SEGMENT REPORTING

Aptiv operates its core business along the following operating segments, which are grouped on the basis of similar product, market and operating factors:


•	Signal and Power Solutions, which includes complete electrical architecture and component products.


•	Advanced Safety and User Experience, which includes component and systems integration expertise in infotainment and connectivity, body controls and security systems, displays and active and passive safety electronics, autonomous driving software and technologies, as well as advanced development of software.


•	Eliminations and Other, which includes i) the elimination of inter-segment transactions, and ii) certain other expenses and income of a non-operating or strategic nature.

The accounting policies of the segments are the same as those described in Note 2. Significant Accounting Policies, except that the disaggregated financial results for the segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for which Aptiv’s chief operating decision maker regularly reviews financial results to assess performance of, and make internal operating decisions about allocating resources to, the segments.

Generally, Aptiv evaluates segment performance based on stand-alone segment net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, income (loss) from discontinued operations, net of tax, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments, gains (losses) on business divestitures and deferred compensation related to acquisitions (“Adjusted Operating Income”) and accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Aptiv’s management utilizes Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of Aptiv’s operating segments. Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies.

As described in Note 21. Discontinued Operations, the Company’s previously reported Powertrain Systems segment has been classified as discontinued operations for all periods presented. Certain original equipment service businesses that were previously included within the Powertrain Systems segment but which were not included in the spin-off, are reported in continuing operations and have been reclassified within the Advanced Safety and User Experience and Signal and Power Solutions segments for all periods presented. No amounts for shared general and administrative operating expense or interest expense were allocated to discontinued operations.

Included below are sales and operating data for Aptiv’s segments for the three and nine months ended September 30, 2018 and 2017.



	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other (1)			Total

	(in millions)
For the Three Months Ended September 30, 2018:
Net sales	$	2,535	$	956	$	(6	)	$	3,485
Depreciation & amortization	$	124	$	39	$	—		$	163
Adjusted operating income	$	346	$	74	$	—		$	420
Operating income	$	277	$	46	$	—		$	323
Equity income, net of tax	$	4	$	—	$	—		$	4
Net income attributable to noncontrolling interest	$	9	$	—	$	—		$	9



	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other (1)			Total

	(in millions)
For the Three Months Ended September 30, 2017:
Net sales	$	2,318	$	846	$	(16	)	$	3,148
Depreciation & amortization	$	109	$	27	$	—		$	136
Adjusted operating income	$	319	$	75	$	—		$	394
Operating income	$	300	$	73	$	—		$	373
Equity income, net of tax	$	6	$	—	$	—		$	6
Net income attributable to noncontrolling interest	$	9	$	—	$	—		$	9



	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other (1)			Total

	(in millions)
For the Nine Months Ended September 30, 2018:
Net sales	$	7,802	$	3,032	$	(35	)	$	10,799
Depreciation & amortization	$	361	$	113	$	—		$	474
Adjusted operating income	$	1,083	$	238	$	—		$	1,321
Operating income	$	956	$	162	$	—		$	1,118
Equity income, net of tax	$	17	$	—	$	—		$	17
Net income attributable to noncontrolling interest	$	30	$	—	$	—		$	30



	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other (1)			Total

	(in millions)
For the Nine Months Ended September 30, 2017:
Net sales	$	7,006	$	2,490	$	(52	)	$	9,444
Depreciation & amortization	$	316	$	76	$	—		$	392
Adjusted operating income	$	940	$	204	$	—		$	1,144
Operating income	$	887	$	143	$	—		$	1,030
Equity income, net of tax	$	24	$	—	$	—		$	24
Net income attributable to noncontrolling interest	$	27	$	—	$	—		$	27


(1)	Eliminations and Other includes the elimination of inter-segment transactions.

The reconciliation of Adjusted Operating Income to operating income includes, as applicable, restructuring, other acquisition and portfolio project costs (which includes costs incurred to integrate acquired businesses and to plan and execute product portfolio transformation actions, including business and product acquisitions and divestitures), asset impairments, gains (losses) on business divestitures and deferred compensation related to acquisitions. The reconciliations of Adjusted Operating Income to net income attributable to Aptiv for the three and nine months ended September 30, 2018 and 2017 are as follows:



	Signal and Power Solutions			Advanced Safety and User Experience			Eliminations and Other		Total

	(in millions)
For the Three Months Ended September 30, 2018:
Adjusted operating income	$	346		$	74		$	—	$	420
Restructuring	(58		)	(7		)	—		(65		)
Other acquisition and portfolio project costs	(11		)	(5		)	—		(16		)
Asset impairments	—			(1		)	—		(1		)
Deferred compensation related to nuTonomy acquisition	—			(15		)	—		(15		)
Operating income	$	277		$	46		$	—	323
Interest expense									(34		)
Other income, net									4
Income from continuing operations before income taxes and equity income									293
Income tax expense									(66		)
Equity income, net of tax									4
Income from continuing operations									231
Income from discontinued operations, net of tax									—
Net income									231
Net income attributable to noncontrolling interest									9
Net income attributable to Aptiv									$	222



	Signal and Power Solutions			Advanced Safety and User Experience			Eliminations and Other		Total

	(in millions)
For the Three Months Ended September 30, 2017:
Adjusted operating income	$	319		$	75		$	—	$	394
Restructuring	(17		)	(1		)	—		(18		)
Other acquisition and portfolio project costs	(1		)	(1		)	—		(2		)
Asset impairments	(1		)	—			—		(1		)
Operating income	$	300		$	73		$	—	373
Interest expense									(35		)
Other expense, net									(7		)
Income from continuing operations before income taxes and equity income									331
Income tax expense									(31		)
Equity income, net of tax									6
Income from continuing operations									306
Income from discontinued operations, net of tax									107
Net income									413
Net income attributable to noncontrolling interest									18
Net income attributable to Aptiv									$	395



	Signal and Power Solutions			Advanced Safety and User Experience			Eliminations and Other		Total

	(in millions)
For the Nine Months Ended September 30, 2018:
Adjusted operating income	$	1,083		$	238		$	—	$	1,321
Restructuring	(87		)	(13		)	—		(100		)
Other acquisition and portfolio project costs	(39		)	(18		)	—		(57		)
Asset impairments	(1		)	(1		)	—		(2		)
Deferred compensation related to nuTonomy acquisition	—			(44		)	—		(44		)
Operating income	$	956		$	162		$	—	1,118
Interest expense									(104		)
Other income, net									27
Income from continuing operations before income taxes and equity income									1,041
Income tax expense									(208		)
Equity income, net of tax									17
Income from continuing operations									850
Income from discontinued operations, net of tax									—
Net income									850
Net income attributable to noncontrolling interest									30
Net income attributable to Aptiv									$	820



	Signal and Power Solutions			Advanced Safety and User Experience			Eliminations and Other		Total

	(in millions)
For the Nine Months Ended September 30, 2017:
Adjusted operating income	$	940		$	204		$	—	$	1,144
Restructuring	(44		)	(57		)	—		(101		)
Other acquisition and portfolio project costs	(8		)	(3		)	—		(11		)
Asset impairments	(1		)	(1		)	—		(2		)
Operating income	$	887		$	143		$	—	1,030
Interest expense									(103		)
Other expense, net									(22		)
Income from continuing operations before income taxes and equity income									905
Income tax expense									(88		)
Equity income, net of tax									24
Income from continuing operations									841
Income from discontinued operations, net of tax									310
Net income									1,151
Net income attributable to noncontrolling interest									52
Net income attributable to Aptiv									$	1,099