BORGWARNER INC

Previous wording

BorgWarner Inc. (collectively with its consolidated subsidiaries, the “Company” or “BorgWarner”) is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles. BorgWarner’s products help improve vehicle performance, propulsion efficiency, stability and air quality. The Company manufactures and sells these products worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles (“SUVs”), vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). The Company also manufactures and sells its products to certain tier one vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in Europe, the Americas and Asia and is an original equipment supplier to nearly every major automotive OEM in the world.

Current wording

BorgWarner Inc. (collectively with its consolidated subsidiaries, the “Company” or “BorgWarner”) is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles. BorgWarner’s products help improve vehicle performance, propulsion efficiency, stability and air quality. The Company manufactures and sells these products worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles, vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). The Company also manufactures and sells its products to certain tier one vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in Europe, the Americas and Asia and is an original equipment supplier to nearly every major automotive OEM in the world.

Previous wording

The Company’s current strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles. This entails growing its product portfolio through organic investments and technology-focused acquisitions. The Company’s balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions. During the three months ended September 30, 2025 and 2024, the Company’s eProducts revenue was approximately $606 million and $639 million, respectively, or 17% and 19% of its total revenue, respectively. During the nine months ended September 30, 2025 and 2024, the Company’s eProducts revenue was approximately $1,901 million and $1,721 million, respectively, or 18% and 16% of its total revenue, respectively.

Current wording

The Company’s current strategy is to focus on profitable growth across its technology-focused product portfolio that supports electric, hybrid and combustion vehicles. This entails growing its product portfolio through organic investments and technology-focused acquisitions. The Company’s balanced portfolio is particularly critical as the automotive industry continues to see electric vehicle adoption volatility across different regions. During the three months ended March 31, 2026 and 2025, the Company’s revenue from eProducts, which include all products utilized on or for electric vehicles (“EVs”) plus those same products and components that are included in hybrid powertrains whose underlying technologies are adaptable or applicable to those used in or for EVs, was approximately $597 million and $637 million, respectively, or 17% and 18% of the Company’s total revenue, respectively.

Previous wording

On September 19, 2024, the Company commenced a lawsuit in Delaware Superior Court against PHINIA, seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies as well as damages and interest, which PHINIA refused to pay to the Company. These refunds consist of VAT paid by the Company in periods prior to or directly related to the Spin-Off that established PHINIA as an independent company. PHINIA responded to the lawsuit and also asserted counterclaims against the Company. On October 15, 2025, the Company entered into a settlement agreement (the “Settlement Agreement”) with PHINIA, pursuant to which PHINIA agreed to pay the Company $78 million, resolving the lawsuit and certain other matters relating to the Spin-Off. In connection with the Settlement Agreement, the Company and PHINIA have also entered into an amended and restated tax matters agreement that, among other things, limits the Company’s responsibility to certain defined tax obligations. As a result, during the three and nine months ended September 30, 2025, the Company recorded a net charge of $38 million, for the reduction of VAT-related receivables, the elimination of certain Company liabilities under the amended and restated tax matters agreement and related legal fees, which is included in Other operating expense, net in the Company’s Condensed Consolidated Statements of Operations. As of September 30, 2025, after giving effect to the Settlement Agreement, the Company had assets related to these VAT refunds of approximately $52 million and $26 million included in Receivables, net and Investments and long-term receivables, respectively, in the Company’s Condensed Consolidated Balance Sheet.

Current wording

On September 19, 2024, the Company commenced a lawsuit against PHINIA, Inc. (“PHINIA”), seeking to recover from PHINIA approximately $120 million of value added tax (“VAT”) refunds that PHINIA received or expected to receive from governmental agencies as well as damages and interest. These refunds consisted of VAT paid by the Company in periods prior to or directly related to the spin-off (“Spin-Off”) that established PHINIA as an independent company. PHINIA responded to the lawsuit and also asserted counterclaims against the Company. On October 15, 2025, the Company entered into a settlement agreement (the “Settlement Agreement”) with PHINIA, pursuant to which PHINIA agreed to pay the Company $78 million, resolving the lawsuit and certain other matters relating to the Spin-Off. In connection with the Settlement Agreement, the Company and PHINIA also entered into an amended and restated tax matters agreement that, among other things, limits the Company’s responsibility to certain defined tax obligations. During the year ended December 31, 2025, the Company recorded a net charge of $40 million, for the reduction of VAT-related receivables, the elimination of certain Company liabilities under the amended and restated tax matters agreement and related legal fees. As of March 31, 2026, after giving effect to the Settlement Agreement and the $52 million received in total, the Company had assets related to these VAT refunds of approximately $26 million in Receivables, net in the Company’s Condensed Consolidated Balance Sheet, which is due no later than December 1, 2026.Refer toPart 1, Item 1 of this report for more information.

Previous wording

In February 2025, the Company made the decision to exit its charging business within the Battery & Charging Systems reportable segment. Production operations ceased during the second quarter of 2025. This decision was made following the Company’s continuing evaluation of its product portfolio and future investments. This action was expected to create a more focused portfolio and eliminate approximately $30 million of annualized adjusted operating losses by 2026. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements for more information.

Current wording

In February 2025, the Company made the decision to exit its charging business within the reportable segment formerly called Battery & Charging Systems. Production operations ceased during the second quarter of 2025. This decision was made following the Company’s continuing evaluation of its product portfolio and future investments. This action was expected to create a more focused portfolio and eliminate approximately $30 million of annualized adjusted operating losses by 2026. In the first quarter of 2026, as a result of the aforementioned disposition, this reportable segment was renamed Battery Energy Systems. The name change reflects the segment’s revised focus after the divestiture. The change did not impact the composition of the segment or require recasting of prior period segment results. Prior periods continue to be presented as previously reported. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.

Previous wording

The Company also made the decision to consolidate its North American battery systems business, which is expected to align the business’ cost structure to current market dynamics. This action is expected to result in annual cost savings of approximately $20 million by 2026.

Current wording

In February 2025, the Company also made the decision to consolidate its North American battery systems business, which is expected to align the business’ cost structure to current market dynamics. This action is expected to result in annual cost savings of approximately $20 million by 2026.

Previous wording

Economic Conditions. The Company’s financial performance depends on conditions in the global automotive industry. Automotive and truck production and sales are cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit and consumer spending and preferences. Government policies, such as the imposition, termination or other changes in tariffs (including retaliatory tariffs), the commencement or termination of consumer tax incentives, such as EV tax credits and programs to invest in infrastructure, including EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on our sales. The weighted average market production, as estimated by the Company for the nine months ended September 30, 2025, was up approximately 1% from the nine months ended September 30, 2024. Weighted average market production reflects light and commercial vehicle production as reported by S&P Global, weighted for the Company’s geographic exposure, as estimated by the Company.

Current wording

Economic Conditions. The Company’s financial performance depends on conditions in the global automotive industry. Automotive and truck production is cyclical and sensitive to general economic conditions and other factors, including interest rates, consumer credit and consumer spending and preferences. Government policies, such as the imposition of, termination or invalidation of or other changes in tariffs (including retaliatory tariffs), or the commencement or termination of consumer tax incentives, such as EV tax credits and programs to invest in infrastructure, including EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on the Company’s sales. The weighted average market production, as estimated by the Company for the three months ended March 31, 2026, was down approximately 3% from the three months ended March 31, 2025. Weighted average market production reflects light and commercial vehicle production as reported by S&P Global, weighted for the Company’s geographic exposure, as estimated by the Company.

Previous wording

Commodities and Other Inflationary Impacts. During 2024, prices for commodities showed a lower level of volatility in comparison to what the Company had experienced from the beginning of 2021. The Company expects commodities and other costs to be relatively flat in 2025. However, the Company expects greater uncertainty and volatility in commodities and other costs as a result of the imposition of tariffs and retaliatory tariffs by the United States and other countries in 2025, which could cause actual costs to be materially higher than expected.

Current wording

Commodities and Other Inflationary Impacts. During 2025, prices for commodities showed a lower level of volatility in comparison to what the Company had experienced from the beginning of 2021. The Company currently expects commodity prices and other input costs to show a higher level of volatility in 2026 compared to 2025. Commodity markets are influenced by geopolitical instability, which can contribute to supply chain fragmentation, higher logistics costs and increased price across energy, metals and other critical inputs.

Previous wording

The Company expects global industry production to be roughly flat year-over-year in 2025. The Company expects net new business-related sales growth and cost recovery actions to be mitigated by the impact of declining sales in the Company’s battery and charging systems segment. As a result, at the mid-point of its outlook, the Company expects sales to be roughly flat year-over-year, excluding the impact of foreign currencies. While the outlook incorporates tariffs known as of the date of this filing, to the extent current tariffs and retaliatory tariffs by the United States and other countries increase, industry production and demand for the Company’s products could decrease, which could adversely impact the Company’s 2025 sales outlook.

Current wording

The Company expects global industry production to be flat to down modestly year-over-year in 2026. In particular, the Company expects a negative sales impact from declining sales in the Company’s Battery Energy Systems reportable segment. As a result, at the mid-point of its outlook, the Company expects total sales in 2026 to decline year-over-year, excluding the impact of foreign currencies.

Previous wording

The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy. There are several trends that are driving the Company’s long-term growth that management expects to continue, including adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards that support demand for the Company’s products that drive vehicle efficiency.

Current wording

The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy. There are several trends that are driving the Company’s long-term growth that management expects to continue, including adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards that support demand for the Company’s products that drive vehicle efficiency as well as power generation industrial solutions growth. The Company expects its power generation industrial solutions growth to be approximately $300 million in 2027.

Previous wording

Net sales for the three months ended September 30, 2025 totaled $3,591 million, an increase of $142 million, or 4%, compared to the three months ended September 30, 2024. The change in net sales for the three months ended September 30, 2025 was primarily driven by the following:

Current wording

Net sales for the three months ended March 31, 2026 totaled $3,533 million, an increase of $18 million, or 1%, compared to the three months ended March 31, 2025. The change in net sales for the three months ended March 31, 2026 was primarily driven by the following:

Previous wording

•Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $69 million, primarily due to the strengthening of the Euro and Thai Baht, partially offset by the weakening of the Korean Won, in each case relative to the U.S. Dollar.

Current wording

•Fluctuations in foreign currencies resulted in a year-over-year increase in sales of approximately $167 million, primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.

Previous wording

Cost of sales and cost of sales as a percentage of net sales were $2,927 million and 81.5%, respectively, during the three months ended September 30, 2025, compared to $2,813 million and 81.6%, respectively, during the three months ended September 30, 2024. The change in cost of sales for the three months ended September 30, 2025 was primarily driven by the following:

Current wording

Cost of sales and cost of sales as a percentage of net sales were $2,856 million and 80.8%, respectively, during the three months ended March 31, 2026, compared to $2,876 million and 81.8%, respectively, during the three months ended March 31, 2025. The change in cost of sales for the three months ended March 31, 2026 was primarily driven by the following:

Previous wording

•Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $60 million, primarily due to the strengthening of the Euro and Thai Baht, partially offset by the weakening of the Korean Won, in each case relative to the U.S. Dollar.

Current wording

•Fluctuations in foreign currencies resulted in a year-over-year increase in cost of sales of approximately $138 million, primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.

Previous wording

Gross profit and gross margin were $664 million and 18.5%, respectively, during the three months ended September 30, 2025, compared to $636 million and 18.4%, respectively, during the three months ended September 30, 2024. The increase in gross margin was primarily due to the factors discussed above.

Current wording

Gross profit and gross margin were $677 million and 19.2%, respectively, during the three months ended March 31, 2026, compared to $639 million and 18.2%, respectively, during the three months ended March 31, 2025. The increase in gross margin was primarily due to the factors discussed above.

Previous wording

SG&A for the three months ended September 30, 2025 was $341 million as compared to $340 million for the three months ended September 30, 2024. SG&A as a percentage of net sales was 9.5% and 9.9% for the three months ended September 30, 2025 and 2024, respectively. The change in SG&A was primarily attributable to:

Current wording

SG&A for the three months ended March 31, 2026 was $328 million as compared to $315 million for the three months ended March 31, 2025. SG&A as a percentage of net sales was 9.3% and 9.0% for the three months ended March 31, 2026 and 2025, respectively. The change in SG&A was primarily due to fluctuations in foreign currencies, which was primarily due to the strengthening of the Euro and Chinese Renminbi, in each case relative to the U.S. Dollar.

Previous wording

Restructuring expense was $23 million and $21 million for the three months ended September 30, 2025 and 2024, respectively, primarily related to employee termination benefits. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.

Current wording

Restructuring expense was $18 million and $31 million for the three months ended March 31, 2026 and 2025, respectively, primarily related to employee termination benefits. Refer to Note 5, “Restructuring,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.

Previous wording

In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the three months ended September 30, 2024, the Company recorded $18 million of restructuring costs related to this plan. The actions under this plan are complete. The resulting gross savings related to this plan are expected to be in the range of at least $80 million to $90 million annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness.

Current wording

In 2023, the Company announced a $130 million to $150 million restructuring plan to address structural costs primarily in its Foundational products businesses. During the three months ended March 31, 2025, the Company recorded $8 million of restructuring costs related to this plan. The actions under this plan are complete. The resulting gross savings related to this plan are expected to be in the range of at least $80 million to $90 million annually by 2027 and are being utilized to sustain overall operating margin profile and cost competitiveness.

Previous wording

In June 2024, the Company announced a $75 million restructuring plan to address the cost structure in its PowerDrive Systems segment due to increased market volatility, which could include realignment of the segment’s manufacturing footprint. During the three months ended September 30, 2025 and 2024, the Company recorded $12 million of restructuring charges related to this plan. The resulting annual cost savings related to this plan are expected to be in the range of at least $100 million to $120 million by 2026.

Current wording

In June 2024, the Company approved an approximately $75 million restructuring plan to address the cost structure in its PowerDrive Systems reportable segment due to electric vehicle adoption volatility across different regions, which could include realignment of the segment’s manufacturing footprint. During the three months ended March 31, 2026, the Company recorded a revision of previous estimates of $1 million and during the three months ended March 31, 2025, the Company recorded $16 million of restructuring costs related to this plan. The resulting annual cost savings related to this plan are expected to be approximately $100 million by 2026.

Previous wording

During the three months ended September 30, 2025, the Company recorded $11 million of restructuring costs for individually approved restructuring actions.

Current wording

During the three months ended March 31, 2026 and 2025, the Company recorded $19 million and $7 million, respectively, of restructuring costs for individually approved restructuring actions.

Previous wording

•During the nine months ended September 30, 2025, the Company recorded charges of $23 million related to the exit of its charging business within the Battery & Charging Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report for more information.

Current wording

Other operating (income) expense, net was $5 million of income and $17 million of expense for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2025, the Company recorded charges of $19 million related to the exit of its charging business within its Battery Energy Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information.

Previous wording

Other operating expense, net is primarily comprised of items included within the subtitle “Non-comparable items impacting the Company’s per diluted share and net earnings” below.

Current wording

Other operating (income) expense, net is primarily comprised of items included within the subtitle “Non-comparable items impacting the Company’s per diluted share and net earnings” below.

Previous wording

Impairment charges were $42 million for the nine months ended September 30, 2025. The Company recorded impairments of intangible assets, goodwill and fixed assets related to the planned exit of its charging business and the consolidation of the Company’s North American battery systems business footprint within the Battery & Charging Systems reportable segment.

Current wording

Impairment chargeswas $39 million for the three months ended March 31, 2025. The Company recorded impairments of intangible assets, goodwill and fixed assets related to the exit of its charging business within its Battery Energy Systems reportable segment. Refer to Note 3, “Acquisitions and Dispositions,” to the Condensed Consolidated Financial Statements in Item 1 of this report for more information. The Company did not recognize any impairment charge for the three months ended March 31, 2026.

Previous wording

Equity in affiliates’ earnings, net of tax was $11 million and $6 million for the three months ended September 30, 2025 and 2024, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures.

Current wording

Equity in affiliates’ earnings, net of tax was $6 million and $10 million for the three months ended March 31, 2026 and 2025, respectively. This line item is driven by the results of the Company’s unconsolidated joint ventures.

Previous wording

Provision for income taxes was $188 million for the nine months ended September 30, 2025, resulting in an effective rate of 25%. This compared to $44 million, or an effective rate of 5%, for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, the Company recorded a discrete tax benefit of $12 million related to the exit of the charging business, a discrete tax expense of $4 million related to net changes to valuation allowances and a discrete tax expense of $3 million related to various changes in filing positions for prior years. During the nine months ended September 30, 2024, the Company recorded a discrete tax benefit of $107 million related to reductions in certain unrecognized tax benefits and accrued interest for matters where the statute of limitations lapsed, a discrete tax benefit of $36 million related to post Spin-Off restructuring and a discrete tax benefit of $4 million related to various changes in filing positions for prior years

Current wording

Provision for income taxes was $73 million for the three months ended March 31, 2026, resulting in an effective rate of 22%. This is compared to $61 million, or an effective rate of 26%, for the three months ended March 31, 2025. During the three months ended March 31, 2026, the Company’s effective tax rate did not differ materially from the estimated annual effective tax rate. During the three months ended March 31, 2025, the Company recorded a discrete tax expense of $4 million related to net changes to valuation allowances, a discrete tax benefit of $3 million related to the exit of the charging business and a discrete tax expense of $2 million related to various changes in filing positions for prior years.

Previous wording

The Company’s earnings per diluted share were $0.73 and $1.08 for the three months ended September 30, 2025 and 2024, respectively and $2.48 and $3.40 nine months ended September 30, 2025 and 2024, respectively. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for each of the periods then ended. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:

Current wording

The Company’s earnings per diluted share were $1.16 and $0.72 for the three months ended March 31, 2026 and 2025, respectively. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for each of the periods then ended. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:

Previous wording

The Company discloses segment information under four reportable segments, consistent with the way operating results are evaluated by management: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems and Battery & Charging Systems. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems.

Current wording

The Company discloses segment information under four reportable segments, consistent with the way operating results are evaluated by management: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems and Battery Energy Systems. These segments are strategic business groups that are managed separately as each represents a specific grouping of related automotive components and systems.

Previous wording

The Battery & Charging Systems segment’s net sales decreased $126 million, or 22%, and Segment Adjusted Operating Loss increased $8 million from the nine months ended September 30, 2024. The decrease in net sales was primarily due to approximately $106 million of volume, mix and net new business and the exit of the charging business. Normal contractual customer commodity pass-through arrangements decreased net sales by $26 million. These decreases were partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $6 million due to the strengthening in the Euro relative to the U.S. Dollar. Segment Adjusted Operating Margin was (9.3)% for the nine months ended September 30, 2025, compared to (5.8)% during the nine months ended September 30, 2024. The Segment Adjusted Operating Loss increased primarily due to lower sales and higher depreciation costs, partially offset by restructuring savings and other operational improvements.

Current wording

The Battery Energy Systems segment’s net sales decreased $48 million, or 32%, and Segment Adjusted Operating Loss decreased $20 million from the three months ended March 31, 2025. Unfavorable volume, mix and net new business decreased net sales by approximately $54 million primarily due to lower battery pack volumes.This decrease was partially offset by the impact of foreign currencies, which resulted in a year-over-year increase in net sales of approximately $6 million due to the strengthening in the Euro, relative to the U.S. Dollar. Segment Adjusted Operating margin was (2.0)% for the three months ended March 31, 2026, compared to (14.7)% during the three months ended March 31, 2025. The Segment Adjusted Operating margin increased primarily due to the exit of the charging business and restructuring savings.

Previous wording

The Company was in full compliance with its covenants under the revolving credit facility and had full access to the undrawn amount under the revolving credit facility. Given the Company’s strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants through at least the next 12 months.

Current wording

The Company maintains various liquidity sources, including cash and cash equivalents and the undrawn portion of its multi-currency revolving credit agreement. As of March 31, 2026, the Company had liquidity of $4.1 billion, comprised of cash and cash equivalent balances of $2.1 billion and an undrawn multi-currency revolving credit facility of $2.0 billion. As of March 31, 2026, the Company was in full compliance with its covenants under the revolving credit facility and had full access to the undrawn amount under the revolving credit facility. Given the Company’s strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants under the revolving credit facility through at least the next 12 months.

Previous wording

As of September 30, 2025, cash balances of $1,223 million were held by the Company’s subsidiaries outside the United States. Cash and cash equivalents held by these subsidiaries are used to fund foreign operational activities and future investments, including acquisitions. The majority of cash and cash equivalents held outside the United States is available for repatriation. The Company uses its U.S. liquidity primarily for various corporate purposes, including but not limited to debt service, share repurchases, dividend distributions, acquisitions and other corporate expenses.

Current wording

As of March 31, 2026, cash balances of $1.2 billion were held by the Company’s subsidiaries outside the United States. Cash and cash equivalents held by these subsidiaries are used to fund foreign operational activities and future investments, including acquisitions. The majority of cash and cash equivalents held outside the United States is available for repatriation. The Company uses its U.S. liquidity primarily for various corporate purposes, including but not limited to debt service, share repurchases, dividend distributions, acquisitions and other corporate expenses.

Previous wording

In addition to the revolving credit facility, the Company’s universal shelf registration statement filed with the U.S. Securities and Exchange Commission provides the Company with the ability to issue various debt and equity securities subject to market conditions.

Current wording

In addition, the Company’s universal shelf registration statement filed with the U.S. Securities and Exchange Commission provides the Company with the ability to issue various debt and equity securities subject to market conditions.

Previous wording

On February 6, 2025 and April 30, 2025, the Company’s Board of Directors declared quarterly cash dividends of $0.11 per share of common stock, respectively. The dividends declared in the first quarter and second quarter were paid on March 17, 2025 and June 16, 2025, respectively. On July 30, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividend declared in the third quarter was paid on September 15, 2025.

Current wording

On each of February 5, 2026 and April 29, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.17 per share of common stock. The dividend declared in the first quarter was paid on March 16, 2026, and the dividend declared in the second quarter will be paid on June 15, 2026.

Previous wording

From a credit quality perspective, the Company has a credit rating of BBB from Standard & Poor’s, Baa1 from Moody’s and BBB+ from Fitch Ratings. The current outlook from each of Standard & Poor’s, Moody’s and Fitch is stable. None of the Company's debt agreements requires accelerated repayment in the event of a downgrade in credit ratings.

Current wording

From a credit quality perspective, the Company has a Baa1 from Moody’s and BBB+ from Fitch Ratings and Standard & Poor’s. The current outlook from each of Standard & Poor’s, Moody’s and Fitch Ratings is stable. None of the Company's debt agreements requires accelerated repayment in the event of a downgrade in credit ratings.

Previous wording

Net cash provided by operating activities was $1,029 million during the nine months ended September 30, 2025 compared to $700 million for the nine months ended September 30, 2024. The increase for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 was primarily due to changes in working capital.

Current wording

Net cash provided by operating activities was $152 million during the three months ended March 31, 2026 compared to $82 million for the three months ended March 31, 2025. The increase for the three months ended March 31, 2026 was primarily due to changes in working capital.

Previous wording

Net cash used in investing activities was $246 million during the nine months ended September 30, 2025 compared to $460 million during the nine months ended September 30, 2024. As a percentage of sales, capital expenditures were 2.9% and 4.8% for the nine months ended September 30, 2025 and 2024, respectively. We believe the year-over-year decline in capital expenditures primarily reflects lower eProduct investments.

Current wording

Net cash used in investing activities was $130 million during the three months ended March 31, 2026 compared to $94 million during the three months ended March 31, 2025. As a percentage of sales, capital expenditures, net of customer advances, were 3.9% and 3.3% for the three months ended March 31, 2026 and 2025, respectively. The year-over-year increase in capital expenditures was primarily driven higher eProduct and power generation industrial solutions investments.

Previous wording

Net cash used in financing activities was $753 million during the nine months ended September 30, 2025 compared $250 million net cash provided by financing activities during the nine months ended September 30, 2024. Net cash used in financing activities during the nine months ended September 30, 2025 was primarily related to $406 million of debt repayments associated with the maturity of the Company’s 3.375% senior notes on March 15, 2025 and other short-term borrowings, $210 million, including taxes, for BorgWarner share repurchases, $84 million in dividends paid to the Company’s stockholders and $22 million in dividends paid to noncontrolling stockholders of the Company’s consolidated joint ventures.

Current wording

Net cash used in financing activities was $218 million during the three months ended March 31, 2026 compared to $397 million during the three months ended March 31, 2025. Net cash used in financing activities during the three months ended March 31, 2026 was primarily related to $150 million of BorgWarner share repurchases and $35 million in dividends paid to the Company’s stockholders. Net cash used in financing activities during the three months ended March 31, 2025, was primarily related to $346 million of debt repayments associated with the maturity of the Company’s 3.375% senior notes on March 15, 2025, and $24 million in dividends paid to the Company’s stockholders.