BWA secures $78M from PHINIA; records $38M noncomparable charge

Rhea-AI Filing Summary

BorgWarner Inc. announced a settlement with PHINIA related to value added tax refunds tied to the PHINIA spin-off. PHINIA agreed to pay $78 million, with $31 million paid immediately, $21 million due in January 2026, and the remainder payable upon government collections but no later than December 1, 2026.

As of June 30, 2025, BorgWarner carried an asset of approximately $120 million for these VAT refunds. As a result of the settlement, the company recorded a net charge of $38 million in the third quarter of 2025 for the reduction of VAT-related receivables, elimination of certain liabilities and related legal fees. BorgWarner will present this charge as a noncomparable item not reflective of ongoing operations.

Insights

Accounting & Special Situations Analyst

One-time settlement: $78M inflow, $38M Q3 charge.

The settlement sets PHINIA’s total payment to $78 million, staged as $31 million immediately, $21 million in January 2026, and the remainder by December 1, 2026 or earlier upon government collections. This converts previously uncertain VAT refund claims into defined cash inflows.

Accounting-wise, BorgWarner recorded a net $38 million charge in Q3 2025 tied to reducing VAT receivables, eliminating certain liabilities, and legal fees. Management will treat this as a noncomparable item, separating it from ongoing operations presentation.

Key anchors are the prior VAT asset of approximately $120 million as of June 30, 2025 and the specified payment schedule. Actual cash timing beyond the stated milestones depends on government collections within the stated deadlines.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 21, 2025

BORGWARNER INC.

________________________________________________

(Exact name of registrant as specified in its charter)

Delaware

1-12162

13-3404508

State or other jurisdiction of

Commission File No.

(I.R.S. Employer

Incorporation or organization

Identification No.)

3850 Hamlin Road,

Auburn Hills,

Michigan

48326

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (248) 754-9200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

BWA

New York Stock Exchange

1.00% Senior Notes due 2031

BWA31

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o  

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. o  

Item 8.01 Other Events

As BorgWarner Inc. (the “Company”) previously disclosed, most recently in its Quarterly Report on Form 10-Q filed on July 31, 2025, the Company commenced a lawsuit against PHINIA Inc. (“PHINIA”) seeking to recover value added tax (“VAT”) refunds that PHINIA has received or expects to receive from governmental agencies. As of June 30, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, which was included in Receivables, net on the Company’s Condensed Consolidated Balance Sheet. On October 15, 2025, the Company entered into a settlement with PHINIA (the “Settlement”) resolving the dispute and certain other matters relating to the spin-off that established PHINIA as an independent company. Pursuant to the Settlement, PHINIA agreed to pay the Company $78 million. PHINIA paid $31 million immediately upon the Settlement. PHINIA is obligated to pay $21 million in January 2026, and it is obligated to pay the remainder immediately upon collection from governments but no later than December 1, 2026. As a result of the Settlement, in the third quarter of 2025, the Company incurred a net $38 million charge for the reduction of VAT-related receivables, the elimination of certain Company liabilities and related legal fees, which the Company will treat as a noncomparable item not reflective of the Company’s ongoing operations when it presents its earnings results.

Item 9.01     Financial Statements and Exhibits

(d)     Exhibits. The following exhibits are being furnished as part of this Report.

Exhibit Number			Description
104			The cover page from this Current Report on Form 8-K, formatted as Inline XBRL

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			BorgWarner Inc.
Date: October 21, 2025			By:			/s/ Tonit M. Calaway
						Name: Tonit M. Calaway
						Title: Executive Vice President and Secretary

FAQ

What did BWA announce regarding PHINIA and VAT refunds?

BorgWarner reached a settlement under which PHINIA will pay $78 million related to VAT refunds tied to the spin-off.

How is the $78 million from PHINIA scheduled to be paid to BWA?

PHINIA paid $31 million immediately, owes $21 million in January 2026, and will pay the remainder by December 1, 2026 or upon collection.

What accounting impact did the settlement have on BWA’s Q3 2025 results?

BorgWarner recorded a net $38 million charge in Q3 2025 for reduced VAT receivables, elimination of certain liabilities, and legal fees.

How will BWA present the settlement’s financial effect?

The company will treat the $38 million charge as a noncomparable item not reflective of ongoing operations.

What was BWA’s VAT-related asset before the settlement?

As of June 30, 2025, BorgWarner reported an asset of approximately $120 million related to the VAT refunds.