APTIV PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. GENERAL

General and basis of presentation—“Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC, a public limited company formed under the laws of Jersey on May 19, 2011 as Delphi Automotive PLC, which, through its subsidiaries, acquired certain assets of the former Delphi Corporation (now known as DPH Holdings Corp. (“DPHH”)) and completed an initial public offering on November 22, ~~2011~~.2011. On December 4, 2017 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its former Powertrain Systems segment by distributing to Aptiv shareholders on a pro rata basis all of the issued and outstanding ordinary shares of Delphi Technologies PLC, a public limited company formed to hold the spun-off business. To effect the Separation, the Company distributed to its shareholders one ordinary share of Delphi Technologies PLC for every three Aptiv ordinary shares outstanding as of November 22, 2017,, the record date for the distribution. Following the Separation, the remaining company changed its name to Aptiv PLC and New York Stock Exchange (“NYSE”) symbol to “APTV.”

In April 2018, primarily as a result of the impact of the Separation on the Company’s United Kingdom (“U.K.”) presence and the centralization of the Company’s non-manufacturing European footprint, along with the long-term stability of the financial and regulatory environment in Ireland and continued uncertainties with regards to the impending exit of the U.K. from the European Union, Aptiv PLC changed its tax residence from the U.K. to Ireland. Aptiv PLC remains a public limited company incorporated under the laws of Jersey, and continues to be subject to United States (“U.S.”) Securities and Exchange Commission reporting requirements and prepare itsThe consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

~~The consolidated financial statements have been prepared in accordance with U.S. GAAP~~ and all adjustments, consisting of only normal recurring items, which are necessary for a fair presentation, have been included. The consolidated financial statements and notes thereto included in this report should be read in conjunction with Aptiv’s ~~2018~~2019 Annual Report on Form 10-K.

Nature of operations—Aptiv is a leading global technology and mobility company primarily serving the automotive sector. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets. Aptiv operates manufacturing facilities and technical centers utilizing a regional service model that enables the Company to efficiently and effectively serve its global customers from best cost countries. In line with the long-term growth in emerging markets, Aptiv has been increasing its focus on these markets, particularly in China, where the Company has a major manufacturing base and strong customer relationships.

2. SIGNIFICANT ACCOUNTING POLICIES

Consolidation—The consolidated financial statements include the accounts of Aptiv and United States (“U.S.”) and non-U.S. subsidiaries in which Aptiv holds a controlling financial or management interest and variable interest entities of which Aptiv has determined that it is the primary beneficiary. Aptiv’s share of the earnings or losses of non-controlled affiliates, over which Aptiv exercises significant influence (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 ability to exercise significant influence (generally when ownership interest is less than 20%), investments in non-consolidated affiliates ~~are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-01,~~ ~~Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, and~~without readily determinable fair values are measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer. All significant intercompany transactions and balances between consolidated Aptiv businesses have been eliminated. The Company monitors its investments in affiliates for indicators of other-than-temporary 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 difference between carrying value and estimated fair value. Estimated fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.

~~Investments in non-consolidated affiliates~~Aptiv’s equity investments totaled ~~$94~~$101 million and ~~$72~~$101 million as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and are classified within other long-term assets in the consolidated balance ~~sheet.~~sheets.

Use of estimates—Preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect amounts reported therein. Generally, matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, asset impairments, useful lives of intangible and fixed assets, deferred tax asset valuation allowances, income taxes, pension benefit plan assumptions, accruals related to litigation, warranty costs, environmental remediation costs, contingent consideration arrangements, worker’s compensation

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accruals and healthcare accruals. Due to the inherent uncertainty involved in making estimates, including the duration and severity of the impacts of the novel coronavirus (COVID-19) pandemic, actual results reported in future periods may be based upon amounts that differ from those estimates.

Revenue recognition—Aptiv recognizes revenue to depict the transfer of promised goods or services to customers in ~~accordance~~an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Accordingly, revenue is measured based on consideration specified in a contract with ~~ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~.a customer. Refer to Note ~~21.~~20. Revenue for additional information regarding the Company’s revenue recognition policies.

Net income per share—Basic net income per share is computed by dividing net income attributable to Aptiv by the weighted average number of ordinary shares outstanding during the period. Diluted net income per share reflects the weighted average dilutive impact of all potentially dilutive securities from the date of issuance and is computed using the treasury stock

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method by dividing net income attributable to Aptiv by the diluted weighted average number of ordinary shares outstanding during the period. Unless otherwise noted, share and per share amounts included in these notes are on a diluted basis. Refer to Note 12. Shareholders’ Equity and Net Income Per Share for additional information including the calculation of basic and diluted net income per share.

Cash and cash equivalents—Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less.

Restricted cash—Restricted cash includes balances on deposit at financial institutions that have issued letters of credit in favor of Aptiv and cash deposited into an escrow account. Refer to Note 15. Fair Value of Financial Instruments for further information regarding amounts deposited into an escrow account.

Accounts receivable—Aptiv enters into agreements to sell certain of its accounts receivable, primarily in Europe. Sales of receivables are accounted for in accordance with ~~FASB~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing (“ASC 860”). Agreements which result in true sales of the transferred receivables, as defined in ASC 860, which occur when receivables are transferred without recourse to the Company, are excluded from amounts reported in the consolidated balance sheets. Cash proceeds received from such sales are included in operating cash flows. Agreements that allow Aptiv to maintain effective control over the transferred receivables and which do not qualify as a sale, as defined in ASC 860, are accounted for as secured borrowings and recorded in the consolidated balance sheets within accounts receivable, net and short-term debt. The expenses associated with receivables factoring are recorded in the consolidated statements of operations within interest expense.

Credit losses—Aptiv is exposed to credit losses primarily through the sale of services and vehicle components. Aptiv assesses the creditworthiness of a counterparty by conducting ongoing credit reviews, which considers the Company’s expected billing exposure and timing for payment, as well as the counterparty’s established credit rating. When a credit rating is not available, the Company’s assessment is based on an analysis of the counterparty’s financial statements. Aptiv also considers contract terms and conditions, country and political risk, and business strategy in its evaluation. Based on the outcome of this review, the Company establishes a credit limit for each counterparty. The Company continues to monitor its ongoing credit exposure through active review of counterparty balances against contract terms and due dates, which includes timely account reconciliation, payment confirmation and dispute resolution. The Company may also employ collection agencies and legal counsel to pursue recovery of defaulted receivables, if necessary.

Aptiv primarily utilizes historical loss and recovery data, combined with information on current economic conditions and reasonable and supportable forecasts to develop the estimate of the allowance for doubtful accounts in accordance with ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326”). As of March 31, 2020 and December 31, 2019, the Company reported $2,308 million and $2,569 million, respectively, of accounts receivable, net of the allowance for doubtful accounts of $38 million and $37 million, respectively. Changes in the allowance were not material for the three months ended March 31, 2020.

Assets and liabilities held for sale—The Company considers assets to be held for sale when management approves and commits to a formal plan to actively market the assets for sale at a price reasonable in relation to their estimated fair value, the assets are available for 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 probable and expected to be completed within one year (or, if it is expected that others will impose conditions on the sale of the assets that will extend the period required to complete the sale, that a firm purchase commitment is probable within one year) and it is unlikely that significant changes will be made to the plan. Upon designation as held for sale, the Company records the assets at the lower of their carrying value or their estimated fair value, less cost to sell, and ceases to record depreciation expense on the assets.

Assets and liabilities of a discontinued operation are reclassified as held for sale for all comparative periods presented in the consolidated balance sheets. For assets that meet the held for sale criteria but do not meet the definition of a discontinued operation, the Company reclassifies the assets and liabilities in the period in which the held for sale criteria are met, but does not reclassify prior period amounts. Refer to Note 17. Acquisitions and Divestitures for further information regarding the Company's assets and liabilities held for sale.

Intangible assets—Intangible assets were ~~$1,334~~$1,132 million and ~~$1,380~~$1,186 million as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Aptiv amortizes definite-lived intangible assets over their estimated useful lives. Aptiv has definite-lived intangible assets related to patents and developed technology, customer relationships and trade names. Indefinite-lived in-process research and development intangible assets are not amortized, but are tested for impairment annually, or more frequently when indicators of potential impairment exist, until the completion or abandonment of the associated research and development efforts. Upon completion of the projects, the assets will be amortized over the expected economic life of the asset, which will be determined on that date. Should the project be determined to be abandoned, and if the asset developed has no alternative use, the full value of the asset will be charged to expense. The Company also has intangible assets related to acquired trade names that are classified as indefinite-lived when there are no foreseeable limits on the periods of time over

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which they are expected to contribute cash flows. These indefinite-lived trade name assets are tested for impairment annually, or more frequently when indicators of potential impairment exist. Costs to renew or extend the term of acquired intangible assets are recognized as expense as incurred. Amortization expense was ~~$34~~$36 million and ~~$30~~$34 million ~~and~~ for the three months ended March 31, 2020 and 2019, ~~and 2018, respectively.~~respectively, which includes the impact of any intangible asset impairment charges recorded during the period.

Goodwill—Goodwill is the excess of the purchase price over the estimated fair value of identifiable net assets acquired in business combinations. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently when indications of potential impairment exist. The Company monitors the existence of potential impairment indicators throughout the fiscal year. The Company tests for goodwill impairment at the reporting unit level. Our reporting units are the components of operating segments which constitute businesses for which discrete financial information is available and is regularly reviewed by segment management.

The impairment test involves first qualitatively assessing goodwill for impairment. If the qualitative assessment is not met the Company then performs a quantitative assessment by ~~first~~ comparing the estimated fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the estimated fair value exceeds carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its estimated fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit’s goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the ~~carrying value. There~~amount of goodwill allocated to the reporting unit. The Company qualitatively concluded there were no ~~indicators of potential~~ goodwill ~~impairment~~impairments during the three months ended March 31, 2020 and 2019. Goodwill was ~~$2,503~~$2,389 million and ~~$2,524~~$2,407 million as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Warranty and product recalls—Expected warranty costs for products sold are recognized at the time of sale of the product based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based

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on factors such as past experience, production changes, industry 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 to remove and replace the recalled part, are accrued as part of our warranty accrual at the time an obligation becomes probable and can be reasonably estimated. These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. Refer to Note 6. Warranty Obligations for additional information.

~~Discontinued operations~~—The Company reports financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Discontinued operations reporting occurs only when the disposal of a component or a group of components of the Company represents a strategic shift that will have a major effect on the Company’s operations and financial results. During the year ended December 31, 2017, the Company completed the Separation of its former Powertrain Systems segment by means of a spin-off into Delphi Technologies PLC. As a result of the spin-off, Aptiv recorded certain short-term assets and liabilities within the consolidated balance sheets as of March 31, 2018 and December 31, 2017 related to various agreements entered into in connection with the spin-off. The changes in these short-term assets and liabilities are reflected within operating activities from discontinued operations in the consolidated statement of cash flows for the three months ended March 31, 2018.

Income taxes—Deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. The effect on deferred tax assets and liabilities 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 deferred 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 deferred tax assets will not be realized in the future, the valuation allowance adjustment to the deferred 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 benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities. Refer to Note 11. Income Taxes for additional information.

Restructuring—Aptiv continually evaluates alternatives to align the business with the changing needs of its customers and to lower operating costs. This includes the realignment of its existing manufacturing capacity, facility closures, or similar actions, either in the normal course of business or pursuant to significant restructuring programs. These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly pursuant to union or other contractual ~~agreements.~~agreements or statutory requirements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and when the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a substantive plan for severance or termination. Contract termination costs are recorded when contracts are terminated or when Aptiv ceases to use the leased facility and no longer derives economic benefit from the contract. All other exit costs are expensed as incurred. Refer to Note 7. Restructuring for additional information.

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Customer concentrations—As reflected in the table below, net sales to General Motors Company (“GM”) ~~and~~, Volkswagen Group (“VW”) and Fiat Chrysler Automobiles N.V. (“FCA”), Aptiv’s ~~two~~three largest customers, totaled approximately ~~18%~~27% and ~~19%~~27% of our total net sales for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Percentage of Total Net Sales Accounts and Other Receivables
Three Months Ended March 31, March 31,
2019 December 31,
2018
2019 2018

(in millions)
GM 10 % 11 % $ 252
$ 169
VW 8 % 8 % 134
149


	Percentage of Total Net Sales						Accounts and Other Receivables
	Three Months Ended March 31,						March 31, 2020		December 31, 2019
	2020		2019

					(in millions)
GM	10	%	10	%	$	190	$	205
VW	9	%	8	%	115		135
FCA	8	%	9	%	186		207

Recently adopted accounting pronouncements—Aptiv adopted ~~ASU 2016-02,~~ ~~Leases~~, in the first quarter of 2019 using the optional transition method. This guidance requires lessees to recognize a lease liability and a right-of-use asset for all leases, with the exception of short-term leases with terms of twelve months or less. The lease liability represents the lessee’s obligation to make lease payments arising from a lease, and is measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. Under the optional transition method, the Company’s reporting for the comparative periods in the consolidated financial statements will continue to be in accordance with ASC Topic 840, ~~Leases~~ (“ASC 840”). The adoption of this guidance resulted in the recording of operating lease right-of-use assets and operating lease liabilities to the consolidated balance sheet as of March 31, 2019 and did not have a significant impact on the Company’s results of operations or cash flows.

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As permitted by ASU 2016-02, Aptiv elected to apply the package of practical expedients allowing the Company to not reassess whether any expired or existing contracts are, or contain, leases, the lease classification for any expired or existing leases or initial direct costs for any expired or existing leases. Aptiv did not elect to apply the hindsight practical expedient allowing the Company to use hindsight when determining the lease term (i.e., evaluating the Company’s option to renew or terminate the lease or to purchase the underlying asset) and assessing impairment of expired or existing leases. Aptiv elected to apply the land easements practical expedient allowing the Company to not assess whether any expired or existing land easements are, or contain, leases if they were not previously accounted for as leases under ASC 840. Instead, Aptiv will continue to apply its existing accounting policies to historical land easements. Aptiv also elected to apply the short-term lease exception, therefore Aptiv will not record a right-of-use asset or corresponding lease liability for leases with a term of twelve months or less and instead will recognize a single lease cost allocated over the lease term, generally on a straight-line basis. Additionally, Aptiv elected the practical expedient to not separate lease components from non-lease components and instead accounts for both as a single lease component for all asset classes. Refer to Note 22. Leases for additional information.

~~Aptiv adopted ASU 2017-12,~~ ~~Derivatives and Hedging—Targeted Improvements to~~ Accounting ~~for Hedging Activities~~, in the first quarter of 2019. This guidance expands and refines the application of hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The adoption of this guidance did not have a significant impact on Aptiv’s financial statements. Refer to Note 14. Derivatives and Hedging Activities for further information regarding derivatives.

~~Aptiv adopted ASU 2018-02,~~ ~~Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, in the first quarter of 2019. This guidance allows for the elimination of the stranded income tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the “Tax Legislation”~~Standards Update (“ASU”) through a reclassification from accumulated other comprehensive income (“OCI”) to retained earnings. Upon adoption, Aptiv recorded an increase to retained earnings of $9 million and a corresponding decrease to accumulated OCI during the three months ended March 31, 2019.

~~Recently issued accounting pronouncements not yet adopted—In June 2016, the FASB issued ASU~~ 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. in the first quarter of 2020 using the modified retrospective transition method. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ~~This guidance also requires enhanced disclosures~~These amendments replace the incurred loss model with an expected loss model, which results in more timely measurement of expected credit losses. Upon adoption, Aptiv recorded a cumulative-effect adjustment of $1 million to retained earnings as of the beginning of the period of adoption. Refer to the “Credit losses” section above for further information regarding significant estimates and judgments used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

~~In January 2017, the FASB issued~~Aptiv adopted ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. in the first quarter of 2020 on a prospective basis. This guidance simplifies ~~how an entity is required to~~the test for goodwill ~~for~~ impairment by eliminating step two from the goodwill impairment test, which ~~measures a goodwill impairment loss by comparing~~required an entity to calculate the implied fair value of goodwill to measure a ~~reporting unit’s~~ goodwill ~~with the carrying amount.~~impairment charge. Under the new guidance, ifan entity will record an impairment charge based on the amount by which a reporting unit’s carrying amount exceeds its estimated fair value, ~~an entity will record an impairment charge based on that difference. The impairment charge will be~~ limited to the amount of goodwill allocated to that reporting unit. The ~~standard~~adoption of this guidance did not have a significant impact on Aptiv’s financial statements. Refer to the “Goodwill” section above for further information regarding the Company’s testing for goodwill impairment.

Aptiv adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement in the first quarter of 2020 on a retrospective basis to all periods presented. This guidance modifies disclosure requirements related to fair value measurements by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements. The adoption of this guidance did not have a significant impact on Aptiv’s financial statements. Refer to Note 15. Fair Value of Financial Instruments for further information regarding the Company’s fair value measurements.

Recently issued accounting pronouncements not yet adopted—In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance clarifies the interactions between accounting for equity securities under the measurement alternative in Topic 321 and the equity method of accounting in Topic 323, as well as the accounting for certain forward contracts and purchased options to purchase securities that, upon settlement or exercise, would be accounted for under the equity method of accounting. The new guidance will be applied prospectively and is effective for ~~annual and interim impairment tests performed in periods~~fiscal years beginning after December 15, ~~2019.~~2020. Early adoption is permitted. The ~~Company~~adoption of this guidance is ~~currently evaluating the~~not expected to have a significant impact ~~of adopting this standard~~ on ~~its financial statements, but does not anticipate a material impact. As this standard is prospective in nature, the impact to~~ Aptiv’s financial statements of not performing a step two in order to measure the amount of any potential goodwill impairment will depend on various factors associated with the Company’s assessment of goodwill for impairment in those future periods.statements.

3. INVENTORIES

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or net realizable value, including direct material costs and direct and indirect manufacturing costs. A summary of inventories is shown below:


	March 31, 2020		December 31, 2019

	(in millions)
Productive material	$	793	$	706
Work-in-process	107		102
Finished goods	463		478
Total	$	1,363	$	1,286

March 31,
2019 December 31,
2018

(in millions)
Productive material $ 761
$ 724
Work-in-process 107
101
Finished goods 458
452
Total $ 1,326
$ 1,277

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~~21.~~20. REVENUE

Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Accordingly, revenue is measured based on consideration specified in a contract with a customer. Customer contracts generally are represented by a combination of a current purchase order and a current production schedule issued by the customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. From time to time, Aptiv enters into pricing agreements with its customers that provide for price reductions, some of which are conditional upon achieving certain joint cost savings targets. In these instances, revenue is recognized based on the agreed-upon price at the time of shipment.

Sales incentives and allowances are recognized as a reduction to revenue at the time of the related sale. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by Aptiv from a customer are excluded from revenue. Shipping and handling fees billed to customers are included in net sales, while costs of shipping and handling are included in cost of sales.

Nature of Goods and Services

The principal activity from which the Company generates its revenue is the manufacturing of production parts for OEM customers. Aptiv recognizes revenue at a point in time, rather than over time, as the performance obligation is satisfied when customers obtain control of the product upon title transfer and not as the product is manufactured or developed.

Aptiv recognizes revenue for production parts at a point in time as title transfers to the customer. Although production parts are highly customized with no alternative use, Aptiv does not have an enforceable right to payment as customers have the right to cancel a product program without a notification period. The amount of revenue recognized is based on the purchase order price and adjusted for revenue allocated to variable consideration (i.e. estimated rebates and price discounts), as applicable. Customers typically pay for production parts based on customary business practices with payment terms averaging 60 days.

Disaggregation of Revenue

Revenue generated from Aptiv’s operating segments is disaggregated by primary geographic market in the following tables for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019. Information concerning geographic market reflects the manufacturing location.


For the Three Months Ended March 31, 2020:	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other		Total

	(in millions)
Geographic Market

North America	$	1,005	$	292	$	—	$	1,297
Europe, Middle East and Africa	778		443		(3)		1,218
Asia Pacific	492		167		(3)		656
South America	55		—		—		55
Total net sales	$	2,330	$	902	$	(6)	$	3,226

For the Three Months Ended March 31, 2019: Signal and Power Solutions Advanced Safety and User Experience Eliminations and Other Total

(in millions)
Geographic Market
North America $ 1,096
$ 326
$ (1 ) $ 1,421
Europe, Middle East and Africa 789
443
(3 ) 1,229
Asia Pacific 622
254
(6 ) 870
South America 55
—
—
55
Total net sales $ 2,562
$ 1,023
$ (10 ) $ 3,575

For the Three Months Ended March 31, 2018: Signal and Power Solutions Advanced Safety and User Experience Eliminations and Other Total

(in millions)
Geographic Market
North America $ 1,020
$ 335
$ (4 ) $ 1,351
Europe, Middle East and Africa 837
437
(5 ) 1,269
Asia Pacific 687
259
(10 ) 936
South America 73
1
—
74
Total net sales $ 2,617
$ 1,032
$ (19 ) $ 3,630


For the Three Months Ended March 31, 2019:	Signal and Power Solutions		Advanced Safety and User Experience		Eliminations and Other		Total

	(in millions)
Geographic Market

North America	$	1,096	$	326	$	(1)	$	1,421
Europe, Middle East and Africa	789		443		(3)		1,229
Asia Pacific	622		254		(6)		870
South America	55		—		—		55
Total net sales	$	2,562	$	1,023	$	(10)	$	3,575

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Contract Balances

Consistent with the recognition of production parts revenue at a point in time as title transfers to the customer, Aptiv has no contract assets or contract liabilities balances as of March 31, ~~2019~~2020 or December 31, ~~2018.~~2019.

Outstanding Performance Obligations

As customer contracts generally are represented by a combination of a current purchase order and a current production schedule issued by the customer for a production part, there are no contracts outstanding beyond one year. Aptiv does not enter into fixed long-term supply agreements.

As permitted, Aptiv does not disclose information about remaining performance obligations that have original expected durations of one year or less.

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 upfront fees, meet the criteria to be considered a cost to obtain a contract as they are directly attributable to a contract, are incremental and management expects the fees to be recoverable. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, Aptiv has recorded ~~$82~~$104 million (of which ~~$15~~$20 million was classified within other current assets and ~~$67~~$84 million was classified within other long-term assets) and ~~$72~~$99 million (of which $8$20 million was classified within other current assets and ~~$64~~$79 million was classified within other long-term assets), respectively, related to these capitalized upfront fees.

Capitalized upfront fees are amortized to revenue based on the transfer of goods and services to the customer for which the upfront fees relate, which typically range from three to five years. There have been no impairment losses in relation to the costs capitalized. The amount of amortization to net sales was $3$4 million and $1$3 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

~~22.~~21. LEASES

Lease Portfolio

The Company has operating and finance leases for real estate, office equipment, automobiles, forklifts and certain other equipment. The Company's leases have remaining lease terms of 1 year to 30 years, some of which include options to extend the leases for up to 8 years, and some of which include options to terminate the leases within 1 year. Certain of our lease agreements include rental payments which are adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. When available, 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 determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate is not a quoted rate and is derived by applying a spread over U.S. Treasury 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 full collateralization.

Related Party Lease Agreement

In connection with the closing of the autonomous driving joint venture, as further discussed in Note 17. Acquisitions and Divestitures, Aptiv agreed to sublease certain office space to the newly formed entity with a remaining lease term of approximately 9 years. Total income under the agreement was less than $1 million during the three months ended March 31, 2020. 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 significantly been affected by the fact the Company and the lessee are related parties.

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The components of lease expense were as follows:

Three Months Ended March 31, 2019

(in millions)
Lease cost:
Finance lease cost:
Amortization of right-of-use assets $ 1
Interest on lease liabilities —
Total finance lease cost 1
Operating lease cost 29
Short-term lease cost 1
Variable lease cost 1
Sublease income (1) —
Total lease cost $ 32


~~(1)~~	~~Sublease income excludes rental income from owned properties of less than $5 million for the three months ended March 31, 2019, which is included in other income, net.~~


	Three Months Ended March 31,
	2020		2019

	(in millions)
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	1	$	1
Interest on lease liabilities	—		—		��
Total finance lease cost	1		1
Operating lease cost	27		29
Short-term lease cost	4		1
Variable lease cost	—		1
Sublease income (1)	—		—
Total lease cost	$	32	$	32

~~Table~~(1)Sublease income excludes rental income from owned properties of ~~Contents~~$3 million and $3 million for the three months ended March 31, 2020 and 2019, respectively, which is included in other income, net.

Supplemental cash flow and other information related to leases was as follows:


	Three Months Ended March 31,
	2020		2019

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	—	$	—
Operating cash flows for operating leases	28		27
Financing cash flows for finance leases	1		1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	6	$	36
Finance leases	—		—

Three Months Ended March 31, 2019

(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases $ —
Operating cash flows for operating leases 27
Financing cash flows for finance leases 1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 36
Finance leases —

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Supplemental balance sheet information related to leases was as follows:

March 31, 2019

(dollars in millions)
Operating leases:
Operating lease right-of-use assets $ 434
Accrued liabilities (Note 5) $ 93
Long-term operating lease liabilities 350
Total operating lease liabilities $ 443

Finance leases:
Property and equipment $ 22
Less: accumulated depreciation (5 )
Total property, net $ 17
Short-term debt (Note 8) $ 2
Long-term debt (Note 8) 16
Total finance lease liabilities $ 18

Weighted average remaining lease term:
Operating leases 7 years
Finance leases 7 years

Weighted average discount rate:
Operating leases 3.5 %
Finance leases 5.5 %


	March 31, 2020			December 31, 2019

	(dollars in millions)
Operating leases:
Operating lease right-of-use assets	$	393		$	413
Accrued liabilities (Note 5)	$	93		$	94
Long-term operating lease liabilities	308			329
Total operating lease liabilities	$	401		$	423

Finance leases:
Property and equipment	$	30		$	30
Less: accumulated depreciation	(10)			(9)
Total property, net	$	20		$	21
Short-term debt (Note 8)	$	4		$	4
Long-term debt (Note 8)	17			18
Total finance lease liabilities	$	21		$	22

Weighted average remaining lease term:
Operating leases	6 years			6 years
Finance leases	6 years			6 years

Weighted average discount rate:
Operating leases	3.5		%	3.5		%
Finance leases	4.0		%	4.0		%

~~Table~~Additionally, the Company reclassified $12 million of ~~Contents~~operating lease right-of-use assets and $13 million of operating lease liabilities as held for sale in the consolidated balance sheet as of December 31, 2019. Refer to Note 17. Acquisitions and Divestitures for further information regarding the Company's assets and liabilities held for sale.

Maturities of lease liabilities were as follows:

Operating Leases
Finance
Leases

(in millions)
As of March 31, 2019:
2019 (remaining as of March 31, 2019) $ 80
$ 3
2020 96
4
2021 83
4
2022 69
3
2023 51
3
Thereafter 120
7
Total lease payments 499
24
Less: imputed interest (56 ) (6 )
Total $ 443
$ 18


	Operating Leases		Finance Leases

	(in millions)
As of March 31, 2020:
2020 (remaining as of March 31, 2020)	$	79	$	4
2021	95		5
2022	79		4
2023	59		3
2024	40		2
Thereafter	93		6
Total lease payments	445		24
Less: imputed interest	(44)		(3)
Total	$	401	$	21

As of March 31, ~~2019,~~ 2020, the Company has entered into additional operating leases which are not significant, primarily for real estate, that have not yet ~~commenced and which are not significant.~~commenced.

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22. SUBSEQUENT EVENTS

Credit Agreement Amendment

On May 1, 2020, to further enhance its liquidity and financial flexibility due to the unprecedented uncertainty related to the impact the COVID-19 pandemic is having on the global automotive industry and economies around the world, the Company amended and restated its existing Credit Agreement, comprised of a $2.0 billion Revolving Credit Facility and $350 million Tranche A Term Loan (the “Credit Agreement Amendment”). This Credit Agreement Amendment, among other things, extends the maturity date of $1,779 million principal amount of the Revolving Credit Facility and $298 million principal amount of the Tranche A Term Loan from August 17, 2021 to August 17, 2022 and increases the leverage ratio maintenance covenant until July 1, 2021, unless Aptiv elects to terminate at an earlier date (the “Covenant Relief Period”). Under the terms of the Credit Agreement Amendment, Aptiv’s consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement Amendment) will be increased from not more than 3.5 to 1.0 to not more than 4.5 to 1.0 during the Covenant Relief Period, and Aptiv will be subject to certain additional covenant restrictions during the Covenant Relief Period, including restrictions on Aptiv’s ability to execute repurchases of or pay dividends on its outstanding ordinary shares. The maturity date of the remaining portions of the Revolving Credit Facility and Tranche A Term Loan were not extended to August 17, 2022 and will consequently mature on August 17, 2021. The Credit Agreement Amendment also requires that Aptiv pay certain facility fees on the Revolving Credit Facility and certain fronting fees incremental to the existing Credit Agreement.

Loans under the Credit Agreement Amendment bear interest, at Aptiv’s option, at either (a) ABR or (b) LIBOR plus in either case a percentage per annum as set forth in the table below (the “Applicable Rate”). The Applicable Rate may increase or decrease from time to time based on changes in Aptiv’s credit ratings. The Applicable Rates related to the extended principal amounts under the Credit Agreement Amendment, on the date specified, are set forth below:


	May 1, 2020
	LIBOR plus		ABR plus
Revolving Credit Facility	1.65	%	0.65	%
Tranche A Term Loan	1.75	%	0.75	%

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q, including the exhibits being filed as part of this report, as well as other statements made by Aptiv PLC (“Aptiv,” the “Company,” “we,” “us” and “our”), contain forward-looking statements that reflect, when made, the Company’s current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company’s operations and business environment, which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or the Company’s strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: global and regional economic conditions, including conditions affecting the credit ~~market~~market; uncertainties posed by the novel coronavirus (COVID-19) pandemic and ~~resulting from~~ the ~~United Kingdom referendum~~difficulty in ~~which voters approved an exit from~~predicting its future course and its impact on the ~~European Union, commonly referred to as “Brexit,” scheduled to become effective on October 31, 2019, following an extension;~~global economy and the Company’s future operations; fluctuations in interest rates and foreign currency exchange rates; the cyclical nature of global automotive sales and production; the potential disruptions in the supply of and changes in the competitive environment for raw material integral to the Company’s products; the Company’s ability to maintain contracts that are critical to its operations; potential changes to beneficial free trade laws and regulations such as the United States-Mexico-Canada Agreement and its predecessor agreement, the North American Free Trade ~~Agreement and its anticipated successor agreement, the United States-Mexico-Canada Agreement which remains subject to approval;~~Agreement; the ability of the Company to integrate and realize the expected benefits of recent ~~acquisitions;~~transactions; the ability of the Company to attract, motivate and/or retain key executives; the ability 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 ability of the Company to attract and retain customers. Additional factors are discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings with the Securities and Exchange Commission, including those set forth in the Company’s Annual Report on Form 10-K for fiscal year ended December 31, ~~2018~~2019 and within this Form 10-Q filing. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. Aptiv disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three months endedMarch 31, ~~2019~~.2020. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:

•Executive Overview

~~Executive Overview~~

•Consolidated Results of Operations

•Results of Operations by Segment

•Liquidity and Capital Resources

•Off-Balance Sheet Arrangements

•Contingencies and Environmental Matters

•Recently Issued Accounting Pronouncements

•Critical Accounting Estimates

Within the MD&A, “Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC, a public limited company formed under the laws of Jersey on May 19, 2011 as Delphi Automotive PLC, which, through its subsidiaries, acquired certain assets of the former Delphi Corporation (now known as DPH Holdings Corp. (“DPHH”)) and completed an initial public offering on November 22, 2011. On December 4, 2017 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its former Powertrain Systems segment by distributing to Aptiv shareholders on a pro rata basis all of the issued and outstanding ordinary shares of Delphi Technologies PLC, a public limited company formed to hold the spun-off business. To effect the Separation, the Company distributed to its shareholders one ordinary share of Delphi Technologies PLC for every three Aptiv ordinary shares outstanding as of November 22, 2017, the record date for the distribution. Following the Separation, the remaining company changed its name to Aptiv PLC and New York Stock Exchange (“NYSE”) symbol to “APTV.” The completion of the Separation positioned Aptiv as a new mobility provider focused on solving the complex challenges associated with safer, greener and more connected transportation. At the core of our capabilities is the software and vehicle architecture expertise that enables the advanced safety, automated driving, user experience and connected services that are enabling the future of mobility.

In April 2018, primarily as a result of the impact of the Separation on the Company’s United Kingdom (“U.K.”) presence and the centralization of the Company’s non-manufacturing European footprint, along with the long-term stability of the financial and regulatory environment in Ireland and continued uncertainties with regards to the impending exit of the U.K. from the European Union, Aptiv PLC changed its tax residence from the U.K. to Ireland. Aptiv PLC remains a public limited company incorporated under the laws of Jersey, and continues to be subject to United States (“U.S.”) Securities and Exchange Commission reporting requirements and prepare its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Executive Overview

Our Business

We are a leading global technology and mobility company primarily serving the automotive sector. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive market, creating the software and hardware foundation for vehicle features and functionality. We enable and deliver end-to-end smart mobility solutions, active safety and autonomous driving technologies and provide enhanced user experience and connected services. Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles. 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 component manufacturers and our customers include ~~all~~23 of the 25 of the largest automotive original equipment manufacturers (“OEMs”) in the world.

Our total net sales during the three months ended March 31, ~~2019~~2020 were ~~$3.6~~$3.2 billion, a decrease of 2%10% compared to the same period of ~~2018.~~2019. Despite continued volume growth compared to market during the three months ended March 31, 2020, our overall volumes decreased 7% for the period, primarily due to the impacts of the COVID-19 pandemic, which also resulted in global vehicle production declines of 24% over the same period. The ~~decrease in~~adverse impacts of the pandemic have included extended work stoppages and travel restrictions at our ~~total net sales is primarily attributable to significant volume~~facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from governmental “lock-down” orders for all non-essential activities in China, ~~coupled with unfavorable foreign currency impacts, partially offset by volume increases in~~Europe and North America ~~and Europe. However,~~to-date. Although our overall lean cost structure, along with continued above-market sales growth, has enabled us to maintain strong levels of operating income while continuing to strategically invest in the ~~future.~~

future prior to the evolving COVID-19 pandemic, we anticipate the adverse impacts will persist through the second quarter of 2020 and perhaps beyond, and will likely have an adverse impact on our operating income and cash flows.

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We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle, including during periods of reduced industry volumes. Accordingly, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets, particularly resulting from the current impacts of the COVID-19 pandemic, and in order to increase investment in advanced technologies and ~~engineering.~~engineering as conditions permit. As we operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further refine our cost structure, as evidenced by our ongoing restructuring programs focused on the continued rotation of our manufacturing footprint to best cost locations and on reducing our global overhead costs, as described in Note 7. Restructuring to the consolidated financial statements contained herein. We believe our strong balance sheet coupled with our flexible cost structure will position us to capitalize on improvements in OEM production ~~volumes.~~volumes as economic and pandemic conditions improve.

Trends, Uncertainties and Opportunities

COVID-19 pandemic. The global spread of the COVID-19 pandemic, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, has negatively impacted the global economy, disrupted supply chains and created significant volatility in global financial markets. Most notably with respect to the automotive industry, we have experienced extended work stoppages in China, where we have a major manufacturing base, and the subsequent suspension of vehicle production by our OEM customers in North America and Europe, which combined accounts for approximately 70% of our annual net sales, as the pandemic spread to those regions and governmental authorities initiated “lock-down” orders for all non-essential activities. Although we have taken decisive actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, suspending our cash dividend, drawing down all remaining availability under our existing Revolving Credit Facility and actively managing costs, capital spending and working capital to further strengthen our liquidity, the ultimate impact to our business remains highly uncertain. During the three months ended March 31, 2020, our net sales were adversely impacted by volume decreases of approximately 7% largely due to the impacts resulting from the COVID-19 pandemic, primarily as a result of extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other resultant adverse global economic impacts. Although we are unable to predict the ultimate impact to our business due to a number of evolving factors, including the duration and spread of the pandemic, the impact of the pandemic on economic activity, consumer demand and vehicle production schedules, and the actions of governmental authorities across the globe, we expect to experience continued adverse impacts resulting from the pandemic throughout the second quarter of 2020 and possibly beyond. However, we continue to actively monitor the ongoing potential impacts of COVID-19 and will seek to aggressively mitigate and minimize its impact on our business.

Economic conditions. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales depend on a number of factors, including global and regional economic conditions. ~~Although global~~Global automotive vehicle production decreased 1%6% from ~~2017~~2018 to ~~2018, the levels of~~2019, representing automotive vehicle production ~~were uneven from a regional perspective.~~declines across all major regions during 2019. Compared to ~~2017,~~2018, vehicle production in ~~2018~~2019 decreased by 9% in China, 4% in North America, ~~remained flat as compared to the reduced volumes experienced in the region in 2017, while vehicle production decreased by 1%~~4% in Europe and 4% in ~~China. Vehicle production in~~ South America, our smallest ~~region, increased~~region. Global automotive vehicle production has continued to decline through the first quarter of 2020, primarily due to the adverse global economic impacts and uncertainty caused by ~~4% compared~~the worldwide spread of the COVID-19 pandemic. Compared to ~~2017.~~2019, vehicle production in the first quarter of 2020 decreased by 24% and is currently anticipated to decrease significantly in the second quarter and for the full year of 2020, although the extent to which the COVID-19 pandemic will impact global and regional automotive vehicle production for the remainder of 2020 and beyond remains highly uncertain.

Economic volatility or weakness in North America, Europe, China or South America could result in a significant reduction in automotive sales and production by our customers, which would have an adverse effect on our business, results of operations and financial condition. There is also potential that geopolitical factors could adversely impact the U.S. and other economies, and specifically the automotive sector. In particular, changes to international trade agreements such as the United States-Mexico-Canada Agreement and its predecessor agreement, the North American Free Trade Agreement, ~~and its anticipated successor agreement, the United States-Mexico-Canada Agreement which remains subject to approval,~~ or other political pressures could affect the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts 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 availability. Additionally, economic weakness may result in shifts in the mix of future automotive sales (from vehicles with more content such as luxury vehicles, trucks and sport utility vehicles toward smaller passenger cars). While our diversified customer and geographic revenue base, along with our flexible cost structure, have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts in the mix of global automotive production to higher cost regions or to vehicles with less content could adversely impact our profitability.

There have also been periods of increased market volatility and currency exchange rate fluctuations, both globally and most specifically within the U.K. and Europe, as a result of the U.K. referendum in which voters approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit,” scheduled to become effective on October 31, 2019, following an extension. The proposed withdrawal has created significant uncertainty about the future relationship between the U.K. and the E.U. These developments, or the perception that any of them could occur, may adversely affect European and worldwide economic and market conditions, including vehicle production, significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets and could contribute to instability in global financial and foreign exchange markets, including increased volatility in interest rates and foreign exchange rates. Although we do not have a material physical presence in the U.K., with less than 1% of our workforce located in the U.K. and approximately 1% of our annual net sales generated in the U.K., the potential impacts of the impending Brexit decision could adversely impact other global economies, and in particular, the European economy, a region which accounted for approximately 34% of our total net sales for the three months ended March 31, 2019. We continue to actively monitor the ongoing potential impacts of Brexit and will seek to minimize its impact on our business through review of our existing contractual arrangements and obligations, particularly in the European region.

Key growth markets. There have been periods of increased market volatility and ~~moderations~~moderation in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously

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experienced, as evidenced by the ~~significant~~ reduction in volumes in the region during the ~~three months~~year ended ~~March~~December 31, ~~2019~~2019. In addition, automotive vehicle production in China decreased by 48% in the first quarter of 2020 as compared to 2019 and is currently anticipated to decrease significantly in the ~~same period~~second quarter and for the full year of ~~2018.~~2020, primarily as a result of the developing COVID-19 pandemic. Despite these vehicle production declines and the recent ~~moderations~~moderation in the level of economic growth in China, rising income levels in China and other key growth markets are expected to result in stronger growth rates in these markets over the long-term. Our strong global presence, and presence in these markets, has positioned us to experience above-market growth rates over the long-term. We continue to expand our established presence in key growth markets, positioning us to benefit from the expected long-term growth opportunities in these regions. We are capitalizing on our long-standing relationships with the global OEMs and further enhancing our positions with the key growth market OEMs to continue expanding our worldwide leadership. We continue to build upon our extensive geographic reach to capitalize on fast-growing automotive markets. We believe that our presence in best cost countries positions us to realize incremental margin improvements as the global balance of automotive production shifts towards the key growth markets.

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We have a strong local presence in China, including a major manufacturing base and well-established 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 affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in ~~China.~~China, as have recently been experienced as a result of the COVID-19 pandemic. However, we continue to believe there is long-term growth potential in this market based on increasing long-term automotive and vehicle content demand.

Market driven products. Our product offerings satisfy the OEMs’ needs to meet increasingly stringent government regulations and meet consumer preferences for products that address the mega-trends of Safe, Green and Connected, leading to increased content per vehicle, greater profitability and higher margins. With these offerings, we believe we are well-positioned to benefit from the growing demand for vehicle content and technology related to safety, electrification, high speed data, connectivity to the global information network and automated driving technologies. We are benefiting from the substantial increase in vehicle content, software and electrification that requires a complex and reliable electrical architecture and systems to operate, such as automated advanced driver assistance technologies, electrical vehicle monitoring, active safety systems, lane departure warning systems, integrated vehicle cockpit displays, navigation systems and technologies that enable connected infotainment in vehicles. Our ability to design a reliable electrical architecture that optimizes power distribution and/or consumption is key to satisfying the OEMs’ needs to reduce emissions while continuing to meet consumer demand for increased vehicle content and technology. We have developed a 48-volt mild hybrid vehicle electrical architecture solution, which maximizes the use of 48-volt electrification to minimize the demand on the engine, improving performance while lowering CO2 ~~emissions by more than 10%.~~

Global capabilities. Many OEMs are continuing to adopt global vehicle platforms to increase standardization, reduce per unit cost and increase capital efficiency and profitability. As a result, OEMs are selecting suppliers that have the capability to manufacture products on a worldwide basis, as well as the flexibility to adapt to regional variations. Suppliers with global scale and strong design, engineering and manufacturing capabilities are best positioned to benefit from this trend. Our global footprint enables us to serve the global OEMs on a worldwide basis as we gain market share with the emerging market OEMs. This regional model principally services the North American market out of Mexico, the South American market out of Brazil, the European market out of Eastern Europe and North Africa and the Asia Pacific market out of China, and we have continued to rotate our manufacturing footprint to best cost locations within these regions.

Our global operations are subject to certain risks inherent in doing business abroad, including unexpected changes in laws or regulations governing trade, or other monetary or tax fiscal policy changes, including tariffs, quotas, customs and other import or export restrictions ~~and other~~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 outbreak of an illness. For instance, the worldwide spread of the COVID-19 pandemic is having adverse impacts on our global operations, the automotive industry and economies around the world. Most notably, the pandemic has resulted in extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from governmental “lock-down” orders for all non-essential activities in China, Europe and North America to-date. Although we are unable to predict the ultimate impact to our business due to a number of evolving factors, including the duration and spread of the pandemic, the impact of the pandemic on economic activity, consumer demand and vehicle production schedules, and the actions of governmental authorities across the globe, we expect to experience continued adverse impacts resulting from the pandemic throughout the second quarter of 2020 and possibly beyond. In addition, recent ~~presidential elections and~~ government changes in Mexico have yielded requirements that call for ~~an increase~~increases in minimum wages at the border as well as the interior of Mexico. These or any further political or governmental developments in response to the COVID-19 pandemic or in Mexico or other countries in which we operate could result in social, economic and labor instability.

In addition, existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement and its predecessor agreement, the North American Free Trade Agreement, ~~and its anticipated successor agreement, the United States-Mexico-Canada Agreement which remains subject to approval,~~ provide certain beneficial duties and tariffs for qualifying

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imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as China and Mexico, could have a material adverse effect on our business and financial results. For instance, ~~during~~beginning in 2018, the U.S. and Chinese governments have imposed a series of significant incremental retaliatory tariffs to certain imported products. Most notably with respect to the automotive industry, the U.S. imposed tariffs on imports of certain steel, aluminum and automotive components, and China imposed retaliatory tariffs on imports of U.S. vehicles and certain automotive components. While these tariffs could have potentially adverse economic impacts, particularly with respect to the automotive industry and vehicle production levels, we do not anticipate a significant impact to our operations, as we have developed and implemented strategies to mitigate adverse tariff impacts, such as production localization and relocation, contract review and renegotiation and working with the appropriate governmental agencies. Further, our global footprint and regional model serves to minimize our exposure to cross-border transactions. However, despite recent trade negotiations between the U.S. and Chinese governments, the scope and duration of the imposed tariffs remain uncertain.

Product development. The automotive technology and components industry is highly competitive, both domestically and internationally, and is characterized by rapidly changing technology, evolving industry standards and changes in customer needs. Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely and cost competitive basis will be a significant factor in our ability to remain competitive. To compete effectively in the automotive technology and components industry, we must be able to develop and launch new products to meet our customers’ demands in a timely manner. Our innovative technologies and robust global engineering and development capabilities have well positioned us to meet the increasingly stringent vehicle manufacturer demands and consumer preferences for high-technology content in automobiles.

OEMs are increasingly looking to their suppliers to simplify vehicle design and assembly processes to reduce costs and weight. As a result, suppliers that sell vehicle components directly to manufacturers (Tier I suppliers) have assumed many of the design, engineering, research and development and assembly functions traditionally performed by vehicle manufacturers.

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Suppliers that can provide fully-engineered solutions, systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing.

Engineering, design and development. Our history and culture of innovation have enabled us to develop significant intellectual property and design and development expertise to provide advanced technology solutions that meet the demands of our customers. WeFollowing the completion of the autonomous driving joint venture in the first quarter of 2020, we have a team of approximately ~~18,600~~19,300 scientists, engineers and technicians focused on developing leading product solutions for our key markets, located at 1512 major technical centers in China, Germany, India, Mexico, Poland, Singapore and the United States. We invest approximately ~~$1.4~~$1.2 billion (which includes approximately $300 million co-investment by customers and government agencies) annually in research and development, including engineering, to maintain our portfolio of innovative products, and ~~owned/held~~own/hold approximately ~~7,100~~7,300 patents and protective rights as of ~~December~~March 31, ~~2018.~~2020. We also encourage “open innovation” and collaborate extensively with peers in the industry, government agencies and academic institutions. Our technology competencies are recognized by both customers and government agencies, who ~~have co-invested~~co-invest approximately $300 million annually in new product development, accelerating the pace of innovation and reducing the risk associated with successful commercialization of technological breakthroughs.

In the past, suppliers often incurred the initial cost of engineering, designing and developing automotive component parts, and recovered their investments over time by including a cost recovery component in the price of each part based on expected volumes. Recently, we and many other suppliers have negotiated for cost recovery payments independent of volumes. This trend reduces our economic risk.

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 significant leverage over their outside suppliers because the automotive component supply industry is fragmented and serves a limited number of automotive OEMs. Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions.

We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable at all points of the traditional vehicle industry production cycle. As a result, approximately ~~96%~~97% of our hourly workforce is located in best cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of temporary workers, which represented approximately 14% of the hourly workforce as of March 31, ~~2019.~~2020. However, we will continue to adjust our cost structure and optimize our manufacturing footprint in response to changes in the global and regional automotive markets and in order to increase investment in advanced technologies and engineering, as evidenced by our ongoing restructuring programs focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and on reducing our global overhead costs. As we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further refine our cost structure.

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We have a strong balance sheet with gross debt of approximately ~~$4.5~~$6.2 billion and substantial available liquidity of approximately ~~$2.1~~$2.2 billion ~~of cash and cash equivalents and available financing under our Revolving Credit Facility and committed European accounts receivable factoring facility~~ as of March 31, ~~2019~~,2020, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. As further described in Note 8. Debt to the consolidated financial statements contained herein, we drew down all remaining availability under the Revolving Credit Facility during the first quarter of 2020, primarily to provide additional liquidity and financial flexibility to mitigate the impacts on our business resulting from the uncertainty caused by the global spread of the COVID-19 pandemic. We intend to maintain strong financial discipline by targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.

OEM product recalls. The number of vehicles recalled globally by OEMs has increased above historical levels. These recalls can either be initiated by the OEMs or influenced by regulatory agencies. Although there are differing rules and regulations across countries governing recalls for safety issues, the overall transition towards global vehicle platforms may also contribute to increased recalls outside of the U.S., as automotive components are increasingly standardized across regions. Given the sensitivity to safety issues in the automotive industry, including increased focus from regulators and consumers, we anticipate the number of automotive recalls may remain above historical levels in the near future. Although we engage in extensive product quality programs and processes, it is possible that we may be adversely affected in the future if the pace of these recalls continues.

Efficient use of capital. The global vehicle components industry is generally capital intensive and a portion of a supplier’s capital equipment is frequently utilized for specific customer programs. Lead times for procurement of capital equipment are long and typically exceed start of production by one to two years. Substantial advantages exist for suppliers that can leverage their prior investments in capital equipment or amortize the investment over higher volume global customer programs.

Industry consolidation. Consolidation among worldwide suppliers is expected to continue as suppliers seek to achieve operating synergies and value stream efficiencies, acquire complementary technologies and build stronger customer relationships as OEMs continue to expand globally. Additionally, new entrants from outside the traditional automotive industry may seek to gain access to certain vehicle component markets, as evidenced by the acquisition of Harman International Industries, Incorporated by Samsung Electronics Co., Ltd. and the acquisition of Mobileye N.V. by Intel Corporation. We

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believe companies with strong balance sheets and financial discipline are in the best position to take advantage of the industry consolidation trend.

Commercializing the high-tech evolution of the automotive industry. The automotive industry is increasingly evolving towards the implementation of software-dependent components and solutions. In particular, the industry is focused on the development of advanced driver assistance technologies, with the goal of developing and introducing a commercially-viable, fully automated driving experience. We expect automated driving technologies will provide strong societal benefit as well as the opportunity for long-term growth for our product offerings in this space. We are focused on enabling and delivering end-to-end smart mobility solutions, accelerating the commercialization of active safety and autonomous driving technologies and providing enhanced user experience and connected services. Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles. 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 continuing to invest in the automated driving space, and have continued to develop market-leading automated driving platform solutions such as automated driving software, key active safety sensing technologies and our Multi-Domain Controller, which fuses information from sensing systems as well as mapping and navigation data to make driving decisions.

We believe we are well-aligned with industry technology trends that will result in sustainable future growth in this space, and have partnered with leaders in their respective fields to advance the pace of development and commercialization of these emerging technologies. ~~We have entered into a collaborative arrangement with Intel Corporation and the BMW Group to develop and deploy automated driving technology.~~ Additionally, in 2017 we acquired nuTonomy, Inc. (“nuTonomy”) in order to further accelerate the commercialization of automated driving solutions. The acquisition of nuTonomy iswas the latest in a series of investments we have made to expand our position in the new mobility space, including the ~~prior period acquisitions~~2015 acquisition of automated driving software developer ~~Ottomatika and data service companies Control-Tec and Movimento.~~Ottomatika.

There has also been increasing societal demand for mobility on demand (“MoD”) services, such as car- and ride-sharing, and an increasing number of traditional automotive companies have made investments in the MoD space. We believe the increasing societal demand for MoD services will accelerate the development of autonomous driving technologies, strongly benefiting the MoD space. In 2018, we announced a partnership with Lyft, Inc. (“Lyft”) by launching a fleet of autonomous vehicles in Las Vegas which operate on Aptiv’s fully-integrated autonomous driving platform and are available to the public on the Lyft network. This partnership leverages our connected services capabilities and Lyft’s ride-hailing experience to provide valuable insights on self-driving fleet operations and management. In addition, we have entered into agreements with the Singapore Land Transport Authority and with the city of Boston to develop fully-autonomous vehicles and associated infrastructure as part of automated MoD pilots.

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In an effort to further our leadership position in the automated driving space, in March 2020 we completed the transaction with Hyundai Motor Group to form a new joint venture focused on the design, development and commercialization of autonomous driving technologies. We expect this partnership to advance the development of production-ready autonomous driving systems for commercialization by bringing together our innovative vehicle technologies in the new mobility space with one of the world’s largest vehicle manufacturers. The joint venture anticipates it will begin testing fully driverless systems in 2020 and have a production-ready autonomous driving platform available for robotaxi providers, fleet operators and automotive manufacturers in 2022. As a result of our substantial investments and strategic partnerships, we believe we are well-aligned with industry technology trends that will result in sustainable future growth in these evolving areas.

We are focused on enabling and delivering end-to-end smart mobility solutions, accelerating the commercialization of active safety and autonomous driving technologies and providing enhanced user experience and connected services. Our Advanced Safety and User Experience segment is focused on providing the necessary software and advanced computing platforms, and our Signal and Power Solutions segment is focused on providing the requisite networking architecture required to support the integrated systems in today’s complex vehicles. Together, our businesses develop the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, providing integration of the vehicle into its operating environment.

However, there are many risks associated with these evolving areas, including the high development costs of active safety and autonomous driving technologies, the uncertain timing of customer and consumer adoption of these technologies, increased competition from entrants outside the traditional automotive industry and new and emerging regulations, such as the recently released federal guidance for automated driving systems published by the U.S. Department of Transportation. While we believe we are well-positioned in these markets, the high development cost of active safety and autonomous driving technologies may result in a higher risk of exposure to the success of new or disruptive technologies different than those being developed by ~~us.~~us or our partners.

Consolidated Results of Operations

Aptiv typically experiences fluctuations in revenue due to changes in OEM production schedules, vehicle sales mix and the net of new and lost business (which we refer to collectively as volume), increased prices attributable to escalation clauses in our supply contracts for recovery of increased commodity costs (which we refer to as commodity pass-through), fluctuations in foreign currency exchange rates (which we refer to as ~~FX)~~“FX”), contractual reductions of the sales price to the OEM (which we refer to as contractual price reductions) and engineering changes. Changes in sales mix can have either favorable or unfavorable impacts on revenue. Such changes can be the result of shifts in regional growth, shifts in OEM sales demand, as well as shifts in consumer demand related to vehicle segment purchases and content penetration. For instance, a shift in sales demand favoring a particular OEM’s vehicle model for which we do not have a supply contract may negatively impact our revenue. A shift in regional sales demand toward certain markets could favorably impact the sales of those of our customers that have a large market share in those regions, which in turn would be expected to have a favorable impact on our revenue.

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We typically experience (as described below) fluctuations in operating income due to:

•Volume, net of contractual price reductions—changes in volume offset by contractual price reductions (which typically range from 1% to 3% of net sales) and changes in mix;

•Operational performance—changes to costs for materials and commodities or manufacturing and engineering variances; and

•Other—including restructuring costs and any remaining variances not included in Volume, net of contractual price reductions or Operational performance.

The automotive technology and component supply industry is traditionally subject to inflationary pressures with respect to raw materials and labor which may place operational and profitability burdens on the entire supply chain. We will continue to work with our customers and suppliers to mitigate the impact of these inflationary pressures in the future. In addition, we expect commodity cost volatility, particularly related to copper and petroleum-based resin products, to have a continual impact on future earnings and/or operating cash flows. As such, we continually seek to mitigate both inflationary pressures and our material-related cost exposures using a number of approaches, 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 manufacturer supply contracts and hedging.

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Three Months Ended March 31, ~~2019~~2020 versus Three Months Ended March 31, ~~2018~~2019

The results of operations for the three months endedMarch 31, ~~2019~~2020 and ~~2018~~2019 were as follows:


	Three Months Ended March 31,
	2020			2019			Favorable/(unfavorable)

	(dollars in millions)
Net sales	$	3,226		$	3,575		$	(349)
Cost of sales	2,725			2,962			237
Gross margin	501		15.5%	613		17.1%	(112)
Selling, general and administrative	252			256			4
Amortization	36			34			(2)
Restructuring	28			26			(2)
Gain on autonomous driving joint venture	(1,434)			—			1,434
Operating income	1,619			297			1,322
Interest expense	(43)			(38)			(5)
Other (expense) income, net	(1)			16			(17)
Income before income taxes and equity income	1,575			275			1,300
Income tax expense	(10)			(33)			23
Income before equity income	1,565			242			1,323
Equity income, net of tax	2			3			(1)


Net income	1,567			245			1,322
Net (loss) income attributable to noncontrolling interest	(5)			5			(10)
Net income attributable to Aptiv	$	1,572		$	240		$	1,332

Three Months Ended March 31,
2019 2018 Favorable/(unfavorable)

(dollars in millions)
Net sales $ 3,575
$ 3,630
$ (55 )
Cost of sales 2,962
2,947
(15 )
Gross margin 613
17.1% 683
18.8% (70 )
Selling, general and administrative 256
259
3
Amortization 34
30
(4 )
Restructuring 26
20
(6 )
Operating income 297
374
(77 )
Interest expense (38 ) (34 ) (4 )
Other income, net 16
30
(14 )
Income before income taxes and equity income 275
370
(95 )
Income tax expense (33 ) (59 ) 26
Income before equity income 242
311
(69 )
Equity income, net of tax 3
5
(2 )
Net income 245
316
(71 )
Net income attributable to noncontrolling interest 5
9
(4 )
Net income attributable to Aptiv $ 240
$ 307
$ (67 )

Total Net Sales

Below is a summary of our total net sales for the three months ended March 31, ~~2019~~2020 versus ~~March 31, 2018~~.2019.


	Three Months Ended March 31,										Variance Due To:
	2020		2019		Favorable/(unfavorable)		Volume, net of contractual price reductions		FX		Commodity pass-through		Other		Total

	(in millions)										(in millions)
Total net sales	$	3,226	$	3,575	$	(349)	$	(279)	$	(63)	$	(7)	$	—	$	(349)

Total net sales for the three months ended March 31, ~~2019~~2020 decreased 2%10% compared to the three months ended March 31, ~~2018. We experienced~~2019. Despite continued volume growth of 4% for the period, which includes net sales of $125 million as a result of the acquisitions of KUM and Winchester in 2018, primarily as a result of increases in North America and Europe, partially offset by volume declines of approximately 10% in China as compared to market during the three months ended March 31, ~~2018. Volume growth~~

~~Table~~2020, our overall volumes decreased 7% for the period, primarily due to the impacts of ~~Contents~~

the COVID-19 pandemic, which also resulted in global vehicle production declines of 24% over the same period. The adverse impacts of the pandemic included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from governmental “lock-down” orders for all non-essential activities in China, Europe and North America to-date. Our total net sales was ~~offset~~also impacted by unfavorable foreign currency impacts, primarily related to the Euro and Chinese Yuan Renminbi, and ~~decreases due to~~ contractual price reductions. ~~Refer to Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein for further detail of our business acquisitions.~~

Cost of Sales

Cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, fluctuations in foreign 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 $15~~decreased $237 million for the three months ended March 31, ~~2019~~2020 compared to the three months ended March 31, ~~2018,~~2019, as summarized below. The Company’s material cost of sales was approximately 50% of net sales in both the three months endedMarch 31, ~~2019~~2020 and ~~2018.~~2019.

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	Three Months Ended March 31,									Variance Due To:														Three Months Ended March 31,												Variance Due To:
	2019			2018			Favorable/(unfavorable)			Volume (a)			FX			Operational performance		Other		Total				2020			2019			Favorable/(unfavorable)		Volume (a)		FX		Operational performance		Other		Total

	(dollars in millions)									(in millions)														(dollars in millions)												(in millions)
Cost of sales	$	2,962		$	2,947		$	(15	)	$	(181	)	$	118		$	19	$	29	$	(15	)	Cost of sales	$	2,725		$	2,962		$	237	$	148	$	56	$	9	$	24	$	237
Gross margin	$	613		$	683		$	(70	)	$	(73	)	$	(30	)	$	19	$	14	$	(70	)	Gross margin	$	501		$	613		$	(112)	$	(131)	$	(7)	$	9	$	17	$	(112)
Percentage of net sales	17.1		%	18.8		%																	Percentage of net sales	15.5		%	17.1		%


~~(a)~~	~~Presented net of contractual price reductions for gross margin variance.~~

(a)Presented net of contractual price reductions for gross margin variance.

The ~~increase~~decrease in cost of sales reflects ~~increased~~decreased volumes, largely resulting from the impacts of the COVID-19 pandemic, and ~~incremental investment in advanced technologies and engineering, partially offset by~~ the impacts from currency exchange and operational performance improvements. Cost of sales was also impacted by the following items in Other above:

•$157 million of decreased commodity ~~costs; and~~pass-through costs.

~~$3 million of decreased warranty costs.~~

Selling, General and Administrative Expense


	Three Months Ended March 31,									Three Months Ended March 31,
	2019			2018			Favorable/ (unfavorable)			2020			2019			Favorable/ (unfavorable)

	(dollars in millions)									(dollars in millions)
Selling, general and administrative expense	$	256		$	259		$	3	Selling, general and administrative expense	$	252		$	256		$	4
Percentage of net sales	7.2		%	7.1		%			Percentage of net sales	7.8		%	7.2		%

Selling, general and administrative expense (“SG&A”) includes administrative expenses, information technology costs and incentive compensation related costs. SG&A increased as a percentage of net sales for the three months ended March 31, ~~2019~~2020 as compared to ~~2018,~~2019, primarily due to the impacts of the COVID-19 pandemic on our ~~acquisitions,~~overall net sales volumes. SG&A was also impacted by reduced incentive compensation costs, partially offset by ~~cost reduction initiatives, including our continuing rotation~~increased information technology costs as compared to ~~best cost manufacturing locations in Europe and initiatives focused on reducing global overhead costs.~~the prior period.

Amortization

Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(in millions)
Amortization $ 34
$ 30
$ (4 )








	Three Months Ended March 31,
	2020		2019		Favorable/ (unfavorable)

	(in millions)
Amortization	$	36	$	34	$	(2)

Amortization expense reflects the non-cash charge related to definite-lived intangible assets. The increase in amortization during the three months ended March 31, ~~2019~~2020 compared to ~~2018~~2019 reflects the continued amortization of our definite-lived

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intangible assets, which resulted primarily from our acquisitions, over their estimated useful lives. Refer to Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein for further detail of our business acquisitions, including details of the intangible assets recorded in each transaction.

Restructuring

Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(dollars in millions)
Restructuring $ 26
$ 20
$ (6 )
Percentage of net sales 0.7 % 0.6 %

The increase in restructuring expense recorded during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 is primarily attributable to an increase in costs recognized for global overhead reductions as compared to the prior period.









	Three Months Ended March 31,
	2020			2019			Favorable/ (unfavorable)

	(dollars in millions)
Restructuring	$	28		$	26		$	(2)
Percentage of net sales	0.9		%	0.7		%

The Company recorded employee-related and other restructuring charges ~~related~~totaling approximately $28 million during the three months ended March 31, 2020, of which $11 million was recognized for programs implemented in the European region, pursuant to ~~these~~the Company’s ongoing overhead cost reduction strategy. None of the Company’s individual restructuring programs

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initiated during the three months ended March 31, 2020 were material and there have been no changes in previously initiated programs that have resulted (or are expected to result) in a material change to our restructuring costs. We expect to make cash payments of approximately $80 million over the next twelve months pursuant to currently implemented restructuring programs.

The Company recorded employee-related and other restructuring charges totaling approximately $26 million during the three months ended March 31, 2019, of which $7 million was recognized for programs focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and reducing overhead costs in the region.

The Company recorded employee-related and other restructuring charges related to these programs totaling approximately $20 million during the three months ended March 31, 2018, of which $12 million was recognized for programs focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and reducing overhead costs in the region.

We expect to continue to incur additional restructuring expense in ~~2019,~~2020 and beyond, primarily related to programs focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and to reduce global overhead ~~costs.~~costs, which includes approximately $40 million of restructuring costs within the Signal and Power Solutions segment for programs approved as of March 31, 2020. Additionally, as we continue to operate in a cyclical industry that is impacted by movements in the global and regional economies, we continually evaluate opportunities to further adjust our cost structure and optimize our manufacturing footprint. The Company plans to implement additional restructuring activities in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing regional automotive production levels and locations, to improve the efficiency and utilization of other locations and in order to increase investment in advanced technologies and engineering. Such future restructuring actions are dependent on market conditions, customer actions and other factors.

Refer to Note 7. Restructuring to the consolidated financial statements contained herein for additional information.

Interest Expense








	Three Months Ended March 31,
	2020		2019		Favorable/ (unfavorable)

	(in millions)
Interest expense	$	43	$	38	$	(5)

Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(in millions)
Interest expense $ 38
$ 34
$ (4 )

The increase in interest expense during the three months ended March 31, 2020 compared to 2019 reflects the issuance of the 2019 Senior Notes in the first quarter of 2019, which were utilized to redeem the 3.15% Senior Notes, and increased borrowings under the Revolving Credit Facility. Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.

Other Income, Net

Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(in millions)
Other income, net $ 16
$ 30
$ (14 )








	Three Months Ended March 31,
	2020		2019		Favorable/ (unfavorable)

	(in millions)
Other (expense) income, net	$	(1)	$	16	$	(17)

As further discussed in Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein, during the three months ended March 31, 2019, Aptiv recorded a pre-tax unrealized gain of $19 million related to increases in

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fair value of its equity investments without readily determinable fair values. Also, as further discussed in Note 8. Debt to the consolidated financial statements contained herein, during the three months ended March 31, 2019, Aptiv redeemed for cash the entire $650 million aggregate principal amount outstanding of the 3.15% Senior Notes, resulting in a loss on debt extinguishment of approximately $6 million.

As further discussed in Note 14. Derivatives and Hedging Activities to the consolidated financial statements contained herein, during the three months ended March 31, 2018, Aptiv recorded a gain of $11 million on forward contracts entered into in order to hedge portions of the currency risk associated with the cash payment for the acquisition of KUM. Additionally, during the three months ended March 31, 2018, Aptiv recorded $3 million for certain fees earned pursuant to the Transition Services Agreement in connection with the Separation of the Company’s former Powertrain Systems business.

Income Taxes








	Three Months Ended March 31,
	2020		2019		Favorable/ (unfavorable)

	(in millions)
Income tax expense	$	10	$	33	$	23

The Company’s tax rate is affected by the fact that its parent entity is an Irish resident taxpayer, the tax rates in Ireland and other jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction and the relative

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Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(in millions)
Income tax expense $ 33
$ 59
$ 26

amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. The Company’s effective tax rate ~~was~~is also impacted by ~~favorable changes in geographic income mix in 2019 as compared to 2018, primarily due to changes in the underlying business operations and~~ the receipt of certain tax incentives and holidays that ~~reduced~~reduce the effective tax rate for certain subsidiaries below the statutory ~~rate during the three months ended March 31, 2019.~~rate.

The Company’s effective tax rate for the three months ended March 31, 2020 includes net discrete tax benefits of $3 million, primarily related to changes in reserves, changes in accruals for unremitted earnings and provision to return adjustments. Also included as a discrete item in the effective tax rate for the three months ended March 31, 2020 is the beneficial impact of approximately 11 points resulting from the gain on the autonomous driving joint venture. The tax expense associated with the gain was insignificant as Aptiv’s aggregate autonomous driving assets were exempt from capital gains tax in the jurisdiction from which they were sold. The aggregate autonomous driving assets had been acquired, purchased or developed in taxable transactions in prior periods and reflect changes made to the corporate entity operating structure for intellectual property following the Separation of its former Powertrain Systems segment. The effective tax rate for the three months ended March 31, 2019 ~~also~~ includes net discrete tax benefits of $10 million, primarily related to changes in reserves and provision to return ~~adjustments, as further discussed in~~adjustments. Refer to Note 11. Income Taxes to the consolidated financial statements contained ~~herein. The effective tax rate~~herein for ~~the three months ended March 31, 2018 includes net discrete tax benefits of $1 million, primarily related to changes in reserves, offset by provision to return adjustments.~~additional information.

Equity Income

Three Months Ended March 31,
2019 2018
Favorable/
(unfavorable)

(in millions)
Equity income, net of tax $ 3
$ 5
$ (2 )








	Three Months Ended March 31,
	2020		2019		Favorable/ (unfavorable)

	(in millions)
Equity income, net of tax	$	2	$	3	$	(1)

Equity income, net of tax reflects the Company’s interest in the results of ongoing operations of entities accounted for as equity-method investments. Equity income ~~decreased~~remained consistent for the three months ended March 31, ~~2019~~2020 as compared to the three months ended March 31, ~~2018,~~2019, primarily attributable to the performance of our joint ventures in North America and Asia Pacific as compared to the prior period.

Results of Operations by Segment

We operate our core business along the following operating segments, which are grouped on the basis of similar product, market and operating factors:

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

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

•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.

Our management utilizes segment Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of our operating segments. 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,

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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.

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 other transactions and deferred compensation related to acquisitions. The reconciliations of Adjusted Operating Income to net income attributable to Aptiv for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are as follows:

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

(in millions)
For the Three Months Ended March 31, 2019:
Adjusted operating income $ 283
$ 62
$ —
$ 345
Restructuring (19 ) (7 ) —
(26 )
Other acquisition and portfolio project costs (7 ) (4 ) —
(11 )
Deferred compensation related to nuTonomy acquisition —
(11 ) —
(11 )
Operating income $ 257
$ 40
$ —
297
Interest expense (38 )
Other income, net 16
Income before income taxes and equity income 275
Income tax expense (33 )
Equity income, net of tax 3
Net income 245
Net income attributable to noncontrolling interest 5
Net income attributable to Aptiv $ 240

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

(in millions)
For the Three Months Ended March 31, 2018:
Adjusted operating income $ 351
$ 76
$ —
$ 427
Restructuring (18 ) (2 ) —
(20 )
Other acquisition and portfolio project costs (11 ) (8 ) —
(19 )
Deferred compensation related to nuTonomy acquisition —
(14 ) —
(14 )
Operating income $ 322
$ 52
$ —
374
Interest expense (34 )
Other income, net 30
Income before income taxes and equity income 370
Income tax expense (59 )
Equity income, net of tax 5
Net income 316
Net income attributable to noncontrolling interest 9
Net income attributable to Aptiv $ 307

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

	(in millions)
For the Three Months Ended March 31, 2020:
Adjusted operating income	$	225	$	6	$	—	$	231
Restructuring	(19)		(9)		—		(28)

Other acquisition and portfolio project costs	(7)		(7)		—		(14)

Deferred compensation related to nuTonomy acquisition	—		(4)		—		(4)
Gain on business divestitures and other transactions	—		1,434		—		1,434
Operating income	$	199	$	1,420	$	—	1,619
Interest expense							(43)
Other expense, net							(1)
Income before income taxes and equity income							1,575
Income tax expense							(10)
Equity income, net of tax							2


Net income							1,567
Net loss attributable to noncontrolling interest							(5)
Net income attributable to Aptiv							$	1,572


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

	(in millions)
For the Three Months Ended March 31, 2019:
Adjusted operating income	$	283	$	62	$	—	$	345
Restructuring	(19)		(7)		—		(26)

Other acquisition and portfolio project costs	(7)		(4)		—		(11)

Deferred compensation related to nuTonomy acquisition	—		(11)		—		(11)

Operating income	$	257	$	40	$	—	297
Interest expense							(38)
Other income, net							16
Income before income taxes and equity income							275
Income tax expense							(33)
Equity income, net of tax							3


Net income							245
Net income attributable to noncontrolling interest							5
Net income attributable to Aptiv							$	240

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Net sales, gross margin as a percentage of net sales and Adjusted Operating Income by segment for the three months endedMarch 31, ~~2019~~2020 and ~~2018~~2019 are as follows:

Net Sales by Segment












	Three Months Ended March 31,										Variance Due To:
	2020		2019		Favorable/(unfavorable)		Volume, net of contractual price reductions		FX		Commodity pass-through		Other		Total

	(in millions)										(in millions)
Signal and Power Solutions	$	2,330	$	2,562	$	(232)	$	(173)	$	(52)	$	(7)	$	—	$	(232)
Advanced Safety and User Experience	902		1,023		(121)		(110)		(11)		—		—		(121)
Eliminations and Other	(6)		(10)		4		4		—		—		—		4
Total	$	3,226	$	3,575	$	(349)	$	(279)	$	(63)	$	(7)	$	—	$	(349)

Three Months Ended March 31, Variance Due To:
2019 2018
Favorable/
(unfavorable)
Volume, net of contractual price reductions FX Commodity pass-through Other Total

(in millions) (in millions)
Signal and Power Solutions $ 2,562
$ 2,617
$ (55 ) $ 71
$ (111 ) $ (15 ) $ —
$ (55 )
Advanced Safety and User Experience 1,023
1,032
(9 ) 29
(38 ) —
—
(9 )
Eliminations and Other (10 ) (19 ) 9
8
1
—
—
9
Total $ 3,575
$ 3,630
$ (55 ) $ 108
$ (148 ) $ (15 ) $ —
$ (55 )

Gross Margin Percentage by Segment


	Three Months Ended March 31,
	2020		2019
Signal and Power Solutions	18.6	%	19.5	%

Advanced Safety and User Experience	7.4	%	11.1	%
Eliminations and Other	—	%	—	%
Total	15.5	%	17.1	%

Three Months Ended March 31,
2019 2018
Signal and Power Solutions 19.5 % 21.4 %
Advanced Safety and User Experience 11.1 % 12.0 %
Eliminations and Other — % — %
Total 17.1 % 18.8 %

Adjusted Operating Income by Segment


	Three Months Ended March 31,										Variance Due To:
	2020		2019		Favorable/(unfavorable)		Volume, net of contractual price reductions		Operational performance		Other		Total

	(in millions)										(in millions)
Signal and Power Solutions	$	225	$	283	$	(58)	$	(83)	$	30	$	(5)	$	(58)

Advanced Safety and User Experience	6		62		(56)		(48)		(28)		20		(56)
Eliminations and Other	—		—		—		—		—		—		—
Total	$	231	$	345	$	(114)	$	(131)	$	2	$	15	$	(114)

Three Months Ended March 31, Variance Due To:
2019 2018
Favorable/
(unfavorable)
Volume, net of contractual price reductions Operational performance Other Total

(in millions) (in millions)
Signal and Power Solutions $ 283
$ 351
$ (68 ) $ (59 ) $ 4
$ (13 ) $ (68 )
Advanced Safety and User Experience 62
76
(14 ) (14 ) 12
(12 ) (14 )
Eliminations and Other —
—
—
—
—
—
—
Total $ 345
$ 427
$ (82 ) $ (73 ) $ 16
$ (25 ) $ (82 )

As noted in the table above, Adjusted Operating Income for the three months endedMarch 31, ~~2019~~2020 as compared to the three months endedMarch 31, ~~2018~~2019 was impacted by volume ~~and~~decreases, net of contractual price reductions, including product mix, largely resulting from the impacts of the COVID-19 pandemic. The adverse impacts of the pandemic included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from governmental “lock-down” orders for all non-essential activities in China, Europe and North America to-date. Adjusted Operating Income was also impacted by operational performance improvements ~~which were partially offset by incremental investment in advanced technologies~~ and ~~engineering, as well as~~ the following items included within Other in the table above:

~~Unfavorable foreign currency impacts of $20 million, primarily related to the Euro and Chinese Yuan Renminbi; and~~

•$186 million of ~~increased depreciation~~decreased SG&A expense, not including the impact of other acquisition and ~~amortization,~~portfolio project costs, primarily as a result of ~~a higher fixed asset base; partially offset by~~decreased incentive compensation costs.

~~$3 million of decreased warranty costs.~~

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Liquidity and Capital Resources

COVID-19 Pandemic

Due to the unprecedented uncertainty related to the impact the COVID-19 pandemic is having on the global automotive industry and economies around the world, the Company initiated a series of precautionary actions during the first quarter of 2020 to further enhance its liquidity and financial flexibility. Among these, the Company has taken decisive actions to manage costs, capital spending and working capital to further strengthen its liquidity, including the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules. Additionally, as further described below, the Company drew down all remaining availability under its existing Revolving Credit Facility and suspended the payment of its cash dividend to further increase capital preservation during the pandemic. The impacts of COVID-19 are increasingly reducing visibility into when customers’ plants will be fully operational, as well as creating the potential for lower consumer demand and additional supply chain interruptions, which could adversely impact global vehicle production and the viability and financial stability of our customers and suppliers. While the Company believes it has taken prudent actions to mitigate the impacts on its business resulting from the COVID-19 pandemic and to provide sufficient liquidity to fund our global operations and capital investments, the ultimate impact of the pandemic to our business remains highly uncertain. However, we will continue to actively monitor the ongoing potential impacts of COVID-19 and will continue to seek to aggressively mitigate and minimize its impact on our business.

Overview of Capital Structure

Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements and operational restructuring ~~activities and dividends on share capital.~~activities. Our primary sources of liquidity are cash flows from operations, our existing cash balance, and as necessary and available, borrowings under ~~available~~ credit facilities and issuance of long-term debt. To the extent we generate discretionary cash flow we may consider using this additional cash flow for optional prepayments of existing indebtedness, strategic acquisitions or investments, ~~additional share repurchases~~ and/or general corporate purposes. We will also continually explore ways to enhance our capital structure.

As of March 31, ~~2019,~~2020, we had cash and cash equivalents of ~~$0.3~~$2.1 billion and net debt (defined as outstanding debt less cash and cash equivalents) of $4.2 billion. We also have access to additional liquidity pursuant to the terms of the $2.0 billion Revolving Credit Facility and the €300 million committed European accounts receivable factoring facility, as described below.

The following table summarizes our available liquidity, which includes cash, cash equivalents and funds available under our significant committed credit facilities, as of March 31, ~~2019.~~2020. The amounts disclosed as available under the Company’s significant committed credit facilities are available without violating our existing debt covenants, which are described below.


	March 31, 2020

	(in millions)
Cash and cash equivalents	$	2,055
Revolving Credit Facility, unutilized portion (1)	—
Committed European accounts receivable factoring facility, unutilized portion (2)	98
Total available liquidity	$	2,153

March 31,
2019

(in millions)
Cash and cash equivalents $ 321
Revolving Credit Facility, unutilized portion (1) 1,825
Committed European accounts receivable factoring facility, unutilized portion (2) 2
Total available liquidity $ 2,148

(1)Availability reduced by less than $1 million in letters of credit issued under the Credit Agreement as of March 31, ~~2019.~~2020.

(2)Based on March 31, ~~2019~~2020 foreign currency rates, subject to the availability of eligible accounts receivable.

We expect existing cash, available liquidity and cash flows from operations to continue to be sufficient to fund our global operating activities, including restructuring payments, any mandatory payments required under the Credit Agreement as described below, dividends on ordinary shares and capital expenditures. In addition, we expect to continue to repurchase outstanding ordinary shares pursuant to our authorized ordinary share repurchase program, as further described below.

We also continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies and to the terms of the Credit Agreement. While a substantial portion of our operating income is generated by our non-U.S. subsidiaries, and as of March 31, 2019, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled $309 million, weWe utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan repayments and other distributions and advances to provide the funds necessary to meet our global liquidity needs. There are no significant restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Aptiv. As of March 31, 2020, the Company’s cash and cash equivalents held by our non-U.S. subsidiaries totaled approximately $2.0 billion. If additional non-U.S. cash was needed for our U.S. operations, we may be required to accrue and pay withholding if we were to distribute such funds from non-U.S. subsidiaries to the U.S.; however, based on our current liquidity needs and strategies, we do not anticipate a need to accrue and pay such additional amounts.

~~Based~~Despite the current global economic impacts and uncertainty resulting from the ongoing COVID-19 pandemic and its impact on ~~these factors,~~global vehicle production, as further described above, we ~~believe we possess~~currently expect existing cash, available liquidity and cash flows from operations to continue to be sufficient ~~liquidity~~ to fund our global ~~operations~~operating activities, including restructuring payments, any mandatory payments required under the Credit Agreement as described below and capital ~~investments in 2019 and beyond.~~expenditures.

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Share Repurchases

In April 2016, the Board of Directors authorized a share repurchase program of up to $1.5 billion of ordinary shares, which commenced in September 2016. This share repurchase program provides for share purchases in the open market or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the Company.

~~Table of Contents~~

A summary of the ordinary shares repurchased during the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 is as follows:


	Three Months Ended March 31,					Three Months Ended March 31,
	2019		2018			2020		2019
Total number of shares repurchased	2,840,079		1,676,144		Total number of shares repurchased	1,059,075		2,840,079
Average price paid per share	$	79.57	$	89.17	Average price paid per share	$	53.73	$	79.57
Total (in millions)	$	226	$	149	Total (in millions)	$	57	$	226

As of March 31, ~~2019,~~2020, approximately ~~$264~~$13 million of share repurchases remained available under the April 2016 share repurchase program. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in-capital and retained earnings.

New Share Repurchase Program

In January 2019, the Board of Directors authorized a new share repurchase program of up to $2.0 billion of ordinary shares. This share repurchase program provides for share purchases in the open market or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the Company. This program will commence following the completion of the Company’s April 2016 share repurchase program described above. Although both the April 2016 and this new share repurchase program remain authorized, in order to preserve liquidity during the COVID-19 pandemic crisis, the Company does not anticipate executing further share repurchases until such time as the global economic uncertainties and business impacts resulting from the pandemic have abated.

Dividends

During the first quarter of 2020, following the payment of its first quarter dividend, the Company suspended its annual cash dividend of $0.88 per ordinary share, primarily to provide additional liquidity and financial flexibility to mitigate the impacts on its business resulting from the uncertainty caused by the global spread of the COVID-19 pandemic.

Acquisitions

~~Winchester~~gabocom——On ~~October 24, 2018,~~November 19, 2019, Aptiv acquired 100% of the equity interests of ~~Winchester Interconnect~~gabo Systemtechnik GmbH (“~~Winchester”~~gabocom”), a leading provider of ~~custom engineered interconnect~~highly-engineered cable management and protection solutions for ~~harsh environment applications,~~the telecommunications industry, for ~~approximately $680~~total consideration of $311 million, net of cash acquired. ~~As further described in Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein, the~~The acquisition was accounted for as a business combination, with the operating results of ~~Winchester~~gabocom included within the Company’s Signal and Power Solutions segment from the date of acquisition. The Company acquired ~~Winchester~~gabocom utilizing cash on ~~hand and short-term borrowings.~~hand.

~~KUM~~Falmat—On ~~June~~May 14, ~~2018,~~2019, Aptiv acquired 100% of the equity interests of ~~KUM,~~Falmat Inc. (“Falmat”), a ~~specialized~~leading manufacturer of ~~connectors~~high performance custom cable and cable assemblies for ~~the automotive industry,~~industrial applications, for total consideration of ~~$526 million. As further described in Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein, the~~$25 million, net of cash acquired. The acquisition was accounted for as a business combination, with the operating results of ~~KUM~~Falmat included within the Company’s Signal and Power Solutions segment from the date of acquisition. The Company acquired ~~KUM~~Falmat utilizing cash on hand.

Dynawave—In March 2020, Aptiv agreed to acquire Dynawave Inc. (“Dynawave”), a specialized manufacturer of custom-engineered interconnect solutions for a wide range of industries, for total consideration of approximately $22 million. The acquisition is subject to the satisfaction of customary closing conditions and the receipt of regulatory and other approvals, and is expected to close by the third quarter of 2020. The Company expects to acquire Dynawave primarily utilizing cash on hand. Upon completion, Dynawave will become part of the Signal and Power Solutions segment.

Technology Investments—During the fourth quarter of 2019, the Company’s Advanced Safety and User Experience segment made a $6 million investment in Krono-Safe, SAS, a leading software developer of safety-critical real-time embedded systems. During the first quarter of 2019, the Company’s Advanced Safety and User Experience segment made an additional $3 million investment in Otonomo Technologies Ltd. (“Otonomo”), a connected car data marketplace developer. This investment was in addition to the Company’s $15 million investment made in the first quarter of 2017. ~~During~~These investments do not have readily determinable fair values and are measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the ~~fourth quarter~~same issuer.

Table of ~~2018,~~Contents

Refer to Note 17. Acquisitions and Divestitures to the consolidated financial statements contained herein for further detail of the Company’s business acquisitions and technology investments.

Autonomous Driving Joint Venture

On March 26, 2020, Aptiv completed the transaction with Hyundai Motor Group (“Hyundai”) to form a new joint venture focused on the design, development and commercialization of autonomous driving technologies. Under the terms of the agreement, Aptiv contributed to the joint venture autonomous driving technology, intellectual property and approximately 700 employees for a 50% ownership interest in the newly formed entity. Hyundai contributed to the joint venture approximately $1.6 billion in cash, along with vehicle engineering services, research and development resources and access to intellectual property for a 50% ownership interest in the newly formed entity. As a result, subsequent to the closing of the transaction, the newly formed joint venture is expected to fund all of its future operating expenses and investments in autonomous driving technologies for the foreseeable future. Consequently, Aptiv is no longer required to fund these investments and expenses, which approximated $180 million for the year ended December 31, 2019 prior to the joint venture formation. Upon closing of the transaction, Aptiv deconsolidated the carrying value of the associated assets and liabilities contributed to the joint venture, previously classified as held for sale, and recognized an asset of approximately $2.0 billion within Investments in affiliates in the consolidated balance sheet, based on the preliminary fair value of its investment in the newly formed joint venture. The Company recognized a pre-tax gain of approximately $1.4 billion in the consolidated statement of operations (approximately $5.63 per diluted share during the three months ended March 31, 2020), net of transaction costs of $22 million, based on the difference between the carrying value of its contribution to the joint venture and the preliminary fair value of its investment in the newly formed entity. The estimated fair value of Aptiv’s ownership interest in the newly formed joint venture was determined primarily based on third-party valuations and management estimates, generally utilizing income and market approaches. The estimated fair value is preliminary and could be revised as a result of additional information obtained or adjustments made due to the completion of independent appraisals and valuations. The effects of this transaction would not materially impact the Company’s reported results for any period presented, and the transaction did not meet the criteria to be reflected as a discontinued operation.

In connection with the closing of the transaction, Aptiv and the newly formed entity entered into various agreements to facilitate an orderly transition and to provide a framework for their relationship going forward, which included a transition services agreement. The transition services primarily involve Aptiv providing certain administrative services to the joint venture for a period of up to 24 months after the closing date. These agreements are not material to Aptiv. The Company will account for its investment in the newly formed entity prospectively using the equity method of accounting.

The Company determined that the assets and liabilities associated with Aptiv’s contribution to the joint venture, which were reported within the Advanced Safety and User Experience segment, ~~made a $15 million investment~~met the held for sale criteria as of December 31, 2019. Accordingly, the held for sale assets and liabilities were reclassified in ~~Affectiva, Inc., a leader in human perception artificial intelligence technology. These investments are accounted~~the consolidated balance sheet as of December 31, 2019 to current assets held for ~~in accordance with ASU 2016-01,~~sale and current liabilities held for sale, respectively, as ~~further described in~~the contribution of such assets and liabilities to the joint venture was expected to occur within one year. Upon designation as held for sale, the Company ceased recording depreciation of the held for sale assets. Refer to Note ~~2. Significant Accounting Policies~~17. Acquisitions and Divestitures to the consolidated financial statements contained ~~herein.~~herein for additional information.

Credit Agreement

Aptiv PLC and its wholly-owned subsidiary Aptiv Corporation entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit facilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit facility of $2.0 billion (the “Revolving Credit Facility”). The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on August 17, 2016. The 2016 amendment extended the maturity of the Revolving Credit Facility and the Tranche A Term Loan from 2018 to 2021, increased the capacity of the Revolving Credit Facility from $1.5 billion to $2.0 billion and permitted Aptiv PLC to act as a borrower on the Revolving Credit Facility.

~~The Tranche A Term Loan and the Revolving Credit Facility mature on August 17, 2021.~~ Beginning in the fourth quarter of 2017, Aptiv was obligated to begin making quarterly principal payments throughout the term of the Tranche A Term Loan, according to the amortization schedule in the Credit Agreement. The Credit Agreement also contains an accordion feature that permits Aptiv to increase, from time to time, the aggregate borrowing capacity under the Credit Agreement by up to an additional $1 billion (or a greater amount based upon a formula set forth in the Credit Agreement) upon Aptiv’s request, the agreement of the lenders participating in the increase, and the approval of the Administrative Agent and existing lenders.

During the first quarter of 2020, the Company drew down all remaining availability under its Revolving Credit Facility, primarily to provide additional liquidity and financial flexibility to mitigate the impacts on its business resulting from the uncertainty caused by the global spread of the COVID-19 pandemic. As ~~of March 31, 2019, $175 million~~a result, approximately $2.0 billion was outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit ~~Agreement. Letters~~Agreement as of ~~credit issued under the Credit Agreement reduce availability~~

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~~under the Revolving Credit Facility.~~March 31, 2020. The maximum amount drawn under the Revolving Credit Facility during the three months ended March 31, ~~2019~~2020 was ~~$465 million, primarily to manage intra-month working capital requirements.~~$2.0 billion.

Loans under the Credit Agreement bear interest, at Aptiv’s option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as defined in the Credit Agreement) or (b) the London Interbank Offered Rate (the “Adjusted LIBO Rate” as defined in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forth in the table below (the “Applicable Rate”). The Applicable Rates under the Credit Agreement on the specified dates are set forth below:


	March 31, 2019				December 31, 2018					March 31, 2020						December 31, 2019
	LIBOR plus		ABR plus		LIBOR plus		ABR plus			LIBOR plus		ABR plus		LIBOR plus		ABR plus
Revolving Credit Facility	1.10	%	0.10	%	1.10	%	0.10	%	Revolving Credit Facility	1.10	%	0.10	%	1.10	%	0.10	%
Tranche A Term Loan	1.25	%	0.25	%	1.25	%	0.25	%	Tranche A Term Loan	1.25	%	0.25	%	1.25	%	0.25	%

The Applicable Rate under the Credit Agreement may increase or decrease from time to time based on changes in the Company’s credit ratings. Accordingly, the interest rate will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR or future changes in the Company’s corporate credit ratings. The Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility and certain letter of credit issuance and fronting fees.

The interest rate period with respect to LIBOR interest rate options can be set at one-, two-, three-, or six-months as selected by Aptiv in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable lenders). Aptiv may elect to change the selected interest rate option in accordance with the provisions of the Credit Agreement. As of March 31, ~~2019,~~2020, Aptiv selected the one-month LIBOR interest rate option on the Tranche A Term Loan, and the rate effective as of March 31, ~~2019,~~2020, as detailed in the table below, was based on the Company’s current credit rating and the Applicable Rate for the Credit Agreement:


		Borrowings as of						Borrowings as of
		March 31, 2019		Rates effective as of				March 31, 2020		Rates effective as of
	Applicable Rate	(in millions)		March 31, 2019			Applicable Rate	(in millions)		March 31, 2020
Revolving Credit Facility	ABR plus 0.10%	$	25	5.60	%	Revolving Credit Facility	ABR plus 0.10%	$	150	3.35	%
Revolving Credit Facility	LIBOR plus 1.10%	$	150	3.60	%	Revolving Credit Facility	LIBOR plus 1.10%	$	1,850	1.88	%
Tranche A Term Loan	LIBOR plus 1.25%	$	380	3.75	%	Tranche A Term Loan	LIBOR plus 1.25%	$	350	2.00	%

Borrowings under the Credit Agreement are prepayable 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’) ability to incur certain additional indebtedness or liens or to dispose of substantially all of its assets. In addition, the Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement) of ~~less~~not more than ~~3.50~~3.5 to 1.0. The Credit Agreement also contains events of default customary for financings of this type. The Company was in compliance with the Credit Agreement covenants as of March 31, ~~2019.~~2020.

As of March 31, ~~2019,~~2020, all obligations under the Credit Agreement were borrowed by Aptiv Corporation and jointly and severally guaranteed by its direct and indirect parent companies, subject to certain exceptions set forth in the Credit ~~Agreement. Refer~~Agreement, and the Tranche A Term Loan and the Revolving Credit Facility were set to mature on August 17, 2021. Subsequent to March 31, 2020, the Company amended and restated the Credit Agreement, extending the maturity date of substantially all of the Revolving Credit Facility and the Tranche A Term Loan from August 17, 2021 to August 17, 2022, as further described in Note ~~19. Supplemental Guarantor and Non-Guarantor Condensed Consolidating Financial Statements~~22. Subsequent Events to the consolidated financial statements contained ~~herein for additional information.~~herein.

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Senior Unsecured Notes

OnAs of March ~~3, 2014, Aptiv Corporation issued $700 million in aggregate principal amount of 4.15%~~31, 2020, the Company had the following senior unsecured notes due 2024 (the “2014 Senior Notes”) in a transaction registered under the Securities Act of 1933, as amended (the “Securities Act”). The 2014 Senior Notes were priced at 99.649% of par, resulting in a yield to maturity of 4.193%. The proceeds were primarily utilized to redeem $500 million of 5.875% senior unsecured notes due 2019issued and to repay a portion of the Tranche A Term Loan. Aptiv paid approximately $6 million of issuance costs in connection with the 2014 Senior Notes. Interest is payable 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.outstanding:

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. The 2015 Euro-denominated Senior Notes were priced at 99.54% of par, resulting in a yield to maturity of 1.55%. The proceeds were primarily utilized to redeem $500 million of 6.125% senior unsecured notes due 2021, and to fund growth initiatives, such as acquisitions, and share repurchases. Aptiv incurred approximately $5 million of issuance costs in connection with the 2015

~~Table of Contents~~

Euro-denominated Senior Notes. Interest is payable annually on March 10. The Company has designated the 2015 Euro-denominated Senior Notes as a net investment hedge of the foreign currency exposure of its investments in certain Euro-denominated wholly-owned subsidiaries. Refer to Note 14. Derivatives and Hedging Activities to the consolidated financial statements contained herein for further information.

On November 19, 2015, Aptiv PLC issued $1.3 billion in aggregate principal amount of senior unsecured notes in a transaction registered under the Securities Act, comprised of $650 million of 3.15% senior unsecured notes due 2020 (the “3.15% Senior Notes”) and $650 million of 4.25% senior unsecured notes due 2026 (the “4.25% Senior Notes”) (collectively, the “2015 Senior Notes”). The 3.15% Senior Notes were priced at 99.784% of par, resulting in a yield to maturity of 3.197%, and the 4.25% Senior Notes were priced at 99.942% of par, resulting in a yield to maturity of 4.256%. The proceeds were primarily utilized to fund a portion of the cash consideration for the acquisition of HellermannTyton PLC and for general corporate purposes, including the payment of fees and expenses associated with the HellermannTyton PLC acquisition and the related financing transaction. Aptiv incurred approximately $8 million of issuance costs in connection with the 2015 Senior Notes. Interest on the 3.15% Senior Notes was payable semi-annually on May 19 and November 19 of each year to holders of record at the close of business on May 4 or November 4 immediately preceding the interest payment date. Interest on the 4.25% Senior Notes is payable semi-annually on January 15 and July 15 of each year to holders of record at the close of business on January 1 or July 1 immediately preceding the interest payment date. In March 2019, Aptiv redeemed for cash the entire $650 million aggregate principal amount outstanding of the 3.15% Senior Notes, financed by the proceeds received from the issuance of the 2019 Senior Notes, as defined below. As a result of the redemption of the 3.15% Senior Notes, Aptiv recognized a loss on debt extinguishment of approximately $6 million during the three months ended March 31, 2019 within other expense, net in the consolidated statement of operations.

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 maturity of 1.611%. The proceeds, together with proceeds from the 2016 Senior Notes described below, were utilized to redeem the $800 million of 5.00% senior unsecured notes due 2023. Aptiv incurred approximately $4 million of issuance costs in connection with the 2016 Euro-denominated Senior Notes. Interest is payable annually on September 15. The Company has designated the 2016 Euro-denominated Senior Notes as a net investment hedge of the foreign currency exposure of its investments in certain Euro-denominated wholly-owned subsidiaries. Refer to Note 14. Derivatives and Hedging Activities to the consolidated financial statements contained herein for further information.

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 maturity of 4.433%. The proceeds, together with proceeds from the 2016 Euro-denominated Senior Notes, were utilized to redeem the $800 million of 5.00% senior unsecured notes due 2023. Aptiv incurred approximately $3 million of issuance costs in connection with the 2016 Senior Notes. Interest is payable semi-annually on April 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.

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, the “2019 Senior Notes”). The 4.35% Senior Notes were priced at 99.879% of par, resulting in a yield to maturity of 4.365%, and the 5.40% Senior Notes were priced at 99.558% of par, resulting in a yield to maturity of 5.430%. The proceeds were utilized to redeem the 3.15% Senior Notes. Aptiv incurred approximately $5 million of issuance costs in connection with the 2019 Senior Notes. Interest on the 2019 Senior Notes is payable 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.

Aggregate Principal Amount
(in millions)

Stated Coupon Rate

Issuance Date

Maturity Date

Interest Payment Date

700

4.15%

March 2014

March 2024

March 15 and September 15

780

1.50%

March 2015

March 2025

March 10

650

4.25%

November 2015

January 2026

January 15 and July 15

557

1.60%

September 2016

September 2028

September 15

300

4.35%

March 2019

March 2029

March 15 and September 15

300

4.40%

September 2016

October 2046

April 1 and October 1

350

5.40%

March 2019

March 2049

March 15 and September 15

Although the specific terms of each indenture governing each series of senior notes vary, the indentures contain certain restrictive covenants, including with respect to Aptiv’s (and Aptiv’s subsidiaries) ability to incur liens, enter into sale and leaseback transactions and merge with or into other entities. As of March 31, ~~2019,~~2020, the Company was in compliance with the provisions of all series of the outstanding senior notes. Refer to Note 8. Debt to the consolidated financial statements contained herein for additional information.

~~The~~Guarantor Summarized Financial Information

In March 2020, the Securities and Exchange Commission (“SEC”) adopted amendments to simplify the financial disclosure requirements for guarantors and issuers of guaranteed securities registered under Rule 3-10 of Regulation S-X. As permitted, the Company elected to early adopt these amendments during the first quarter of 2020. Accordingly, the below summarized financial information has been provided in lieu of the condensed consolidating financial statements provided in the Company’s 2019 Annual Report on Form 10-K.

As further described in Note 8. Debt to the consolidated financial statements contained herein, Aptiv Corporation issued the 2014 Senior Notes ~~issued by Aptiv Corporation~~and is the borrower of obligations under the Credit Agreement, which are fully and unconditionally guaranteed ~~jointly and severally,~~ by Aptiv PLC and by certain of Aptiv PLC’s direct and indirect subsidiaries ~~which are directly or indirectly 100% owned by~~(the “Obligor Group”). Aptiv PLC ~~subject to customary release provisions (other than in~~issued the ~~case of Aptiv PLC). The~~ 2015 Euro-denominated Senior Notes, 4.25% Senior Notes, 2016 Euro-denominated Senior Notes, 2016 Senior Notes and 2019 Senior Notes, ~~issued by Aptiv PLC~~which are fully and unconditionally guaranteed ~~jointly and severally,~~ by ~~certain of Aptiv PLC’s~~the Obligor Group. All other consolidated direct and indirect subsidiaries ~~(including Aptiv Corporation), which are directly or indirectly 100% owned by~~of Aptiv PLC are not subject to ~~customary release provisions. Refer~~the guarantees (the “Non-Guarantors”). The guarantees rank equally in right of payment with all of the guarantors’ existing and future senior indebtedness, are effectively subordinated to ~~Note 19. Supplemental Guarantor~~any of their existing and ~~Non-Guarantor Condensed Consolidating Financial Statements~~future secured indebtedness to the extent of the value of the collateral securing such indebtedness and are structurally subordinated to the indebtedness of each of their existing and future subsidiaries that is not a guarantor.

The below summarized financial information is presented on a combined basis after the elimination of intercompany balances and transactions among the Obligor Group and equity in earnings from and investments in the Non-Guarantors. The below summarized financial information should be read in conjunction with the Company’s consolidated financial statements contained herein, ~~for additional information.~~

as the financial information may not necessarily be indicative of results of operations or financial position had the subsidiaries operated as independent entities.

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	Obligor Group

Three Months Ended March 31, 2020	(in millions)
Net sales	$	—
Gross margin	$	—
Operating income	$	29
Net loss	$	(63)
Net loss attributable to Aptiv	$	(63)

As of March 31, 2020
Current assets (1)	$	2,446
Long-term assets	$	18
Current liabilities (2)	$	6,670
Long-term liabilities (2)	$	6,166
Noncontrolling interest	$	—

As of December 31, 2019
Current assets (1)	$	522
Long-term assets (1)	$	772
Current liabilities (2)	$	6,579
Long-term liabilities (2)	$	4,172
Noncontrolling interest	$	—

(1)Includes current assets of $2,446 million and $522 million as of March 31, 2020 and December 31 2019, respectively, and long-term assets of $768 million as of December 31 2019, due from Non-Guarantors.

(2)Includes current liabilities of $6,627 million and $6,409 million, and long-term liabilities of $226 million and $226 million, due to Non-Guarantors as of March 31, 2020 and December 31 2019, respectively.

Other Financing

Receivable factoring—Aptiv maintains a €300 million European accounts receivable factoring facility that is available on a committed basis. This facility is accounted for as short-term debt and borrowings are subject to the availability of eligible accounts receivable. Collateral is not required related to these trade accounts receivable. This program renews on a non-committed, indefinite basis unless terminated by either party. Borrowings bear interest at Euro Interbank Offered Rate (“EURIBOR”) plus 0.42% for borrowings denominated in Euros. The rate effective on amounts outstanding as of March 31, ~~2019~~2020 was 0.42%. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, Aptiv had ~~$335~~$236 million and ~~$279~~$266 million, respectively, outstanding on the European accounts receivable factoring facility. The maximum amount drawn under the European facility during the three months ended March 31, ~~2019~~2020 was ~~$335~~$253 million, primarily to ~~manage intra-month working capital requirements.~~provide additional liquidity and financial flexibility to mitigate the impacts on its business resulting from the uncertainty caused by the global spread of the COVID-19 pandemic.

Finance leases and other—As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, approximately ~~$27~~$28 million and ~~$32~~$33 million, respectively, of other debt primarily issued by certain non-U.S. subsidiaries and finance lease obligations were outstanding.

Letter of credit facilities��—In addition to the letters of credit issued under the Credit Agreement, Aptiv had approximately $2 million and $2 million outstanding through other letter of credit facilities as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, primarily to support arrangements and other obligations at certain of its subsidiaries.

Cash Flows

Intra-month cash flow cycles vary by region, but in general we are users of cash through the first half of a typical month and we generate cash during the latter half of a typical month. Due to this cycle of cash flows, we may utilize short-term financing, including our Revolving Credit Facility and European accounts receivable factoring facility, to manage our intra-month working capital needs. Our cash balance typically peaks at month end.

We utilize a combination of strategies, including dividends, cash pooling arrangements, intercompany loan structures and other distributions and advances, to provide the funds necessary to meet our global liquidity needs. We utilize a global cash pooling arrangement to consolidate and manage our global cash balances, which enables us to efficiently move cash into and out of a number of the countries in which we operate.

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Operating activities—Net cash provided by operating activities ~~from continuing operations~~ totaled ~~$84~~$161 million and ~~$186~~$84 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Cash ~~flow from~~flows provided by operating activities for the three months ended March 31, 2020 consisted primarily of net earnings of $1,567 million, increased by $190 million for non-cash charges for depreciation, amortization and pension costs, offset by $1,434 million for the non-cash gain resulting from ~~continuing operations~~the formation of the autonomous driving joint venture and $142 million related to changes in operating assets and liabilities, net of restructuring and pension contributions. Cash flows provided by operating activities for the three months ended March 31, 2019 consisted primarily of net earnings of $245 million, increased by $189 million for non-cash charges for depreciation, amortization, pension costs and extinguishment of debt, partially offset by $368 million related to changes in operating assets and liabilities, net of restructuring and pension contributions. Cash flow from operating activities from continuing operations for the three months ended March 31, 2018 consisted primarily of net earnings of $316 million, increased by $166 million for non-cash charges for depreciation, amortization and pension costs, partially offset by $299 million related to changes in operating assets and liabilities, net of restructuring and pension contributions.

Investing activities—Net cash used in investing activities totaled $207 million for the three months ended March 31, 2020, as compared to $235 million for the three months ended March 31, ~~2019, as compared to $245 million for the three months ended March 31, 2018.~~2019. The decrease in usage is primarily attributable to decreased capital expenditures of $8$30 million during the three months ended March 31, ~~2019~~2020 as compared to the three months ended March 31, ~~2018.~~2019.

Financing activities—Net cash provided by financing activities totaled $1,720 million for the three months ended March 31, 2020 and net cash used in financing activities totaled $99 million ~~and $205 million~~ for the three months ended March 31, ~~2019~~2019. Cash flows provided by financing activities for the three months ended March 31, 2020 primarily included $1,900 million in proceeds under other long-term debt agreements, as the Company drew down all remaining availability under its existing Revolving Credit Facility in response to the COVID-19 pandemic, partially offset by $57 million paid to repurchase ordinary shares and ~~2018, respectively.~~$56 million of dividend payments. Cash flows used in financing activities for the three months ended March 31, 2019 primarily included net proceeds of $643 million received from the issuance of the 2019 Senior Notes, which were utilized to redeem $650 million of the 3.15% Senior Notes, as well as $226 million paid to repurchase ordinary shares and $57 million of dividend payments, partially offset by ~~$229~~$234 million in proceeds under other short-term debt agreements. ~~Cash flows used in financing activities for the three months ended March 31, 2018 primarily included $149 million paid to repurchase ordinary shares and $59 million of dividend payments.~~

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note 10. Commitments and Contingencies to the unaudited consolidated financial statements included in Part I, Item 1 of this report is incorporated herein by reference.

Recently Issued Accounting Pronouncements

The information concerning recently issued accounting pronouncements contained in Note 2. Significant Accounting Policies to the unaudited consolidated financial statements included in Part I, Item 1 of this report is incorporated herein by reference.

Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the three months endedMarch 31, ~~2019~~2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the information concerning our exposures to market risk as stated in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. As described in the Form 10-K, we have currency exposures related to buying, selling and financing in currencies other than the local functional currencies in which we operate (“transactional exposure”). We also have currency exposures related to the translation of the financial statements of our non-U.S. subsidiaries that use the local currency as their functional currency into U.S. dollars, the Company’s reporting currency (“translational exposure”). As described in Note 14. Derivatives and Hedging Activities to the unaudited consolidated financial statements included in Part I, Item 1 of this report, to manage this risk the Company designates certain qualifying instruments as net investment hedges of certain non-U.S. subsidiaries. The effective portion of the gains or losses on instruments designated as net investment hedges are recognized within the cumulative translation adjustment component of OCI to offset changes in the value of the net investment in these foreign currency-denominated operations.

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ITEM 4. CONTROLS AND PROCEDURES

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance of achieving their objectives.

As of March 31, ~~2019~~,2020, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated, for disclosure purposes, the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved as of March 31, ~~2019~~.2020.

Changes in Internal Control over Financial Reporting

There were no material changes in the Company’s internal controls over financial reporting during the three months endedMarch 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time to time subject to various actions, claims, suits, government investigations, and other proceedings incidental to our business, including those arising out of alleged defects, breach of contracts, competition and antitrust matters, product warranties, intellectual property matters, personal injury claims and employment-related matters. For a description of risks related to various legal proceedings and claims, see Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. For a description of our outstanding material legal proceedings, see Note 10. Commitments and Contingencies to the unaudited consolidated financial statements included in this report.

ITEM 1A. RISK FACTORS

~~There~~We are including the following risk factor to reflect a material development subsequent to the risk factors presented in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”). To the extent the below risk factor adversely affects our business, financial condition, results of operations and cash flows, it may also have the effect of heightening many of the other risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report. Except for the following additional risk factor, there have been no material changes in risk factors for the Company in the period covered by this report. ~~For information regarding factors that could affect the Company’s results~~The following risk factor should be read in conjunction with our description of ~~operations, financial condition and liquidity, see the~~ risk factors ~~discussed~~ in Part I, “Item 1A. Risk Factors” in our Annual Report.

The effects of a pandemic or widespread outbreak of an illness, such as the novel coronavirus (COVID-19) pandemic, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The global spread of the COVID-19 pandemic, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, has negatively impacted the global economy, disrupted supply chains and created significant volatility in global financial markets. Although we have taken decisive actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, suspending the Company’s ~~Annual Report~~cash dividend, drawing down all remaining availability under our existing Revolving Credit Facility and actively managing costs, capital spending and working capital to further strengthen our liquidity, the ultimate impact to our business remains highly uncertain. The extent to which the COVID-19 pandemic will impact our business will depend on ~~Form 10-K~~a number of evolving factors, including the duration and spread of the pandemic, as well as the possibility of the pandemic reoccurring, actions taken by governmental authorities to restrict certain business operations and social activity, impose travel restrictions or other actions, the impact of the pandemic on economic activity and whether recessionary conditions will persist, consumer demand and vehicle production schedules, the ability of our supply chain to deliver in a timely and cost-effective manner, the ability of our employees, manufacturing and distribution facilities to operate efficiently and effectively, the continued viability and financial stability of our customers and suppliers and future access to capital, all of which remain uncertain. To date, the COVID-19 pandemic has adversely impacted our business, financial condition, results of operations and cash flows. The adverse impacts of the pandemic have included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from governmental “lock-down” orders for all non-essential activities in China, Europe and North America to-date. Our total net sales during the ~~year~~three months ended ~~December~~March 31, ~~2018.~~2020 were $3.2 billion, a decrease of 10% compared to the same period of 2019, primarily attributable to volume decreases largely resulting from the impacts of the COVID-19 pandemic. In addition, many of our largest customers have experienced vehicle production shutdowns across their global production facilities, specifically in the North American and European regions, beginning in the first quarter of 2020 and extending into the second quarter of 2020. As a result, these or any further production shutdowns, or an extended period of global and economic disruption resulting from this pandemic and its effects could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

A summary of our ordinary shares repurchased during the three months ended March 31, ~~2019,~~2020, is shown below:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (3)
January 1, 2020 to January 31, 2020	11,800	$	84.93	11,800	$	2,069
February 1, 2020 to February 29, 2020	291,954	79.44		291,954	2,046
March 1, 2020 to March 31, 2020	755,321	43.31		755,321	2,013
Total	1,059,075	53.73		1,059,075

Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (3)
January 1, 2019 to January 31, 2019 —
$ —
—
$ 2,490
February 1, 2019 to February 28, 2019 2,406,149
78.96
2,406,149
2,300
March 1, 2019 to March 31, 2019 433,930
82.92
433,930
2,264
Total 2,840,079
79.57
2,840,079



(1)			The total number of shares purchased under the plans authorized by the Board of Directors are described below.


(2)		Excluding commissions.
~~(2)~~(3)	~~Excluding commissions.~~



~~(3)~~	In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion. This program will commence following the completion of the previously announced share repurchase program of $1.5 billion, which was approved by the Board of Directors in April 2016. The timing of repurchases is dependent on price, market conditions and applicable regulatory requirements.



Jersey						98-1029562
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



~~Title of each class~~	~~Trading symbol(s)~~	~~Name of each exchange on which registered~~
~~Ordinary Shares. $0.01 par value per share~~	~~APTV~~	~~New York Stock Exchange~~


	Three Months Ended March 31,						Three Months Ended March 31,
	2019		2018				2020		2019

	(in millions)						(in millions)
Net income	$	245	$	316		Net income	$	1,567	$	245
Other comprehensive income:
Other comprehensive (loss) income:						Other comprehensive (loss) income:
Currency translation adjustments	1		61			Currency translation adjustments	(131)		1
Net change in unrecognized gain (loss) on derivative instruments, net of tax (Note 14)	19		(23		)
Net change in unrecognized (loss) gain on derivative instruments, net of tax (Note 14)						Net change in unrecognized (loss) gain on derivative instruments, net of tax (Note 14)	(153)		19
Employee benefit plans adjustment, net of tax	2		1			Employee benefit plans adjustment, net of tax	7		2
Other comprehensive income	22		39
Other comprehensive (loss) income						Other comprehensive (loss) income	(277)		22
Comprehensive income	267		355			Comprehensive income	1,290		267
Comprehensive income attributable to noncontrolling interests	6		13
Comprehensive (loss) income attributable to noncontrolling interests						Comprehensive (loss) income attributable to noncontrolling interests	(10)		6
Comprehensive income attributable to Aptiv	$	261	$	342		Comprehensive income attributable to Aptiv	$	1,300	$	261


	March 31, 2019			December 31, 2018				March 31, 2020		December 31, 2019
	(Unaudited)							(Unaudited)

	(in millions)							(in millions)
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	321		$	567		Cash and cash equivalents	$	2,055	$	412
Restricted cash	1			1			Restricted cash	32		16
Accounts receivable, net	2,736			2,487
Accounts receivable, net of allowances of $38 million and $37 million, respectively (Note 2)							Accounts receivable, net of allowances of $38 million and $37 million, respectively (Note 2)	2,308		2,569
Inventories (Note 3)	1,326			1,277			Inventories (Note 3)	1,363		1,286
Other current assets (Note 4)	435			445			Other current assets (Note 4)	432		504
Assets held for sale (Note 17)							Assets held for sale (Note 17)	—		532
Total current assets	4,819			4,777			Total current assets	6,190		5,319
Long-term assets:							Long-term assets:
Property, net	3,218			3,179			Property, net	3,249		3,309
Operating lease right-of-use assets (Note 22)	434			—
Operating lease right-of-use assets (Note 21)							Operating lease right-of-use assets (Note 21)	393		413
Investments in affiliates	102			99			Investments in affiliates	2,090		106
Intangible assets, net (Note 2)	1,334			1,380			Intangible assets, net (Note 2)	1,132		1,186
Goodwill (Note 2)	2,503			2,524			Goodwill (Note 2)	2,389		2,407
Other long-term assets (Note 4)	609			521			Other long-term assets (Note 4)	724		719

Total long-term assets	8,200			7,703			Total long-term assets	9,977		8,140
Total assets	$	13,019		$	12,480		Total assets	$	16,167	$	13,459
LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Short-term debt (Note 8)	$	542		$	306		Short-term debt (Note 8)	$	260	$	393
Accounts payable	2,340			2,334			Accounts payable	2,243		2,463

Accrued liabilities (Note 5)	1,132			1,054			Accrued liabilities (Note 5)	1,152		1,155
Liabilities held for sale (Note 17)							Liabilities held for sale (Note 17)	—		43
Total current liabilities	4,014			3,694			Total current liabilities	3,655		4,054
Long-term liabilities:							Long-term liabilities:
Long-term debt (Note 8)	3,995			4,038			Long-term debt (Note 8)	5,964		3,971
Pension benefit obligations	440			445			Pension benefit obligations	466		483
Long-term operating lease liabilities (Note 22)	350			—
Long-term operating lease liabilities (Note 21)							Long-term operating lease liabilities (Note 21)	308		329
Other long-term liabilities (Note 5)	585			633			Other long-term liabilities (Note 5)	621		611

Total long-term liabilities	5,370			5,116			Total long-term liabilities	7,359		5,394
Total liabilities	9,384			8,810			Total liabilities	11,014		9,448
Commitments and contingencies (Note 10)							Commitments and contingencies (Note 10)
Shareholders’ equity:							Shareholders’ equity:
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, none issued and outstanding	—			—			Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, none issued and outstanding	—		—
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 257,840,184 and 259,991,022 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively	3			3
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 254,853,978 and 255,288,240 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively							Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 254,853,978 and 255,288,240 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	3		3
Additional paid-in-capital	1,606			1,639			Additional paid-in-capital	1,606		1,645
Retained earnings	2,491			2,511			Retained earnings	4,353		2,890
Accumulated other comprehensive loss (Note 13)	(682		)	(694		)	Accumulated other comprehensive loss (Note 13)	(991)		(719)
Total Aptiv shareholders’ equity	3,418			3,459			Total Aptiv shareholders’ equity	4,971		3,819
Noncontrolling interest	217			211			Noncontrolling interest	182		192
Total shareholders’ equity	3,635			3,670			Total shareholders’ equity	5,153		4,011
Total liabilities and shareholders’ equity	$	13,019		$	12,480		Total liabilities and shareholders’ equity	$	16,167	$	13,459


	Three Months Ended March 31,							Three Months Ended March 31,
	2019			2018				2020		2019

	(in millions)							(in millions)
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	245		$	316		Net income	$	1,567	$	245

Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	139			125			Depreciation	144		139
Amortization	34			30			Amortization	36		34
Amortization of deferred debt issuance costs	2			2			Amortization of deferred debt issuance costs	1		2
Restructuring expense, net of cash paid	(5		)	(16		)	Restructuring expense, net of cash paid	(15)		(5)
Deferred income taxes	4			(7		)	Deferred income taxes	(18)		4
Pension and other postretirement benefit expenses	10			11			Pension and other postretirement benefit expenses	10		10
Income from equity method investments, net of dividends received	(3		)	(5		)	Income from equity method investments, net of dividends received	(2)		(3)
Loss on extinguishment of debt	6			—			Loss on extinguishment of debt	—		6

Share-based compensation	15			13			Share-based compensation	(1)		15
Gain on autonomous driving joint venture, net							Gain on autonomous driving joint venture, net	(1,434)		—
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable, net	(249		)	(206		)	Accounts receivable, net	260		(249)
Inventories	(49		)	(119		)	Inventories	(77)		(49)
Other assets	(45		)	(49		)	Other assets	12		(45)
Accounts payable	53			140			Accounts payable	(170)		53
Accrued and other long-term liabilities	(35		)	2			Accrued and other long-term liabilities	(98)		(35)
Other, net	(30		)	(40		)	Other, net	(45)		(30)
Pension contributions	(8		)	(11		)	Pension contributions	(9)		(8)
Net cash provided by operating activities from continuing operations	84			186
Net cash used in operating activities from discontinued operations	—			(31		)

Net cash provided by operating activities	84			155			Net cash provided by operating activities	161		84
Cash flows from investing activities:							Cash flows from investing activities:
Capital expenditures	(235		)	(243		)	Capital expenditures	(205)		(235)
Proceeds from sale of property / investments	3			3			Proceeds from sale of property / investments	2		3
Cost of business acquisitions, net of cash acquired	2			—
Deposit for acquisition of KUM	—			(5		)

Cost of business acquisitions and other transactions, net of cash acquired							Cost of business acquisitions and other transactions, net of cash acquired	(5)		2

Cost of technology investments	(3		)	—			Cost of technology investments	—		(3)

Settlement of derivatives	(2		)	—			Settlement of derivatives	1		(2)

Net cash used in investing activities	(235		)	(245		)	Net cash used in investing activities	(207)		(235)
Cash flows from financing activities:							Cash flows from financing activities:
Net proceeds under other short-term debt agreements	229			35
Net (repayments) proceeds under other short-term debt agreements							Net (repayments) proceeds under other short-term debt agreements	(29)		234
Net proceeds (repayments) under other long-term debt agreements							Net proceeds (repayments) under other long-term debt agreements	1,900		(5)
Repayment of senior notes	(654		)	—			Repayment of senior notes	—		(654)
Proceeds from issuance of senior notes, net of issuance costs	643			—			Proceeds from issuance of senior notes, net of issuance costs	—		643

Dividend payments of consolidated affiliates to minority shareholders							Dividend payments of consolidated affiliates to minority shareholders	(6)		—
Repurchase of ordinary shares	(226		)	(149		)	Repurchase of ordinary shares	(57)		(226)
Distribution of cash dividends	(57		)	(59		)	Distribution of cash dividends	(56)		(57)
Taxes withheld and paid on employees’ restricted share awards	(34		)	(32		)	Taxes withheld and paid on employees’ restricted share awards	(32)		(34)
Net cash used in financing activities	(99		)	(205		)
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	1,720		(99)
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	4			44			Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash	(16)		4
Decrease in cash, cash equivalents and restricted cash	(246		)	(251		)
Increase (decrease) in cash, cash equivalents and restricted cash							Increase (decrease) in cash, cash equivalents and restricted cash	1,658		(246)
Cash, cash equivalents and restricted cash at beginning of the period	568			1,597			Cash, cash equivalents and restricted cash at beginning of the period	429		568
Cash, cash equivalents and restricted cash at end of the period	$	322		$	1,346		Cash, cash equivalents and restricted cash at end of the period	$	2,087	$	322



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Ordinary Shares
	Number of Shares		Amount		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Aptiv Shareholders’ Equity			Noncontrolling Interest		Total Shareholders’ Equity

	(in millions)
Balance at January 1, 2019	260		$	3	$	1,639		$	2,511		$	(694	)	$	3,459		$	211	$	3,670
Net income	—		—		—			240			—			240			5		245
Other comprehensive income	—		—		—			—			21			21			1		22
Dividends on ordinary shares	—		—		1			(58		)	—			(57		)	—		(57		)
Taxes withheld on employees’ restricted share award vestings	—		—		(34		)	—			—			(34		)	—		(34		)
Repurchase of ordinary shares	(3	)	—		(15		)	(211		)	—			(226		)	—		(226		)
Share-based compensation	1		—		15			—			—			15			—		15
Adjustment for recently adopted accounting pronouncements (Note 2)	—		—		—			9			(9		)	—			—		—
Balance at March 31, 2019	258		$	3	$	1,606		$	2,491		$	(682	)	$	3,418		$	217	$	3,635


																							Three Months Ended March 31,
	Ordinary Shares																						Number of Ordinary Shares	Amount of Ordinary Shares		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Aptiv Shareholders’ Equity		Noncontrolling Interest		Total Shareholders’ Equity
	Number of Shares		Amount		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Aptiv Shareholders’ Equity			Noncontrolling Interest		Total Shareholders’ Equity
2020																						2020	(in millions)
Balance at January 1, 2020																						Balance at January 1, 2020	255	$	3	$	1,645	$	2,890	$	(719)	$	3,819	$	192	$	4,011
Net income (loss)																						Net income (loss)	—	—		—		1,572		—		1,572		(5)		1,567
Other comprehensive loss																						Other comprehensive loss	—	—		—		—		(272)		(272)		(5)		(277)
Dividends on ordinary shares																						Dividends on ordinary shares	—	—		1		(57)		—		(56)		—		(56)

	(in millions)
Balance at January 1, 2018	266		$	3	$	1,649		$	2,118		$	(471	)	$	3,299		$	218	$	3,517
Net income	—		—		—			307			—			307			9		316
Other comprehensive income	—		—		—			—			35			35			4		39
Taxes withheld on employees’ restricted share award vestings	—		—		(32		)	—			—			(32		)	—		(32		)	Taxes withheld on employees’ restricted share award vestings	—	—		(33)		—		—		(33)		—		(33)
Repurchase of ordinary shares	(2	)	—		(8		)	(141		)	—			(149		)	—		(149		)	Repurchase of ordinary shares	(1)	—		(6)		(51)		—		(57)		—		(57)
Share-based compensation	1		—		13			—			—			13			—		13			Share-based compensation	1	—		(1)		—		—		(1)		—		(1)
Distribution of Delphi Technologies	—		—		—			3			—			3			—		3

Adjustment for recently adopted accounting pronouncements (Note 2)																						Adjustment for recently adopted accounting pronouncements (Note 2)	—	—		—		(1)		—		(1)		—		(1)
Balance at March 31, 2020																						Balance at March 31, 2020	255	$	3	$	1,606	$	4,353	$	(991)	$	4,971	$	182	$	5,153

2019																						2019
Balance at January 1, 2019																						Balance at January 1, 2019	260	$	3	$	1,639	$	2,511	$	(694)	$	3,459	$	211	$	3,670
Net income																						Net income	—	—		—		240		—		240		5		245
Other comprehensive income																						Other comprehensive income	—	—		—		—		21		21		1		22
Dividends on ordinary shares																						Dividends on ordinary shares	—	—		1		(58)		—		(57)		—		(57)

Taxes withheld on employees’ restricted share award vestings																						Taxes withheld on employees’ restricted share award vestings	—	—		(34)		—		—		(34)		—		(34)
Repurchase of ordinary shares																						Repurchase of ordinary shares	(3)	—		(15)		(211)		—		(226)		—		(226)
Share-based compensation																						Share-based compensation	1	—		15		—		—		15		—		15

Adjustment for recently adopted accounting pronouncements	—		—		—			(9		)	—			(9		)	—		(9		)	Adjustment for recently adopted accounting pronouncements	—	—		—		9		(9)		—		—		—
Balance at March 31, 2018	265		$	3	$	1,622		$	2,278		$	(436	)	$	3,467		$	231	$	3,698
Balance at March 31, 2019																						Balance at March 31, 2019	258	$	3	$	1,606	$	2,491	$	(682)	$	3,418	$	217	$	3,635


	Warranty Obligations

	(in millions)
Accrual balance at beginning of period	$	37
Provision for estimated warranties incurred during the period	7
Changes in estimate for pre-existing warranties	1
Settlements made during the period (in cash or in kind)	(8)
Foreign currency translation and other	(1)
Accrual balance at end of period	$	36


	Employee Termination Benefits Liability		Other Exit Costs Liability		Total

	(in millions)
Accrual balance at January 1, 2020	$	134	$	—	$	134
Provision for estimated expenses incurred during the period	28		—		28
Payments made during the period	(43)		—		(43)
Foreign currency and other	(1)		—		(1)
Accrual balance at March 31, 2020	$	118	$	—	$	118



	Non-U.S. Plans						U.S. Plans

	Three Months Ended March 31,
	2019			2018			2019		2018

	(in millions)
Service cost	$	5		$	5		$	—	$	—
Interest cost	7			7			—		—
Expected return on plan assets	(5		)	(6		)	—		—
Curtailment loss	—			1			—		—
Amortization of actuarial losses	3			4			—		—
Net periodic benefit cost	$	10		$	11		$	—	$	—



	Dividend		Amount
	Per Share		(in millions)
2019:
First quarter	$	0.22	$	57
Total	$	0.22	$	57
2018:
Fourth quarter	$	0.22	$	58
Third quarter	0.22		58
Second quarter	0.22		58
First quarter	0.22		59
Total	$	0.88	$	233


~~(1)~~	Includes gains of $23 million and losses of $37 million for the three months ended March 31, 2019 and 2018, respectively, related to non-derivative net investment hedges. Refer to Note 14. Derivatives and Hedging Activities for further description of these hedges.


Reclassification Out of Accumulated Other Comprehensive Income (Loss)
Details About Accumulated Other Comprehensive Income Components	Three Months Ended March 31,							Affected Line Item in the Statements of Operations
			2020			2019

	(in millions)


Gains (losses) on derivatives:
Commodity derivatives	$	(3)		$	(2)		Cost of sales
Foreign currency derivatives	7			(1)			Cost of sales

	4			(3)			Income before income taxes
	—			—			Income tax expense
	4			(3)			Net income
	—			—			Net income attributable to noncontrolling interest
	$	4		$	(3)		Net income attributable to Aptiv

Pension and postretirement plans:

Actuarial losses	$	(4)		$	(3)		Other income (expense), net (1)

	(4)			(3)			Income before income taxes
	1			1			Income tax expense
	(3)			(2)			Net income
	—			—			Net income attributable to noncontrolling interest
	$	(3)		$	(2)		Net income attributable to Aptiv

Total reclassifications for the period	$	1		$	(5)


~~(1)~~	~~These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 9. Pension Benefits for additional details).~~



Commodity	Quantity Hedged	Unit of Measure	Notional Amount (Approximate USD Equivalent)

	(in thousands)		(in millions)
Copper	76,959	pounds	$	225


Foreign Currency	Quantity Hedged	Unit of Measure	Notional Amount (Approximate USD Equivalent)

	(in millions)
Mexican Peso	14,600	MXN	$	625
Chinese Yuan Renminbi	2,341	RMB	330
Euro	273	EUR	305
Polish Zloty	512	PLN	125


	Asset Derivatives						Liability Derivatives						Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
	Balance Sheet Location	March 31, 2020				Balance Sheet Location	March 31, 2020				March 31, 2020

	(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives	Other current assets	$	—			Accrued liabilities	$	25

Foreign currency derivatives*	Accrued liabilities	7				Accrued liabilities	52				$	(45)
Commodity derivatives	Other long-term assets	—				Other long-term liabilities	9

Foreign currency derivatives*	Other long-term liabilities	—				Other long-term liabilities	31				(31)


Total derivatives designated as hedges				$	7				$	117

Derivatives not designated:


Foreign currency derivatives*	Accrued liabilities	$	—			Accrued liabilities	$	2			(2)



Total derivatives not designated as hedges				$	—				$	2


*	Derivative instruments within this category are subject to master netting arrangements and are presented on a net basis in the consolidated balance sheets in accordance with accounting guidance related to the offsetting of amounts related to certain contracts.


Three Months Ended March 31, 2020	(Loss) Gain Recognized in OCI		(Loss) Gain Reclassified from OCI into Income

	(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives	$	(39)	$	(3)
Foreign currency derivatives	(111)		7
Derivatives designated as net investment hedges:
Foreign currency derivatives	1		—
Total	$	(149)	$	4



Three Months Ended March 31, 2019	Gain (Loss) Recognized in OCI			Loss Reclassified from OCI into Income

	(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives	$	20		$	(2	)
Foreign currency derivatives	(2		)	(1		)
Derivatives designated as net investment hedges:
Foreign currency derivatives	(2		)	—
Total	$	16		$	(3	)



	Loss Recognized in Income

	(in millions)
Derivatives not designated:

Foreign currency derivatives	$	(2)
Total	$	(2)


	Gain Recognized in Income

	(in millions)
Derivatives not designated:

Foreign currency derivatives	$	—
Total	$	—



Three Months Ended March 31, 2018	(Loss) Gain Recognized in OCI			Gain (Loss) Reclassified from OCI into Income

	(in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives	$	(17	)	$	9
Foreign currency derivatives	16			(5		)
Derivatives designated as net investment hedges:
Foreign currency derivatives	(13		)	—
Total	$	(14	)	$	4



	Contingent Consideration Liability

	(in millions)
Fair value at beginning of period	$	49
Additions	—
Payments	—
Interest accretion	1
Fair value at end of period	$	50



	Total		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3

	(in millions)
As of March 31, 2019:
Commodity derivatives	$	2	$	—	$	2	$	—
Foreign currency derivatives	7		—		7		—
Total	$	9	$	—	$	9	$	—
As of December 31, 2018:
Foreign currency derivatives	$	8	$	—	$	8	$	—
Total	$	8	$	—	$	8	$	—



Purchase price, cash consideration, net of cash acquired	$	680

Property, plant and equipment	$	31
Intangible assets	226
Other assets, net	25
Identifiable net assets acquired	282
Goodwill resulting from purchase	398
Total purchase price allocation	$	680



Purchase price, cash consideration, net of cash acquired	$	515
Debt and pension liabilities assumed	11
Total consideration, net of cash acquired	$	526

Property, plant and equipment	$	121
Intangible assets	110
Other assets, net	31
Identifiable net assets acquired	262
Goodwill resulting from purchase	264
Total purchase price allocation	$	526



Investment Name	Segment	Investment Date	Investment (in millions)
Affectiva, Inc.	Advanced Safety and User Experience	Q4 2018	$	15
Innoviz Technologies	Advanced Safety and User Experience	Q3 2017	15
LeddarTech, Inc.	Advanced Safety and User Experience	Q3 2017	10
Valens Semiconductor Ltd.	Signal and Power Solutions	Q2 2017	10
Otonomo Technologies Ltd.	Advanced Safety and User Experience	Q1 2017; Q1 2019	37
Quanergy Systems, Inc	Advanced Safety and User Experience	Q2 2015; Q1 2016	6
Other investments	Advanced Safety and User Experience	Q4 2018	1
			$	94


Metric	2020 Grant	2016 - 2019 Grants
Average return on net assets (1)	33%	50%
Cumulative net income	33%	25%

Relative total shareholder return (2)	33%	25%



Metric	2016 - 2019 Grants	2015 Grant
Average return on net assets (1)	50%	50%
Cumulative net income	25%	N/A
Cumulative earnings per share (2)	N/A	30%
Relative total shareholder return (3)	25%	20%


~~(1)~~	Average return on net assets is measured by tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year during the respective performance period.


~~(2)~~	~~Cumulative earnings per share is measured by net income attributable to Aptiv divided by the weighted average number of diluted shares outstanding for the respective three-year performance period.~~



Grant Date	RSUs Granted	Grant Date Fair Value		Time-Based Award Vesting Dates	Performance-Based Award Vesting Date

	(in millions)
February 2015	0.90	$	76	Annually on anniversary of grant date, 2016 - 2018	December 31, 2017
February 2016	0.71	48		Annually on anniversary of grant date, 2017 - 2019	December 31, 2018
February 2017	0.80	63		Annually on anniversary of grant date, 2018 - 2020	December 31, 2019
February 2018	0.63	61		Annually on anniversary of grant date, 2019 - 2021	December 31, 2020
February 2019	0.71	62		Annually on anniversary of grant date, 2020 - 2022	December 31, 2021