other items. The estimated faff ir value a The Company’s investment in Motional is accounted forff using the equity method of accounting and Aptiv recognized an equity loss of $291 million, $215 million and $98 million, net of tax, during the years ended December 31, 2022, 2021, and ther inforff mation on Aptiv’s equity method investments. 2020, respectively. Refeff r to Note 5. Investments in Affff iff liates forff The pre-tax loss of Aptiv’s autonomous driving operations that were contributed to the joint venturt e on March 26, 2020, included within Aptiv’s consolidated operating results, was $41 million forff the year ended December 31, 2020. furff Planned Exit frff om Majority Owned Russian Subsidiary Given the sanctions put in place by the European Union (the “E.U.”), U.S. and other governments, which restrict our sale criteria as of December 31, 2022. Consequently, during the year ended December 31, 2022, the abia lity to conduct business in RusRR sia, we initiated a plan to exit our maja ority owned subsidiaryrr of 2022. As a result, the Company determined that this subsidiary,rr which is reported within the Signal and Power Solutions segment, met the held forff Company recorded a pre-tax charge of $51 million to impair the carryirr ng value of the RusRR sian subsidiary’rr value, which was recorded primarily within cost of sales in the consolidated statement of operations. Approximately $25 million of these charges were attributabla e to the noncontrolling interest based on the noncontrolling shareholder’s economic interest. The remaining assets and liabia lities of the subsidiaryrr were reclassififf ed as held forff valuation allowances. The net assets and liabia lities are de minimis and are presented as other current assets and other current liabia lities, respectively, in the consolidated balance sheet as of December 31, 2022. These assets and liabia lities represent the only balances recorded as held forff in RusRR sia in the second quarter sale as of December 31, 2022. sale and reflff ect the appr s net assets to faff ir opriate a 21. SHARE-BASED COMPENSATION Long Term Incentive Plan The PLC LTIP allows forff the grant of awards of up to 25,665,448 ordinaryrr shares forff long-term compensation. The PLC LTIP is designed to align the interests of management and shareholders. The awards can be in the forff m of shares, options, stock appr eciation rights, restricted stock, RSUs, perforff mance awards and other share-based awards to the employees, directors, a consultants and advisors of the Company. The Company has awarded annual long-term grants of RSUs under the PLC LTIP in order to align management compensation with Aptiv’s overall business strategy. In addition, the Company has competitive and market-appr eligible to receive dividend equivalents forff equivalents are generally paid out in ordinaryrr shares upon vesting of the underlying RSUs. its directors and offff iff cers. All of the RSUs granted under the PLC LTIP are any dividend paid frff om the grant date through the vesting date. Dividend opriate ownership requirements forff a Board of Director Awards Aptiv has granted RSUs to the Board of Directors as detailed in the tabla e below: Grant Date RSUs granted Grant Date Fair Value (1) Vesting Date (dollars in millions) Shares Issued Upon Vesting Fair Value of Shares at Issuance Shares Withheld to Cover Withholding Taxes April 2022 .... April 2021 .... April 2020 .... 23,387 $ 17,589 48,745 2 3 3 April 2023 April 2022 April 2021 N/A 15,633 $ 41,896 N/A 2 6 N/A 1,956 6,849 (1) Determined based on the closing price of the Company’s ordinaryrr shares on the date of the grant. ExEE ecutive Awards Aptiv has made annual grants of RSUs to its executives in Februarr ryrr of each year beginning in 2012. These awards include a time-based vesting portion and a perforff mance-based vesting portion, as well as continuity awards in certain years. The time- based RSUs, which make up 40% (25% prior to 2021) of the awards forff Aptiv’s offff iff cers and 50% forff Aptiv’s other executives, vest ratabla y over three years beginning on the fiff rst anniversaryrr of the grant date. The perforff mance-based RSUs, which make up 60% (75% prior to 2021) of the awards forff Aptiv’s offff iff cers and 50% forff Aptiv’s other executives, vest at the completion of a three-year perforff mance period if certain targets are met. Each executive will receive between 0% and 200% (150% forff and 2020 grants based on the executive perforff mance grant modififf cation in 2020 described below) of his or her target the 2019 121 perforff mance-based award based on the Company’s perforff mance against establa ished company-wide perforff mance metrics, which are: Metric 2020 - 2022 Grants 2018 - 2019 Grants Average returt n on net assets (1) ........................................................................................ Cumulative net income...................................................................................................... Relative total shareholder returt n (2).................................................................................. 33% 33% 33% 50% 25% 25% (1) Average returt n on net assets is measured by tax-affff eff cted operating income divided by average net working capia tal plus average net property, plant and equipment forff each calendar year during the respective perforff mance period. (2) Relative total shareholder returt n is measured by comparing the average closing price per share of the Company’s ordinaryrr shares forff the specififf ed th quarter of the end of the perforff mance period to the average closing price per share of the Company’s ordinaryrr shares forff the th quarter of the year preceding the grant, including dividends, and assessed against a comparabla e measure of trading days in the four specififf ed trading days in the four competitor and peer group companies. ff ff The details of the executive grants were as folff lows: Grant Date Februarr ryrr 2018 ........ Februarr ryrr 2019 ........ Februarr ryrr 2020 ........ Februarr ryrr 2021 ........ Februarr ryrr 2022 ........ RSUs Granted Grant Date Fair Value (in millions) Time-Based Award Vesting Dates Perforff mance-Based Award Vesting Date $ 0.63 0.71 0.75 0.44 0.59 61 62 62 72 80 Annually on anniversaryrr of grant date, 2019 - 2021 December 31, 2020 Annually on anniversaryrr of grant date, 2020 - 2022 December 31, 2021 Annually on anniversaryrr of grant date, 2021 - 2023 December 31, 2022 Annually on anniversaryrr of grant date, 2022 - 2024 December 31, 2023 Annually on anniversaryrr of grant date, 2023 - 2025 December 31, 2024 The grant date faff ir value of the RSUs is determined based on the target number of awards issued, the closing price of the feff iturt es, and a contemporaneous Company’s ordinaryrr shares on the date of the grant of the award, including an estimate forff valuation perforff med by an independent valuation specialist with respect to the relative total shareholder returt n awards. forff Any new executives hired aftff er the annual executive RSU grant date may be eligible to participate in the PLC LTIP. The Company has also granted additional awards to employees in certain periods under the PLC LTIP. Any offff cycle grants made new hires or to other employees are valued at their grant date faff ir value based on the closing price of the Company’s forff ordinaryrr shares on the date of such grant. The details of the shares issued upon vesting of the executive grants are as folff lows: Time-Based Awards Perforff mance-Based Awards Ordinary Shares Issued Upon Vesting Grant Date Fair Value Ordinary Shares Withheld to Cover Withholding Taxes Ordinary Shares Issued Upon Vesting Fair Value of Shares at Issuance Ordinary Shares Withheld to Cover Withholding Taxes 354,600 $ 449,426 468,240 (dollars in millions) 46 67 37 140,409 177,825 181,495 325,283 $ 288,074 580,390 42 43 45 136,143 121,609 243,080 Vesting Date Q1 2022....... Q1 2021....... Q1 2020....... As a result of the impacts of the COVID-19 pandemic on the Company’s industryrr and operations, during the four ff th quarter of 2020 the fiff nancial perforff mance targets associated with Februar were modififf ed, which impacted appr million of incremental compensation expense during the year ended December 31, 2020. oximately 300 award recipients and resulted in the recognition of appr a a ryrr 2018, 2019 and 2020 executive perforff mance grants oximately $22 122 A summaryrr of RSU activity, including award grants, vesting and forff feff iturt es is provided below: RSUs (in thousands) Weighted Average Grant Date Fair Value Nonvested, Januaryrr 1, 2020.......................................................................................... 1,822 $ Granted..................................................................................................................... Vested....................................................................................................................... Forfeff ited ................................................................................................................... Nonvested, December 31, 2020.................................................................................... Granted..................................................................................................................... Vested....................................................................................................................... Forfeff ited ................................................................................................................... Nonvested, December 31, 2021.................................................................................... Granted..................................................................................................................... Vested....................................................................................................................... Forfeff ited ................................................................................................................... Nonvested, December 31, 2022.................................................................................... 934 (773) (197) 1,786 661 (829) (274) 1,344 939 (713) (323) 1,247 89.32 99.14 98.90 82.93 102.95 161.90 98.55 118.97 131.40 122.73 109.36 134.75 136.61 As of December 31, 2022, there were appr a oximately 318,000 Aptiv perforff mance-based RSUs, with a weighted average grant date faff ir value of $121.04, that were vested but not yet distributed. Aptiv recognized share-based compensation expense of $86 million ($85 million, net of tax), $87 million ($86 million, net of tax) and $60 million ($60 million net of tax) based on the Company’s best estimate of ultimate perforff mance against the respective targets during the years ended December 31, 2022, 2021 and 2020, respectively. Aptiv will continue to recognize compensation expense, based on the grant date faff ir value of the awards appl perforff mance against the respective targets, over the requisite vesting periods of the awards. Based on the grant date faff ir value of the awards and the Company’s best estimate of ultimate perforff mance against the respective targets as of December 31, 2022, unrecognized compensation expense on a pre-tax basis of appr oximately $105 million is anticipated to be recognized over a oximately two years. For the years ended December 31, 2022, 2021 and 2020, respectively, weighted average period of appr appr a of cash flff ows related to the tax withholding forff oximately $36 million, $45 million and $33 million of cash was paid and reflff ected as a fiff nancing activity in the statements ied to the Company’s best estimate of ultimate vested RSUs. a a a 22. SEGMENT REPORTING Aptiv operates its core business along the folff lowing operating segments, which are grouped on the basis of similar product, market and operating faff ctors: • • • Signal and Power Solutions, which includes complete electrical architecturt e and component products. Advanced Safeff ty and User Experience, which includes vehicle technology and services in advanced safeff ty, user experience and connectivity and security solutions, as well as cloud-native softff ware platforff ms, 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 naturt e. The accounting policies of the segments are the same as those described in Note 2. Signififf cant Accounting Policies, oach, which is except that the disaggregated fiff nancial results forff consistent with the basis and manner in which management internally disaggregates fiff nancial inforff mation forff which Aptiv’s chief operating decision maker regularly reviews fiff nancial results to assess perforff mance of,ff and make internal operating decisions about the segments have been prepared using a management appr allocating resources to, the segments. a a Generally, Aptiv evaluates segment perforff mance based on stand-alone segment net income beforff e interest expense, other income (expense), net, income tax (expense) benefiff t, equity income (loss), net of tax, amortization, restrucrr acquisition and portfolff product portfolff other related charges and gains (losses) on business divestiturt es and other transactions (“Adjusted Operating Income”) and accounts forff io project costs (which includes costs incurred to integrate acquired businesses and to plan and execute io transforff mation actions, including business and product acquisitions and divestiturt es), asset impairments and inter-segment sales and transfeff rs as if the sales or transfeff rs were to third parties, at current market prices. ing, other turt 123 Effff eff ctive on Januaryrr 1, 2022, the Company now excludes amortization expense of intangible assets frff om the calculation of Adjusted Operating Income, as reflff ected in the defiff nition above to both management and investors in their analysis of the Company’s calculation of this fiff nancial measure will be more usefulff results of operations due to recent acquisitions. Amortization of intangible assets generally results frff om a write-up in the value of assets in connection with an acquisition. The Company believes that exclusion of amortization expense will faff cilitate more comparabla e operating results of the Company over time, between periods when the Company is more or less acquisitive and allows forff Adjusted Operating Income in the tabla es below has been revised to be consistent with this updated calculation. improved comparison with both acquisitive and non-acquisitive peer companies. The historical presentation of . The Company’s management believes that the updated a Aptiv’s management utilizes Adjusted Operating Income as the key perforff mance measure of segment income or loss to planning and forff ecasting purpos evaluate segment perforff mance, and forff es to allocate resources to the segments, as management believes this measure is most reflff ective of the operational profiff tabia lity or loss of Aptiv’s operating segments. Segment Adjusted Operating Income should not be considered a substitutt e forff considered an alternative to net income attributabla e to Aptiv, which is the most directly comparabla e fiff nancial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies. results prepared in accordance with U.S. GAAP and should not be r Included below are sales and operating data forff Aptiv’s segments forff the years ended December 31, 2022, 2021 and 2020, as well as balance sheet data as of December 31, 2022 and 2021. Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other (1) Total For the Year Ended December 31, 2022: Net sales ............................................................................... $ 12,943 Depreciation and amortization ............................................. $ Adjusted operating income .................................................. $ Operating income (2) ........................................................... $ Equity income (loss), net of tax ............................................ $ Net loss attributabla e to noncontrolling interest .................... $ Net loss attributabla e to redeemabla e noncontrolling interest. $ Capia tal expenditurt es............................................................. $ (in millions) 4,587 178 144 68 $ $ $ $ (299) $ — $ — $ 196 $ (41) $ 17,489 — $ — $ — $ — $ — $ — $ 75 $ 762 1,585 1,263 (279) (3) (1) 844 $ $ $ $ $ 584 1,441 1,195 20 (3) $ (1) $ 573 $ Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other (1) Total For the Year Ended December 31, 2021: Net sales ............................................................................... $ Depreciation and amortization ............................................. $ Adjusted operating income (3)............................................. $ Operating income (4) ........................................................... $ Equity income (loss), net of tax ............................................ $ Net income attributabla e to noncontrolling interest............... $ Capia tal expenditurt es............................................................. $ 11,598 595 1,225 1,064 15 19 434 $ $ $ $ $ $ $ (in millions) 4,056 178 153 125 $ $ $ $ (215) $ — $ 124 $ (36) $ — $ — $ — $ — $ — $ 53 $ 15,618 773 1,378 1,189 (200) 19 611 124 Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other (1) Total For the Year Ended December 31, 2020: Net sales ............................................................................... $ 9,522 Depreciation and amortization ............................................. $ Adjusted operating income (3)............................................. $ Operating income (5) ........................................................... $ Equity income (loss), net of tax ............................................ $ Net income attributabla e to noncontrolling interest............... $ Capia tal expenditurt es............................................................. $ 588 900 656 15 18 355 $ $ $ $ $ $ $ (in millions) 3,573 176 111 1,462 $ $ $ $ (98) $ — $ 173 $ (29) $ 13,066 — $ — $ — $ — $ — $ 56 $ 764 1,011 2,118 (83) 18 584 (1) Eliminations and Other includes the elimination of inter-segment transactions. Capia tal expenditurt es amounts are attributabla e to corpor rr ate administrative and support func ff tions, including corpor rr ate headquarters and certain technical centers. (2) Includes charges recorded in 2022 related to costs associated with employee termination benefiff ts and other exit costs of $30 million foff r Signal and Power Solutions and $55 million forff Advanced Safeff ty and User Experience. (3) As described above a , the calculation of adjusted operating income excludes amortization expense effff eff ctive on Januaryrr 1, 2022. The historical presentation of adjusted operating income as shown in this tabla e has been revised to be consistent with the updated calculation. (4) (5) Includes charges recorded in 2021 related to costs associated with employee termination benefiff ts and other exit costs of $8 million forff Signal and Power Solutions and $16 million forff Advanced Safeff ty and User Experience. Includes a pre-tax gain in 2020 of $1.4 billion within Advanced Safeff ty and User Experience forff joint venturt e. Also, includes charges recorded in 2020 related to costs associated with employee termination benefiff ts and other exit costs of $90 million forff Signal and Power Solutions and $46 million forff Advanced Safeff ty and User Experience. the completion of the Motional autonomous driving Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other (1) Total Balance as of December 31, 2022: Investment in affff iff liates ............................................................. $ Goodwill (2) ............................................................................. $ Total segment assets (2) ........................................................... $ Balance as of December 31, 2021: Investment in affff iff liates ............................................................. $ Goodwill ................................................................................... $ Total segment assets ................................................................. $ 126 2,756 14,575 110 2,475 13,385 $ $ $ $ $ $ (1) Eliminations and Other includes the elimination of inter-segment transactions. (in millions) 1,597 2,350 11,864 1,687 36 7,244 $ $ $ $ $ $ — $ — $ 1,723 5,106 (4,555) $ 21,884 — $ — $ 1,797 2,511 (2,622) $ 18,007 (2) Signal and Power Solutions includes amounts recognized as part of the preliminaryrr purchase price allocation folff lowing the acquisition of Intercabla e Automotive in November 2022. Advanced Safeff ty and User Experience includes amounts recognized as part of the preliminaryrr purchase price allocation folff acquisitions. lowing the acquisition of Wind River in December 2022. Refeff r to Note 20. Acquisitions and Divestiturt es forff additional inforff mation on these The reconciliation of Adjusted Operating Income to operating income includes, as appl turt io project costs (which includes costs incurred to integrate acquired businesses and to plan and other acquisition and portfolff execute product portfolff impairments and other related charges and gains (losses) on business divestiturt es and other transactions. The reconciliations of Adjusted Operating Income to net income attributabla e to Aptiv forff folff io transforff mation actions, including business and product acquisitions and divestiturt es), asset the years ended December 31, 2022, 2021 and 2020 are as icabla e, amortization, restrucr lows: a ing, 125 Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total For the Year Ended December 31, 2022: Adjusted operating income ............................................................................. $ 1,441 $ 144 $ Amortization.............................................................................................. Restrucrr turt ing ............................................................................................. Other acquisition and portfolff io project costs............................................. Asset impairments ..................................................................................... Other charges related to Ukraine/RusRR sia conflff ict (1) ................................ (139) (30) (15) (8) (54) Operating income............................................................................................ $ 1,195 $ (10) (55) (11) — — 68 Interest expense............................................................................................... Other expense, net........................................................................................... Income beforff e income taxes and equity loss .................................................. Income tax expense......................................................................................... Equity loss, net of tax ..................................................................................... Net income...................................................................................................... Net loss attributabla e to noncontrolling interest............................................... Net loss attributabla e to redeemabla e noncontrolling interest ........................... Net income attributabla e to Aptiv .................................................................... $ 1,585 (149) (85) (26) (8) (54) 1,263 (219) (54) 990 (121) (279) 590 (3) (1) 594 (1) Primarily consists of charges related to the designation of our maja ority owned RusRR sian subsidiaryrr as held forff sale as of December 31, 2022. Refeff r to Note 20. Acquisitions and Divestiturt es forff furff ther inforff mation. Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total For the Year Ended December 31, 2021: Adjusted operating income ............................................................................. $ 1,225 $ 153 $ Amortization.............................................................................................. Restrucrr turt ing ............................................................................................. Other acquisition and portfolff io project costs............................................. Asset impairments ..................................................................................... (141) (8) (11) (1) Operating income............................................................................................ $ 1,064 $ (7) (16) (4) (1) 125 Interest expense............................................................................................... Other expense, net........................................................................................... Income beforff e income taxes and equity loss .................................................. Income tax expense......................................................................................... Equity loss, net of tax ..................................................................................... Net income...................................................................................................... Net income attributabla e to noncontrolling interest ......................................... Net income attributabla e to Aptiv .................................................................... $ 1,378 (148) (24) (15) (2) 1,189 (150) (129) 910 (101) (200) 609 19 590 126 Signal and Power Solutions Advanced Safeff ty and User Experience (in millions) Total For the Year Ended December 31, 2020: Adjusted operating income ............................................................................. $ Amortization.............................................................................................. Restrucrr turt ing ............................................................................................. Other acquisition and portfolff io project costs............................................. Asset impairments ..................................................................................... Defeff rred compensation related to acquisitions.......................................... Gain on business divestiturt es and other transactions ................................ 900 $ (138) (90) (12) (4) — — Operating income............................................................................................ $ 656 $ 111 $ (6) (46) (11) (6) (14) 1,434 1,462 Interest expense............................................................................................... Income beforff e income taxes and equity loss .................................................. Income tax expense......................................................................................... Equity loss, net of tax ..................................................................................... Net income...................................................................................................... Net income attributabla e to noncontrolling interest ......................................... Net income attributabla e to Aptiv .................................................................... $ 1,011 (144) (136) (23) (10) (14) 1,434 2,118 (164) 1,954 (49) (83) 1,822 18 1,804 Inforff mation concerning principal geographi a c areas is set forff th below. Net sales reflff ects the manufaff cturt ing location and is forff the years ended December 31, 2022, 2021 and 2020. Long-lived assets is as of December 31, 2022, 2021 and 2020. Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Net Sales Long-Lived Assets (1) Net Sales Long-Lived Assets (1) Net Sales Long-Lived Assets (1) (in millions) United States (2) ................................... $ 6,292 $ 1,136 $ 5,196 $ 1,010 $ 4,382 $ Other North America ............................ Europe, Middle East & Afrff ica (3) ........ Asia Pacififf c (4) ..................................... South America ...................................... 159 5,372 5,274 392 291 1,429 1,031 59 136 5,179 4,829 278 248 1,390 978 51 112 4,483 3,898 191 985 253 1,440 953 50 Total ................................................. $ 17,489 $ 3,946 $ 15,618 $ 3,677 $ 13,066 $ 3,681 (1) (2) (3) Includes property, plant and equipment, net of accumulated depreciation and operating lease right-of-ff use assets. Includes net sales and machinery,rr utilized to produce products sold to customers located in the U.S. equipment and tooling that relate to the Company’s maquiladora operations located in Mexico. These assets are Includes Aptiv’s countryrr of domicile, Jersey. The Company had no sales or long-lived assets in Jersey in any period. The largest portion of net sales in the Europe, Middle East & Afrff ica region was $1,485 million, $1,436 million and $1,248 million in Germany forff 2021 and 2020, respectively. the years ended December 31, 2022, (4) Net sales and long-lived assets in Asia Pacififf c are primarily attributabla e to China. 127 23. FOURTH QUARTER DATA (UNAUDITED) The folff lowing is a condensed summaryrr of the Company’s unaudited results of operations forff the three months ended December 31, 2022 and 2021. Three Months Ended December 31, 2022 2021 (in millions, except per share amounts) Net sales ...................................................................................................................................... $ Cost of sales ................................................................................................................................ Gross margin............................................................................................................................. $ Operating income ........................................................................................................................ $ Net income (1)............................................................................................................................. Net income attributabla e to Aptiv ................................................................................................. Net income attributabla e to ordinaryrr shareholders ....................................................................... 4,640 3,827 813 440 266 249 233 Basic net income per share: Basic net income per share attributabla e to ordinaryrr shareholders ........................................... $ Weighted average number of basic shares outstanding............................................................ 0.86 270.95 $ $ $ $ Diluted net income per share: Diluted net income per share attributabla e to ordinaryrr shareholders ........................................ $ 0.86 $ Weighted average number of diluted shares outstanding ......................................................... 271.40 4,134 3,543 591 260 39 31 15 0.06 270.52 0.06 271.47 (1) ff In the four Automotive. In the four ff th quarter of 2022, Aptiv incurred appr a oximately $53 million in transaction costs related to the acquisitions of Wind River and Intercabla e th quarter of 2021, Aptiv recognized a loss on extinguishment of debt of $126 million. 24. REVENUE Refeff r to Note 2. Signififf cant Accounting Policies forff a complete description of the Company’s revenue recognition accounting policy. Nature of Goods and Services The principal activity frff om which the Company generates its revenue is the manufaff cturt ing of production parts forff OEM customers. Aptiv recognizes revenue forff is satisfiff ed when customers obtain control of the product upon title transfeff r and not as the product is manufaff cturt ed or developed. production parts at a point in time, rather than over time, as the perforff mance obligation Although production parts are highly customized with no alternative use, Aptiv does not have an enforff ceabla e right to payment as customers have the right to cancel a product program without a notififf cation period. The amount of revenue recognized is based on the purchase order price and adjusted forff rebates and price discounts), as appl a with payment terms averaging 60 days. revenue allocated to variabla e consideration (i.e. estimated icabla e. Customers typically pay forff production parts based on customaryrr business practices The Company also generates revenue frff om the sale of softff ware licenses, post deliveryrr support and maintenance and profeff ssional softff ware services, primarily frff om Wind River, which the Company acquired in December 2022. Refeff r to Note 20. Acquisitions and Divestiturt es forff softff ware licenses and profeff ssional softff ware services at a point in time upon deliveryrr or when the services are provided. Revenue frff om post deliveryrr support and maintenance forff contract term. Under certain of these arrangements, timing may diffff eff r between revenue recognition and billing. ther inforff mation on this acquisition. The Company generally recognizes revenue forff softff ware contracts are recognized over time on a ratabla e basis over the furff 128 Disaggregation of Revenue Revenue generated frff om Aptiv’s operating segments is disaggregated by primaryrr geographi the years ended December 31, 2022, 2021 and 2020. Inforff mation concerning geographi a a c market in the folff c market reflff ects the lowing tabla es forff manufaff cturt ing location. For the Year Ended December 31, 2022: Geographic Market Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other Total (in millions) North America...................................................................... $ 5,026 $ 1,435 $ (10) $ Europe, Middle East and Afrff ica........................................... Asia Pacififf c .......................................................................... South America...................................................................... 3,289 4,236 392 2,094 1,058 — (11) (20) — 6,451 5,372 5,274 392 Total net sales ................................................................. $ 12,943 $ 4,587 $ (41) $ 17,489 For the Year Ended December 31, 2021: Geographic Market Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other Total (in millions) North America...................................................................... $ 4,135 $ 1,204 $ (7) $ Europe, Middle East and Afrff ica........................................... Asia Pacififf c .......................................................................... South America...................................................................... 3,387 3,798 278 1,802 1,050 — (10) (19) — 5,332 5,179 4,829 278 Total net sales ................................................................. $ 11,598 $ 4,056 $ (36) $ 15,618 For the Year Ended December 31, 2020: Geographic Market Signal and Power Solutions Advanced Safeff ty and User Experience Eliminations and Other Total (in millions) North America...................................................................... $ 3,527 $ 970 $ (3) $ Europe, Middle East and Afrff ica........................................... Asia Pacififf c .......................................................................... South America...................................................................... Total net sales ................................................................. $ 2,869 2,935 191 9,522 $ 1,625 978 — 3,573 $ (11) (15) — (29) $ 4,494 4,483 3,898 191 13,066 Contract Balances As of December 31, 2022, the balance of contract liabia lities, which solely consisted of defeff rred revenue, was $99 million (of which $90 million was recorded in other current liabia lities and $9 million was recorded in other long-term liabia lities). There were no contract liabia lities recorded as of December 31, 2021. Contract assets include amounts related to the Company’s contractuat l right to consideration forff both completed and partially completed perforff mance obligations that have not been invoiced. As of December 31, 2022, the balance of contract assets was $67 million (of which $24 million was recorded in other current assets and $43 million was recorded in other long- term assets). There were no contract assets recorded as of December 31, 2021. The increase in our contract liabia lities and contract assets during the year ended December 31, 2022 is due to the acquisition of Wind River. Remaining Perforff mance Obligations For production parts, customer contracts generally are represented by a combination of a current purchase order and a current production schedule issued by the customer. There are no contracts forff production parts outstanding beyond one year. 129 Aptiv does not enter into fiff xed long-term supply agreements. As permitted, Aptiv does not disclose inforff mation about remaining perforff mance obligations that have original expected durations of one year or less forff a production parts. Customer contracts forff sales of softff ware and related services are generally represented by a sales contract or purchase order with contract durations typically ranging frff om one to three years. Remaining perforff mance obligations include contract liabia lities and unbilled amounts that will be recognized as revenue in futff urt e periods. Transaction price allocated to the remaining perforff mance obligation is based on the standalone selling price. The value of the transaction price allocated to remaining perforff mance obligations under softff ware and related service contracts as of December 31, 2022 was appr $135 million. The Company expects to recognize appr next twelve months, and the remainder thereaftff er. oximately oximately 67% of remaining perforff mance obligations as revenue in the a a Costs to Obtain a Contract From time to time, Aptiv makes payments to customers in conjunction with ongoing business. These payments to customers are generally recognized as a reduction to revenue at the time of the commitment to make these payments. However, certain other payments to customers, or upfrff ont feff es, meet the criteria to be considered a cost to obtain a contract as they are directly attributabla e to a contract, are incremental and management expects the feff es to be recoverabla e. As of December 31, 2022 and 2021, Aptiv has recorded $78 million (of which $17 million was classififf ed within other current assets and $61 million was classififf ed within other long-term assets) and $92 million (of which $34 million was classififf ed within other current assets and $58 million was classififf ed within other long-term assets), respectively, related to these capia talized upfrff ont feff es. Capia talized upfrff ont feff es are amortized to revenue based on the transfeff r of goods and services to the customer forff which the upfrff ont feff es relate, which typically range frff om three to fiff ve years. There have been no impairment losses in relation to the costs capia talized. The amount of amortization to net sales was $28 million, $31 million and $18 million forff December 31, 2022, 2021 and 2020, respectively. the years ended 25. LEASES Lease Portfolff io The Company has operating and fiff nance leases forff real estate, offff iff ce equipment, automobiles, forff kliftff s and certain other equipment. The Company's leases have remaining lease terms of one year to 30 years, some of which include options to extend the leases forff up to eight years, and some of which include options to terminate the leases within one year. Certain of our lease inflff ation. Our lease agreements do not contain any agreements include rental payments which are adjusted periodically forff material residual value guarantees or material restrictive covenants. When availabla e, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinabla e implicit rate. Thereforff e, we must estimate our incremental borrowing rate to discount the lease payments based on inforff mation availabla e at ying a spread over lease commencement. The incremental borrowing rate is not a quoted rate and is primarily derived by appl U.S. Treasuryrr rates with a similar duration to the Company’s lease payments. The spread utilized is based on the Company’s credit rating and the impact of fulff l collateralization. a Relatl ed Partytt Lease Agreement Aptiv subleases certain offff iff ce space to Motional, our autonomous driving joint venturt e, which has a remaining lease term oximately six years as of December 31, 2022. Total income under the agreement was $4 million, $3 million and $3 of appr a million during the years ended December 31, 2022, 2021 and 2020, respectively. The sublease income and Aptiv’s associated operating lease cost are recorded to cost of sales in the consolidated statement of operations. The Company believes the terms of the lease agreement have not signififf cantly been affff eff cted by the faff ct the Company and the lessee are related parties. 130 The components of lease expense were as folff lows: Year Ended December 31, 2022 2021 2020 (in millions) Lease cost: Finance lease cost: Amortization of right-of-ff use assets ............................................................. $ Interest on lease liabia lities ........................................................................... Total fiff nance lease cost.................................................................................... Operating lease cost......................................................................................... Short-term lease cost........................................................................................ Variabla e lease cost ........................................................................................... Sublease income (1)......................................................................................... $ 4 1 5 122 14 1 (5) $ 4 1 5 119 13 — (4) Total lease cost ............................................................................................ $ 137 $ 133 $ 5 1 6 111 13 — (4) 126 (1) Sublease income excludes rental income frff om owned properties of $8 million, $10 million and $10 million forff the years ended December 31, 2022, 2021 and 2020, respectively, which is included in other income, net. Supplemental cash flff ow and other inforff mation related to leases was as folff lows: Year Ended December 31, 2022 2021 2020 (in millions) Cash paid forff amounts included in the measurement of lease liabilities: Operating cash flff ows forff fiff nance leases........................................................... $ 1 $ 1 $ Operating cash flff ows forff operating leases ....................................................... Financing cash flff ows forff fiff nance leases........................................................... 116 4 Right-of-ff use assets obtained in exchange forff lease obligations: Operating leases ............................................................................................... $ 102 $ Finance leases .................................................................................................. 3 122 4 $ 74 1 1 107 4 35 1 131 Supplemental balance sheet inforff mation related to leases was as folff lows: Operating leases: Operating lease right-of-ff use assets .............................................................................................. $ Accruer d liabia lities (Note 8) ......................................................................................................... $ Long-term operating lease liabia lities ........................................................................................... Total operating lease liabia lities ............................................................................................... $ Finance leases: Property and equipment............................................................................................................... $ Less: accumulated depreciation................................................................................................... Total property, net................................................................................................................... $ Short-term debt (Note 11)............................................................................................................ $ Long-term debt (Note 11)............................................................................................................ Total fiff nance lease liabia lities................................................................................................... $ December 31, 2022 2021 (dollars in millions) 451 109 361 470 35 (19) 16 6 12 18 $ $ $ $ $ $ $ 383 92 304 396 26 (15) 11 3 10 13 Weighted average remaining lease term: Operating leases........................................................................................................................... Finance leases .............................................................................................................................. 6 years 4 years 6 years 5 years Weighted average discount rate: Operating leases........................................................................................................................... Finance leases .............................................................................................................................. 3.25 % 4.00 % 3.00 % 3.50 % Maturt ities of lease liabia lities were as folff lows: Operating Leases Finance Leases (in millions) As of December 31, 2022 2023............................................................................................................................................. $ 2024............................................................................................................................................. 2025............................................................................................................................................. 2026............................................................................................................................................. 2027............................................................................................................................................. Thereaftff er .................................................................................................................................... Total lease payments............................................................................................................... Less: imputed interest.................................................................................................................. $ 121 95 78 65 49 106 514 (44) Total ........................................................................................................................................ $ 470 $ 6 5 4 3 2 1 21 (3) 18 As of December 31, 2022, the Company has entered into additional operating leases, primarily forff real estate, that have oximately $55 million. These operating leases are anticipated to commence primarily in 2023 with a not yet commenced of appr lease terms of fiff ve to ten years. 132 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Management of the Company, under the supervision and with the participation of the Chief Executive Offff iff cer and the Chief Financial Offff iff cer, carried out an evaluation of the effff eff ctiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2022. As defiff ned in RulRR e 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), disclosure controls and procedures are controls and procedures designed to provide reasonabla e assurance that inforff mation required to be disclosed in reports fiff led or submitted under the Exchange Act is recorded, processed, summarized and reported on a timely basis, and that such inforff mation is accumulated and communicated to management, including the Company’s Chief Executive Offff iff cer and Chief Financial Offff iff cer, as appr disclosure. The Company’s disclosure controls and procedures include components of the Company’s internal control over fiff nancial reporting. Based upon this evaluation, the Chief Executive Offff iff cer and Chief Financial Offff iff cer have concluded that the Company’s disclosure controls and procedures were effff eff ctive as of December 31, 2022. opriate, to allow timely decisions regarding required a Management’s Report on Internal Control Over Financial Reporting Management is responsible forff establa ishing and maintaining adequate internal control over fiff nancial reporting, as such the Company. Under the supervision of the Chief Executive term is defiff ned in Exchange Act RulRR es 13a-15(f)ff and 15d-15(f)ff , forff Offff iff cer and Chief Financial Offff iff cer, management conducted an evaluation of the effff eff ctiveness of the Company’s internal control over fiff nancial reporting as of December 31, 2022 based on the frff amework set forff Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated Framework (2013).” Based on that evaluation, management has concluded that the Company’s internal control over fiff nancial reporting was effff eff ctive as of December 31, 2022. Due to the timing of each respective acquisition during the four excluded the acquired operations of Wind River Systems, Inc. (“Wind River”) and Intercabla e Automotive S.r.l. (“Intercabla e Automotive”) frff om its assessment of the effff eff ctiveness of the Company’s internal controls over fiff nancial reporting. Wind River and Intercabla e Automotive represented appr oximately 23% of the Company’s assets as of December 31, 2022 and less than 1% of net sales and net income forff th quarter of 2022, the Company has the year ended December 31, 2022. th by the Committee of Sponsoring a ff Ernst & Young LLP has issued an attestation report which is included herein as the Report of Independent Registered Public Accounting Firm under the section headed Financial Statements and Supplementaryrr Data forff December 31, 2022. the year ended Changes in Internal Control Over Financial Reporting There were no material changes in the Company’s internal control over fiff nancial reporting, identififf ed in connection with management’s evaluation of internal control over fiff nancial reporting, that occurred during the quarter and year ended December 31, 2022 that have materially affff eff cted, or are reasonabla y likely to materially affff eff ct, the Company’s internal control over fiff nancial reporting. The Company is integrating Wind River and Intercabla e Automotive into the Company’s operations, compliance programs and internal control processes. Specififf cally, as permitted by SEC rulr es and regulations, the Company has excluded Wind River and Intercabla e Automotive frff om management’s evaluation of internal controls over fiff nancial reporting as of December 31, 2022. ITEM 9B. OTHER INFORMATION None. 133 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORARR TE GOVERNANCE PART III The inforff mation called forff by Item 10, as to the audit committee and the audit committee fiff nancial expert, is incorpor r ated by refeff rence to the Company’s Defiff nitive Proxy Statement to be fiff led with the SEC pursuant to Regulation 14A in connection with the Company’s 2023 Annual General Meeting of Shareholders (the “Proxy Statement”) under the headings “Board Practices” and “Board Committees.” The inforff mation called forff Offff iff cers of the Registrant in the Supplementaryrr by Item 10, as to directors, is incorpor Directors” and “Board Practices.” by Item 10, as to executive offff iff cers, is set forff Item in Part I of this Annual Report on Form 10-K. The inforff mation called forff ated by refeff rence to the Company’s Proxy Statement under the headings “Election of th under Executive rr The Company has adopted a code of ethics, the Code of Ethical Business Conduct, which appl a executive offff iff cer, principal fiff nancial offff iff cer, principal accounting offff iff cer or controller, or persons perforff ming similar func and all other employees and non-employee directors of the Company. The Code of Ethical Business Conduct is posted on the Company’s website (aptiv.com). The Company intends to satisfyff regarding an amendment to, or waiver frff om, a provision of the code of ethics that appl offff iff cer, principal fiff nancial offff iff cer, principal accounting offff iff cer or controller, or persons perforff ming similar func . such inforff mation on the Company’s website, at the address specififf ed above ies to the Company’s principal executive tions, by posting ff the disclosure requirement under Item 5.05 of Form 8-K tions, a a ies to its principal ff The Company’s Corpor r ate Governance Guidelines and charters forff each Committee of its Board of Directors are also availabla e on the Company’s website. The Code of Ethical Business Conduct, Corpor also availabla e in print to any shareholder who submits a request to: Corpor Canal Dock, Dublin, D02 VY79, Ireland. r r ate Governance Guidelines and charters are ate Secretary,rr Aptiv PLC, 5 Hanover Quay, Grand Inforff mation on the Company’s website is not deemed to be incorpor r ated by refeff rence into this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The inforff mation called forff by Item 11 is incorpor r ated by refeff rence to the Company’s Proxy Statement under the headings “Director Compensation,” “Compensation Discussion and Analysis” and “Compensation Committee Report.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The inforff mation called forff r by Item 12, as to security ownership of certain benefiff cial owners, directors and management, ated by refeff rence to the Company’s Proxy Statement under the headings “Security Ownership of Certain Benefiff cial is incorpor Owners” and “Security Ownership of Management.” Inforff mation as of December 31, 2022 about a the Company’s ordinaryrr shares that may be issued under all of its equity compensation plans is set forff th in Part II Item 5 of this Annual Report on Form 10-K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRARR NSACTIONS AND DIRECTOR INDEPENDENCE The inforff mation called forff by Item 13, as to director independence, is incorpor r ated by refeff rence to the Company’s Proxy Statement under the heading “Board Practices.” The inforff mation called forff incorpor rr Transactions.” ated by refeff rence to the Company’s Proxy Statement under the heading “Relationships and Related Party by Item 13, as to related person transactions, is ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The inforff mation called forff by Item 14 is incorpor r ated by refeff rence to the Company’s Proxy Statement under the heading “Independent Registered Public Accounting Firm’s Fees.” 134 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The folff lowing documents are fiff led as part of this Form 10-K. PART IV (1) Financial Statements: — Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) — Consolidated Statements of Operations forff the Years Ended December 31, 2022, 2021 and 2020 — Consolidated Statements of Comprehensive Income forff the Years Ended December 31, 2022, 2021 and 2020 — Consolidated Balance Sheets as of December 31, 2022 and 2021 — Consolidated Statements of Cash Flows forff — Consolidated Statements of Redeemabla e Noncontrolling Interest and Shareholders’ Equity forff the Years Ended December 31, 2022, 2021 and 2020 the Years Ended December 31, 2022, 2021 and 2020 — Notes to Consolidated Financial Statements (2) Financial Statement Schedule: SCHEDULE II—VALUATION ANA D QUALIFYING ACCOUNUU TS ANA D RESERVRR ES Page No. g 62 67 68 69 70 72 74 Balance at Beginning of Period Additions Charged to Costs and Expenses Deductions Other Activity (in millions) Balance at End of Period December 31, 2022: Allowance forff doubtfulff accounts ........... $ Tax valuation allowance (a) ................... $ December 31, 2021: Allowance forff doubtfulff accounts ........... $ Tax valuation allowance (a) ................... $ December 31, 2020: 37 766 40 832 Allowance forff doubtfulff accounts ........... $ Tax valuation allowance (a) ................... $ 37 1,075 $ $ $ $ $ $ 27 57 22 25 39 84 $ $ $ $ $ $ (12) $ (83) $ (24) $ (78) $ (39) $ (333) $ — $ 16 $ (1) $ (13) $ 3 6 $ $ (a) Additions Charged to Costs and Expenses and Deductions are primarily related to taxabla e losses forff which the tax benefiff t has been reserved. The other schedules have been omitted because they are not appl therein is included in the Consolidated Financial Statements or notes thereto. a icabla e, not required or the inforff mation to be set forff 52 756 37 766 40 832 th 135 (3) Exhibits: (including those incorpor r ated by refeff rence) Exhibit Number 3.1 Memorandum and Articles of Association (incorpor Company fiff led with the SEC on December 7, 2017) rr ated by refeff rence to Exhibit 3.1 to the Current Report on Form 8-K of the Descriptionp 3.2 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 Statement Of Rights of the 5.50% Series A Mandatoryrr Convertible Prefeff rred Shares Of Aptiv PLC, effff eff ctive June 12, 2020 ated by refeff rence to Exhibit 3.1 to the Current Report on Form 8-K of the Company fiff led with the SEC on June 12, rr (incorpor 2020) Senior Notes Indenturt e, dated as of March 10, 2015, among Aptiv PLC, Wilmington Trusrr and Deutsche Bank Trusrr to Exhibit 4.1 to the Current Report on Form 8-K of the Company fiff led with the SEC on March 10, 2015) t Company Americas, as Registrar, Paying Agent and Authenticating Agent (incorpor t, National Association, as Trusrr rr tee ated by refeff rence First Supplemental Indenturt e, dated as of March 10, 2015, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr t, National Association, as Trusrr t Company Americas, as Registrar, Paying Agent and Authenticating Agent (incorpor March 10, 2015) ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led with the SEC on tee and Deutsche Bank Trusrr rr Second Supplemental Indenturt e, dated as of November 19, 2015, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr and Authenticating Agent (incorpor with the SEC on November 19, 2015) t, National Association, as Trusrr rr ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led t Company Americas, as Registrar, Paying Agent tee and Deutsche Bank Trusrr t, National Association, as Trusrr Third Supplemental Indenturt e, dated as of September 15, 2016, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr Authenticating Agent (incorpor the SEC on September 15, 2016) ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led with t Company Americas, as Registrar, Paying Agent and tee and Deutsche Bank Trusrr rr t, National Association, as Trusrr Fourth Supplemental Indenturt e, dated as of September 20, 2016, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr Authenticating Agent (incorpor the SEC on September 20, 2016) ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led with t Company Americas, as Registrar, Paying Agent and tee and Deutsche Bank Trusrr rr t, National Association, as Trusrr Fiftff h Supplemental Indenturt e, dated as of March 14, 2019, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr Authenticating Agent (incorpor rr the SEC on March 14, 2019) ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led with t Company Americas, as Registrar, Paying Agent and tee, and Deutsche Bank Trusrr rr tee, and Deutsche Bank Trusrr t, National Association, as Trusrr Sixth Supplemental Indenturt e, dated as of November 23, 2021, among Aptiv PLC, the guarantors named therein, Wilmington Trusrr Authenticating Agent (incorpor the SEC on November 23, 2021) Seventh Supplemental Indenturt e, dated as of December 27, 2021, among Aptiv PLC, Aptiv Global Financing Limited, the guarantors named therein, Wilmington Trusrr as Registrar, Paying Agent and Authenticating Agent* Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934* ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Company fiff led with t Company Americas, as Registrar, Paying Agent and t, National Association, as Trusrr tee, and Deutsche Bank Trusrr t Company Americas, Eighth Supplemental Indenturt e, dated as of Februarr Limited, Wilmington Trusrr Paying Agent and Authenticating Agent (incorpor Company fiff led with the SEC on Februarr rr ryrr 18, 2022) t, National Association, as Trusrr ryr 18, 2022, among Aptiv PLC, Aptiv Corpor rr ation, Aptiv Global Financing tee, and Deutsche Bank Trusrr t Company Americas, as Registrar, ated by refeff rence to Exhibit 4.2 to the Current Report on Form 8-K of the Ninth Supplemental Indenturt e, dated as of Februarr Limited, Wilmington Trusrr Paying Agent and Authenticating Agent (incorpor Company fiff led with the SEC on Februarr rr ryrr 18, 2022) t, National Association, as Trusrr ryrr 18, 2022, among Aptiv PLC, Aptiv Corpor tee, and Deutsche Bank Trusrr rr ation, Aptiv Global Financing t Company Americas, as Registrar, ated by refeff rence to Exhibit 4.3 to the Current Report on Form 8-K of the Third Amended and Restated Credit Agreement, dated as of June 24, 2021, among Aptiv PLC, Aptiv Corpor Global Financing Limited and JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto rr (incorpor 2021) ated by refeff rence to Exhibit 1.1 to the Current Report on Form 8-K of the Company fiff led with the SEC on June 25, ation, Aptiv rr Aptiv PLC Executive Severance Plan, effff eff ctive Februarr ryrr 1, 2017(7)+ Aptiv PLC Executive Change in Control Severance Plan, effff eff ctive Februarr ryr 1, 2017(7)+ Aptiv Corpor rr ation Supplemental Executive Retirement Program(1)+ Aptiv Corpor rr ation Salaried Retirement Equalization Savings Program(1)+ Offff eff r letter forff Kevin P. Clark, dated June 10, 2010(1)+ Offff eff r letter forff Joseph R. Massaro, dated September 13, 2013(6)+ Form of Non-Employee Director RSU Award Agreement pursuant to Aptiv PLC Long Term Incentive Plan, as amended(2)+ Letter Agreement, dated October 29, 2012, between the Company and Kevin P. Clark(3)+ 10.10 Aptiv PLC Long-Term Incentive Plan, as amended and restated (incorpor dated March 9, 2015)+ rr ated by refeff rence to the Company’s Proxy Statement 136 Exhibit Number 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 21.1 22 23.1 23.2 31.1 31.2 32.1 32.2 99.1 Descriptionp Form of Offff iff cer Perforff mance-Based RSU Award pursuant to the Aptiv PLC Long-Term Incentive Plan, as amended and restated, effff eff ctive 2016(5)+ Form of Offff iff cer Time-Based RSU Award pursuant to the Aptiv PLC Long-Term Incentive Plan, as amended and restated(4)+ Form of Allocation Letter forff Executives, effff eff ctive 2019(8)+ Aptiv PLC Annual Incentive Plan (as Amended and Restated Effff eff ctive Januaryrr 1, 2021)(9)+ Form of Offff iff cer Time-Based RSU Award pursuant to the Aptiv PLC Long-Term Incentive Plan, as amended and restated, effff eff ctive 2022(10)+ Form of Offff iff cer Perforff mance-Based RSU Award pursuant to the Aptiv PLC Long-Term Incentive Plan, as amended and restated, effff eff ctive 2022(10)+ Offff eff r letter forff Katherine H. Ramundo, dated December 12, 2020(10)+ Offff eff r letter forff William T. Presley, dated December 15, 2022*+ Subsidiaries of the Registrant* List of Guarantor Subsidiaries* Consent of Ernst & Young LLP* Consent of Ernst & Young LLP, Independent Auditors of Motional AD LLC , dated Februarr ryrr 7, 2023* RulRR e 13a-14(a)/15d-14(a) Certififf cation of Principal Executive Offff iff cer* RulRR e 13a-14(a)/15d-14(a) Certififf cation of Principal Financial Offff iff cer* Certififf cation by Chief Executive Offff iff cer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002* Certififf cation by Chief Financial Offff iff cer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbar nes-Oxley Act of 2002* Audited Consolidated Financial Statements of Motional AD LLC as of December 31, 2022 and 2021 and forff years in the period ended December 31, 2022* each of the three 101.INS Inline XBRL Instance Document# - The instance document does not apa pear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document# 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document# 101.DEF Inline XBRL Taxonomy Extension Defiff nition Linkbase Document# 101.LAB Inline XBRL Taxonomy Extension Labea l Linkbase Document# 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document# 104 Cover Page Interactive Data File# - The cover page interactive data fiff le does not appe XBRL tags are embedded within the Inline XBRL document. a ar in the Interactive Data File because its * Filed herewith. + Management contract or compensatoryrr plan or arrangement. (1) Filed with the Registration Statement on Form S-1 (File No. 333-174493) on June 30, 2011 and incorpor r ated herein by refeff rence. (2) Filed with Form 10-Q forff the period ended June 30, 2012 on July 31, 2012 and incorpor r ated herein by refeff rence. (3) Filed with Form 10-Q forff the period ended September 30, 2012 on November 1, 2012 and incorpor r ated herein by refeff rence. (4) Filed with Form 10-Q forff the period ended March 31, 2015 on April 30, 2015 and incorpor r ated herein by refeff rence. (5) Filed with Form 10-Q forff the period ended March 31, 2016 on May 4, 2016 and incorpor r ated herein by refeff rence. (6) Filed with Form 10-Q forff the period ended June 30, 2016 on August 3, 2016 and incorpor rr ated herein by refeff rence. (7) Filed with Form 10-K forff (8) Filed with Form 10-Q forff the year ended December 31, 2016 on Februarr ryrr 6, 2017 and incorpor r ated herein by refeff rence. the period ended March 31, 2019 on May 2, 2019 and incorpor r ated herein by refeff rence. (9) Filed with Form 10-Q forff the period ended June 30, 2021 on August 5, 2021 and incorpor rr ated herein by refeff rence. (10) Filed with Form 10-Q forff the period ended March 31, 2022 on May 5, 2022 and incorpor r ated herein by refeff rence. # Filed electronically with the Report. 137 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES APTIV PLC /s/ Joseph R. Massaro By: Joseph R. Massaro Chief Financial Offff iff cer and Senior Vice President, Business Operations Dated: Februarr ryrr 8, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of Februar ryrr 8, 2023, by the folff lowing persons on behalf of the registrant and in the capaa cities indicated: Signaturt e /s/ Kevin P. Clark Kevin P. Clark /s/ Joseph R. Massaro Joseph R. Massaro /s/ Allan J. Brazier Allan J. Brazier /s/ Richard L. Clemmer Richard L. Clemmer /s/ Nancy E. Cooper Nancy E. Cooper /s/ Joseph L. Hooley Joseph L. Hooley /s/ Merit E. Janow Merit E. Janow /s/ Sean O. Mahoney Sean O. Mahoney /s/ Paul M. Meister Paul M. Meister Title Chairman and Chief Executive Offff iff cer (Principal Executive Offff iff cer) Chief Financial Offff iff cer and Senior Vice President, Business Operations (Principal Financial Offff iff cer) Vice President and Chief Accounting Offff iff cer (Principal Accounting Offff iff cer) Director Director Director Director Director Director 138 /s/ Robert K. Ortbet rg Robert K. Ortbet rg /s/ Colin J. Parris Colin J. Parris /s/ Ana G. Pinczuk Ana G. Pinczuk Director Director Director 139 CERTIFICATIONS Certififf cation of Principal Executive Offff iff cer I, Kevin P. Clark, certifyff that: 1. I have reviewed this annual report on Form 10-K of Aptiv PLC; Exhibit 31.1 2. Based on my knowledge, this report does not contain any untruerr statement of a material faff ct or omit to state a material to make the statements made, in light of the circumstances under which such statements were made, not faff ct necessaryrr misleading with respect to the period covered by this report; 3. Based on my knowledge, the fiff nancial statements, and other fiff nancial inforff mation included in this report, faff irly present in all material respects the fiff nancial condition, results of operations and cash flff ows of the registrant as of,ff and forff periods presented in this report; , the 4. The registrant’s other certifyiff ng offff iff cer and I are responsible forff establa ishing and maintaining disclosure controls and procedures (as defiff ned in Exchange Act RulRR es 13a-15(e) and 15d-15(e)) and internal control over fiff nancial reporting (as defiff ned in Exchange Act RulRR es 13a-15(f)ff and 15d-15(f)ff ) forff the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material inforff mation relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over fiff nancial reporting, or caused such internal control over fiff nancial reporting to be designed under our supervision, to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff generally accepted accounting principles; es in accordance with external purpos r (c) Evaluated the effff eff ctiveness of the registrant’s disclosure controls and procedures and presented in this report the effff eff ctiveness of the disclosure controls and procedures, as of the end of the period a our conclusions about covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over fiff nancial reporting that occurred th fiff scal quarter in the case of an annual during the registrant’s most recent fiff scal quarter (the registrant’s four report) that has materially affff eff cted, or is reasonabla y likely to materially affff eff ct, the registrant’s internal control over fiff nancial reporting; and ff 5. The registrant’s other certifyiff ng offff iff cer and I have disclosed, based on our most recent evaluation of internal control over fiff nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons perforff ming the equivalent func tions): ff (a) All signififf cant defiff ciencies and material weaknesses in the design or operation of internal control over fiff nancial reporting which are reasonabla y likely to adversely affff eff ct the registrant’s abia lity to record, process, summarize and report fiff nancial inforff mation; and (b) Any frff aud, whether or not material, that involves management or other employees who have a signififf cant role in the registrant’s internal control over fiff nancial reporting. Date: Februar ryrr 8, 2023 /s/ Kevin P. Clark Kevin P. Clark Chairman and Chief Executive Offff iff cer (Principal Executive Offff iff cer) CERTIFICATIONS Certififf cation of Principal Financial Offff iff cer I, Joseph R. Massaro, certifyff that: 1. I have reviewed this annual report on Form 10-K of Aptiv PLC; Exhibit 31.2 2. Based on my knowledge, this report does not contain any untruerr statement of a material faff ct or omit to state a material to make the statements made, in light of the circumstances under which such statements were made, not faff ct necessaryrr misleading with respect to the period covered by this report; 3. Based on my knowledge, the fiff nancial statements, and other fiff nancial inforff mation included in this report, faff irly present in all material respects the fiff nancial condition, results of operations and cash flff ows of the registrant as of,ff and forff periods presented in this report; , the 4. The registrant’s other certifyiff ng offff iff cer and I are responsible forff establa ishing and maintaining disclosure controls and procedures (as defiff ned in Exchange Act RulRR es 13a-15(e) and 15d-15(e)) and internal control over fiff nancial reporting (as defiff ned in Exchange Act RulRR es 13a-15(f)ff and 15d-15(f)ff ) forff the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material inforff mation relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over fiff nancial reporting, or caused such internal control over fiff nancial reporting to be designed under our supervision, to provide reasonabla e assurance regarding the reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff generally accepted accounting principles; es in accordance with external purpos r (c) Evaluated the effff eff ctiveness of the registrant’s disclosure controls and procedures and presented in this report the effff eff ctiveness of the disclosure controls and procedures, as of the end of the period our conclusions about covered by this report based on such evaluation; and a (d) Disclosed in this report any change in the registrant’s internal control over fiff nancial reporting that occurred th fiff scal quarter in the case of an annual during the registrant’s most recent fiff scal quarter (the registrant’s four report) that has materially affff eff cted, or is reasonabla y likely to materially affff eff ct, the registrant’s internal control over fiff nancial reporting; and ff 5. The registrant’s other certifyiff ng offff iff cer and I have disclosed, based on our most recent evaluation of internal control over fiff nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons perforff ming the equivalent func tions): ff (a) All signififf cant defiff ciencies and material weaknesses in the design or operation of internal control over fiff nancial reporting which are reasonabla y likely to adversely affff eff ct the registrant’s abia lity to record, process, summarize and report fiff nancial inforff mation; and (b) Any frff aud, whether or not material, that involves management or other employees who have a signififf cant role in the registrant’s internal control over fiff nancial reporting. Date: Februar ryrr 8, 2023 /s/ Joseph R. Massaro Joseph R. Massaro Chief Financial Offff iff cer and Senior Vice President, Business Operations (Principal Financial Offff iff cer) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the fiff ling of this annual report on Form 10-K of Aptiv PLC (the “Company”) forff December 31, 2022, with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin P. Clark, Chief pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbar nes-Oxley Act Executive Offff iff cer, certify,ff of 2002 to the best of my knowledge, that: the period ended 1. The Report fulff 2. The inforff mation contained in the Report faff irly presents, in all material respects, the fiff nancial condition and results of ly complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and Exhibit 32.1 operations of the Company. Date: Februar ryrr 8, 2023 /s/ Kevin P. Clark Kevin P. Clark Chairman and Chief Executive Offff iff cer (Principal Executive Offff iff cer) A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furff nished to the Securities and Exchange Commission or its staffff upon request. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.2 In connection with the fiff ling of this annual report on Form 10-K of Aptiv PLC (the “Company”) forff December 31, 2022, with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph R. Massaro, Chief Financial Offff iff cer, certify,ff Act of 2002 to the best of my knowledge, that: pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbar nes-Oxley the period ended 1. The Report fulff 2. The inforff mation contained in the Report faff irly presents, in all material respects, the fiff nancial condition and results of ly complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and operations of the Company. Date: Februar ryrr 8, 2023 /s/ Joseph R. Massaro Joseph R. Massaro Chief Financial Offff iff cer and Senior Vice President, Business Operations (Principal Financial Offff iff cer) A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furff nished to the Securities and Exchange Commission or its staffff upon request. [PAGE INTENTIONALLY LEFT BLANK] [PAGE INTENTIONALLY LEFT BLANK] O U R L E A D E R S H I P as of March 1, 2023 BOARD OF DIRECTORS KEVIN P. CLARK Chairman and Chief Executive Ofﬁcer PAUL M. MEISTER Partner, Novalis LifeSciences and Co-founder and Chief Executive Ofﬁcer, Liberty Lane Partners LLC SENIOR LEADERSHIP KEVIN P. CLARK Chairman and Chief Executive Ofﬁcer ARTURO ALVAREZ President, Latin America, and President, Electrical Distribution Systems JOSIE ARCHER Senior Vice President, Global Sales MATTHEW COLE Senior Vice President and President, Advanced Safety & User Experience RICHARD L. CLEMMER Former Chief Executive Ofﬁcer and President, NXP Semiconductors JOSEPH L. (JAY) HOOLEY Former Chairman and Chief Executive Ofﬁcer, State Street Corporation NANCY E. COOPER Former Executive Vice President and Chief Financial Ofﬁcer, CA Technologies MERIT E. JANOW Professor and Dean Emerita, School of International and Public Affairs (SIPA) at Columbia University SEAN O. MAHONEY Private Investor ROBERT K. (KELLY) ORTBERG Former Chairman, President and Chief Executive Ofﬁcer Rockwell Collins Inc. COLIN J. PARRIS Senior Vice President and Chief Technology Ofﬁcer, GE Digital ANA G. PINCZUK Chief Operating Ofﬁcer, Dexterity Inc. GLEN W. DE VOS Senior Vice President, Transformation and Special Programs MICHAEL GASSEN Senior Vice President and President, Aptiv Europe, Middle East, and Africa JOSE CARLOS JIMENEZ President, Connection Systems OBED LOUISSAINT Senior Vice President and Chief People Ofﬁcer BENJAMIN LYON Senior Vice President and Chief Technology Ofﬁcer JOSEPH R. MASSARO Chief Financial Ofﬁcer and Senior Vice President, Business Operations KATHERINE H. RAMUNDO Senior Vice President, Chief Legal Ofﬁcer, Chief Compliance Ofﬁcer and Secretary ANANT THAKER Senior Vice President and Chief Strategy Ofﬁcer MATTHEW PETERSON Senior Vice President and Chief Information Ofﬁcer SOPHIA VELASTEGUI Senior Vice President and Chief Product Ofﬁcer WILLIAM T. PRESLEY Senior Vice President and Chief Operating Ofﬁcer, and President, Signal & Power Solutions SIMON X. YANG President, Asia Paciﬁc COMPANY AND INVESTOR INFORMATION ANNUAL MEETING Aptiv’s Annual Meeting of Shareholders will be held on Wednesday, April 26, 2023, at 9:00 a.m. local time, at Aptiv’s Global Headquarters GLOBAL HEADQUARTERS 5 Hanover Quay Grand Canal Dock Dublin 2, Ireland, D02VY79 INDEPENDENT AUDITORS Ernst & Young LLP STOCK EXCHANGE The company’s ordinary shares are traded on the New York Stock Exchange under the ticker symbol APTV. SHAREHOLDER SERVICES Information about change of address, ownership transfer or other shareholder matters can be obtained from: First Class/Registered/Certiﬁed Mail: Computershare Investor Services P.O. BOX 505000 Louisville, KY 40233 Overnight Delivery: Computershare Investor Services 462 South 4th Street, Suite 1600 Louisville, KY 40202 Shareholder Services Number: (877) 373-6374 Investor Centre™ portal: www.computershare.com/ investor INVESTOR RELATIONS CONTACT Copies of the Annual Report, Forms 10-K and 10-Q, and other Aptiv publications are available via Aptiv’s website at ir.aptiv.com or contact: Aptiv Investor Relations 125 Park Avenue, Suite 1535 New York, NY 10017 Email: ir@aptiv.com COMPANY CERTIFICATIONS Aptiv has ﬁled as exhibits to its Annual Report on Form 10-K for the ﬁscal year ended December 31, 2022, the Chief Executive Ofﬁcer and Chief Financial Ofﬁcer certiﬁcates required by Section 302 of the Sarbanes- Oxley Act of 2002. @aptiv Aptiv’s Gen 6 ADAS platform in an environmental chamber at CES 2023 demonstrating how a radar-centric approach supports advanced features across the broadest possible range of weather and lighting conditions. “While we are proud of the resilient and innovative company that we have built, we are even more excited about how we are positioned for the future.” Kevin P. Clark Chairman and Chief Executive Ofﬁcer

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