Note 15, Related Party Transactions

9 Months Ended

Jun. 30, 2017



Note 15.	RELATED PARTY TRANSACTIONS

Related Party Transactions

In the ordinary course of business, Adient enters into transactions with related parties, such as equity affiliates. Such transactions consist of facility management services, the sale or purchase of goods and other arrangements. Subsequent to the separation, transactions with Johnson Controls and its businesses represent third-party transactions.

Revision of Previously Reported Related Party Transactions

Adient previously identified misstatements in amounts classified as related party transactions in previously reported periods. The misstatements impacted the amounts previously disclosed in this footnote. The misstatements are not considered material, individually or in the aggregate, to previously issued financial statements. The misstatements had no impact on the consolidated financial statements.

The following table sets forth the net sales to and purchases from related parties included in the consolidated statements of income:



	Nine Months Ended June 30,
(in millions)	2017		2016
Net sales to related parties	$	300	$	337	⁽¹⁾
Purchases from related parties	377		341		⁽¹⁾

⁽¹⁾These amounts have been revised to correct for previously reported misstatements. The revisions decreased net sales to related parties by $41 million and increased purchases from related parties by $53 million for the nine months ended June 30, 2016.

The following table sets forth the amount of accounts receivable due from and payable to related parties in the consolidated statements of financial position:



(in millions)	June 30, 2017		September 30, 2016
Receivable from related parties	$	159	$	172
Payable to related parties	144		96

Excluding the settlement of intercompany balances in advance of the separation of Adient from JCI, average receivable and payable balances with related parties remained consistent with the period end balances shown above.

Allocations from Former Parent

Prior to the separation, the consolidated statements of income included allocations for certain support functions that were provided on a centralized basis by Johnson Controls and subsequently recorded at the business unit level, such as expenses related to employee benefits, finance, human resources, risk management, information technology, facilities, and legal, among others. Included in cost of sales and selling, general and administrative expense during the three and nine months ended June 30, 2016 were $76 million and $215 million, respectively, of corporate expenses incurred by the former Parent. In addition to these allocations, approximately $138 million and $332 million, respectively, of costs related to the separation of Adient were incurred by the former Parent for the three and nine months ended June 30, 2016. Of these amounts, $122 million and $254 million was deemed to directly benefit Adient as a stand-alone company. Accordingly, these costs were allocated to Adient and are reflected within selling, general and administrative expenses in the consolidated statements of income for the three and nine months ended June 30, 2016. Additionally, certain intercompany transactions prior to the separation between Adient and the former Parent have not been recorded as related party transactions. These transactions were considered to be effectively settled for cash at the time the transaction was recorded. The total net effect of the settlement of these intercompany transactions was reflected in the consolidated statements of cash flows as a financing activity and in the consolidated statements of financial position as Parent's net investment.

During the three and nine months ended June 30, 2017, the allocations from the former Parent were insignificant. During the nine months ended June 30, 2017 Adient and JCI finalized the reconciliation of working capital and other accounts and the net amount due from JCI of $87 million was settled in accordance with the separation agreement. The impact of the settlement is reflected within additional paid-in capital.