Wendy's Co

(1)Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) of The Wendy’s Company (“The Wendy’s Company” and, together with its subsidiaries, the “Company,” “we,” “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and, therefore, do not include all information and footnotes required by GAAP for complete financial statements. In our opinion, the Financial Statements contain all adjustments of a normal recurring nature necessary to present fairly our financial position as of September 28, 2025, the results of our operations for the three and nine months ended September 28, 2025 and September 29, 2024 and cash flows for the nine months ended September 28, 2025 and September 29, 2024. The results of operations for the nine months ended September 28, 2025 are not necessarily indicative of the results to be expected for the full 2025 fiscal year. The Financial Statements should be read in conjunction with the audited consolidated financial statements for The Wendy’s Company and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (the “Form 10-K”).

The principal 100% owned subsidiary of the Company is Wendy’s International, LLC and its subsidiaries (“Wendy’s”). The Company manages and internally reports its business in the following segments: (1) Wendy’s U.S., (2) Wendy’s International and (3) Global Real Estate & Development. See Note 18 for further information.

We report on a fiscal year consisting of 52 or 53 weeks ending on the Sunday closest to or on December 31. All three- and nine-month periods presented herein contain 13 weeks and 39 weeks, respectively. All references to years, quarters and months relate to fiscal periods rather than calendar periods.

Our significant interim accounting policies include the recognition of advertising funds expense in proportion to advertising funds revenue.

(2)Revenue

Disaggregation of Revenue

The following tables disaggregate revenue by segment and source:

Contract Balances

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers:

(a)Excludes funds collected from the sale of gift cards, which are primarily reimbursed to franchisees upon redemption at franchised restaurants and do not ultimately result in the recognition of revenue in the Company’s condensed consolidated statements of operations.

(b)Includes receivables related to “Sales” and “Franchise royalty revenue and fees.”

(c)Deferred franchise fees are included in “Accrued expenses and other current liabilities” and “Deferred franchise fees” and totaled $11,553 and $87,964, respectively, as of September 28, 2025, and $11,024 and $88,387, respectively, as of December 29, 2024.

Significant changes in deferred franchise fees are as follows:

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

(a)Represents franchise fees expected to be recognized for the remainder of 2025, which includes development-related franchise fees expected to be recognized over a duration of one year or less.

(3)Leases

Nature of Leases

The Company operates restaurants that are located on sites owned by us and sites leased by us from third parties. In addition, the Company owns sites and leases sites from third parties, which it leases and/or subleases to franchisees. The Company also leases restaurant, office and transportation equipment. As of September 28, 2025, the nature of restaurants operated by the Company and its franchisees was as follows:

Company as Lessee

The components of lease cost are as follows:

(a)Includes expenses for executory costs of $10,367 and $10,108 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $31,339 and $30,362 for the nine months ended September 28, 2025 and September 29, 2024, respectively, for which the Company is reimbursed by sublessees.

(b)Includes $30,899 and $32,197 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $94,120 and $96,270 for the nine months ended September 28, 2025 and September 29, 2024, respectively, recorded to “Franchise rental expense” for leased properties that are subsequently leased to franchisees. Also includes $6,886 and $7,299 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $20,773 and $22,089 for the nine months ended September 28, 2025 and September 29, 2024, respectively, recorded to “Cost of sales” for leases for Company-operated restaurants.

Company as Lessor

The components of lease income are as follows:

(a)Included in “Interest expense, net.”

(b)Includes sublease income of $41,548 and $43,698 recognized during the three months ended September 28, 2025 and September 29, 2024, respectively, and $128,999 and $131,530 for the nine months ended September 28, 2025 and September 29, 2024, respectively. Sublease income includes lessees’ variable payments to the Company for executory costs of $10,439 and $10,112 for the three months ended September 28, 2025 and September 29, 2024, respectively, and $31,148 and $30,356 for the nine months ended September 28, 2025 and September 29, 2024, respectively.

(4)Investments

The following is a summary of the carrying value of our investments:

Equity Method Investment

Wendy’s has a 50% share in a partnership in a Canadian restaurant real estate joint venture (“TimWen”) with a subsidiary of Restaurant Brands International Inc., a quick-service restaurant company that owns the Tim Hortons® brand (Tim Hortons is a registered trademark of Tim Hortons USA Inc.). The Company has significant influence over this investee. Such investment is accounted for using the equity method, under which our results of operations include our share of the income of the investee in “Other operating income, net.”

Presented below is activity related to our investment in TimWen included in our condensed consolidated financial statements:

(a)Purchase price adjustments that impacted the carrying value of the Company’s investment in TimWen are being amortized over the average original aggregate life of 21 years.

Other Investments in Equity Securities

During the nine months ended September 28, 2025, the Company recorded an impairment charge of $1,718 for the difference between the estimated fair value and the carrying value of an investment in equity securities. As a result, the carrying value of the investment waszero as of September 28, 2025.

(5) Long-Term Debt

Long-term debt consisted of the following:

Other Long-Term Debt

Wendy’s U.S. advertising fund has a revolving line of credit of $15,000, which was established to support the Company’s advertising fund operations and bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.25%. Borrowings under the line of credit are guaranteed by Wendy’s. During the three months ended March 30, 2025, the Company borrowed and repaid $15,000 and $8,500, respectively, under the revolving line of credit. During the three months ended June 29, 2025, the Company borrowed an additional $8,500 under the revolving line of credit. There wereno new borrowings or repayments under the revolving line of credit during the three months ended September 28, 2025. As a result, as of September 28, 2025, the Company had outstanding borrowings of $15,000 under the revolving line of credit, which is included in “Advertising funds restricted liabilities.”

(6)Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques under the accounting guidance related to fair value measurements are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. These inputs are classified into the following hierarchy:

•Level 1 Inputs - Quoted prices for identical assets or liabilities in active markets.

•Level 2 Inputs - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level 3 Inputs - Pricing inputs are unobservable for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value require significant management judgment or estimation.

Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Company’s financial instruments:

(a)The fair value of our other investments in equity securities is based on our review of information provided by the investment manager, which is based on observable price changes in orderly transactions for a similar investment of the same issuer.

(b)The fair values were based on quoted market prices in markets that are not considered active markets.

The carrying amounts of cash, accounts payable and accrued expenses approximate fair value due to the short-term nature of those items. The carrying amounts of accounts and notes receivable, net (both current and non-current) approximate fair value due to the effect of the related allowance for doubtful accounts. Our cash equivalents are the only financial assets measured and recorded at fair value on a recurring basis.

Non-Recurring Fair Value Measurements

Assets and liabilities remeasured to fair value on a non-recurring basis resulted in impairment that we have recorded to “Impairment of long-lived assets” in our condensed consolidated statements of operations.

Total impairment losses may reflect the impact of remeasuring long-lived assets held and used (including land, buildings, leasehold improvements, favorable lease assets and right-of-use assets) to fair value as a result of (1) the deterioration in operating performance of certain Company-operated restaurants and (2) the Company’s decision to lease and/or sublease the land and/or buildings to franchisees in connection with the sale or anticipated sale of restaurants, including any subsequent lease modifications. The fair values of long-lived assets held and used presented in the tables below represent the remaining carrying value and were estimated based on either discounted cash flows of future anticipated lease and sublease income or discounted cash flows of future anticipated Company-operated restaurant performance. Total impairment losses may also include the impact of remeasuring long-lived assets held for sale. The fair values of long-lived assets held for sale presented in the tables below represent the remaining carrying value and were estimated based on current market values. See Note 13 for further information on impairment of our long-lived assets.

(7)Income Taxes

The Company’s effective tax rate for the three months ended September 28, 2025 and September 29, 2024 was 30.0% and 27.9%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the three months ended September 28, 2025 primarily due to state income taxes, the tax effects of our foreign operations and share-based compensation.

The Company’s effective tax rate for the nine months ended September 28, 2025 and September 29, 2024 was 28.6% and 27.3%, respectively. The Company’s effective tax rate varied from the U.S. federal statutory rate of 21% for the nine months ended September 28, 2025 primarily due to state income taxes and the tax effects of our foreign operations.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key provisions include the permanent extension of several business tax incentives originally established under the 2017 Tax Cuts and Jobs Act, as well as changes to provisions related to bonus depreciation, and research and development. The Company is currently evaluating the impact of the OBBBA on our condensed consolidated financial statements. We currently expect that these changes will have an impact on the Company’s current and deferred tax assets and liabilities as well as a favorable impact on the amount of cash taxes paid.

(8)Net Income Per Share

The calculation of basic and diluted net income per share was as follows:

Basic net income per share for the three and nine months ended September 28, 2025 and September 29, 2024 was computed by dividing net income amounts by the weighted average number of shares of common stock outstanding. Diluted net income per share was computed by dividing net income by the weighted average number of basic shares outstanding plus the potential common share effect of dilutive stock options and restricted shares. We excluded potential common shares of 10,193 and 8,823 for the three and nine months ended September 28, 2025, respectively, and 8,605 and 7,667 for the three and nine months ended September 29, 2024, respectively, from our diluted net income per share calculation as they would have had anti-dilutive effects.

(9)Stockholders’ Equity

Dividends

During the first, second, and third quarters of 2025, the Company paid dividends per share of $.25, $.14 and $.14, respectively. During each of the first, second, and third quarters of 2024, the Company paid dividends per share of $.25.

Repurchases of Common Stock

In January 2023, our Board of Directors authorized a repurchase program for up to $500,000 of our common stock through February 28, 2027, when and if market conditions warrant and to the extent legally permissible (the “January 2023 Authorization”). During the nine months ended September 28, 2025, the Company repurchased 14,361 shares under the January 2023 Authorization with an aggregate purchase price of $200,000, excluding excise tax of $1,930 and commissions of $201. During the nine months ended September 28, 2025, the Company paid $565 in excise tax on shares repurchased during 2024. As of September 28, 2025, the Company had $35,000 of availability remaining under the January 2023 Authorization.

During the nine months ended September 29, 2024, the Company repurchased 3,447 shares under the January 2023 Authorization with an aggregate purchase price of $59,637, of which $203 was accrued as of September 29, 2024, and excluding excise tax of $441 and commissions of $49.

Accumulated Other Comprehensive Loss

The following table provides a rollforward of accumulated other comprehensive loss, which is entirely comprised of foreign currency translation:

(10)System Optimization Gains, Net

The Company’s system optimization initiative included a shift from Company-operated restaurants to franchised restaurants over time, through acquisitions and dispositions, as well as facilitating franchisee-to-franchisee restaurant transfers (“Franchise Flips”). As of September 28, 2025, Company-operated restaurant ownership was approximately 5% of the total system. While the Company has no plans to move its ownership away from approximately 5% of the total system, the Company expects to continue to optimize the Wendy’s system through Franchise Flips, as well as evaluating strategic acquisitions of franchised restaurants and strategic dispositions of Company-operated restaurants to existing and new franchisees, to further strengthen the franchisee base and drive new restaurant development. During the nine months ended September 28, 2025 and September 29, 2024, the Company facilitatedone and 14 Franchise Flips, respectively. Additionally, during the nine months ended September 28, 2025 and September 29, 2024, the Company completed the sale offive andone Company-operated restaurants to franchisees, respectively.

Gains and losses recognized on dispositions are recorded to “System optimization gains, net” in our condensed consolidated statements of operations. Costs related to acquisitions and dispositions under our system optimization initiative are recorded to “Reorganization and realignment costs.” All other costs incurred related to facilitating Franchise Flips are recorded to “Franchise support and other costs.”

The following is a summary of the disposition activity recorded as a result of our system optimization initiative:

(a)Net assets sold consisted primarily of land and equipment.

(b)The three and nine months ended September 29, 2024 represent the recognition of deferred gains as a result of the resolution of certain contingencies related to the extension of lease terms for restaurants previously sold to franchisees.

(c)During the three and nine months ended September 28, 2025, the Company received net cash proceeds of $5 and $1,305, respectively, primarily from the sale of surplus and other properties. During the three and nine months ended September 29, 2024, the Company received net cash proceeds of $1,787 and $2,388, respectively, primarily from the sale of surplus and other properties.

Assets Held for Sale

As of September 28, 2025 and December 29, 2024, the Company had assets held for sale of $4,831 and $2,833, respectively, primarily consisting of surplus properties. Assets held for sale are included in “Prepaid expenses and other current assets.”

(11) Acquisition

During the nine months ended September 28, 2025, the Company acquired 35 restaurants from a franchisee. The Company did not incur any material acquisition-related costs associated with the acquisition and the transaction was not significant to our condensed consolidated financial statements. The table below presents the allocation of the total purchase price to the preliminary fair value of assets acquired and liabilities assumed for restaurants acquired from a franchisee:

(a)The fair value of the assets acquired are provisional amounts as of September 28, 2025, pending final purchase accounting adjustments. The Company utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process.

(12)Reorganization and Realignment Costs

The following is a summary of the initiatives included in “Reorganization and realignment costs:”

Organizational Redesign

In February 2023, the Board of Directors approved a plan to redesign the Company’s organizational structure to better support the execution of the Company’s long-term growth strategy by maximizing organizational efficiency and streamlining decision making (the “Organizational Redesign Plan”). Additionally, in January 2024, the Board of Directors announced the appointment of a new President and Chief Executive Officer and the departure of the Company’s previous President and Chief Executive Officer. The Company expects to incur total costs of approximately $17,000 related to the Organizational Redesign Plan, including costs related to the 2024 succession of the President and Chief Executive Officer role. During the nine months ended September 28, 2025, the Company recognized costs totaling $(820), which primarily included a reversal of a severance accrual. During the nine months ended September 29, 2024, the Company recognized costs totaling $8,327, which primarily included severance and related employee costs. The Company expects to incur additional costs aggregating approximately $400, comprised primarily of share-based compensation. The Company expects costs related to the Organizational Redesign Plan to continue into 2026.

The following is a summary of the costs recorded as a result of the Organizational Redesign Plan:

(a)The three and nine months ended September 28, 2025 includes a reversal of an accrual as a result of a change in estimate.

(b)Total incurred since inception primarily represents the accelerated recognition of share-based compensation resulting from the termination of employees under the Organizational Redesign Plan.

As of September 28, 2025, the accruals for the Organizational Redesign Plan are included in “Accrued expenses and other current liabilities.” The tables below present a rollforward of our accruals for the Organizational Redesign Plan.

Other Reorganization and Realignment Plans

Costs incurred under the Company’s other reorganization and realignment plans were not material during the nine months ended September 28, 2025 and September 29, 2024. The Company does not expect to incur any material additional costs under these plans.

(13)Impairment of Long-Lived Assets

The Company records impairment charges as a result of (1) the deterioration in operating performance of certain Company-operated restaurants, (2) the Company’s decision to lease and/or sublease properties to franchisees in connection with the sale or anticipated sale of Company-operated restaurants, including any subsequent lease modifications and (3) classifying surplus properties as held for sale.

The following is a summary of impairment losses recorded, which represent the excess of the carrying amount over the fair value of the affected assets and are included in “Impairment of long-lived assets:”

(14)Supplemental Cash Flow Information

The following table includes supplemental non-cash investing and financing activities:

The following table includes a reconciliation of cash, cash equivalents and restricted cash:

(15)Guarantees and Other Commitments and Contingencies

Except as described below, the Company did not have any significant changes in guarantees and other commitments and contingencies during the current fiscal period since those reported in the Form 10-K. Refer to the Form 10-K for further information regarding the Company’s additional commitments and obligations.

Lease Guarantees

Wendy’s has guaranteed the performance of certain leases and other obligations, primarily from former Company-operated restaurant locations now operated by franchisees, amounting to $95,072 as of September 28, 2025. These leases extend through 2045. We have had no judgments against us as guarantor of these leases as of September 28, 2025. In the event of default by a franchise owner where Wendy’s is called upon to perform under its guarantee, Wendy’s has the ability to pursue repayment from the franchise owner. The liability recorded for our probable exposure associated with these lease guarantees was not material as of September 28, 2025.

Letters of Credit

As of September 28, 2025, the Company had outstanding letters of credit with various parties totaling $28,991. Substantially all of the outstanding letters of credit include amounts outstanding against the 2021-1 Variable Funding Senior Secured Notes, Class A-1. We do not expect any material loss to result from these letters of credit.

(16)Transactions with Related Parties

Except as described below, the Company did not have any significant changes in or transactions with its related parties during the current fiscal period since those reported in the Form 10-K.

TimWen Lease and Management Fee Payments

A wholly-owned subsidiary of Wendy’s leases restaurant facilities from TimWen, which are then subleased to franchisees for the operation of Wendy’s/Tim Hortons combo units in Canada. Wendy’s paid TimWen $15,960 and $16,065 under these lease agreements during the nine months ended September 28, 2025 and September 29, 2024, respectively, which has been recorded to “Franchise rental expense.” In addition, TimWen paid Wendy’s a management fee under the TimWen joint venture agreement of $174 and $179 during the nine months ended September 28, 2025 and September 29, 2024, respectively, which is included as a reduction to “General and administrative.”

Transactions with QSCC

Wendy’s has a purchasing co-op relationship structure with its franchisees that establishes Quality Supply Chain Co-op, Inc. (“QSCC”). QSCC manages, for the Wendy’s system in the U.S. and Canada, contracts for the purchase and distribution of food, proprietary paper, operating supplies and equipment under national agreements with pricing based upon total system volume. QSCC’s supply chain management facilitates continuity of supply and provides consolidated purchasing efficiencies while monitoring and seeking to minimize possible obsolete inventory throughout the Wendy’s supply chain in the U.S. and Canada.

Wendy’s and its franchisees pay sourcing fees to third-party vendors on certain products sourced by QSCC. Such sourcing fees are remitted by these vendors to QSCC and are the primary means of funding QSCC’s operations. In addition, QSCC collects certain rebates, price variance and other recoveries, technology fees, convention fees and other funding from third-party vendors as part of the administration and management of the Wendy’s supply chain in the U.S. and Canada. Should QSCC’s sourcing fees exceed its expected needs, QSCC’s board of directors may return some or all of the excess to its members in the form of a patronage dividend. Wendy’s recorded its share of patronage dividends of $118 during the nine months ended September 28, 2025, all of which is included as a reduction of “Cost of sales.” Wendy’s recorded its share of patronage dividends of $3,493 during the nine months ended September 29, 2024, of which $2,909 is included in “Other operating income, net” and $584 is included as a reduction of “Cost of sales.”

Transactions with Yellow Cab

Certain family members and/or affiliates of Mr. Nelson Peltz, our former Chairman and Chairman Emeritus, Mr. Peter May, our Senior Vice Chairman, and Mr. Matthew Peltz, our former Vice Chairman, hold minority ownership interests in Yellow Cab Holdings, LLC (“Yellow Cab”), a Wendy’s franchisee that, as of September 28, 2025 owned and operated 89 Wendy’s restaurants, and/or certain of the operating companies managed by Yellow Cab. In addition, Mr. Bradley Peltz, a director of the Company, is a Managing Director of, and holds a minority ownership interest in, Yellow Cab. During the nine months ended September 28, 2025 and September 29, 2024, the Company recognized $11,491 and $11,397, respectively, in royalty, advertising fund, lease and other income from Yellow Cab and related entities. In all transactions involving Yellow Cab, the Company’s standard franchisee recruiting and approval processes were followed, no modifications were made to the Company’s standard franchise agreements or related documents, and all deal terms and transaction documents were negotiated and executed on an arm’s-length basis, consistent with the Company’s comparable franchise transactions and relationships. As of September 28, 2025 and December 29, 2024, $1,050 and $1,132, respectively, was due from Yellow Cab for such income, which is included in “Accounts and notes receivable, net” and “Advertising funds restricted assets.”

Transactions with AMC

Ms. Kristin Dolan, a director of the Company, serves as the Chief Executive Officer of AMC Networks Inc. (“AMC”). During the nine months ended September 28, 2025 and September 29, 2024, the Company purchased approximately $800 and $1,600, respectively, of advertising time from a subsidiary of AMC. The Company’s advertising spend with AMC was made in the ordinary course of business and approved on an arm’s-length basis, consistent with the Company’s comparable advertising decisions. As of September 28, 2025 and December 29, 2024, approximately $15 and $17, respectively, was due to AMC for such advertising time, which is included in “Advertising funds restricted liabilities.”

(17)Legal and Environmental Matters

The Company is involved in litigation and claims incidental to our business. We provide accruals for such litigation and claims when we determine it is probable that a liability has been incurred and the loss is reasonably estimable. The Company believes it has adequate accruals for all of its legal and environmental matters. We cannot estimate the aggregate possible range of loss for our existing litigation and claims due to various reasons, including, but not limited to, many proceedings being in preliminary stages, with various motions either yet to be submitted or pending, discovery yet to occur and significant factual matters unresolved. In addition, most cases seek an indeterminate amount of damages and many involve multiple parties. Predicting the outcomes of settlement discussions or judicial or arbitral decisions is thus inherently difficult and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

(18) Segment Information

Wendy’s U.S. revenue, significant segment expenses and segment adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) are as follows:

(a)Includes advertising fund expense of $5,977 and $13,386 for the three and nine months ended September 29, 2024, respectively, related to the Company’s funding of incremental advertising. There wasno funding of incremental advertising during the three and nine months ended September 28, 2025.

(b)Other segment items for the three and nine months ended September 28, 2025 and September 29, 2024 primarily include professional fees.

Wendy’s International revenue, significant segment expenses and segment adjusted EBITDA are as follows:

(a)Includes advertising fund expense of $191 and $533 for the three and nine months ended September 28, 2025, respectively, and $622 and $1,387 for the three and nine months ended September 29, 2024, respectively, related to the Company’s funding of incremental advertising. In addition, includes other international-related advertising deficit of $650 and $1,769 for the three and nine months ended September 28, 2025, respectively, and $170 and $640 for the three and nine months ended September 29, 2024, respectively.

(b)Other segment items for the three and nine months ended September 28, 2025 and September 29, 2024 primarily include franchise support and other costs.

Global Real Estate & Development revenue, significant segment expenses and segment adjusted EBITDA are as follows:

(a)Other segment items primarily include equity in earnings from our TimWen joint venture, gains on sales-type leases and franchise support and other costs. Equity in earnings from our TimWen joint venture was $3,081 and $8,393 for the three and nine months ended September 28, 2025, respectively, and $3,074 and $8,623 for the three and nine months ended September 29, 2024, respectively.

The following table reconciles profit by segment to the Company’s consolidated income before income taxes:

(a)Includes corporate overhead costs, such as employee compensation and related benefits.

(19) New Accounting Standards

Accounting for and Disclosure of Software Costs

In September 2025, the Financial Accounting Standards Board (“FASB”) issued an amendment to modernize the accounting for costs related to internal-use software, improving the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendment is effective commencing with our 2028 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements.

Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued an amendment to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets for revenue arising from contracts with customers. The amendment is effective commencing with our 2026 fiscal year. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued an amendment to expand disclosure requirements related to certain income statement expenses. The amendment requires disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements.

In January 2025, the FASB issued an update that clarified that the amendment is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

Income Tax Disclosures

In December 2023, the FASB issued an amendment to enhance its income tax disclosure requirements. The amendment requires annual disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The amendment also requires annual disclosure of income taxes paid disaggregated by federal, state and foreign taxes and by individual jurisdictions in which income taxes paid is equal to or greater than 5% of total income taxes paid. The amendment is effective commencing with our 2025 fiscal year. The Company does not expect the guidance to have a material impact on our condensed consolidated financial statements.