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Axalta Coating Systems Ltd.

For the period ended Dec 31, 2025. Filed Feb 13, 2026.

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FY2025 · Filed Feb 13, 2026

AXTA$37.53+3.0%Stored close · as of Nov 9, 2026

Extracted filing text, with the paragraph anchors used by the comparison.

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Contents

(7) LONG-TERM EMPLOYEE BENEFITS

Defined Benefit Pensions

Axalta has defined benefit plans that cover certain employees worldwide, with approximately 85% of the projected benefit obligation within the European region at December 31, 2025.

Obligations and Funded Status

The measurement date used to determine defined benefit obligations is December 31st each year. The following table sets forth the changes to the projected benefit obligations (“PBO”) and plan assets for the years ended December 31, 2025 and 2024 and the funded status and amounts recognized in the accompanying consolidated balance sheets at December 31, 2025 and 2024 for our defined benefit pension plans:

Year Ended December 31,
20252024
Change in benefit obligation:
Projected benefit obligation at beginning of year$468$526
Service cost76
Interest cost1919
Participant contributions22
Actuarial loss (gain), net2(17)
Plan curtailments, settlements and special termination benefits(11)(9)
Benefits paid(29)(29)
Business combinations and other adjustments2—
Foreign currency translation49(30)
Projected benefit obligation at end of year509468
Change in plan assets:
Fair value of plan assets at beginning of year258281
Actual return on plan assets4—
Employer contributions2424
Participant contributions22
Benefits paid(29)(29)
Settlements(11)(9)
Foreign currency translation20(11)
Fair value of plan assets at end of year268258
Funded status, net$(241)$(210)
Amounts recognized in the consolidated balance sheets consist of:
Other assets$14$24
Other accrued liabilities(17)(14)
Accrued pensions(238)(220)
Net amount recognized$(241)$(210)

The net actuarial (gain) loss for 2025 and 2024 was due primarily to fluctuations in the discount rates between years across the plans relative to the rates used in the preceding year to determine benefit obligations (see assumptions table below), which were caused by market volatility during the periods.

The PBO is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits attributable to employee service rendered to date but does not include the effects of estimated future pay increases.

The following table reflects the ABO for all defined benefit plans at December 31, 2025 and 2024. Further, the table reflects the aggregate PBO, ABO and fair value of plan assets for pension plans with PBO in excess of plan assets and for pension plans with ABO in excess of plan assets.

December 31,
20252024
ABO$485$447
Plans with PBO in excess of plan assets:
PBO$322$303
ABO$301$283
Fair value plan assets$68$69
Plans with ABO in excess of plan assets:
PBO$322$293
ABO$301$275
Fair value plan assets$68$60

The pre-tax amounts not yet reflected in net periodic benefit cost and included in AOCI include the following related to defined benefit plans:

Year Ended December 31,
20252024
Accumulated net actuarial losses$(99)$(93)
Accumulated prior service credit(1)2
Total$(100)$(91)

The accumulated net actuarial losses relate primarily to differences between the actual net periodic expense and the expected net periodic expense resulting from differences in the significant assumptions, including return on assets, discount rates and compensation trends, used in these estimates. For individual plans in which the accumulated net actuarial gains or losses exceed 10% of the higher of the fair value of plan assets or the PBO at the beginning of the year, amortization of such excess has been included in net periodic benefit costs. The amortization period is the average remaining service period of active employees expected to receive benefits unless a plan is mostly inactive, in which case the amortization period is the average remaining life expectancy of the plan participants. Accumulated prior service credits are amortized over the future service periods of those employees who are active at the dates of the plan amendments and who are expected to receive benefits.

Components of Net Periodic Benefit Cost

The following table sets forth the pre-tax components of net periodic benefit costs for our defined benefit plans for the years ended December 31, 2025, 2024 and 2023.

Year Ended December 31,
202520242023
Components of net periodic benefit cost and amounts recognized in comprehensive income:
Net periodic benefit cost:
Service cost$7$6$6
Interest cost191919
Expected return on plan assets(10)(12)(11)
Amortization of actuarial loss, net341
Curtailment gain—(1)—
Settlement gain—(1)—
Net periodic benefit cost191515
Changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain), net9(6)51
Amortization of actuarial loss, net(3)(4)(1)
Prior service credit2——
Curtailment gain—1—
Settlement gain—1—
Other adjustments1—(1)
Total loss (gain) recognized in other comprehensive income9(8)49
Total recognized in net periodic benefit cost and comprehensive income$28$7$64

Assumptions

We used the following assumptions in determining the benefit obligations and net periodic benefit cost of our defined benefit plans:

202520242023
Weighted average assumptions:
Discount rate to determine benefit obligation4.36%4.06%3.82%
Discount rate to determine net cost4.06%3.82%4.37%
Rate of future compensation increases to determine benefit obligation2.94%2.89%2.97%
Rate of future compensation increases to determine net cost2.89%2.97%2.98%
Rate of return on plan assets to determine net cost3.94%4.47%4.27%
Cash balance interest credit rate to determine benefit obligation1.35%1.08%1.32%
Cash balance interest credit rate to determine net cost1.08%1.32%1.96%

The discount rates used reflect the expected future cash flow based on plan provisions, participant data and the currencies in which the expected future cash flows will occur. For the majority of our defined benefit obligations, we utilize prevailing long-term high quality corporate bond indices applicable to the respective country at the measurement date. In countries where established corporate bond markets do not exist, we utilize other index movement and duration analysis to determine discount rates. The assumptions of the long-term rate of return on plan assets reflect economic assumptions applicable to each country and assumptions related to the preliminary assessments regarding the type of investments to be held by the respective plans.

Estimated future benefit payments

The following reflects the total benefit payments expected to be paid for defined benefits:

Year ended December 31,Benefits
2026$35
2027$37
2028$38
2029$44
2030$45
2031 - 2035$227

Plan Assets

The defined benefit plans for our subsidiaries represent single-employer plans and the related plan assets are invested within separate trusts. Each of the single-employer plans is managed in accordance with the requirements of local laws and regulations governing defined benefit plans for the exclusive purpose of providing pension benefits to participants and their beneficiaries. Pension plan assets are typically held in a trust by financial institutions. Our established asset allocation targets are intended to achieve the plan’s investment strategies.

Equity securities include varying market capitalization levels. U.S. equity securities are primarily large-cap companies. Fixed income investments include corporate issued, government issued, and asset-backed securities. Corporate debt securities include a range of credit risk and industry diversification. Other investments include real estate and private market securities such as insurance contracts, interests in private equity, and venture capital partnerships. Assets measured using the net asset value (“NAV”) per share practical expedient include debt, asset-backed securities, hedge funds, and real estate funds. Debt asset-backed securities primarily consist of collateralized debt obligations. The market values for these assets are based on the NAV multiplied by the number of shares owned.

Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although we believe the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The Company’s investment strategy in pension plan assets is to generate earnings over an extended time to help fund the cost of benefits while maintaining an adequate level of diversification for a prudent level of risk. The table below summarizes the weighted average actual and target pension plan asset allocations at December 31 st for all funded Axalta defined benefit plans.

Asset Category20252024Target Allocation
Equity securities0-5%5-10%0-5%
Debt securities5-10%40-45%5-10%
Real estate0-5%0-5%0-5%
Other (1)90-95%45-50%90-95%

(1) Substantially all pension insurance contracts and cash and cash equivalents holdings.

The table below presents the fair values of the defined benefit plan assets by level within the fair value hierarchy, as described in Note 1, at December 31, 2025 and 2024, respectively. Defined benefit plan assets measured using NAV have not been categorized in the fair value hierarchy.

Fair value measurements at
TotalLevel 1Level 2Level 3
Asset Category:
Cash and cash equivalents$10$10$—$—
U.S. equity securities33——
Non-U.S. equity securities22——
Debt securities—government issued1073—
Debt securities—corporate issued44——
Insurance contracts and other235—1234
Total carried at fair value$264$26$4$234
Investments measured at NAV4
Total$268
Fair value measurements at
TotalLevel 1Level 2Level 3
Asset Category:
Cash and cash equivalents$11$11$—$—
U.S. equity securities1414——
Non-U.S. equity securities99——
Debt securities—government issued7750261
Debt securities—corporate issued312110—
Insurance contracts and other109——109
Total carried at fair value$251$105$36$110
Investments measured at NAV7
Total$258

Level 3 assets are primarily insurance contracts pledged on behalf of employees with benefits in certain countries, ownership interests in investment partnerships, trusts that own private market securities and other debt and equity investments. The fair values of our insurance contracts are determined based on the cash surrender value or the present value of the expected future benefits to be paid under the contract, discounted at a rate consistent with the related benefit obligation. Debt and equity securities consist primarily of small investments in other investments that are valued at different frequencies based on the value of the underlying investments. The table below presents a roll forward of activity for these assets for the years ended December 31, 2025 and 2024. The transfers presented below during 2024 relate to de-risking activities in certain plans.

Level 3 assets
TotalInsurance contracts and otherDebt and equity
Ending balance at December 31, 2023$126$116$10
Realized (loss)(8)(7)(1)
Purchases, sales, issues and settlements(5)(2)(3)
Transfers (out of) into Level 3(3)2(5)
Ending balance at December 31, 2024$110$109$1
Change in unrealized gain1717—
Purchases, sales, issues and settlements107108(1)
Ending balance at December 31, 2025$234$234$—

Assumptions and Sensitivities

The discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, high-quality corporate bond yield curve.

The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide for the benefits included in the benefit obligations. The long-term rate of return assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses and the potential to outperform market index returns. For 2026, the expected long-term rate of return is 4.13%.

Anticipated Contributions to Defined Benefit Plans

For funded pension plans, our funding policy is to fund amounts for pension plans sufficient to meet minimum requirements set forth in applicable benefit laws and local tax laws. Based on the same assumptions used to measure our benefit obligations at December 31, 2025, we expect to contribute $7 million to our defined benefit plans during 2026.

Defined Contribution Plans

The Company sponsors defined contribution plans in both its U.S. and non-U.S. subsidiaries, under which salaried and certain hourly employees may defer a portion of their compensation. Eligible participants may contribute to the plan up to the allowable amount of their regular compensation before taxes, as determined by the plan. All contributions and Company matches are invested at the direction of the employee. Company matching contributions vest immediately and aggregated to $46 million, $44 million and $56 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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