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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
FORM 10-Q
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             .
Commission file number: 001-35346
_____________________________________________________________________________________________________________________________________________________________________________________________________________
 APTIV PLC
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________________________________________________________________________________________________________________________
Jersey   98-1029562
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
5 Hanover Quay
Grand Canal Dock
Dublin, D02 VY79, Ireland
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code) 353-1-259-7013
(Former name, former address and former fiscal year, if changed since last report) N/A
_____________________________________________________________________________________________________________________________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
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
5.50% Mandatory Convertible Preferred Shares, Series A, $0.01 par value per share APTV PRA New York Stock Exchange
1.500% Senior Notes due 2025 APTV New York Stock Exchange
4.250% Senior Notes due 2026 APTV New York Stock Exchange
1.600% Senior Notes due 2028 APTV New York Stock Exchange
4.350% Senior Notes due 2029 APTV New York Stock Exchange
4.400% Senior Notes due 2046 APTV New York Stock Exchange
5.400% Senior Notes due 2049 APTV New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of the registrant’s ordinary shares outstanding, $0.01 par value per share as of April 30, 2021, was 270,462,749.


Table of Contents

APTIV PLC
INDEX 

    Page
Part I - Financial Information
Item 1.
3
4
5
6
7
8
37
Item 2.
38
Item 3.
56
Item 4.
57
Part II - Other Information
Item 1.
58
Item 1A.
58
Item 2.
58
Item 6.
58
59
Exhibits

2

Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APTIV PLC
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31,
  2021 2020
  (in millions, except per share amounts)
Net sales $ 4,023  $ 3,226 
Operating expenses:
Cost of sales 3,296  2,725 
Selling, general and administrative 255  252 
Amortization 37  36 
Restructuring (Note 7)
28 
Gain on autonomous driving joint venture (Note 17)
—  (1,434)
Total operating expenses 3,594  1,607 
Operating income 429  1,619 
Interest expense (40) (43)
Other income (expense), net (Note 16)
(1)
Income before income taxes and equity (loss) income 390  1,575 
Income tax expense (48) (10)
Income before equity (loss) income 342  1,565 
Equity (loss) income, net of tax (42)
Net income 300  1,567 
Net income (loss) attributable to noncontrolling interest (5)
Net income attributable to Aptiv 295  1,572 
Mandatory convertible preferred share dividends (Note 12)
(16) — 
Net income attributable to ordinary shareholders $ 279  $ 1,572 
Basic net income per share:
Basic net income per share attributable to ordinary shareholders $ 1.03  $ 6.15 
Weighted average number of basic shares outstanding 270.31  255.51 
Diluted net income per share (Note 12):
Diluted net income per share attributable to ordinary shareholders $ 1.03  $ 6.14 
Weighted average number of diluted shares outstanding 271.14  255.83 
See notes to consolidated financial statements.
3

Table of Contents

APTIV PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Three Months Ended March 31,
  2021 2020
  (in millions)
Net income $ 300  $ 1,567 
Other comprehensive (loss) income:
Currency translation adjustments (92) (131)
Net change in unrecognized loss on derivative instruments, net of tax (Note 14)
(7) (153)
Employee benefit plans adjustment, net of tax
Other comprehensive loss (92) (277)
Comprehensive income 208  1,290 
Comprehensive income (loss) attributable to noncontrolling interests
(10)
Comprehensive income attributable to Aptiv $ 204  $ 1,300 
See notes to consolidated financial statements.
4

Table of Contents

APTIV PLC
CONSOLIDATED BALANCE SHEETS
March 31, 2021 December 31,
2020
(Unaudited)
  (in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 2,830  $ 2,821 
Restricted cash 52  32 
Accounts receivable, net of allowance for doubtful accounts of $43 million and $40 million, respectively (Note 2)
2,798  2,812 
Inventories (Note 3)
1,525  1,297 
Other current assets (Note 4)
596  503 
Total current assets 7,801  7,465 
Long-term assets:
Property, net 3,164  3,301 
Operating lease right-of-use assets 359  380 
Investments in affiliates 1,962  2,011 
Intangible assets, net (Note 2)
1,033  1,091 
Goodwill (Note 2)
2,503  2,580 
Other long-term assets (Note 4)
654  694 
Total long-term assets 9,675  10,057 
Total assets $ 17,476  $ 17,522 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (Note 8)
$ 78  $ 90 
Accounts payable 2,624  2,571 
Accrued liabilities (Note 5)
1,260  1,385 
Total current liabilities 3,962  4,046 
Long-term liabilities:
Long-term debt (Note 8)
3,946  4,011 
Pension benefit obligations 504  525 
Long-term operating lease liabilities 276  300 
Other long-term liabilities (Note 5)
512  540 
Total long-term liabilities 5,238  5,376 
Total liabilities 9,200  9,422 
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized; 11,500,000 shares of 5.50% Mandatory Convertible Preferred Shares, Series A, issued and outstanding as of March 31, 2021 and December 31, 2020
—  — 
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 270,462,749 and 270,025,374 issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
Additional paid-in-capital 3,881  3,897 
Retained earnings 4,829  4,550 
Accumulated other comprehensive loss (Note 13)
(636) (545)
Total Aptiv shareholders’ equity 8,077  7,905 
Noncontrolling interest 199  195 
Total shareholders’ equity 8,276  8,100 
Total liabilities and shareholders’ equity $ 17,476  $ 17,522 
See notes to consolidated financial statements.
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Table of Contents

APTIV PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31,
  2021 2020
  (in millions)
Cash flows from operating activities:
Net income $ 300  $ 1,567 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 156  144 
Amortization 37  36 
Amortization of deferred debt issuance costs
Restructuring expense, net of cash paid (25) (15)
Deferred income taxes (18)
Pension and other postretirement benefit expenses 10  10 
Loss (income) from equity method investments, net of dividends received 42  (2)
Share-based compensation 29  (1)
Gain on autonomous driving joint venture, net —  (1,434)
Changes in operating assets and liabilities:
Accounts receivable, net 14  260 
Inventories (228) (77)
Other assets (60) 12 
Accounts payable 101  (170)
Accrued and other long-term liabilities (120) (98)
Other, net (4) (45)
Pension contributions (6) (9)
Net cash provided by operating activities 252  161 
Cash flows from investing activities:
Capital expenditures (134) (205)
Proceeds from sale of property / investments
Cost of business acquisitions and other transactions, net of cash acquired —  (5)
Settlement of derivatives (1)
Net cash used in investing activities (134) (207)
Cash flows from financing activities:
Net repayments under other short-term debt agreements (8) (29)
Net (repayments) proceeds under other long-term debt agreements (8) 1,900 
Dividend payments of consolidated affiliates to minority shareholders —  (6)
Repurchase of ordinary shares —  (57)
Distribution of mandatory convertible preferred share cash dividends (16) — 
Distribution of ordinary share cash dividends —  (56)
Taxes withheld and paid on employees’ restricted share awards (45) (32)
Net cash (used in) provided by financing activities (77) 1,720 
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash (12) (16)
Increase in cash, cash equivalents and restricted cash 29  1,658 
Cash, cash equivalents and restricted cash at beginning of the period 2,853  429 
Cash, cash equivalents and restricted cash at end of the period $ 2,882  $ 2,087 
See notes to consolidated financial statements.
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Table of Contents

APTIV PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)
Three Months Ended March 31,
Ordinary Shares Preferred Shares
  Number of shares Amount of shares Number of shares Amount of shares Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Aptiv Shareholders’ Equity Noncontrolling Interest Total Shareholders’ Equity
2021 (in millions)
Balance at January 1, 2021 270  $ 12  $ —  $ 3,897  $ 4,550  $ (545) $ 7,905  $ 195  $ 8,100 
Net income —  —  —  —  —  295  —  295  300 
Other comprehensive loss
—  —  —  —  —  —  (91) (91) (1) (92)
Mandatory convertible preferred share cumulative dividends —  —  —  —  —  (16) —  (16) —  (16)
Taxes withheld on employees’ restricted share award vestings
—  —  —  —  (45) —  —  (45) —  (45)
Share-based compensation
—  —  —  —  29  —  —  29  —  29 
Balance at March 31, 2021 270  $ 12  $ —  $ 3,881  $ 4,829  $ (636) $ 8,077  $ 199  $ 8,276 
2020
Balance at January 1, 2020 255  $ —  $ —  $ 1,645  $ 2,890  $ (719) $ 3,819  $ 192  $ 4,011 
Net income (loss) —  —  —  —  —  1,572  —  1,572  (5) 1,567 
Other comprehensive loss —  —  —  —  —  —  (272) (272) (5) (277)
Dividends on ordinary shares —  —  —  —  (57) —  (56) —  (56)
Taxes withheld on employees’ restricted share award vestings
—  —  —  —  (33) —  —  (33) —  (33)
Repurchase of ordinary shares
(1) —  —  —  (6) (51) —  (57) —  (57)
Share-based compensation
—  —  —  (1) —  —  (1) —  (1)
Adjustment for recently adopted accounting pronouncements
—  —  —  —  —  (1) —  (1) —  (1)
Balance at March 31, 2020 255  $ —  $ —  $ 1,606  $ 4,353  $ (991) $ 4,971  $ 182  $ 5,153 
See notes to consolidated financial statements.
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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 completed an initial public offering on November 22, 2011. On December 4, 2017, 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. Following the Separation, the remaining company changed its name to Aptiv PLC and New York Stock Exchange (“NYSE”) symbol to “APTV.”
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“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 2020 Annual Report on Form 10-K.
Nature of operations—Aptiv is a leading global technology and mobility architecture 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 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.
Aptiv’s equity investments totaled $113 million and $113 million as of March 31, 2021 and December 31, 2020, respectively, and are classified within other long-term assets in the consolidated balance sheets. Refer to Note 17. Acquisitions and Divestitures for additional information regarding Aptiv’s equity investments.
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 accruals and healthcare accruals. Due to the inherent uncertainty involved in making estimates, including the duration and severity of the impacts of the 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 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. Refer to Note 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 ordinary shareholders 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 and if-converted methods. The if-converted method is used to determine if the impact of conversion of the 5.50% Mandatory Convertible Preferred Shares, Series A, $0.01 par value per share (the “MCPS”) into ordinary shares is more dilutive than the MCPS dividends to net income per share. If so, the MCPS are assumed to have been converted at the
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later of the beginning of the period or the time of issuance, and the resulting ordinary shares are included in the denominator and the MCPS dividends are added back to the numerator. Unless otherwise noted, share and per share amounts included in these notes are on a diluted basis. 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, for which the book value approximates fair value.
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 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 vehicle components and services. 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, 2021 and December 31, 2020, the Company reported $2,798 million and $2,812 million, respectively, of accounts receivable, net of allowances, which includes the allowance for doubtful accounts of $43 million and $40 million, respectively. Changes in the allowance for doubtful accounts were not material for the three months ended March 31, 2021.
Intangible assets—Intangible assets were $1,033 million and $1,091 million as of March 31, 2021 and December 31, 2020, 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 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 $37 million and $36 million for the three months ended March 31, 2021 and 2020, 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 comparing the estimated fair value of each reporting unit to its
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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, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount of goodwill allocated to the reporting unit. The Company qualitatively concluded there were no goodwill impairments during the three months ended March 31, 2021 and 2020. Goodwill was $2,503 million and $2,580 million as of March 31, 2021 and December 31, 2020, 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 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.
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 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 and certain early termination lease costs are recorded when contracts are terminated. All other exit costs are expensed as incurred. Refer to Note 7. Restructuring for additional information.
Customer concentrations—As reflected in the table below, net sales to Stellantis N.V. (“Stellantis”), General Motors Company (“GM”) and Volkswagen Group (“VW”), Aptiv’s three largest customers, totaled approximately 29% and 32% of our total net sales for the three months ended March 31, 2021 and 2020, respectively.
Percentage of Total Net Sales Accounts Receivable
Three Months Ended March 31, March 31,
2021
December 31,
2020
2021 2020
  (in millions)
Stellantis (1) 12  % 13  % $ 337  $ 352 
GM % 10  % 205  200
VW % % 211  216 
(1)On January 16, 2021, Fiat Chrysler Automobiles N.V. (“FCA”) and Peugeot Citroën (“PSA”) merged to form a new, combined company (“Stellantis”). Net sales to FCA and PSA before the date of the merger are included in net sales to Stellantis in the table above for the three months ended March 31, 2021 and 2020. As of December 31, 2020, accounts receivable due from FCA and PSA are shown on a combined basis as accounts receivable due from Stellantis.
Recently adopted accounting pronouncements—Aptiv adopted Accounting Standards Update (“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 in the first quarter of 2021 on a prospective basis. 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
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contracts and purchased options to purchase securities that, upon settlement or exercise, would be accounted for under the equity method of accounting. The adoption of this guidance did not have a significant impact on Aptiv’s financial 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,
2021
December 31,
2020
  (in millions)
Productive material $ 914  $ 745 
Work-in-process 135  111 
Finished goods 476  441 
Total $ 1,525  $ 1,297 


4. ASSETS
Other current assets consisted of the following:
March 31,
2021
December 31,
2020
  (in millions)
Value added tax receivable $ 193  $ 155 
Prepaid insurance and other expenses 86  47 
Reimbursable engineering costs 175  169 
Notes receivable
Income and other taxes receivable 49  41 
Deposits to vendors
Derivative financial instruments (Note 14) 49  48 
Capitalized upfront fees (Note 20) 31  30 
Total $ 596  $ 503 
Other long-term assets consisted of the following:
March 31,
2021
December 31,
2020
  (in millions)
Deferred income taxes, net $ 167  $ 174 
Unamortized Revolving Credit Facility debt issuance costs 11 
Income and other taxes receivable 26  25 
Reimbursable engineering costs 169  186 
Value added tax receivable 27  29 
Equity investments (Note 17) 113  113 
Derivative financial instruments (Note 14) 20  22 
Capitalized upfront fees (Note 20) 74  86 
Other 49  48 
Total $ 654  $ 694 

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5. LIABILITIES
Accrued liabilities consisted of the following:
March 31,
2021
December 31,
2020
  (in millions)
Payroll-related obligations $ 286  $ 293 
Employee benefits, including current pension obligations 56  84 
Income and other taxes payable 175  177 
Warranty obligations (Note 6) 48  51 
Restructuring (Note 7) 59  82 
Customer deposits 53  62 
Derivative financial instruments (Note 14) 10 
Accrued interest 21  48 
MCPS dividends payable
Operating lease liabilities 98  100 
Other 451  477 
Total $ 1,260  $ 1,385 
Other long-term liabilities consisted of the following:
March 31,
2021
December 31,
2020
  (in millions)
Environmental (Note 10) $ $
Extended disability benefits
Warranty obligations (Note 6)
Restructuring (Note 7) 37  43 
Payroll-related obligations 11  11 
Accrued income taxes 152  156 
Deferred income taxes, net 203  207 
Derivative financial instruments (Note 14)
Other 89  105 
Total $ 512  $ 540 

6. WARRANTY OBLIGATIONS
Expected warranty costs for products sold are recognized principally 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 on factors such as past experience, production changes, industry developments and various other considerations. The estimated costs related to product recalls based on a formal campaign soliciting return of that product are accrued 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. Aptiv has recognized its best estimate for its total aggregate warranty reserves, including product recall costs, across all of its operating segments as of March 31, 2021. The Company estimates the reasonably possible amount to ultimately resolve all matters in excess of the recorded reserves as of March 31, 2021 to be zero to $10 million.
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The table below summarizes the activity in the product warranty liability for the three months ended March 31, 2021:
  Warranty Obligations
  (in millions)
Accrual balance at beginning of period $ 59 
Provision for estimated warranties incurred during the period
Changes in estimate for pre-existing warranties
Settlements made during the period (in cash or in kind) (13)
Foreign currency translation and other (1)
Accrual balance at end of period $ 56 

7. RESTRUCTURING
Aptiv’s restructuring activities are undertaken as necessary to implement management’s strategy, streamline operations, take advantage of available capacity and resources, and ultimately achieve net cost reductions. These activities generally relate to the realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, as it relates to executing Aptiv’s strategy, either in the normal course of business or pursuant to significant restructuring programs.
As part of Aptiv’s continued efforts to optimize its cost structure, it has undertaken several restructuring programs which include workforce reductions as well as plant closures. These programs are primarily focused on the continued rotation of our manufacturing footprint to best cost locations in Europe and on reducing global overhead costs. The Company recorded employee-related and other restructuring charges related to these programs totaling approximately $6 million during the three months ended March 31, 2021. None of the Company's individual restructuring programs initiated during the three months ended March 31, 2021 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. The Company expects to incur additional restructuring costs of approximately $30 million (of which approximately $15 million relates to the Signal and Power Solutions segment and approximately $15 million relates to the Advanced Safety and User Experience segment) for programs approved as of March 31, 2021, which are primarily expected to be incurred within the next twelve months.
During the three months ended March 31, 2020, Aptiv recorded employee-related and other restructuring charges totaling approximately $28 million of which $11 million was recognized for programs implemented in the European region, pursuant to the Company’s ongoing overhead cost reduction strategy.
Restructuring charges for employee separation and termination benefits are paid either over the severance period or in a lump sum in accordance with either statutory requirements or individual agreements. Aptiv incurred cash expenditures related to its restructuring programs of approximately $31 million and $43 million in the three months ended March 31, 2021 and 2020, respectively.
The following table summarizes the restructuring charges recorded for the three months ended March 31, 2021 and 2020 by operating segment:
  Three Months Ended March 31,
2021 2020
  (in millions)
Signal and Power Solutions $ (2) $ 19 
Advanced Safety and User Experience
Total $ $ 28 
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The table below summarizes the activity in the restructuring liability for the three months ended March 31, 2021:
Employee Termination Benefits Liability Other Exit Costs Liability Total
  (in millions)
Accrual balance at January 1, 2021 $ 125  $ —  $ 125 
Provision for estimated expenses incurred during the period — 
Payments made during the period (31) —  (31)
Foreign currency and other (4) —  (4)
Accrual balance at March 31, 2021 $ 96  $ —  $ 96 

8. DEBT
The following is a summary of debt outstanding, net of unamortized issuance costs and discounts, as of March 31, 2021 and December 31, 2020:
March 31,
2021
December 31,
2020
  (in millions)
4.15%, senior notes, due 2024 (net of $1 and $1 unamortized issuance costs and $1 and $1 discount, respectively) $ 698  $ 698 
1.50%, Euro-denominated senior notes, due 2025 (net of $2 and $2 unamortized issuance costs and $1 and $2 discount, respectively) 820  857 
4.25%, senior notes, due 2026 (net of $2 and $2 unamortized issuance costs, respectively) 648  648 
1.60%, Euro-denominated senior notes, due 2028 (net of $3 and $3 unamortized issuance costs, respectively) 585  612 
4.35%, senior notes, due 2029 (net of $3 and $3 unamortized issuance costs, respectively) 297  297 
4.40%, senior notes, due 2046 (net of $3 and $3 unamortized issuance costs and $1 and $1 discount, respectively) 296  296 
5.40%, senior notes, due 2049 (net of $4 and $4 unamortized issuance costs and $1 and $1 discount, respectively) 345  345 
Tranche A Term Loan, due 2022 and 2021 (net of $1 and $1 unamortized issuance costs, respectively) 312  320 
Finance leases and other 23  28 
Total debt 4,024  4,101 
Less: current portion (78) (90)
Long-term debt $ 3,946  $ 4,011 
Credit Agreement
Aptiv PLC and its wholly-owned subsidiary Aptiv Corporation entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit facilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit facility of $2 billion (the “Revolving Credit Facility”). The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on May 1, 2020 (the “May 2020 Amendment”) and June 8, 2020 (the “June 2020 Amendment”). The May 2020 Amendment extended the maturity of $1,779 million in principal amount of the Revolving Credit Facility and $298 million in principal amount of the Tranche A Term Loan from August 17, 2021 to August 17, 2022 and increased the leverage ratio maintenance covenant until July 1, 2021 (the “Covenant Relief Period”), unless Aptiv elects to terminate the Covenant Relief Period at an earlier date. Under the terms of the May 2020 Amendment, Aptiv’s consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the May 2020 Amendment) is 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 is 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 and will mature on August 17, 2021. The June 2020 Amendment amended the dividends and distributions covenant set forth in the Credit Agreement to permit the payment of dividends on convertible preferred shares in connection with the preferred equity offering as further discussed in
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Note 12. Shareholders’ Equity and Net Income Per Share. During the year ended December 31, 2020, Aptiv Global Financing Limited (“AGFL”), a wholly-owned Irish subsidiary of Aptiv PLC, executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGFL guarantees the obligations under the Credit Agreement, subject to certain exceptions set forth in the Credit Agreement.
Aptiv is obligated to make 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 upon Aptiv’s request, the agreement of the lenders participating in the increase, and the approval of the Administrative Agent and existing lenders.
As of March 31, 2021, Aptiv had no amounts outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.
Loans under the Credit Agreement bear interest, at Aptiv’s option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as 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, 2021 December 31, 2020
LIBOR plus ABR plus LIBOR plus ABR plus
Revolving Credit Facility (1) 1.10  % 0.10  % 1.10  % 0.10  %
Revolving Credit Facility (2) 1.40  % 0.40  % 1.40  % 0.40  %
Tranche A Term Loan (1) 1.25  % 0.25  % 1.25  % 0.25  %
Tranche A Term Loan (2) 1.75  % 0.75  % 1.75  % 0.75  %
(1)Applicable to principal balances under the Credit Agreement which were not extended as part of the May 2020 Amendment as described above.
(2)Applicable to principal balances under the Credit Agreement which were extended as part of the May 2020 Amendment as described above.
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, 2021, Aptiv selected the one-month LIBOR interest rate option on the Tranche A Term Loan, and the rates effective as of March 31, 2021, as detailed in the table below, were based on the Company’s current credit rating and the Applicable Rate for the Credit Agreement:
Borrowings as of
March 31, 2021 Rates effective as of
Applicable Rate (in millions) March 31, 2021
Tranche A Term Loan (1) LIBOR plus 1.25% $ 49  1.375  %
Tranche A Term Loan (2) LIBOR plus 1.75% $ 264  1.875  %
(1)Applicable to principal balances under the Credit Agreement which were not extended as part of the May 2020 Amendment as described above.
(2)Applicable to principal balances under the Credit Agreement which were extended as part of the May 2020 Amendment as described above.
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 not more than 3.5 to 1.0, which was increased to 4.5 to 1.0 until July 1, 2021 under the May 2020 Amendment. 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, 2021.
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As of March 31, 2021, 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.
Senior Unsecured Notes
On March 3, 2014, Aptiv Corporation issued $700 million in aggregate principal amount of 4.15% 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 2019 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.
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 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 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.
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 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 $7 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.
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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, 2021, the Company was in compliance with the provisions of all series of the outstanding senior notes.
The 2014 Senior Notes issued by Aptiv Corporation 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 Aptiv PLC, subject to customary release provisions (other than in 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 are fully and unconditionally guaranteed, jointly and severally, by certain of Aptiv PLC’s direct and indirect subsidiaries (including Aptiv Corporation), which are directly or indirectly 100% owned by Aptiv PLC, subject to customary release provisions.
Other Financing
Receivable factoring—Aptiv maintains a €450 million European accounts receivable factoring facility that is available on a committed basis and allows for factoring of receivables denominated in both Euros and U.S. dollars (“USD”). This facility became effective on January 1, 2021 and replaced Aptiv’s previous €300 million European accounts receivable factoring facility. 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. The program is for a term of three years, subject to Aptiv’s right to terminate at any time with three months’ notice. After expiration of the three year term, either party can terminate with three months’ notice. Borrowings denominated in Euros under the facility bear interest at the three-month Euro Interbank Offered Rate (“EURIBOR”) plus 0.50% and USD borrowings bear interest at two-month LIBOR plus 0.50%, with borrowings under either denomination carrying a minimum interest rate of 0.20%. As of March 31, 2021, Aptiv had no amounts drawn on the new European accounts receivable factoring facility and as of December 31, 2020, Aptiv had no amounts outstanding on the previous European accounts receivable factoring facility.
Finance leases and other—As of March 31, 2021 and December 31, 2020, approximately $23 million and $28 million, respectively, of other debt primarily issued by certain non-U.S. subsidiaries and finance lease obligations were outstanding.
Interest—Cash paid for interest related to debt outstanding totaled $63 million and $66 million for the three months ended March 31, 2021 and 2020, respectively.
Letter of credit facilities—In addition to the letters of credit issued under the Credit Agreement, Aptiv had approximately $3 million and $2 million outstanding through other letter of credit facilities as of March 31, 2021 and December 31, 2020, respectively, primarily to support arrangements and other obligations at certain of its subsidiaries.

9. PENSION BENEFITS
Certain of Aptiv’s non-U.S. subsidiaries sponsor defined benefit pension plans, which generally provide benefits based on negotiated amounts for each year of service. Aptiv’s primary non-U.S. plans are located in France, Germany, Mexico, Portugal and the U.K. The U.K. and certain Mexican plans are funded. In addition, Aptiv has defined benefit plans in South Korea, Turkey and Italy for which amounts are payable to employees immediately upon separation. The obligations for these plans are recorded over the requisite service period.
Aptiv sponsors a Supplemental Executive Retirement Program (“SERP”) for those employees who were U.S. executives of the former Delphi Corporation prior to September 30, 2008 and were still U.S. executives of the Company on October 7, 2009, the effective date of the program. This program is unfunded. Executives receive benefits over 5 years after an involuntary or voluntary separation from Aptiv. The SERP is closed to new members.
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The amounts shown below reflect the defined benefit pension expense for the three months ended March 31, 2021 and 2020:
  Non-U.S. Plans U.S. Plans
  Three Months Ended March 31,
  2021 2020 2021 2020
  (in millions)
Service cost $ $ $ —  $ — 
Interest cost —  — 
Expected return on plan assets (5) (5) —  — 
Amortization of actuarial losses —  — 
Net periodic benefit cost $ 10  $ 10  $ —  $ — 
Other postretirement benefit obligations were approximately $1 million and $1 million at March 31, 2021 and December 31, 2020, respectively.

10. COMMITMENTS AND CONTINGENCIES
Ordinary Business Litigation
Aptiv is from time to time subject to various legal actions and claims incidental to its business, including those arising out of alleged defects, alleged breaches of contracts, product warranties, intellectual property matters, and employment-related matters. It is the opinion of Aptiv that the outcome of such matters will not have a material adverse impact on the consolidated financial position, results of operations, or cash flows of Aptiv. With respect to warranty matters, although Aptiv cannot ensure that the future costs of warranty claims by customers will not be material, Aptiv believes its established reserves are adequate to cover potential warranty settlements.
Matters Related to Global Supply Chain Disruptions
Due to various factors, there are currently global supply chain disruptions, including a worldwide semiconductor supply shortage. The semiconductor supply shortage, due in part to increased demand across multiple industries, is impacting production in automotive and other industries. We anticipate these supply chain disruptions will persist throughout much of the remainder of 2021. We, along with most automotive component supply companies that use semiconductors, have been unable to fully meet the vehicle production demands of OEMs because of events which are outside our control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, recent fires in our suppliers’ facilities, unprecedented weather events in the southwestern United States, and other extraordinary events. Although we are working closely with suppliers and customers to minimize any potential adverse impacts of these events, some of our customers have indicated that they expect us to bear at least some responsibility for their lost production. While no assurances can be made as to the ultimate outcome of these customer expectations or any other future claims, we do not currently believe a loss is probable, and accordingly, no reserve has been made as of March 31, 2021. We will continue to actively monitor all direct and indirect potential impacts of these supply chain disruptions, and will seek to aggressively mitigate and minimize their impact on our business.
Brazil Matters
Aptiv conducts business operations in Brazil that are subject to the Brazilian federal labor, social security, environmental, tax and customs laws, as well as a variety of state and local laws. While Aptiv believes it complies with such laws, they are complex, subject to varying interpretations, and the Company is often engaged in litigation with government agencies regarding the application of these laws to particular circumstances. As of March 31, 2021, the majority of claims asserted against Aptiv in Brazil relate to such litigation. The remaining claims in Brazil relate to commercial and labor litigation with private parties. As of March 31, 2021, claims totaling approximately $95 million (using March 31, 2021 foreign currency rates) have been asserted against Aptiv in Brazil. As of March 31, 2021, the Company maintains accruals for these asserted claims of $20 million (using March 31, 2021 foreign currency rates). The amounts accrued represent claims that are deemed probable of loss and are reasonably estimable based on the Company’s analyses and assessment of the asserted claims and prior experience with similar matters. While the Company believes its accruals are adequate, the final amounts required to resolve these matters could differ materially from the Company’s recorded estimates and Aptiv’s results of operations could be materially affected. The Company estimates the reasonably possible loss in excess of the amounts accrued related to these claims to be zero to $75 million.
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Environmental Matters
Aptiv is subject to the requirements of U.S. federal, state, local and non-U.S. environmental and safety and health laws and regulations. As of March 31, 2021 and December 31, 2020, the undiscounted reserve for environmental investigation and remediation was approximately $4 million (which was recorded in other long-term liabilities) and $4 million (which was recorded in other long-term liabilities), respectively. Aptiv cannot ensure that environmental requirements will not change or become more stringent over time or that its eventual environmental remediation costs and liabilities will not exceed the amount of its current reserves. In the event that such liabilities were to significantly exceed the amounts recorded, Aptiv’s results of operations could be materially affected. At March 31, 2021, the difference between the recorded liabilities and the reasonably possible range of potential loss was not material.

11. INCOME TAXES
At the end of each interim period, the Company makes its best estimate of the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to unusual or infrequent items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or income tax contingencies is recognized in the interim period in which the change occurs.
The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in respective jurisdictions, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. The ongoing volatile global economic conditions resulting from the COVID-19 pandemic, the future direct and indirect impacts of which are difficult to predict, may cause fluctuations in our expected pre-tax income (or loss) for the year, which could create volatility in our annual expected effective income tax rate. Jurisdictions with a projected loss for the year or a year-to-date loss for which no tax benefit or expense can be recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the composition and timing of actual earnings compared to annual projections. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or as our tax environment changes. To the extent that the expected annual effective income tax rate changes, the effect of the change on prior interim periods is included in the income tax provision in the period in which the change in estimate occurs.
The Company’s income tax expense and effective tax rate for the three months ended March 31, 2021 and 2020 were as follows:
  Three Months Ended March 31,
  2021 2020
  (dollars in millions)
Income tax expense $ 48  $ 10 
Effective tax rate 12  % %
The Company’s tax rate is affected by the fact that its parent entity is an Irish resident taxpayer, the tax rates in Ireland and other jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. The Company’s effective tax rate is also impacted by the receipt of certain tax incentives and holidays that reduce the effective tax rate for certain subsidiaries below the statutory rate.
The Company’s effective tax rate for the three months ended March 31, 2021 also includes net discrete tax benefits of $1 million primarily related to changes in accruals for unremitted earnings and provision to return adjustments. The 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.
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Aptiv PLC is an Irish resident taxpayer and not a domestic corporation for U.S. federal income tax purposes. As such, it is not subject to U.S. tax on remitted foreign earnings and, as a result of its capital structure, is also generally not subject to Irish tax on the repatriation of foreign earnings.
Cash paid or withheld for income taxes was $52 million and $48 million for the three months ended March 31, 2021 and 2020, respectively.

12. SHAREHOLDERS’ EQUITY AND NET INCOME PER SHARE
2020 Public Equity Offering
In June 2020, the Company completed the underwritten public offering of approximately 15.1 million ordinary shares at a price of $75.91 per share (the “Ordinary Share Offering”), resulting in net proceeds of approximately $1,115 million, after deducting expenses and the underwriters’ discount of $35 million. Simultaneously, the Company completed the underwritten public offering of 11.5 million 5.50% Mandatory Convertible Preferred Shares, Series A, $0.01 par value per share (the “MCPS”) with a liquidation preference of $100 per share (the “MCPS Offering”), resulting in net proceeds of approximately $1,115 million, after deducting expenses and the underwriters’ discount of $35 million. The Company intends to use the net proceeds from the Ordinary Share Offering and MCPS Offering for general corporate purposes, which may include funding potential future investments (including acquisitions), capital expenditures, working capital, repayment of outstanding indebtedness and the satisfaction of other obligations.
Each share of MCPS will mandatorily convert on the mandatory conversion date of June 15, 2023, into between 1.0754 and 1.3173 shares of the Company’s ordinary shares, subject to customary anti-dilution adjustments, and further adjustment if there are any accumulated and unpaid MCPS dividends at the conversion date. The number of the Company’s ordinary shares issuable upon conversion will be determined based on the volume-weighted average price per share of the Company’s ordinary shares over the 20 consecutive trading day period beginning on, and including the 21st scheduled trading day immediately before June 15, 2023. Subject to certain exceptions, at any time prior to June 15, 2023, holders of the MCPS may elect to convert each share into 1.0754 ordinary shares, subject to further anti-dilution adjustments. In the event of a fundamental change, the MCPS will convert at the fundamental change rates specified in the statement of rights, and the holders of the MCPS would be entitled to a fundamental change make-whole dividend.
Holders of the MCPS will be entitled to receive, when and if declared by the Company’s Board of Directors, cumulative dividends at the annual rate of 5.50% of the liquidation preference of $100 per share (equivalent to $5.50 annually per share), payable in cash or, subject to certain limitations, by delivery of the Company’s ordinary shares or any combination of cash and the Company’s ordinary shares, at the Company’s election. If declared, dividends on the MCPS will be payable quarterly on March 15, June 15, September 15 and December 15 of each year (commencing on September 15, 2020 to, and including June 15, 2023), to the holders of record of the MCPS as they appear on the Company’s share register at the close of business on the immediately preceding March 1, June 1, September 1 or December 1, respectively.
Net Income Per Share
Basic net income per share is computed by dividing net income attributable to ordinary shareholders 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 and if-converted methods. The if-converted method is used to determine if the impact of the conversion of the MCPS into ordinary shares is more dilutive than the MCPS dividends to net income per share. If so, the MCPS are assumed to have been converted at the later of the beginning of the period or the time of issuance, and the resulting ordinary shares are included in the denominator and the MCPS dividends are added back to the numerator. Unless otherwise noted, share and per share amounts included in these notes are on a diluted basis. For the three months ended March 31, 2021, the impact of the MCPS calculated under the if-converted method was anti-dilutive, and as such 12.37 million ordinary shares underlying the MCPS were excluded from the diluted net income per share calculation. For all periods presented, the calculation of net income per share also contemplates the dilutive impacts, if any, of the Company’s share-based compensation plans. Refer to Note 18. Share-Based Compensation for additional information.
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Weighted Average Shares
The following table illustrates net income per share attributable to ordinary shareholders and the weighted average shares outstanding used in calculating basic and diluted income per share:
Three Months Ended March 31,
2021 2020
  (in millions, except per share data)
Numerator:
Net income attributable to ordinary shareholders $ 279  $ 1,572 
Denominator:
Weighted average ordinary shares outstanding, basic 270.31  255.51 
Dilutive shares related to restricted stock units (“RSUs”) 0.83  0.32 
Weighted average ordinary shares outstanding, including dilutive shares 271.14  255.83 
Net income per share attributable to ordinary shareholders:
Basic $ 1.03  $ 6.15 
Diluted $ 1.03  $ 6.14 
Share Repurchase Programs
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.
There were no shares repurchased during the three months ended March 31, 2021. A summary of the ordinary shares repurchased during the three months ended March 31, 2020 is as follows:
Total number of shares repurchased 1,059,075 
Average price paid per share $ 53.73 
Total (in millions) $ 57 
As of March 31, 2021, approximately $13 million of share repurchases remained available under the April 2016 share repurchase program, which is in addition to the share repurchase program of up to $2.0 billion that was previously announced in January 2019. This program, which will commence following the completion of the April 2016 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. 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.
Although both the April 2016 and the additional share repurchase program remain authorized, the Company is restricted from executing further share repurchases under the terms of the May 2020 Amendment to the Credit Agreement for as long as the Covenant Relief Period remains in effect, as further described in Note 8. Debt. Furthermore, 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.
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Dividends
The Company has declared and paid cash dividends per ordinary and preferred share during the periods presented as follows:
Ordinary Shares Preferred Shares
Dividend Amount Dividend Amount
 Per Share (in millions) Per Share (in millions)
2021:
First quarter $ —  $ —  $ 1.38  $ 16 
Total $ —  $ —  $ 1.38  $ 16 
2020:
Fourth quarter $ —  $ —  $ 1.38  $ 16 
Third quarter —  —  1.42  16 
Second quarter —  —  —  — 
First quarter 0.22  56  —  — 
Total $ 0.22  $ 56  $ 2.80  $ 32 
Under the terms of the May 2020 Amendment to the Credit Agreement, the Company is restricted from the payment of further ordinary share cash dividends for as long as the Covenant Relief Period remains in effect, as further described in Note 8. Debt. Additionally, the Company does not anticipate making further ordinary share cash dividend payments, until such time as the global economic uncertainties and business impacts resulting from the COVID-19 pandemic have abated.

13. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The changes in accumulated other comprehensive income (loss) attributable to Aptiv (net of tax) for the three months ended March 31, 2021 and 2020 are shown below:
Three Months Ended March 31,
2021 2020
(in millions)
Foreign currency translation adjustments:
Balance at beginning of period
$ (445) $ (597)
Aggregate adjustment for the period (1)
(91) (126)
Balance at end of period
(536) (723)
Gains (losses) on derivatives:
Balance at beginning of period
40  13 
Other comprehensive income (loss) before reclassifications (net tax effect of $0 and $0) 12  (149)
Reclassification to income (net tax effect of $0 and $0) (19) (4)
Balance at end of period
33  (140)
Pension and postretirement plans:
Balance at beginning of period
(140) (135)
Other comprehensive income before reclassifications (net tax effect of $2 and $1)
Reclassification to income (net tax effect of $1 and $1)
Balance at end of period
(133) (128)
Accumulated other comprehensive loss, end of period $ (636) $ (991)
(1)Includes gains of $63 million and $6 million for the three months ended March 31, 2021 and 2020, respectively, related to non-derivative net investment hedges. Refer to Note 14. Derivatives and Hedging Activities for further description of these hedges.
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Reclassifications from accumulated other comprehensive income (loss) to income for the three months ended March 31, 2021 and 2020 were as follows:
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
2021 2020
(in millions)
Gains (losses) on derivatives:
Commodity derivatives $ 19  $ (3) Cost of sales
Foreign currency derivatives —  Cost of sales
19  Income before income taxes
—  —  Income tax expense
19  Net income
—  —  Net income attributable to noncontrolling interest
$ 19  $ Net income attributable to Aptiv
Pension and postretirement plans:
Actuarial losses $ (5) $ (4) Other income (expense), net (1)
(5) (4) Income before income taxes
Income tax expense
(4) (3) Net income
—  —  Net income attributable to noncontrolling interest
$ (4) $ (3) Net income attributable to Aptiv
Total reclassifications for the period $ 15  $
(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).

14. DERIVATIVES AND HEDGING ACTIVITIES
Cash Flow Hedges
Aptiv is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices and changes in interest rates, which may result in cash flow risks. To manage the volatility relating to these exposures, Aptiv aggregates the exposures on a consolidated basis to take advantage of natural offsets. For exposures that are not offset within its operations, Aptiv enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes, and designation of derivative instruments is performed on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the fair value or cash flows of the underlying exposures being hedged. Aptiv assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its documented policy.
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As of March 31, 2021, the Company had the following outstanding notional amounts related to commodity and foreign currency forward and option contracts designated as cash flow hedges that were entered into to hedge forecasted exposures:
Commodity Quantity Hedged Unit of Measure Notional Amount
(Approximate USD Equivalent)
  (in thousands) (in millions)
Copper 68,897  pounds $ 280 

Foreign Currency Quantity Hedged Unit of Measure Notional Amount
(Approximate USD Equivalent)
  (in millions)
Mexican Peso 15,148  MXN $ 735 
Chinese Yuan Renminbi 2,206  RMB 335 
Euro 178  EUR 210 
Polish Zloty 508  PLN 130 
Hungarian Forint 4,714  HUF 15 
As of March 31, 2021, Aptiv has entered into derivative instruments to hedge cash flows extending out to March 2023.
Gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated OCI, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated OCI will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. Net gains on cash flow hedges included in accumulated OCI as of March 31, 2021 were $55 million (approximately $55 million, net of tax). Of this total, approximately $41 million of gains are expected to be included in cost of sales within the next 12 months and approximately $14 million of gains are expected to be included in cost of sales in subsequent periods. Cash flow hedges are discontinued when Aptiv determines it is no longer probable that the originally forecasted transactions will occur. Cash flows from derivatives used to manage commodity and foreign exchange risks designated as cash flow hedges are classified as operating activities within the consolidated statements of cash flows.
Net Investment Hedges
The Company is also exposed to the risk that adverse changes in foreign currency exchange rates could impact its net investment in non-U.S. subsidiaries. To manage this risk, the Company designates certain qualifying derivative and non-derivative instruments, including foreign currency forward contracts and foreign currency-denominated debt, as net investment hedges of certain non-U.S. subsidiaries. The gains or losses on instruments designated as net investment hedges are recognized within OCI to offset changes in the value of the net investment in these foreign currency-denominated operations. Gains and losses reported in accumulated OCI are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. Cash flows from derivatives designated as net investment hedges are classified as investing activities within the consolidated statements of cash flows.
The Company has entered into a series of forward contracts, each of which were designated as net investment hedges of the foreign currency exposure of the Company’s investments in certain Chinese Yuan Renminbi (“RMB”)-denominated subsidiaries. During the three months ended March 31, 2021 and 2020, the Company paid $1 million and received $1 million, respectively, at settlement related to this series of forward contracts which matured during the period. In March 2021, the Company entered into a forward contract with a notional amount of 2.3 billion RMB (approximately $350 million, using March 31, 2021 foreign currency rates), which matures in June 2021. Refer to the tables below for details of the fair value recorded in the consolidated balance sheets and the effects recorded in the consolidated statements of operations and consolidated statements of comprehensive income related to these derivative instruments.
The Company has designated the €700 million 2015 Euro-denominated Senior Notes and the €500 million 2016 Euro-denominated Senior Notes, as more fully described in Note 8. Debt, as net investment hedges of the foreign currency exposure of its investments in certain Euro-denominated subsidiaries. Due to changes in the value of the Euro-denominated debt instruments designated as net investment hedges, during the three months ended March 31, 2021 and 2020, $63 million and $6 million of gains, respectively, were recognized within the cumulative translation adjustment component of OCI. Included in accumulated OCI related to these net investment hedges were cumulative losses of $90 million and $153 million as of March 31, 2021 and December 31, 2020, respectively.
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Derivatives Not Designated as Hedges
In certain occasions the Company enters into certain foreign currency and commodity contracts that are not designated as hedges. When hedge accounting is not applied to derivative contracts, gains and losses are recorded to other income (expense), net and cost of sales in the consolidated statements of operations.
Fair Value of Derivative Instruments in the Balance Sheet
The fair value of derivative financial instruments recorded in the consolidated balance sheets as of March 31, 2021 and December 31, 2020 are as follows:
  Asset Derivatives Liability Derivatives Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
  Balance Sheet Location March 31,
2021
Balance Sheet Location March 31,
2021
March 31,
2021
  (in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives Other current assets $ 38  Accrued liabilities $ — 
Foreign currency derivatives* Other current assets 10  Other current assets $
Foreign currency derivatives* Accrued liabilities Accrued liabilities 17  (10)
Commodity derivatives Other long-term assets 15  Other long-term liabilities — 
Foreign currency derivatives* Other long-term assets Other long-term assets
Foreign currency derivatives* Other long-term liabilities —  Other long-term liabilities (3)
Total derivatives designated as hedges $ 77  $ 25 
Derivatives not designated:
Commodity derivatives Other current assets $ Accrued liabilities $ — 
Total derivatives not designated as hedges $ $ — 

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  Asset Derivatives Liability Derivatives Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
  Balance Sheet Location December 31,
2020
Balance Sheet Location December 31,
2020
December 31,
2020
  (in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives Other current assets $ 26  Accrued liabilities $ — 
Foreign currency derivatives* Other current assets 24  Other current assets $ 19 
Foreign currency derivatives* Accrued liabilities Accrued liabilities 13  (6)
Commodity derivatives Other long-term assets Other long-term liabilities — 
Foreign currency derivatives* Other long-term assets 17  Other long-term assets 13 
Foreign currency derivatives* Other long-term liabilities —  Other long-term liabilities (1)
Derivatives designated as net investment hedges:
Foreign currency derivatives Other current assets —  Accrued liabilities
Total derivatives designated as hedges $ 83  $ 25 
Derivatives not designated:
Foreign currency derivatives* Other current assets $ Other current assets $ — 
Total derivatives not designated as hedges $ $ — 
*    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.
The fair value of Aptiv’s derivative financial instruments was in a net asset position as of March 31, 2021 and December 31, 2020.
Effect of Derivatives on the Statements of Operations and Statements of Comprehensive Income
The pre-tax effect of derivative financial instruments in the consolidated statements of operations and consolidated statements of comprehensive income for the three months ended March 31, 2021 and 2020 is as follows:

Three Months Ended March 31, 2021 Gain (Loss) Recognized in OCI Gain Reclassified from OCI into Income
  (in millions)
Derivatives designated as cash flow hedges:
Commodity derivatives $ 34  $ 19 
Foreign currency derivatives (23) — 
Derivatives designated as net investment hedges:
Foreign currency derivatives — 
Total $ 12  $ 19 

  Gain (Loss) Recognized in Income
(in millions)
Derivatives not designated:
Commodity derivatives $
Foreign currency derivatives (2)
Total $ (1)
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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)
Derivatives designated as net investment hedges:
Foreign currency derivatives — 
Total $ (149) $

  Loss Recognized in Income
(in millions)
Derivatives not designated:
Foreign currency derivatives $ (2)
Total $ (2)
The gain or loss recognized in income for designated and non-designated derivative instruments was recorded to cost of sales and other income (expense), net in the consolidated statements of operations for the three months ended March 31, 2021 and 2020, respectively.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Measurements on a Recurring Basis
Derivative instruments—All derivative instruments are required to be reported on the balance sheet at fair value unless the transactions qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. Aptiv’s derivative exposures are with counterparties with long-term investment grade credit ratings. Aptiv estimates the fair value of its derivative contracts using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of foreign currency and commodity derivative instruments are determined using exchange traded prices and rates. Aptiv also considers the risk of non-performance in the estimation of fair value, and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. The non-performance risk adjustment reflects the credit default spread (“CDS”) applied to the net commodity by counterparty and foreign currency exposures by counterparty. When Aptiv is in a net derivative asset position, the counterparty CDS rates are applied to the net derivative asset position. When Aptiv is in a net derivative liability position, estimates of peer companies’ CDS rates are applied to the net derivative liability position.
In certain instances where market data is not available, Aptiv uses management judgment to develop assumptions that are used to determine fair value. This could include situations of market illiquidity for a particular currency or commodity or where observable market data may be limited. In those situations, Aptiv generally surveys investment banks and/or brokers and utilizes the surveyed prices and rates in estimating fair value.
As of March 31, 2021 and December 31, 2020, Aptiv was in a net derivative asset position of $56 million and $61 million, respectively, and no significant adjustments were recorded for nonperformance risk based on the application of peer companies’ CDS rates, evaluation of our own nonperformance risk and because Aptiv’s exposures were to counterparties with investment grade credit ratings. Refer to Note 14. Derivatives and Hedging Activities for further information regarding derivatives.
Contingent consideration—The liability for contingent consideration is estimated as of the date of the acquisition and is recorded as part of the purchase price, and is subsequently re-measured to fair value at each reporting date, based on a probability-weighted analysis using a rate that reflects the uncertainty surrounding the expected outcomes, which the Company believes is appropriate and representative of market participant assumptions. The measurement of the liability for contingent consideration is based on significant inputs that are not observable in the market, and is therefore classified as a Level 3 measurement in accordance with ASC Topic 820-10-35. Examples of utilized unobservable inputs are estimated future earnings or milestone achievements of the acquired businesses and applicable discount rates. The estimate of the liability may fluctuate if there are changes in the actual or forecasted inputs utilized or in the discount rates used to determine the present value of
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contingent future cash flows. The Company regularly reviews these assumptions and makes adjustments to the fair value measurements as required by facts and circumstances. As of March 31, 2021, the Company has determined that all earn-out provisions have been achieved under existing agreements.
As of March 31, 2021 and December 31, 2020, the liability for contingent consideration was $52 million and $52 million, (which was classified within other current liabilities as of both periods presented), respectively, representing the maximum required amounts to be paid under existing agreements. Adjustments to this liability for interest accretion are recognized in interest expense, and any other changes in the fair value of this liability are recognized within other income (expense), net in the consolidated statements of operations.
There were no changes in the contingent consideration liability classified as a Level 3 measurement during the three months ended March 31, 2021.
In accordance with existing agreements, the Company was required to deposit $52 million related to the contingent consideration liability into an escrow account (of which $16 million was deposited in the second quarter of 2019, $16 million was deposited in the first quarter of 2020 and $20 million was deposited in the first quarter of 2021). Accordingly, this amount is classified as restricted cash in the consolidated balance sheets. All amounts are anticipated to be released from the escrow account in the fourth quarter of 2021.
As of March 31, 2021 and December 31, 2020, Aptiv had the following assets measured at fair value on a recurring basis:
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, 2021:
Commodity derivatives $ 57  $ —  $ 57  $ — 
Foreign currency derivatives 12  —  12  — 
Total $ 69  $ —  $ 69  $ — 
As of December 31, 2020:
Commodity derivatives $ 35  $ —  $ 35  $ — 
Foreign currency derivatives 35  —  35  — 
Total $ 70  $ —  $ 70  $ — 
As of March 31, 2021 and December 31, 2020, Aptiv had the following liabilities measured at fair value on a recurring basis:
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, 2021:
Foreign currency derivatives $ 13  $ —  $ 13  $ — 
Contingent consideration 52  —  —  52 
Total $ 65  $ —  $ 13  $ 52 
As of December 31, 2020:
Foreign currency derivatives $ $ —  $ $ — 
Contingent consideration 52  —  —  52 
Total $ 61  $ —  $ $ 52 
Non-derivative financial instruments—Aptiv’s non-derivative financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable, as well as debt, which consists of its accounts receivable factoring arrangement, finance leases and other debt issued by Aptiv’s non-U.S. subsidiaries, the Revolving Credit Facility, the Tranche A Term Loan and all series of outstanding senior notes. The fair value of debt is based on quoted market prices for instruments with public market data or significant other observable inputs for instruments without a quoted public market price (Level 2). As of March 31, 2021 and December 31, 2020, total debt was recorded at $4,024 million and $4,101 million, respectively, and had estimated fair values of $4,411 million and $4,490 million, respectively. For all other financial instruments recorded at March 31, 2021 and December 31, 2020, fair value approximates book value.
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Fair Value Measurements on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, Aptiv also has items in its balance sheet that are measured at fair value on a nonrecurring basis. As these items are not measured at fair value on a recurring basis, they are not included in the tables above. Nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets, equity investments, intangible assets, asset retirement obligations, share-based compensation and liabilities for exit or disposal activities measured at fair value upon initial recognition. During the three months ended March 31, 2021 and 2020, Aptiv recorded no non-cash asset impairment charges. Fair value of long-lived and intangible assets is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved and a review of appraisals or other market indicators and management estimates. As such, Aptiv has determined that the fair value measurements of long-lived and intangible assets fall in Level 3 of the fair value hierarchy.

16. OTHER INCOME, NET
Other income (expense), net included:
  Three Months Ended March 31,
2021 2020
  (in millions)
Interest income $ $
Components of net periodic benefit cost other than service cost (Note 9) (5) (5)
Other, net
Other income (expense), net $ $ (1)

17. ACQUISITIONS AND DIVESTITURES
Acquisition of Dynawave Inc.
On August 4, 2020, Aptiv acquired 100% of the equity interests of Dynawave Inc. (“Dynawave”), a specialized manufacturer of custom-engineered interconnect solutions for a wide range of industries, for total consideration of $22 million. The results of the operations of Dynawave are reported within the Signal and Power Solutions segment from the date of the acquisition. The Company acquired Dynawave utilizing cash on hand.
The acquisition was accounted for as a business combination, with the total purchase price allocated on a preliminary basis using information available, in the third quarter of 2020. The preliminary purchase price and related allocation to the acquired net assets of Dynawave based on their estimated fair values is shown below (in millions):
Assets acquired and liabilities assumed
Purchase price, cash consideration, net of cash acquired $ 22 
Intangible assets $
Other assets, net
Identifiable net assets acquired 12 
Goodwill resulting from purchase 10 
Total purchase price allocation $ 22 
Intangible assets primarily include amounts recognized for the fair value of customer-based assets, which will be amortized over their estimated useful lives of approximately 9 years. The estimated fair value of these assets was based on third-party valuations and management’s estimates, generally utilizing income and market approaches. Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce of Dynawave, and is not expected to be deductible for tax purposes.
The purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed, including, but not limited to, contingent liabilities, revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangible assets, and certain tax attributes.
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The pro forma effects of this acquisition would not materially impact the Company’s reported results for any period presented, and as a result no pro forma financial statements were presented.
Acquisition of Ulti-Mate Connector, Inc.
On April 30, 2021, Aptiv acquired 100% of the equity interests of Ulti-Mate Connector, Inc. ("Ulti-Mate"), a manufacturer of miniature and micro-miniature connectors and cable assemblies, for approximately $45 million, subject to customary post-closing adjustments, which will primarily be allocated to goodwill and other intangible assets. The acquisition will be accounted for as a business combination, with the operating results of Ulti-Mate included within the Company's Signal and Power Solutions segment from the date of acquisition. The Company acquired Ulti-Mate utilizing cash on hand.
Technology Investments
The Company has made technology investments in certain non-consolidated affiliates for ownership interests of less than 20%, as described in Note 2. Significant Accounting Policies. 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 same issuer.
The following is a summary of technology investments, which are classified within other long-term assets in the consolidated balance sheets, as of March 31, 2021 and December 31, 2020:
Investment Name Segment Investment Date March 31, 2021 December 31, 2020
(in millions)
Krono-Safe, SAS Advanced Safety and User Experience Q4 2019 $ $
Affectiva, Inc. Advanced Safety and User Experience Q4 2018 15  15 
Innoviz Technologies Advanced Safety and User Experience Q3 2017 25  25 
LeddarTech, Inc. Advanced Safety and User Experience Q3 2017 10  10 
Valens Semiconductor Ltd. Signal and Power Solutions Q2 2017 10  10 
Otonomo Technologies Ltd. Advanced Safety and User Experience Q1 2017; Q1 2019 37  37 
Quanergy Systems, Inc Advanced Safety and User Experience Q2 2015; Q1 2016
Other investments Advanced Safety and User Experience Various
Total $ 113  $ 113 
In April 2021, Innoviz Technologies (“Innoviz”) merged with a publicly traded Special Purpose Acquisition Company (“SPAC”) and shares of Innoviz began trading on the Nasdaq Capital Market under the symbol INVZ. As part of the SPAC merger, our preferred shares in Innoviz were converted into Innoviz ordinary shares. Following this conversion, the Company will measure the fair value of the Innoviz investment on a recurring basis, with changes in fair value recorded to other income (expense), net.
There were no other material transactions, events or changes in circumstances requiring an impairment or an observable price change adjustment to these investments. The Company continues to monitor these investments to identify potential transactions which may indicate an impairment or an observable price change requiring an adjustment to its carrying value.
Autonomous Driving Joint Venture
On March 26, 2020, Aptiv completed the transaction with Hyundai Motor Group (“Hyundai”) to form a joint venture focused on the design, development and commercialization of autonomous driving technologies. The joint venture operates globally under the Motional brand name. 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 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 entity. As a result, subsequent to the closing of the transaction, the 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 billion within investments in affiliates in the consolidated balance sheet, based on the preliminary fair value of its investment in the
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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 entity. The estimated fair value of Aptiv’s ownership interest in the joint venture was determined primarily based on third-party valuations and management estimates, generally utilizing income and market approaches. Determining the fair value of the joint venture and the underlying assets requires the use of management’s judgment and involves significant estimates and assumptions with respect to the timing and amount of future cash flows, market rate assumptions, projected growth rates and margins, and appropriate discount rates, among other items. The estimated fair value was determined on a preliminary basis using information available in the first quarter of 2020 and was finalized in the first quarter of 2021. 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 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’s investment in the joint venture is accounted for using the equity method of accounting and Aptiv recognized an equity loss of $45 million and $1 million, net of tax, during the three months ended March 31, 2021 and 2020, respectively. The pre-tax loss of Aptiv’s autonomous driving operations that were contributed to the joint venture on March 26, 2020, included within Aptiv’s consolidated operating results, was $41 million for the three months ended March 31, 2020.
Motional Lease Agreement
Upon closing of the transaction, Aptiv agreed to sublease certain office space to Motional, which has a remaining lease term of approximately 8 years as of March 31, 2021. Total income under the agreement was $1 million and less than $1 million during the three months ended March 31, 2021 and 2020, respectively. The sublease income and Aptiv’s associated operating lease cost are recorded to cost of sales in the consolidated statement of operations. The Company believes the terms of the lease agreement have not significantly been affected by the fact the Company and the lessee are related parties.

18. SHARE-BASED COMPENSATION
Long-Term Incentive Plan
The Aptiv PLC Long-Term Incentive Plan, as amended and restated effective April 23, 2015 (the “PLC LTIP”), allows for the grant of awards of up to 25,665,448 ordinary shares for long-term compensation. The PLC LTIP is designed to align the interests of management and shareholders. The awards can be in the form of shares, options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance awards and other share-based awards to the employees, directors, consultants and advisors of the Company. The Company has awarded annual long-term grants of RSUs under the PLC LTIP in order to align management compensation with Aptiv’s overall business strategy. In addition, the Company has competitive and market-appropriate ownership requirements for its directors and officers. All of the RSUs granted under the PLC LTIP are eligible to receive dividend equivalents for any dividend paid from the grant date through the vesting date. Dividend equivalents are generally paid out in ordinary shares upon vesting of the underlying RSUs.
Board of Director Awards
Aptiv has granted RSUs to the Board of Directors as detailed in the table below:
Grant Date RSUs granted Grant Date Fair Value (1) Vesting Date Shares Issued Upon Vesting Fair Value of Shares at Issuance Shares Withheld to Cover Withholding Taxes
(dollars in millions)
April 2020 48,745  $ April 2021 41,896  $ 6,849 
April 2019 20,765  April 2020 23,816  2,041 
(1)Determined based on the closing price of the Company’s ordinary shares on the date of the grant.
In addition, in April 2021, Aptiv granted 17,589 RSUs to the Board of Directors at a grant date fair value of approximately $3 million. The grant date fair value was determined based on the closing price of the Company’s ordinary shares on the date of the grant. The RSUs will vest in April 2022.
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Executive Awards
Aptiv has made annual grants of RSUs to its executives in February of each year beginning in 2012. These awards include a time-based vesting portion and a performance-based vesting portion, as well as continuity awards in certain years. The time-based RSUs, which make up 40% (25% prior to 2021) of the awards for Aptiv’s officers and 50% for Aptiv’s other executives, vest ratably over three years beginning on the first anniversary of the grant date. The performance-based RSUs, which make up 60% (75% prior to 2021) of the awards for Aptiv’s officers and 50% for Aptiv’s other executives, vest at the completion of a three-year performance period if certain targets are met. Each executive will receive between 0% and 150% of his or her target performance-based award based on the Company’s performance against established company-wide performance metrics, which are:
Metric 2020 - 2021
Grants
2017 - 2019
Grants
Average return on net assets (1) 33% 50%
Cumulative net income 33% 25%
Relative total shareholder return (2) 33% 25%
(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)Relative total shareholder return is measured by comparing the average closing price per share of the Company’s ordinary shares for the specified trading days in the fourth quarter of the end of the performance period to the average closing price per share of the Company’s ordinary shares for the specified trading days in the fourth quarter of the year preceding the grant, including dividends, and assessed against a comparable measure of competitor and peer group companies.
The details of the executive grants were as follows:
Grant Date RSUs Granted Grant Date Fair Value Time-Based Award Vesting Dates Performance-Based Award Vesting Date
(in millions)
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
February 2020 0.75  62  Annually on anniversary of grant date, 2021 - 2023 December 31, 2022
February 2021 0.44  72  Annually on anniversary of grant date, 2022 - 2024 December 31, 2023
The grant date fair value of the RSUs is determined based on the target number of awards issued, the closing price of the Company’s ordinary shares on the date of the grant of the award, including an estimate for forfeitures, and a contemporaneous valuation performed by an independent valuation specialist with respect to the relative total shareholder return awards.
Any new executives hired after the annual executive RSU grant date may be eligible to participate in the PLC LTIP. The Company has also granted additional awards to employees in certain periods under the PLC LTIP. Any off cycle grants made for new hires or to other employees are valued at their grant date fair value based on the closing price of the Company’s ordinary shares on the date of such grant.
The details of the shares issued upon vesting of the executive grants are as follows:
Time-Based Awards Performance-Based Awards
Vesting Date Ordinary Shares Issued Upon Vesting Fair Value of Shares at Issuance Ordinary Shares Withheld to Cover Withholding Taxes Ordinary Shares Issued Upon Vesting Fair Value of Shares at Issuance Ordinary Shares Withheld to Cover Withholding Taxes
(in millions) (in millions)
Q1 2021 449,426  $ 67  177,825  288,074  $ 43  121,609 
Q1 2020 468,240  37  181,495  580,390  45  243,080 
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A summary of RSU activity, including award grants, vesting and forfeitures is provided below:
RSUs Weighted Average Grant Date Fair Value
  (in thousands)
Nonvested, January 1, 2021 1,786  $ 102.95 
Granted 509  161.30 
Vested (446) 82.10 
Forfeited (12) 84.35 
Nonvested, March 31, 2021 1,837  124.28 
Aptiv recognized share-based compensation expense of $29 million ($29 million, net of tax) and a benefit from share-based compensation of $1 million ($1 million, net of tax) based on the Company’s best estimate of ultimate performance against the respective targets during the three months ended March 31, 2021 and 2020, respectively. Aptiv will continue to recognize compensation expense, based on the grant date fair value of the awards applied to the Company’s best estimate of ultimate performance against the respective targets, over the requisite vesting periods of the awards. Based on the grant date fair value of the awards and the Company’s best estimate of ultimate performance against the respective targets as of March 31, 2021, unrecognized compensation expense on a pre-tax basis of approximately $199 million is anticipated to be recognized over a weighted average period of approximately 2 years. For the three months ended March 31, 2021 and 2020, approximately $45 million and $32 million, respectively, of cash was paid and reflected as a financing activity in the statements of cash flows related to the tax withholding for vested RSUs.

19. SEGMENT REPORTING
Aptiv operates its core business along the following operating segments, which are grouped on the basis of similar product, market and operating factors:
Signal and Power Solutions, which includes complete electrical architecture and component products.
Advanced Safety and User Experience, which includes component and systems integration expertise in advanced safety, user experience and connectivity and security solutions, as well as advanced software development 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.
The accounting policies of the segments are the same as those described in Note 2. Significant Accounting Policies, except that the disaggregated financial results for the segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for which Aptiv’s chief operating decision maker regularly reviews financial results to assess performance of, and make internal operating decisions about allocating resources to, the segments.
Generally, Aptiv evaluates segment performance based on stand-alone segment net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, 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 (“Adjusted Operating Income”) and accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Aptiv’s management utilizes Adjusted Operating Income as the key performance measure of segment income or loss to evaluate segment performance, and for planning and forecasting purposes to allocate resources to the segments, as management believes this measure is most reflective of the operational profitability or loss of Aptiv’s operating segments. Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Aptiv, which is the most directly comparable financial measure to Adjusted Operating Income that is prepared in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Aptiv, should also not be compared to similarly titled measures reported by other companies.
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Included below are sales and operating data for Apti