Allison Transmission Holdings

None of the warning signs we check for were found.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 24 Feb 2026, plus the 10-Q filed 5 Aug 2026 and 4 later 8-Ks.

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Our indebtedness could adversely affect our financial health, restrict our activities and affect our ability to meet our obligations.

  Could happen

  On January 2, 2026, we amended the Second Amended and Restated Credit Agreement dated as of March 29, 2019, as amended (the “Credit Agreement”), to provide for an incremental term loan facility under the Credit Agreement in an aggregate principal amount equal to $1,200 million (the “Incremental Term Loan”) and increased the commitments under the Revolving Credit Facility by $250 million to an aggregate principal amount of up to $1,000 million. We used the proceeds of the Incremental Term Loan and also borrowed $300 million under the Revolving Credit Facility to pay a portion of the consideration for the acquisition of the Acquired Off-Highway Business and fees, costs and expenses related to the acquisition.

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• Fluctuations in foreign currency exchange rates could adversely affect our results.

  Could happen

  We generate revenues and incur costs in multiple currencies. As a result, changes in exchange rates may impact margins on sales outside the U.S. and on products that include components sourced from suppliers located in other countries. In addition, the translation of foreign-denominated revenues, expenses, assets and liabilities into U.S. dollars for financial reporting purposes may result in variability in our reported results. We use natural hedging strategies and may, from time to time, enter into derivative instruments to manage a portion of our foreign currency exposure. However, these measures may not fully offset the effects of exchange rate fluctuations, and our hedging activities may not be effective in mitigating all foreign currency risks, which could adversely affect our results of operations, financial condition and cash flows. Our exposure to such exchange rate fluctuations and foreign currency risks has increased with the acquisition of the Acquired Off-Highway Business.

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• Our international operations, in particular our emerging markets, are subject to various risks which could have a material adverse effect on our business, results of operations and financial condition.

  Could happen

  Our business is subject to certain risks associated with doing business internationally, particularly in emerging markets. Outside-North America net sales represented approximately 24% of our net sales for 2025. Most of our operations were in the U.S. in 2025, but we also have manufacturing and customization facilities in India and Hungary with a services agreement with Stellantis N.V. and customization capability in Brazil, the Netherlands, China and Japan, and, effective January 1, 2026, manufacturing and assembly facilities located in approximately 14 additional countries as a result of the acquisition of the Acquired Off-Highway Business. Further, we intend to continue to pursue growth opportunities for our business in a variety of business environments outside the U.S., which could exacerbate the risks set forth below. Our international operations are subject to, without limitation, the following risks: the burden of complying with multiple and possibly conflicting laws and any unexpected changes in regulatory requirements; foreign currency exchange controls, sanctions, import and export restrictions and tariffs, including restrictions promulgated by the Office of Foreign Assets Control of the U.S. Department of the Treasury, and other trade protection regulations and measures; political risks, including increased trade protectionism and risks of loss due to civil disturbances, acts of terrorism, acts of war, guerrilla activities and insurrection; unstable economic, financial and market conditions and increased expenses as a result of inflation, higher energy costs or higher interest rates; difficulties in enforcement of third-party contractual obligations and intellectual property rights and collecting receivables through foreign legal systems; difficulties in staffing and managing international operations and the application of foreign labor regulations; differing local product preferences and product requirements; potentially adverse tax consequences from changes in tax laws, requirements relating to withholding taxes on remittances and other payments by subsidiaries and restrictions on our ability to repatriate dividends from our subsidiaries; and exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar laws and regulations in other jurisdictions.

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• We are subject to cybersecurity risks to operational systems, security systems, and infrastructure owned by Allison or third-party vendors or suppliers.

  We and certain of our customers and third-party providers have experienced cyberattacks and other incidents in the past and will continue to experience varying degrees of cyberattacks and incidents in the future. While to date no cybersecurity incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. As a provider of defense products and services to the U.S. government and foreign governments, we are subject to a heightened risk of cyberattacks, including by foreign governments, violent extremist organizations, and transnational criminal organizations. In addition, because certain of our systems are integrated with third-party (e.g., dealers) systems and technology, the circumvention or failure of our cybersecurity measures could compromise the confidentiality, integrity, and availability of those third-party systems, and vice versa.

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