APTVAptiv

If any of our products are or are alleged to be defective, we may be required to participate in a recall involving such products. Each vehicle manufacturer has its own practices regarding product recalls and other product liability actions relating to its suppliers. However, as suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, OEMs continue to look to their suppliers for contribution when faced with recalls and product liability claims. A recall claim brought against us, The number of vehicles recalled globally by OEMs has increased above historical levels. These recalls can either be initiated by the OEMs or a product liability claim brought against us in excess of our available insurance, influenced or required by regulatory agencies. Although there are differing rules and regulations across countries governing recalls for safety issues, the overall transition towards global vehicle platforms may have a material adverse effect on our business. OEMs also require their suppliers contribute to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which we supply products to a vehicle manufacturer, a vehicle manufacturer may attempt to hold us responsible for some or all increased recalls outside of the repair or replacement costs United States, as automotive components are increasingly standardized across regions. Given the sensitivity to safety issues in the automotive industry, including increased focus from regulators and consumers, we anticipate the number of products automotive recalls may remain above historical levels in the near future. In addition, the National Highway Traffic Safety Administration and other non-U.S. regulators have the authority, under new vehicle warranties when the OEM asserts that the product supplied did not perform as warranted. Although we cannot ensure that the future costs of warranty claims by our customers will not be material, we believe our established reserves are adequate certain circumstances, to cover potential warranty settlements. Our warranty reserves are based on our best estimates of amounts necessary require recalls to settle future and existing claims. We regularly evaluate the level of these reserves and adjust them when appropriate. However, the final amounts determined to be due related to these matters could differ materially from our recorded estimates. remedy safety concerns.

The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021, and was further amended on April 19, 2023. March 31, 2025 (the “March 2025 amendment”). The June 2021 March 2025 amendment, among other things, (1) refinanced and replaced the term loan A and revolver with a new term loan A with an original maturity in 2026, and a new five-year revolving credit facility with aggregate commitments of $2 billion, and (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, and (3) established the leverage ratio maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement) and allowed for dividends and other payments on equity. Effective removed provisions from the date of the April 2023 amendment, all interest June 2021 amendment for sustainability-linked rate benchmarks within the adjustments. The Revolving Credit Agreement that were previously based Facility matures on the London Interbank Offered Rate were transitioned to a rate based on the Secured Overnight Financing Rate (“SOFR”). March 31, 2030. The Credit Agreement also contains an uncommitted accordion feature that permits Aptiv to increase, from time to time, on customary terms and conditions, 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. Borrowings under the Credit Agreement are prepayable revolving in nature and may be made and prepaid from time to time at Aptiv’s option without premium or penalty. penalty, in accordance with the terms and conditions of the Credit Agreement. The March 2025 amendment also required that Aptiv pay amendment fees of $5 million during the year ended December 31, 2025, which are reflected as a financing activity in the consolidated statements of cash flows.

Recently issued accounting pronouncements not yet adopted—In November 2024, December 2025, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. 2025-12, Codification Improvements. The amendments in this update require public entities address changes to disclose, on an annual the Codification that clarify, correct errors and interim basis, disaggregated information about certain income statement expenses, including purchases of inventory, employee compensation, depreciation, intangible asset amortization make minor improvements, making the Codification easier to understand and depletion, that are included in each relevant income statement expense line item. The amendments also require qualitative descriptions of the amounts remaining in relevant expense line items not separately disaggregated quantitatively. Certain amounts already disclosed under existing U.S. GAAP are required to be included in the same disclosure as the other disaggregated income statement expense line items. In addition, the amendments require disclosure of the total amount of selling expenses and, in annual reporting periods, an entity’s definition of those expenses. apply. The new guidance will be applied prospectively and is effective for fiscal years beginning after December 15, 2026 2026, and interim periods within fiscal years beginning after December 15, 2027. those annual reporting periods, with the option to apply retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to result in incremental disclosures in the Company’s have a significant impact on Aptiv’s consolidated financial statements.