CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Charles River Laboratories International, Inc. (the Company) in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal year 2025 as filed with the SEC on February 18, 2026. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.

Newly Adopted Accounting Pronouncements

In July 2025, the FASB issued Accounting Standards Update (ASU) 2025-05, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivables and Contract Assets.” ASU 2025-05 provides a practical expedient to assume that the current conditions as of the balance sheet date do not change for the remaining life of the asset if the expected credit losses were estimated under the reasonable and supportable approach. The ASU was effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods, and if the practical expedient was elected, the amendments in this update should be applied on a prospective basis. The Company’s adoption of this standard on December 28, 2025 on a prospective basis did not have a significant impact on the unaudited condensed consolidated financial statements as of and for the three and nine month periods ended September 26, 2026 or the related disclosures.

Newly Issued Accounting Pronouncements

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40) - Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 improves 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, including the methods that entities may use to develop software in the future. The ASU is effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this ASU may be adopted using either a prospective transition approach, a modified transition approach or a retrospective transition approach. The Company is currently evaluating the impact this new standard will have on the condensed consolidated financial statements and the related disclosures.

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (Subtopic 220-40)” which requires enhanced disclosure of income statement expense categories to improve transparency and provide financial statement users with more detailed information about the nature, amount and timing of expenses impacting financial performance. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU may be adopted using the prospective or retrospective methods. The Company is currently evaluating the impact this new standard will have on the related disclosures in the condensed consolidated financial statements.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for fiscal year 2025 as filed with the SEC on February 18, 2026.

Consolidation

The Company’s unaudited condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income attributable to noncontrolling interests in its unaudited condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Redeemable noncontrolling interests, where the noncontrolling interest holders have the ability to require the Company to purchase the remaining interests, are classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. Intercompany balances and transactions are eliminated in consolidation.

The Company’s fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end.

Segment Reporting

The Company reports its results inthree reportable segments: Discovery and Safety Assessment (DSA), Manufacturing Solutions (Manufacturing), and Research Models and Services (RMS).

The Company’s DSA reportable segment includes discovery and safety assessment services. The Company provides regulated and non-regulated DSA services to support the discovery, development, and regulatory-required safety testing of potential new drugs, includingin vitro (non-animal), in vivo (in research models) andin silico studies, laboratory support services, including bioanalytical and strategic non-clinical consulting and program management to support product development. In May 2026, the Company sold certain European Discovery Services businesses.

The Company’s Manufacturing reportable segment includes Microbial Solutions, which providesin vitro lot-release testing products, microbial detection products, and species identification services and Biologics Testing (Biologics), which performs specialized testing of biologics. In May 2026, the Company sold the contract development and manufacturing products and services (CDMO) business, reported in the Manufacturing segment.

The Company’s RMS reportable segment includes products and services offered within Research Models, Research Model Services, and Cell Solutions. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Insourcing Solutions (IS), which provides colony management of clients’ research operations (including recruitment, training, staffing, and management services) within the clients’ facilities and utilizing the Charles River Accelerator and Development Lab (CRADL™) offerings, which provide vivarium space to clients, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models. In May 2026, the Company sold the Cell Solutions business, reported in the RMS segment, which supplied controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

2. ACQUISITIONS AND DIVESTITURES.

Fiscal 2026 Acquisitions

PathoQuest SAS

On April 17, 2026, the Company completed the acquisition of an additional 79% equity interest in PathoQuest SAS (PathoQuest), a provider of next-generation sequencing solutions for manufacturing quality-control testing for biopharmaceutical companies, resulting in a 100% controlling interest. The total consideration for the PathoQuest acquisition was $67.4 million, net of $0.5 million acquired cash. This amount consists of $62.3 million of cash consideration, $5.6 million representing the fair value for the 21% strategic equity interest previously owned by the Company, and an offsetting estimated post-closing adjustment for working capital of $0.5 million. The acquisition was funded through a combination of cash on hand and borrowings under the Credit Facility. PathoQuest’s results are reported within the Company’s Manufacturing reportable segment. The Company incurred transaction and integration costs in connection with the acquisition of $1.6 million and $3.5 million for the three and nine months ended September 26, 2026, respectively, which was included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) have not been presented separately because PathoQuest financial results are not significant to the Company’s consolidated financial results.

K.F. Cambodia

On January 14, 2026, the Company completed the acquisition of certain assets of K.F. Cambodia Ltd (Cambodian NHP Supplier), a leading supplier of non-human primates (NHPs) located in Cambodia. The preliminary purchase price for the Cambodian NHP Supplier was $507.3 million, consisting of $335.0 million paid at closing and $172.3 million representing the acquisition date fair value of deferred consideration, which is payable upon the satisfaction of certain post-close conditions. During the three and nine months ended September 26, 2026, the Company paid $100.0 million and $170.0 million of deferred consideration, respectively, with the remaining balance of $5 million to be paid as of September 26, 2026. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers. The Company incurred transaction and integration costs in connection with the acquisition of $0.8 million and $13.3 million for the three and nine months ended September 26, 2026, respectively, which was included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income. Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) have not been presented separately because the Cambodian NHP Supplier’s financial results are not significant when compared to the Company’s consolidated financial results.

Purchase Price Information

The preliminary purchase price allocations were as follows:

The definite-lived intangible assets acquired were as follows:

Divestitures

The Company routinely evaluates the strategic fit and fundamental performance of its global businesses, divesting operations that do not meet key business criteria. As part of this ongoing assessment, the Company determined that certain capital could be better deployed in other long-term growth opportunities.

Divestiture of Certain European Discovery Services Businesses

On May 22, 2026, the Company sold certain European Discovery Services businesses (European Discovery Divestiture) to IQVIA Inc. (IQVIA) for a purchase price of $126.4 million in cash, net of costs to sell and subject to certain customary closing adjustments. The Company may also earn up to $10.0 million of contingent payments, which are tied to future performance. The contingent payments have been valued at $2.8 million using a discounted probability weighted model. The results of the European Discovery Services businesses were reported in the Company’s DSA reportable segment. During the three and nine months ended September 26, 2026, the Company recorded a pre-tax gain on the divestiture of $1.1 million and $1.4 million, respectively, within Other expense, net on the unaudited condensed consolidated statements of income.

Divestiture of CDMO and Cell Solutions

On May 6, 2026, the Company sold its CDMO and Cell Solutions businesses (CDMO and Cell Solutions Divestiture) to GI Partners (GI) for net cash paid to the buyer of $12.4 million, net of costs to sell and subject to certain customary closing adjustments. Additionally, the Company may be required to fund up to $45.0 million of future EBITDA losses and capital expenditures of the divested businesses to GI over afour-year period, which is expected to be fully used by GI. Conversely, the Company may also earn up to $50.0 million of contingent payments, which are tied to future performance and achievement of milestones. The contingent payments receivable have been valued at $15.7 million using a discounted probability weighted model. The results of the CDMO and Cell Solutions businesses were reported in the Company’s Manufacturing reportable segment and RMS reportable segment, respectively. These businesses and the related assets and liabilities met the criteria for held-for-sale as of March 28, 2026, resulting in a pre-tax loss of $118.0 million recognized for the three months ended March 28, 2026, which represents the excess of its carrying value over the fair value less cost to sell. Upon closing of the sale, a $63.7 million pre-tax loss on divestiture was recognized for the three months ended June 27, 2026. No pre-tax loss was recognized on the divestiture for the three months ended September 26, 2026. The Company recognized the pre-tax loss on divestiture of $181.7 million for the nine months ended September 26, 2026 within Other expense, net on the unaudited condensed consolidated statements of income.

As a result of the divestitures, the Company derecognized the net assets of the European Discovery Divestiture and CDMO and Cell Solutions Divestiture as follows:

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by reportable segment and timing of transfer of products or services:

Contract Balances from Contracts with Customers

The following table provides information about client receivables, contract assets, and contract liabilities from contracts with customers:

Approximately 90% of unbilled revenue as of December 27, 2025, which was $201 million, was billed during the nine months ended September 26, 2026. Approximately 90% of unbilled revenue as of December 28, 2024, which was $212 million, was billed during the nine months ended September 27, 2025.

Approximately 70% of contract liabilities as of December 27, 2025, which was $256 million, were recognized as revenue during the nine months ended September 26, 2026. Approximately 75% of contract liabilities as of December 28, 2024, which was $283 million, were recognized as revenue during the nine months ended September 27, 2025.

When the Company does not have the unconditional right to advanced billings, both advanced client payments and unpaid advanced client billings are excluded from deferred revenue, with the advanced billings also being excluded from client receivables. The Company excluded approximately $60 million and $43 million of unpaid advanced client billings from both client receivables and deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of September 26, 2026 and December 27, 2025, respectively.

Allowance for Credit Losses

The following is a summary of the activity of the Company’s allowance for credit losses:

Net recoveries were $0.9 million during the nine months ended September 26, 2026, while net provision expenses were $2.8 million during the nine months ended September 27, 2025. These amounts include recoveries of balances previously written off, which are excluded from the table above.

Transaction Price Allocated to Future Performance Obligations

The Company discloses the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 26, 2026. Excluded from the disclosure is the value of unsatisfied performance obligations for contracts with an original expected length of one year or less, contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed, and service revenue recognized in accordance with ASC 842, “Leases.” The aggregate amount of transaction price allocated to the remaining performance obligations for all open customer contracts as of September 26, 2026 was $675.3 million. The Company will recognize revenues for these performance obligations as they are satisfied, approximately 60% of which is expected to occur within the next twelve months and the remainder recognized thereafter during the remaining contract term.

Other Performance Obligations

As part of the Company’s service offerings, the Company has identified performance obligations related to leasing Company owned assets. In certain arrangements, customers obtain substantially all of the economic benefits of the identified assets, which may include manufacturing suites and related equipment, and have the right to direct the assets’ use over the term of the contract. The associated revenue is recognized on a straight-line basis over the term of the lease, which is generally less than one year, and recorded within service revenue. The Company recognized $6.7 million and $12.1 million in lease revenue during the three months ended September 26, 2026 and September 27, 2025, respectively. The Company recognized $27.6 million and $35.7 million in lease revenue during the nine months ended September 26, 2026 and September 27, 2025, respectively. The decrease in lease revenue was primarily due to the CDMO divestiture in the second quarter of 2026. Due to the nature of these arrangements and timing of the contractual lease term, the remaining revenue to be recognized related to these lease performance obligations is not material to the unaudited condensed consolidated financial statements.

4. SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates inthree reportable segments: DSA, Manufacturing, and RMS. The reportable segments comprise the structure used by the Company’s Chief Executive Officer, who is the Chief Operating Decision Maker (CODM), to make key operating decisions and assess performance. These segments are strategic business units with differing products and services.

The Company’s CODM evaluates the segments’ operating performance based on operating income. Operating income is the measure of profit or loss regularly provided to and used by the CODM to assess performance and allocate resources. Operating income is defined as revenue less costs of revenue; selling, general, and administrative expenses; and amortization of intangible assets. For each segment, the CODM uses operating income in the annual budgeting and quarterly forecasting process when comparing to actual results. Asset information on a reportable segment basis is not disclosed as this information is not separately identified and internally reported to the Company’s CODM. The following table presents the results of operations by reportable segment:

Capital expenditures and depreciation and amortization (related to both intangible assets and certain assets acquired in business combinations) by reportable segment are as follows:

Revenue represents sales originating in entities physically located in the identified geographic area. Revenue by geographic area is as follows:

Long-lived assets consist of property, plant, and equipment, net. Long-lived assets by geographic area are as follows:

5. SUPPLEMENTAL CASH FLOW INFORMATION

Cash, cash equivalents and restricted cash are included in the accompanying unaudited condensed consolidated balance sheets as follows:

6. SUPPLEMENTAL BALANCE SHEET INFORMATION

The composition of other assets included in the accompanying unaudited condensed consolidated balance sheets is as follows:

The composition of other long-term liabilities included in the accompanying unaudited condensed consolidated balance sheets is as follows:

7. INVENTORY

Inventories

The composition of inventories is as follows:

Inventory step up amortization expense for the three months ended September 26, 2026 and September 27, 2025 was $5.9 million and $7.4 million, respectively. Inventory step up amortization expense for the nine months ended September 26, 2026 and September 27, 2025 was $7.4 million and $17.8 million, respectively.

8. PROPERTY, PLANT AND EQUIPMENT, NET

The composition of property, plant and equipment, net is as follows:

In March 2026, the Company completed the sale of certain assets at the Wilmington, Massachusetts site. The assets consisted of office, laboratory and mixed-use buildings within our RMS segment and unallocated corporate, and was sold to an unrelated third party for cash consideration of $60.1 million, net of costs to sell. In conjunction with the sale, the Company has entered into a long-term operating lease for certain buildings to support RMS and unallocated corporate operations. Upon meeting the criteria for sale leaseback, the Company derecognized the book value of $21.6 million and recognized a pre-tax gain of $38.5 million. The gain was recognized within the RMS reportable segment and unallocated corporate for $23.2 million and $15.3 million, respectively, and is included in Selling, general and administrative expenses for the nine months ended September 26, 2026 within the unaudited condensed consolidated statements of income. As of December 27, 2025, the Company included the above assets as held for sale within Other assets on the unaudited condensed consolidated balance sheets.

The following table details depreciation expense:

9. VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS

Venture capital investments are summarized below:

The Company also invests, with minority positions, directly in equity of predominantly privately held companies. Strategic investments are summarized below:

10. FAIR VALUE

Assets and liabilities measured at fair value on a recurring basis are summarized below:

The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the nine months ended September 26, 2026, there were no transfers between levels.

During the year ended December 27, 2025, there were no transfers between levels.

Contingent Consideration

The following table provides a rollforward of the contingent consideration related to the Company’s acquisitions and divestitures.

The Company estimates the fair value of contingent consideration obligations through valuation models, such as probability-weighted and option pricing models, which incorporate probability adjusted assumptions and simulations related to the achievement of the milestones and the likelihood of making related payments. The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain financial targets, forecasted results or targets, volatility, and discount rates. The remaining maximum potential payments are approximately $45.0 million, the full value of which is accrued as of September 26, 2026.

Debt Instruments

The book value of the Company’s revolving loans are variable rate loans carried at amortized cost which approximates the fair value. The fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, and is deemed to be Level 2 within the fair value hierarchy.

The book value of the Company’s Senior Notes are fixed rate obligations carried at amortized cost. Fair value is based on quoted market prices as well as borrowing rates available to the Company. As the fair value is based on significant other observable outputs, it is deemed to be Level 2 within the fair value hierarchy. The book value, excluding issuance costs, and fair value of the Company’s Senior Notes is summarized below:

11. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table provides a rollforward of the Company’s goodwill:

The increase in goodwill during the nine months ended September 26, 2026 is primarily related to the acquisitions of the Cambodian NHP Supplier in the DSA reportable segment and PathoQuest in the Manufacturing reportable segment; partially offset by the European Discovery Divestiture in the DSA reportable segment and the effect of foreign exchange.

Intangible Assets, Net

The following table displays intangible assets, net by major class:

The decrease in net intangible assets for the nine months ended September 26, 2026 related primarily to the derecognition of certain intangible assets associated with the European Discovery Divestiture, and to a lesser extent normal amortization over the useful lives; offset by an increase in certain intangible assets associated with the PathoQuest acquisition.

The following table details amortization expense of definite-lived intangible assets:

Amortization expense for the nine months ended September 27, 2025 includes $71.0 million of accelerated amortization expense as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers in 2025.

12. DEBT AND OTHER FINANCING ARRANGEMENTS

Long-term debt, net and finance leases consist of the following:

As of September 26, 2026 and December 27, 2025, the weighted average interest rate on the Company’s debt was 4.11% and 4.05%, respectively.

Revolving Credit Facility

The Company has a revolving credit facility (Credit Facility) that provides for up to $2.0 billion of multi-currency revolving credit. The Credit Facility has a maturity date of December 2029, with no required scheduled payment before that date. The interest rates applicable to the Credit Facility are equal to (A) for revolving loans denominated in U.S. dollars, at the Company’s option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon the Company’s leverage ratio.

Letters of Credit

As of September 26, 2026 and December 27, 2025, the Company had $21.7 million and $22.0 million, respectively, in outstanding letters of credit.

13. EQUITY AND NONCONTROLLING INTERESTS

Earnings Per Share

The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share:

Treasury Shares

On October 29, 2025, the Company’s Board of Directors approved a stock repurchase program of $1.0 billion. During the nine months ended September 26, 2026, the Company repurchased 1.7 million shares of common stock for $300.0 million under the stock repurchase program. As of September 26, 2026, the Company had $700.0 million remaining on the authorized stock repurchase program.

The Company’s stock-based compensation plans permit the netting of common stock upon vesting of RSUs and PSUs in order to satisfy individual statutory tax withholding requirements. Under the current program, the Company acquired 0.1 million shares during thenine months ended September 26, 2026 and 0.1 million shares in the nine months ended September 27, 2025, for $20.8 million and $9.9 million, respectively, from such netting.

Accumulated Other Comprehensive Income (Loss)

Changes to each component of accumulated other comprehensive income (loss), net of income taxes, are as follows:

Redeemable Noncontrolling Interests

The Company has held and continues to hold redeemable noncontrolling interests. Since the Company has the right to purchase, and the noncontrolling interest holders have the right to require the Company to purchase the remaining interest, which represents a derivative embedded within the equity instrument, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities.

The redeemable noncontrolling interests are measured at the greater of (i) the redemption amount or (ii) the historical value resulting from the original acquisition date fair value, increased or decreased for the noncontrolling interest’s share of net income (loss), equity capital contributions and distributions. The fair value of the redeemable noncontrolling interest is determined using the income approach, with key assumptions being projected cash flows and discount rates based on market participant’s weighted average cost of capital. To the extent redemption value exceeds carrying value, adjustments are recorded to additional paid-in capital, with any cumulative excess of redemption value over fair value recorded in retained earnings, which impacts net income (loss) attributable to common shareholders used in the calculation of earnings (loss) per common share.

Noveprim

The Company holds a 90% ownership interest in Noveprim Group (Noveprim). The Company has the right to purchase, and the noncontrolling interest holders have the right to sell, the remaining 10% equity interest at a fixed redemption value that ranges from $47.0 million to $54.0 million depending on when exercised. The Company has the call option right to purchase the remaining 10% equity up until one month after the sixth anniversary of closing the 41% equity stake (December 2029). On the first anniversary of the expiration of the call option (December 2030), a 12-month put option will be triggered giving the seller the right to require the Company to acquire the remaining shares of the seller for $54.0 million. The redemption value is accreted to the put purchase price of $54.0 million using the interest method through December 2030. As of September 26, 2026, the redemption value of $43.2 million was less than the carrying value, resulting in a $0.3 million reversal of previously recognized adjustments to additional paid-in capital during the three months ended September 26, 2026. The cumulative adjustment to additional paid in capital for thenine months ended September 26, 2026 was$4.8 million. As of September 27, 2025, the redemption value of $40.5 million exceeded the carrying value, resulting in an adjustment to additional paid in capital of $4.0 million for the nine months ended September 27, 2025.

Nonredeemable Noncontrolling Interest

The Company has an investment in an entity whose financial results are consolidated in the Company’s unaudited condensed consolidated financial statements, as it has the ability to exercise control over this entity. The interest of the noncontrolling party in this entity has been recorded as nonredeemable noncontrolling interest within Equity in the accompanying unaudited condensed consolidated balance sheets. The activity within the nonredeemable noncontrolling interest was not material during the three and nine months ended September 26, 2026 and September 27, 2025.

14. INCOME TAXES

The Company’s effective tax rates were as follows:

The difference in the effective tax rate for the three and nine months ended September 26, 2026 compared to the corresponding prior year period was primarily attributable to a $201 million tax benefit resulting from the reversal of an unrecognized tax benefit reserve and related interest and penalties following the enactment of tax legislation and completion of certain tax requirements in a foreign jurisdiction.

For the three months ended September 26, 2026, the Company’s unrecognized tax benefit reserve decreased by $135.7 million to $22.5 million, primarily due to changes in applicable tax law enacted and completion of certain tax requirements in a foreign jurisdiction. For the three months ended September 26, 2026, the amount of unrecognized income tax benefits that would impact the effective tax rate decreased by $135.9 million to $17.4 million, primarily driven by the reversal discussed above. The accrued interest on unrecognized tax benefits was $2.8 million as of September 26, 2026.

The Company’s prepaid and accrued tax positions are as follows:

The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2022.

The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, France, Ireland, the U.K., and India. The Company does not anticipate resolution of these audits will have a material impact on its unaudited condensed consolidated financial statements.

15. RESTRUCTURING AND ASSET IMPAIRMENTS

In September 2026, the Company announced “Create the Future,” a multi-year restructuring program intended to modernize operations, improve client experience, and enhance profitability through AI and automation, simplification and digitization, and enterprise optimization. Create the Future builds upon actions already underway, including process improvements, procurement synergies, global business service expansion, workforce optimization, and real estate footprint rationalization.

Costs associated with these ongoing actions and Create the Future are expected to be incurred across all reportable segments and corporate through 2030 and primarily relate to workforce reduction initiatives resulting in severance and transition costs, facility consolidation activities resulting in long-lived asset impairment charges (principally property, plant, and equipment and operating lease right-of-use assets), accelerated depreciation charges, and certain other costs.

The following table presents restructuring costs by reportable segment:

The following table presents restructuring costs as included within the Company’s unaudited condensed consolidated statements of income:

Rollforward of Restructuring Activities

The following table provides a rollforward for the Company’s accrued restructuring costs related to all restructuring activities:

As of September 26, 2026 and December 27, 2025, $16.1 million and $23.0 million, respectively, of severance and other personnel related costs liabilities were included in accrued compensation and accrued liabilities within the Company’s unaudited condensed consolidated balance sheets.

16. COMMITMENTS AND CONTINGENCIES

Litigation

A putative securities class action (Securities Class Action) was filed on May 19, 2023 against the Company and a number of its current/former officers in the United States District Court for the District of Massachusetts. On August 31, 2023, the court appointed the State Teachers Retirement System of Ohio as lead plaintiff. An amended complaint was filed on November 14, 2023 that, among other things, included only James Foster, the then current Chief Executive Officer and David R. Smith, the former Chief Financial Officer as defendants along with the Company. The amended complaint asserted claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act) on behalf of a putative class of purchasers of Company securities from May 5, 2020 through February 21, 2023, alleging that certain of the Company’s disclosures about its practices with respect to the importation of non-human primates made during the putative class period were materially false or misleading. On July 1, 2024, the court dismissed the complaint, denied the plaintiff’s informal request for leave to amend, and entered judgment for defendants. On July 30, 2024, the plaintiff filed a notice of appeal in the United States Court of Appeals for the First Circuit. Oral arguments took place on May 5, 2025. On August 15, 2025, the U.S. Court of Appeals for the First Circuit reversed in part and vacated in part the district court’s dismissal on the pleadings of the securities fraud claims. The case returned to U.S. District Court for the District of Massachusetts. On October 16, 2025, the plaintiff filed a motion to withdraw the State Teachers Retirement System of Ohio as lead plaintiff, due to lack of standing, and substitute Oklahoma Firefighters Pension and Retirement System. On September 2, 2026, the court granted the motion and appointed Oklahoma Firefighters Pension and Retirement System as lead plaintiff. On September 15, 2026, Oklahoma Firefighters Pension and Retirement System filed a second amended complaint that names only the Company and James Foster as defendants, narrows the putative class period to November 30, 2022 through March 15, 2023, and removes the alleged misstatements that the district court and the First Circuit determined were not actionable. On October 15, 2026, the Company filed a motion to dismiss the second amended complaint on the issue left unresolved by the First Circuit’s decision. Plaintiff’s opposition is due by November 16, 2026. While the Company cannot predict the final outcome of this matter, it believes the class action to be without merit and plans to vigorously defend against it. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with this matter.

On November 8, 2023, a stockholder filed a derivative lawsuit in the U.S. District Court of the District of Delaware asserting claims on the Company’s behalf against the members of the Company’s Board of Directors and certain of the Company’s current/former officers (James Foster, the then current Chief Executive Officer; David R. Smith, a former Chief Financial Officer; and Flavia Pease, the then current Chief Financial Officer). The complaint alleges that the defendants breached their fiduciary duties to the Company and its stockholders because certain of the Company’s disclosures about its practices with respect to the importation of non-human primates were materially false or misleading. The complaint also alleges that the defendants breached their fiduciary duties by causing the Company to fail to maintain adequate internal controls over securities disclosure and compliance with applicable law and by failing to comply with the Company’s Code of Business Conduct and Ethics. On August 2, 2024, a different stockholder filed a lawsuit in the U.S. District Court of Delaware asserting similar derivative claims on the Company’s behalf against members of the Company’s current and former Board of Directors and the same current/former officers based on similar allegations of purportedly misleading disclosures and non-compliance with legal rules and ethics standards in respect of the importation of non-human primates, as well as insider-trading claims against certain of the defendants. Both of these lawsuits are currently stayed by agreement of the parties pending resolution of the motion to dismiss in the Securities Class Action pending in the United States District Court for the District of Massachusetts. While the Company cannot predict the outcome of these matters, it believes the derivative lawsuits to be without merit and plans to vigorously defend against them. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in association with these matters.

Aside from the matters above, the Company believes there are no other matters pending against the Company that could have a material impact on the Company’s business, financial condition, or results of operations.