8. Leases
Adient's lease portfolio consists of operating leases for real estate including production facilities, warehouses and administrative offices, equipment such as forklifts, computer servers, laptops and fleet vehicles. Adient has elected not to record leases with an initial term of 12 months or less on its consolidated statement of financial position.
A lease liability and corresponding ROU asset are recognized based on the present value of lease payments. To determine the present value of lease payments, Adient uses its incremental borrowing rate as of lease commencement. The incremental borrowing rate (“IBR”) is defined as the rate Adient would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Adient primarily derives its IBR from its debt portfolio, adjusted for collateralization, lease term and jurisdictional factors.
The components of lease costs for the years ended September 30, 2025, 2024 and 2023 were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2023 |
| Operating lease cost | | $ | 111 | | | $ | 108 | | | $ | 108 | |
| Short-term lease cost | | 26 | | | 29 | | | 29 | |
| | | | | | |
| Total lease cost | | $ | 137 | | | $ | 137 | | | $ | 137 | |
Operating lease right-of-use assets and lease liabilities included in the consolidated statement of financial position were as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | | September 30, |
| (in millions) | | | | 2025 | | 2024 |
| Operating leases: | | | | | | |
| Operating lease right-of-use assets | | Other noncurrent assets | | $ | 259 | | | $ | 248 | |
| | | | | | |
| Operating lease liabilities - current | | Other current liabilities | | $ | 82 | | | $ | 78 | |
| Operating lease liabilities - noncurrent | | Other noncurrent liabilities | | 176 | | | 168 | |
| | | | $ | 258 | | | $ | 246 | |
| | | | | | |
| Weighted average remaining lease term: | | | | | | |
| Operating leases | | | | 5 years | | 5 years |
| | | | | | |
| Weighted average discount rate: | | | | | | |
| Operating leases | | | | 6.0 | % | | 6.2 | % |
Maturities of operating lease liabilities and minimum payments for operating leases having initial or remaining non-cancelable terms in excess of one year as of September 30, 2025 were as follows:
| | | | | | | | |
| Fiscal years (in millions) | | Operating Leases |
| 2026 | | $ | 93 | |
| 2027 | | 71 | |
| 2028 | | 48 | |
| 2029 | | 30 | |
| 2030 | | 20 | |
| Thereafter | | 37 | |
| Total lease payments | | 299 | |
| Less: imputed interest | | (41) | |
| Present value of lease liabilities | | $ | 258 | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended September 30, |
| (in millions) | | 2025 | | 2024 | | 2023 |
| Right-of-use assets obtained in exchange for lease obligations: | | | | | | |
| Operating leases (non-cash activity) | | $ | 96 | | | $ | 84 | | | $ | 35 | |
| | | | | | |
| Operating cash flows: | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities | | $ | 110 | | | $ | 108 | | | $ | 108 | |
| | | | | | |
Adient’s finance leases were not significant to the consolidated financial statements during fiscal 2025, 2024 and 2023. Refer to Note 9, “Debt and Financing Arrangements,” of the notes to consolidated financial statements for additional information.