SEDAR Interim Financial Statements

Table of Contents Consolidated Interim Financial Statements Consolidated income statement 1 Consolidated statement of comprehensive income 2 Consolidated statement of financial position 3 Consolidated statement of changes in equity 4 Consolidated statement of cash flows 5 Notes to the Consolidated Interim Financial Statements Note 1 - Nature of operations and summary of material accounting policies 6 Note 2 - Operating segments and geographic information 7 Note 3 - Debt facilities and finance expense – net 10 Note 4 - Share capital and earnings per share 10 Note 5 - Supplementary cash flows information 11 Note 6 - Fair value of financial instruments 11 Consolidated Income Statement Three months ended December 31 Nine months ended December 31 (Unaudited) (amounts in millions of Canadian dollars, except per share amounts) Notes 2025 2024 2025 2024 Revenue 2 $ 1,252.1 $ 1,223.4 $ 3,587.3 $ 3,432.5 Cost of sales 889.9 883.8 2,597.5 2,523.1 Gross profit $ 362.2 $ 339.6 $ 989.8 $ 909.4 Research and development expenses 26.0 28.7 99.7 101.8 Selling, general and administrative expenses 161.7 140.2 469.4 401.3 Other (gains) and losses 4.0 (0.1) (1.4) (3.7) Share of after-tax profit of equity accounted investees 2 (25.3) (19.2) (62.8) (63.2) Restructuring, integration and acquisition costs — — — 56.5 Gain on remeasurement of previously held equity interest — (72.6) — (72.6) Operating income $ 195.8 $ 262.6 $ 484.9 $ 489.3 Finance expense – net 3 54.1 56.6 165.6 159.0 Earnings before income taxes $ 141.7 $ 206.0 $ 319.3 $ 330.3 Income tax expense 29.6 34.8 70.9 53.5 Net income $ 112.1 $ 171.2 $ 248.4 $ 276.8 Attributable to: Equity holders of the Company $ 108.9 $ 168.6 $ 240.0 $ 269.4 Non-controlling interests 3.2 2.6 8.4 7.4 Earnings per share attributable to equity holders of the Company Basic and diluted 4 $ 0.34 $ 0.53 $ 0.75 $ 0.84 The accompanying notes form an integral part of these Consolidated Interim Financial Statements. Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 1 Consolidated Statement of Comprehensive Income Three months ended December 31 Nine months ended December 31 (Unaudited) (amounts in millions of Canadian dollars) 2025 2024 2025 2024 Net income $ 112.1 $ 171.2 $ 248.4 $ 276.8 Items that may be reclassified to net income Foreign currency exchange differences on translation of foreign operations $ (85.1) $ 248.8 $ (182.4) $ 315.7 Net gain (loss) on hedges of net investment in foreign operations 26.2 (127.8) 90.5 (122.5) Reclassification to income of gains on foreign currency exchange differences (1.2) (7.8) (4.9) (7.9) Net gain (loss) on cash flow hedges 6.0 (35.7) 12.6 (36.8) Reclassification to income of losses on cash flow hedges 1.8 10.9 6.7 15.8 Income taxes (3.1) 11.9 (5.8) 9.8 $ (55.4) $ 100.3 $ (83.3) $ 174.1 Items that will never be reclassified to net income Remeasurement of defined benefit pension plan obligations $ 8.2 $ (5.7) $ 62.2 $ (59.9) Income taxes (2.2) 1.5 (16.5) 15.9 $ 6.0 $ (4.2) $ 45.7 $ (44.0) Other comprehensive (loss) income $ (49.4) $ 96.1 $ (37.6) $ 130.1 Total comprehensive income $ 62.7 $ 267.3 $ 210.8 $ 406.9 Attributable to: Equity holders of the Company $ 60.4 $ 262.1 $ 204.0 $ 396.3 Non-controlling interests 2.3 5.2 6.8 10.6 The accompanying notes form an integral part of these Consolidated Interim Financial Statements. Consolidated Interim Financial Statement 2 I CAE Third Quarter Report 2026 Consolidated Statement of Financial Position (Unaudited) December 31 M --- arch 31 (amounts in millions of Canadian dollars) 2025 2025 Assets Cash and cash equivalents $ 463.7 $ 293.7 Accounts receivable 529.0 612.0 Contract assets 463.7 482.2 Inventories 527.9 595.0 Prepayments 81.1 78.2 Income taxes recoverable 70.6 59.0 Derivative financial assets 25.1 23.5 Total current assets $ 2,161.1 $ 2,143.6 Property, plant and equipment 2,983.6 2,989.5 Right-of-use assets 749.6 788.0 Intangible assets 3,707.6 3,871.0 Investment in equity accounted investees 564.8 559.1 Employee benefits assets 32.8 11.6 Deferred tax assets 128.8 191.8 Derivative financial assets 2.1 1.4 Other non-current assets 695.2 657.8 Total assets $ 11,025.6 $ 11,213.8 Liabilities and equity Accounts payable and accrued liabilities $ 1,020.6 $ 1,190.8 Provisions 25.9 34.5 Income taxes payable 22.1 18.4 Contract liabilities 1,040.3 1,001.6 Current portion of long-term debt 242.9 399.0 Derivative financial liabilities 11.5 42.2 Total current liabilities $ 2,363.3 $ 2,686.5 Provisions 14.0 14.3 Long-term debt 3,003.1 3,071.4 Employee benefits obligations 106.0 134.1 Deferred tax liabilities 36.9 40.7 Derivative financial liabilities 5.8 22.4 Other non-current liabilities 246.5 268.4 Total liabilities $ 5,775.6 $ 6,237.8 Equity Share capital $ 2,377.5 $ 2,327.1 Contributed surplus 94.7 69.8 Accumulated other comprehensive income 300.1 381.8 Retained earnings 2,395.4 2,112.8 Equity attributable to equity holders of the Company $ 5,167.7 $ 4,891.5 Non-controlling interests 82.3 84.5 Total equity $ 5,250.0 $ 4,976.0 Total liabilities and equity $ 11,025.6 $ 11,213.8 The accompanying notes form an integral part of these Consolidated Interim Financial Statements. Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 3 Attributable to equity holders of the Company Nine months ended December 31, 2025 Common shares Accumulated other (amounts in millions of Canadian dollars, Number of Stated Contributed comprehensive Retained Non-controlling Total except number of shares) Notes shares value surplus income earnings Total interests equity Balances as at March 31, 2025 320,265,108 $ 2,327.1 $ 69.8 $ 381.8 $ 2,112.8 $ 4,891.5 $ 84.5 $ 4,976.0 Net income — $ — $ — $ — $ 240.0 $ 240.0 $ 8.4 $ 248.4 Other comprehensive (loss) income — — — (81.7) 45.7 (36.0) (1.6) (37.6) Total comprehensive (loss) income — $ — $ — $ (81.7) $ 285.7 $ 204.0 $ 6.8 $ 210.8 Exercise of stock options 1,520,398 51.1 (9.1) — — 42.0 — 42.0 Settlement of equity-settled awards 2,951 0.1 (0.1) — — — — — Repurchase and cancellation of common shares 4 (106,000) (0.8) — — (3.1) (3.9) — (3.9) Equity-settled share-based payments expense, after tax — — 34.1 — — 34.1 — 34.1 Transactions with non-controlling interests — — — — — — (9.0) (9.0) Balances as at December 31, 2025 321,682,457 $ 2,377.5 $ 94.7 $ 300.1 $ 2,395.4 $ 5,167.7 $ 82.3 $ 5,250.0 Attributable to equity holders of the Company Nine months ended December 31, 2024 Common shares Accumulated other (amounts in millions of Canadian dollars, Number of Stated Contributed comprehensive Retained Non-controlling Total except number of shares) Notes shares value surplus income earnings Total interests equity Balances as at March 31, 2024 318,312,233 $ 2,252.9 $ 55.4 $ 154.0 $ 1,762.6 $ 4,224.9 $ 77.7 $ 4,302.6 Net income — $ — $ — $ — $ 269.4 $ 269.4 $ 7.4 $ 276.8 Other comprehensive income (loss) — — — 170.9 (44.0) 126.9 3.2 130.1 Total comprehensive income — $ — $ — $ 170.9 $ 225.4 $ 396.3 $ 10.6 $ 406.9 Exercise of stock optio --- ns 2,174,482 58.8 (8.6) — — 50.2 — 50.2 Settlement of equity-settled awards 43,557 1.2 (1.2) — — — — — Repurchase and cancellation of common shares 4 (856,230) (6.1) — — (15.2) (21.3) — (21.3) Equity-settled share-based payments expense, after tax — — 23.4 — — 23.4 — 23.4 Transactions with non-controlling interests — — — — — — (2.9) (2.9) Balances as at December 31, 2024 319,674,042 $ 2,306.8 $ 69.0 $ 324.9 $ 1,972.8 $ 4,673.5 $ 85.4 $ 4,758.9 The accompanying notes form an integral part of these Consolidated Interim Financial Statements. Consolidated Statement of Changes in Equity (Unaudited) 4 I CAE Third Quarter Report 2026 Consolidated Interim Financial Statements Consolidated Statement of Cash Flows Nine months ended December 31 (Unaudited) (amounts in millions of Canadian dollars) Notes 2025 2024 Operating activities Net income $ 248.4 $ 276.8 Adjustments for: Depreciation and amortization 2 343.2 304.2 Share of after-tax profit of equity accounted investees (62.8) (63.2) Deferred income taxes 41.6 9.4 Investment tax credits (20.1) (8.9) Equity-settled share-based payments expense 31.3 23.4 Defined benefit pension plans 12.6 25.8 Derivative financial assets and liabilities – net (7.8) (37.0) Gain on remeasurement of previously held equity interest — (72.6) Other 11.6 7.7 Changes in non-cash working capital 5 8.3 108.2 Net cash provided by operating activities $ 606.3 $ 573.8 Investing activities Business combinations, net of cash acquired $ — $ (308.0) Property, plant and equipment expenditures 2 (245.1) (247.2) Proceeds from disposal of property, plant and equipment 5.1 3.3 Intangible assets expenditures 2 (55.2) (70.3) Net payments to equity accounted investees (24.3) (5.0) Dividends received from equity accounted investees 61.0 28.7 Other (10.2) (5.2) Net cash used in investing activities $ (268.7) $ (603.7) Financing activities Net (repayment of) proceeds from borrowing under revolving credit facilities $ (0.2) $ 97.7 Proceeds from long-term debt 3 89.1 314.7 Repayment of long-term debt 3 (243.1) (237.8) Repayment of lease liabilities (47.4) (42.8) Net proceeds from the issuance of common shares 42.0 50.2 Repurchase and cancellation of common shares 4 (3.9) (21.3) Other (1.3) (0.9) Net cash (used in) provided by financing activities $ (164.8) $ 159.8 Effect of foreign currency exchange differences on cash and cash equivalents $ (2.8) $ 12.5 Net increase in cash and cash equivalents $ 170.0 $ 142.4 Cash and cash equivalents, beginning of period 293.7 160.1 Cash and cash equivalents, end of period $ 463.7 $ 302.5 The accompanying notes form an integral part of these Consolidated Interim Financial Statements. Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 5 Notes to the Consolidated Interim Financial Statements (Unaudited) (Unless otherwise stated, all tabular amounts are in millions of Canadian dollars) The consolidated interim financial statements were authorized for issue by the Board of Directors on February 12, 2026. NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF MATERIAL ACCOUNTING POLICIES Nature of operations CAE exists to make the world safer. CAE delivers cutting-edge training, simulation, and critical operations solutions to prepare aviation professionals and defence forces for the moments that matter. CAE Inc. and its subsidiaries’ (CAE or the Company) operations are managed through two segments: (i) Civil Aviation – Provides comprehensive training solutions for flight, cabin, maintenance, gro --- und personnel and air traffic controllers in commercial, business and helicopter aviation, a complete range of flight simulation training devices, ab initio pilot training and crew sourcing services, as well as airline operations digital solutions; (ii) Defense and Security – A global training and simulation provider delivering scalable, platform-independent solutions that enable and enhance force readiness and security. CAE Inc. is incorporated and domiciled in Canada with its registered and main office located at 8585 Côte-de-Liesse, Saint-Laurent, Québec, Canada, H4T 1G6. CAE common shares are traded on the Toronto Stock Exchange (TSX) and on the New York Stock Exchange (NYSE). Seasonality and cyclicality of the business The Company’s business operating segments are affected in varying degrees by market cyclicality and/or seasonality. As such, operating performance over a given interim period should not necessarily be considered indicative of full fiscal year performance. The Company’s business, revenues and cash flows are affected by certain seasonal trends. In the Civil Aviation segment, the level of training delivered is driven by the availability of pilots to train, which tends to be lower in the second quarter as pilots are flying more and training less, thus, driving lower revenues. In the Defense and Security segment, revenue and cash collection is not as consistent across quarters throughout the year as contract awards and availability of funding are influenced by customers’ budget cycles. Basis of preparation The material accounting policies applied in the preparation of these consolidated interim financial statements are consistent with those disclosed in Note 1 of the Company’s consolidated financial statements for the year ended March 31, 2025. These policies have been consistently applied to all periods presented. These condensed consolidated interim financial statements should be read in conjunction with the Company’s most recent annual consolidated financial statements for the year ended March 31, 2025. The consolidated interim financial statements have been prepared in accordance with Part I of the CPA Canada Handbook - Accounting, IFRS Accounting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) applicable to the preparation of interim financial statements, IAS 34 – Interim Financial Reporting. CAE Inc.’s consolidated financial statements are presented in Canadian dollars, which is also the parent company’s functional currency. Use of judgements, estimates and assumptions The preparation of the consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies, the reported amounts of assets and liabilities and disclosures at the date of the consolidated interim financial statements, as well as the reported amounts of revenues and expenses for the period reported. Actual results could differ from those estimates. Changes will be reported in the period in which they are identified. In preparing these consolidated interim financial statements, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements of the year ended March 31, 2025. Notes to the Consolidated Interim Financial Statements 6 I CAE Third Quarter Report 2026 NOTE 2 – OPERATING SE --- GMENTS AND GEOGRAPHIC INFORMATION The Company elected to organize its operating segments principally on the basis of its customer markets. The Company manages its operations through its two segments: Civil Aviation and Defense and Security. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Company has decided to disaggregate revenue from contracts with customers by segment, by products and services and by geographic regions as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. Results by segment The profitability measure employed by the Company for making decisions about allocating resources to segments and assessing segment performance is adjusted segment operating income. Adjusted segment operating income is calculated by taking operating income and adjusting for restructuring, integration and acquisition costs, and impairments and other gains and losses arising from significant strategic transactions or specific events, which gives an indication of the profitability of each segment because it does not include the impact of items not specifically related to the segment’s performance. For the nine months ended December 31, 2025, impairments and other gains and losses arising from significant strategic transactions or specific events consist of the executive management transition costs (recorded in selling, general and administrative expenses). The accounting principles used to prepare the information by operating segments are the same as those used to prepare the Company’s consolidated financial statements. The method used for the allocation of assets jointly used by operating segments and costs and liabilities jointly incurred (mostly corporate costs) between operating segments is based on the level of consumption when determinable and measurable, otherwise the allocation is based on a proportion of each segment’s cost of sales and revenue. Specified items included in the segment profitability measure are as follows: Defense Civil Aviation and Security Total Three months ended December 31 2025 2024 2025 2024 2025 2024 External revenue $ 717.2 $ 752.6 $ 534.9 $ 470.8 $ 1,252.1 $ 1,223.4 Depreciation and amortization 88.1 80.1 27.4 26.2 115.5 106.3 Share of after-tax profit of equity accounted investees 20.5 13.8 4.8 5.4 25.3 19.2 Gross profit 232.9 234.2 129.3 105.4 362.2 339.6 Operating income 141.8 223.4 54.0 39.2 195.8 262.6 Adjusted segment operating income 141.8 150.8 54.0 39.2 195.8 190.0 Defense Civil Aviation and Security Total Nine months ended December 31 2025 2024 2025 2024 2025 2024 External revenue $ 1,994.9 $ 1,980.9 $ 1,592.4 $ 1,451.6 $ 3,587.3 $ 3,432.5 Depreciation and amortization 261.7 228.1 81.5 76.1 343.2 304.2 Share of after-tax profit of equity accounted investees 44.4 47.9 18.4 15.3 62.8 63.2 Gross profit 632.6 611.2 357.2 298.2 989.8 909.4 Operating income 349.9 407.9 135.0 81.4 484.9 489.3 Adjusted segment operating income 358.1 373.1 140.8 100.1 498.9 473.2 Notes to the Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 7 Reconciliation of adjusted segment operating income is as follows: Defense Civil Aviation and Security Total Three months ended December 31 2025 2024 2025 2024 2025 2024 Operating income $ 141.8 $ 223.4 $ 54.0 $ 39.2 $ 195.8 $ 262.6 Impairments and other gains and losses arising from signi --- ficant strategic transactions or specific events: Gain on fair value remeasurement of SIMCOM — (72.6) — — — (72.6) Adjusted segment operating income $ 141.8 $ 150.8 $ 54.0 $ 39.2 $ 195.8 $ 190.0 Defense Civil Aviation and Security Total Nine months ended December 31 2025 2024 2025 2024 2025 2024 Operating income $ 349.9 $ 407.9 $ 135.0 $ 81.4 $ 484.9 $ 489.3 Restructuring, integration and acquisition costs — 37.8 — 18.7 — 56.5 Impairments and other gains and losses arising from significant strategic transactions or specific events: Executive management transition costs 8.2 — 5.8 — 14.0 — Gain on fair value remeasurement of SIMCOM — (72.6) — — — (72.6) Adjusted segment operating income $ 358.1 $ 373.1 $ 140.8 $ 100.1 $ 498.9 $ 473.2 Capital expenditures by segment, which consist of property, plant and equipment expenditures and intangible assets expenditures (excluding those acquired in business combinations), are as follows: Three months ended December 31 Nine months ended December 31 2025 2024 2025 2024 Civil Aviation $ 38.7 $ 71.2 $ 183.5 $ 219.8 Defense and Security 24.7 43.7 116.8 97.7 Total capital expenditures $ 63.4 $ 114.9 $ 300.3 $ 317.5 Assets and liabilities employed by segment The Company uses assets employed and liabilities employed to assess resources allocated to each segment. Assets employed include accounts receivable, contract assets, inventories, prepayments, property, plant and equipment, right-of-use assets, intangible assets, investment in equity accounted investees, derivative financial assets and other non-current assets. Liabilities employed include accounts payable and accrued liabilities, provisions, contract liabilities, derivative financial liabilities and other non-current liabilities. Assets and liabilities employed by segment are reconciled to total assets and liabilities as follows: December 31 March 31 2025 2025 Assets employed Civil Aviation $ 6,955.8 $ 7,263.4 Defense and Security 2,955.0 3,000.6 Assets not included in assets employed by segment 1,114.8 949.8 Total assets $ 11,025.6 $ 11,213.8 Liabilities employed Civil Aviation $ 1,264.0 $ 1,369.1 Defense and Security 951.0 1,009.3 Liabilities not included in liabilities employed by segment 3,560.6 3,859.4 Total liabilities $ 5,775.6 $ 6,237.8 Notes to the Consolidated Interim Financial Statements 8 I CAE Third Quarter Report 2026 Products and services information The Company's revenue from external customers for its products and services are as follows: Defense Civil Aviation and Security Total Three months ended December 31 2025 2024 2025 2024 2025 2024 Products $ 243.1 $ 290.4 $ 259.9 $ 195.2 $ 503.0 $ 485.6 Training, software and services 474.1 462.2 275.0 275.6 749.1 737.8 Total external revenue $ 717.2 $ 752.6 $ 534.9 $ 470.8 $ 1,252.1 $ 1,223.4 Defense Civil Aviation and Security Total Nine months ended December 31 2025 2024 2025 2024 2025 2024 Products $ 648.3 $ 721.1 $ 782.4 $ 636.7 $ 1,430.7 $ 1,357.8 Training, software and services 1,346.6 1,259.8 810.0 814.9 2,156.6 2,074.7 Total external revenue $ 1,994.9 $ 1,980.9 $ 1,592.4 $ 1,451.6 $ 3,587.3 $ 3,432.5 Geographic information The Company markets its products and services globally. Revenues are attributed to geographical regions based on the location of customers. Non-current assets other than financial instruments, deferred tax assets and employee benefits assets are attributed to geographical regions based on the location of the assets, excluding goodwill. Goodwill is presented by geog --- raphical regions based on the Company’s allocation of the related purchase price. Three months ended December 31 Nine months ended December 31 2025 2024 2025 2024 External revenue Canada $ 138.2 $ 145.5 $ 368.7 $ 357.0 United States 551.5 547.8 1,633.3 1,621.6 United Kingdom 64.2 67.9 185.4 207.4 Rest of Americas 25.1 32.0 85.1 106.6 Europe 220.0 182.3 563.6 484.9 Asia 215.9 214.9 621.6 542.6 Oceania and Africa 37.2 33.0 129.6 112.4 $ 1,252.1 $ 1,223.4 $ 3,587.3 $ 3,432.5 December 31 March 31 2025 2025 Non-current assets other than financial instruments, deferred tax assets and employee benefits assets Canada $ 1,517.7 $ 1,541.7 United States 4,337.7 4,534.7 United Kingdom 398.7 399.0 Rest of Americas 217.0 221.8 Europe 1,241.8 1,162.3 Asia 573.9 610.8 Oceania and Africa 194.6 188.2 $ 8,481.4 $ 8,658.5 Notes to the Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 9 NOTE 3 – DEBT FACILITIES AND FINANCE EXPENSE – NET Three months ended December 31 Nine months ended December 31 2025 2024 2025 2024 Finance expense: Long-term debt (other than lease liabilities) $ 36.2 $ 40.3 $ 111.3 $ 116.1 Lease liabilities 11.8 11.2 36.3 30.1 Other 12.2 11.2 35.2 31.9 Borrowing costs capitalized (1.5) (0.9) (4.8) (3.9) Finance expense $ 58.7 $ 61.8 $ 178.0 $ 174.2 Finance income: Loans and investment in finance leases $ (3.1) $ (3.5) $ (8.8) $ (10.4) Other (1.5) (1.7) (3.6) (4.8) Finance income $ (4.6) $ (5.2) $ (12.4) $ (15.2) Finance expense – net $ 54.1 $ 56.6 $ 165.6 $ 159.0 Revolving credit facility In June 2025, the Company extended the maturity date of its US$1.0 billion unsecured revolving credit facility by two years, until June 2030. Term loans In May 2025, the Company prepaid a US$125.0 million unsecured term loan due in July 2025. In June 2025, the Company extended the maturity date of a US$200.0 million syndicated term loan, bearing interest at a variable rate, until June 2027. In June 2025, the Company entered into an unsecured term loan agreement amounting to US$50.0 million maturing in June 2027, bearing interest at a variable rate. NOTE 4 – SHARE CAPITAL AND EARNINGS PER SHARE Share capital Repurchase and cancellation of common shares On June 6, 2025, the Company announced the renewal of the normal course issuer bid program (NCIB) to purchase, for cancellation, up to 16,019,294 of its common shares. The NCIB began on June 10, 2025 and will end on June 9, 2026 or on such earlier date when the Company completes its purchases or elects to terminate the NCIB. These purchases may be made through the facilities of the TSX or the NYSE, or in such other manner as may be permitted under applicable stock exchange rules and securities laws, at the prevailing market price at the time of acquisition, plus brokerage fees. All common shares purchased pursuant to the NCIB will be cancelled. During the three months ended December 31, 2025, the Company repurchased and cancelled a total of 44,100 common shares (2024 – nil) under the NCIB, at a weighted average price of $36.50 per common share (2024 – nil), for a total consideration of $1.6 million (2024 – nil). During the nine months ended December 31, 2025, the Company repurchased and cancelled a total of 106,000 common shares (2024 – 856,230) under the NCIB, at a weighted average price of $36.65 per common share (2024 - $24.85), for a total consideration of $3.9 million (2024 – $21.3 million). Earnings per share computation The denominators for the basic and diluted earnings per sh --- are computations are as follows: Three months ended December 31 Nine months ended December 31 2025 2024 2025 2024 Weighted average number of common shares outstanding 321,419,285 319,021,553 320,842,883 318,776,416 Effect of dilutive stock options and other equity-settled share-based payments 1,296,626 793,907 1,076,618 463,843 Weighted average number of common shares outstanding for diluted earnings per share calculation 322,715,911 319,815,460 321,919,501 319,240,259 For the three months ended December 31, 2025, stock options to acquire nil common shares (2024 – 1,845,100) have been excluded from the above calculation since their inclusion would have had an anti-dilutive effect. For the nine months ended December 31, 2025, stock options to acquire 5,800 common shares (2024 – 2,841,731) have been excluded from the above calculation since their inclusion would have had an anti-dilutive effect. Notes to the Consolidated Interim Financial Statements 10 I CAE Third Quarter Report 2026 NOTE 5 – SUPPLEMENTARY CASH FLOWS INFORMATION Changes in non-cash working capital are as follows: Nine months ended December 31 2025 2024 Accounts receivable $ 73.5 $ 122.2 Contract assets 15.4 32.4 Inventories 84.5 2.6 Prepayments (11.7) (23.8) Income taxes (13.7) (63.6) Accounts payable and accrued liabilities (183.7) (52.8) Provisions (9.4) (6.3) Contract liabilities 53.4 97.5 $ 8.3 $ 108.2 Supplemental information: Nine months ended December 31 2025 2024 Interest paid $ 145.6 $ 150.1 Interest received 13.2 15.3 Income taxes paid 38.2 82.9 NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of a financial instrument is determined by reference to the available market information at the reporting date. When no active market exists for a financial instrument, the Company determines the fair value of that instrument based on valuation methodologies as discussed below. In determining assumptions required under a valuation model, the Company primarily uses external, readily observable market data inputs. Assumptions or inputs that are not based on observable market data incorporate the Company’s best estimates of market participant assumptions. Counterparty credit risk and the Company’s own credit risk are taken into account in estimating the fair value of financial assets and financial liabilities. The following assumptions and valuation methodologies have been used to measure the fair value of financial instruments: (i) The fair value of cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities approximate their carrying values due to their short-term maturities; (ii) The fair value of derivative instruments, which include forward contracts, swap agreements and embedded derivatives accounted for separately and is calculated as the present value of the estimated future cash flows using an appropriate interest rate yield curve and forward foreign exchange rate. Assumptions are based on market conditions prevailing at each reporting date. The fair value of derivative instruments reflect the estimated amounts that the Company would receive or pay to settle the contracts at the reporting date; (iii) The fair value of the equity investments, which does not have a readily available market value, is estimated using a discounted cash flow model, which includes some assumptions that are not based on observable market prices or rates; (iv) The fair value of non-current receivables is estimated based on discounted cash flows using --- current interest rates for instruments with similar risks and remaining maturities; (v) The fair value of long-term debts, royalties obligations and other non-current liabilities are estimated based on discounted cash flows using current interest rates for instruments with similar risks and remaining maturities. Fair value hierarchy The fair value hierarchy reflects the significance of the inputs used in making the measurements and has the following levels: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices in markets that are not active) or indirectly (i.e. quoted prices for similar assets or liabilities); Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Each type of fair value is categorized based on the lowest level input that is significant to the fair value measurement in its entirety. Notes to the Consolidated Interim Financial Statements CAE Third Quarter Report 2026 I 11 The carrying values and fair values of financial instruments, by category, are as follows: December 31 March 31 2025 2025 Level Carrying value Fair value Carrying value Fair value Financial assets (liabilities) measured at FVTPL Cash and cash equivalents Level 1 $ 463.7 $ 463.7 $ 293.7 $ 293.7 Equity swap agreements Level 2 7.9 7.9 13.0 13.0 Forward foreign currency contracts Level 2 2.9 2.9 (6.4) (6.4) Derivative assets (liabilities) designated in a hedge relationship Foreign currency and interest rate swap agreements Level 2 (3.1) (3.1) (14.4) (14.4) Forward foreign currency contracts Level 2 2.2 2.2 (31.9) (31.9) Financial assets (liabilities) measured at amortized cost Accounts receivable(1) Level 2 468.4 468.4 567.7 567.7 Investment in finance leases Level 2 143.9 140.0 142.0 135.8 Other non-current assets(2) Level 2 94.4 94.4 79.5 79.5 Accounts payable and accrued liabilities(3) Level 2 (799.9) (799.9) (914.4) (914.4) Total long-term debt(4) Level 2 (2,487.5) (2,518.1) (2,684.7) (2,700.6) Other non-current liabilities(5) Level 2 (76.3) (73.2) (91.4) (84.8) Financial assets measured at FVOCI Equity investments Level 3 1.4 1.4 1.4 1.4 $ (2,182.0) $ (2,213.4) $ (2,645.9) $ (2,661.4) (1) Includes trade receivables, accrued receivables and certain other receivables. (2) Includes non-current receivables and certain other non-current assets. (3) Includes trade accounts payable, accrued liabilities, interest payable and current royalty obligations. (4) Excludes lease liabilities. The carrying value of long-term debt excludes transaction costs. (5) Includes non-current royalty obligations and other non-current liabilities. During the nine months ended December 31, 2025, there were no significant changes in level 3 financial instruments. Notes to the Consolidated Interim Financial Statements 12 I CAE Third Quarter Report 2026