KinderCare Learning Companies, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited condensed consolidated financial statements and notes thereto for the three months ended April 4, 2026 and March 29, 2025 included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements and notes thereto for the fiscal year ended January 3, 2026 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 13, 2026. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by reference to, our unaudited condensed consolidated financial statements and notes thereto for the three and six months ended July 4, 2026 and June 28, 2025 included elsewhere in this Quarterly Report on Form 10-Q and audited consolidated financial statements and notes thereto for the fiscal year ended January 3, 2026 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 13, 2026. Some of the information included in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” sections of this Quarterly Report on Form 10-Q for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Previous wording

KinderCare Learning Companies, Inc. (“the Company,” “we,” “us,” and “our”) is a leading provider of high-quality early childhood education (“ECE”) in the United States. We are a mission-driven organization, rooted in a commitment to providing all children with the very best start in life. We serve children ranging from six weeks to 12 years of age across our market-leading footprint of 1,606 early childhood education centers with center capacity for 215,371 children and 1,159 before- and after-school sites located in 41 states and the District of Columbia as of April 4, 2026.

Current wording

KinderCare Learning Companies, Inc. (“the Company,” “we,” “us,” and “our”) is a leading provider of high-quality early childhood education (“ECE”) in the United States. We are a mission-driven organization, rooted in a commitment to providing all children with the very best start in life. We serve children ranging from six weeks to 12 years of age across our market-leading footprint of 1,567 early childhood education centers with center capacity for 210,539 children and 1,128 before- and after-school sites located in 42 states and the District of Columbia as of July 4, 2026.

Previous wording

We measure and track the number of centers and sites because, as our number of centers and sites change, it highlights our geographic footprint and potential growth in revenue. We believe this information is useful to investors as an indicator of opportunity for revenue growth and operational expansion and can be used to measure and track our performance over time. We define the number of centers and sites as the number of centers and sites at the beginning of the period plus openings and acquisitions, minus any permanent closures for the period. A permanently closed center or site is a center or site that has ceased operations as of the end of the reporting period that management does not intend on reopening. During the three months ended June 28, 2025, management updated the definition of total before- and after-school sites to include sites that are temporarily closed as a result of the summer season to more accurately reflect the total sites that were operating during the year. Prior periods presented were adjusted to reflect the updated definition for comparative purposes.

Current wording

We measure and track the number of centers and sites because, as our number of centers and sites change, it highlights our geographic footprint and potential growth in revenue. We believe this information is useful to investors as an indicator of opportunity for revenue growth and operational expansion and can be used to measure and track our performance over time. We define the number of centers and sites as the number of centers and sites at the beginning of the period plus openings and acquisitions, minus any permanent closures for the period. A permanently closed center or site is a center or site that has ceased operations as of the end of the reporting period that management does not intend on reopening.

Previous wording

As of April 4, 2026, we operated 1,606 early childhood education centers with a center capacity for 215,371 children as compared to 1,582 early childhood education centers as of March 29, 2025, with a center capacity for 211,767 children. During the three months ended April 4, 2026, total centers increased by five due to opening three centers and acquiring two centers. During the three months ended March 29, 2025, total centers increased by eight due to both acquiring and opening five centers, partially offset by two permanent center closures.

Current wording

As of July 4, 2026, we operated 1,567 early childhood education centers with a center capacity for 210,539 children as compared to 1,589 early childhood education centers as of June 28, 2025, with a center capacity for 212,901 children. During the six months ended July 4, 2026, total centers decreased by 34 due to 49 permanent center closures as part of our ongoing center optimization initiative, partially offset by opening eight centers and acquiring seven centers. During the six months ended June 28, 2025, total centers increased by 15 due to acquiring 14 centers and opening eight centers, partially offset by seven permanent center closures.

Previous wording

As of April 4, 2026, we operated 1,159 before- and after-school sites, an increase of 121 sites from 1,038 before- and after-school sites as of March 29, 2025. Total before- and after-school sites increased by six during the three months ended April 4, 2026 due to opening 17 sites, partially offset by 11 permanent site closures. Total before- and after-school sites increased by 13 during the three months ended March 29, 2025 due to opening 19 sites, partially offset by six permanent site closures.

Current wording

As of July 4, 2026, we operated 1,128 before- and after-school sites, an increase of 85 sites from 1,043 before- and after-school sites as of June 28, 2025. Total before- and after-school sites decreased by 25 during the six months ended July 4, 2026 due to 67 permanent closures, partially offset by opening 42 sites. Total before- and after-school sites increased by 18 during the six months ended June 28, 2025 due to opening 47 sites, partially offset by 29 permanent site closures.

Previous wording

ECE same-center occupancy decreased by 310 basis points for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 primarily due to lower enrollment.

Current wording

ECE same-center occupancy decreased by 240 basis points and 230 basis points for the three and six months ended July 4, 2026 as compared to the three and six months ended June 28, 2025, respectively, primarily due to lower enrollment. For the three and six months ended July 4, 2026, our center optimization initiative positively impacted ECE same-center occupancy by approximately 70 basis points and 100 basis points, respectively, as a result of closing underperforming centers.

Previous wording

ECE same-center revenue decreased by $7.4 million, or 1.2%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. ECE same-center revenue decrease of $15.4 million was driven by centers that were classified as same-centers as of both April 4, 2026 and March 29, 2025. This decrease was partially offset by $8.0 million in ECE same-center revenue growth driven by the net impact of new and acquired centers not yet classified as same-centers as of March 29, 2025 and center closures as of April 4, 2026.

Current wording

ECE same-center revenue decreased by $14.0 million, or 2.2%, for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025. This decrease was driven by $16.5 million lower revenue from centers that were classified as same-centers as of both July 4, 2026 and June 28, 2025. Additionally, same-center revenue decreased by $10.7 million due to center closures as of July 4, 2026. These decreases were partially offset by $13.2 million in ECE same-center revenue growth driven by the impact of new and acquired centers not yet classified as same-centers as of June 28, 2025.

Previous wording

Revenue from early childhood education centers decreased by $4.8 million, or 0.8%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The decrease was driven from 3.0% lower enrollment, partially offset by 2.2% increase from higher tuition rates.

Current wording

Revenue from early childhood education centers decreased by $9.6 million, or 1.5%, for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025. The decrease was driven from 4.0% lower enrollment, partially offset by 2.6% increase from higher tuition rates.

Previous wording

The $4.8 million decrease in early childhood education centers revenue for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 was comprised of $7.4 million lower ECE same-center revenue, partially offset by $3.0 million higher revenue from new and acquired centers not yet classified as same centers.

Current wording

The $9.6 million decrease in revenue from early childhood education centers for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025 was comprised of $14.0 million lower ECE same-center revenue, partially offset by a $4.4 million net increase in revenue from centers that were not classified as same-centers.

Previous wording

Revenue from before- and after-school sites increased by $9.1 million, or 17.1%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 primarily due to opening new sites and higher tuition rates.

Current wording

Revenue from before- and after-school sites increased by $7.0 million, or 13.4%, for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025 primarily due to higher rates and opening new sites.

Previous wording

Interest expense decreased by $1.9 million, or 9.4%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This decrease was primarily driven by lower interest rates on the First Lien Term Loan Facility as a result of the July 2025 repricing amendment and lower outstanding principal, partially offset by losses on interest rate derivative contracts reclassified into net loss during the three months ended April 4, 2026 compared to gains reclassified into net income during the three months ended March 29, 2025.

Current wording

Interest expense decreased by $1.8 million, or 9.1%, for the three months ended July 4, 2026 as compared to the three months ended June 28, 2025. This decrease was primarily driven by lower interest rates on the First Lien Term Loan Facility as a result of the July 2025 repricing amendment and lower outstanding principal, partially offset by losses on interest rate derivative contracts reclassified into net loss during the three months ended July 4, 2026 compared to gains reclassified into net income during the three months ended June 28, 2025.

Previous wording

Total revenue increased by $4.3 million, or 0.6%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025.

Current wording

Total revenue increased by $1.7 million, or 0.1%, for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025.

Previous wording

Cost of services (excluding depreciation and impairment) increased by $34.7 million, or 6.7%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was driven by $18.3 million higher food, supplies, utilities, and janitorial costs, partially due to operating more centers and sites, combined with an increase in marketing spend. Rent expense increased $8.2 million due to new and acquired centers and sites as well as contractual rent increases. The increase was also attributable to $4.8 million higher personnel costs due to increased wage rates. Lastly, cost reimbursements from government assistance was $3.4 million lower following the conclusion of certain COVID-19 stimulus funding.

Current wording

Cost of services (excluding depreciation and impairment) increased by $82.7 million, or 8.0%, for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025. The increase was driven by $30.1 million of ERC recognized during the six months ended June 28, 2025, which offsets cost of services (excluding depreciation and impairment) in the comparative period. Additionally, the increase was attributable to $29.0 million higher insurance, janitorial, utilities and food costs, partially due to operating more centers and sites, combined with an increase in marketing spend. Rent expense increased $15.9 million due to new and acquired centers and sites as well as contractual rent increases. Lastly, the increase was also attributable to $5.0 million higher personnel costs due to increased wage rates.

Previous wording

Depreciation and amortization increased by $1.1 million, or 3.7%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was primarily driven by higher depreciation expense as a result of assets placed into service from new and acquired centers.

Current wording

Depreciation and amortization increased by $1.7 million, or 2.8%, for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025. This increase was primarily due to higher depreciation expense as a result of assets placed into service from new and acquired centers.

Previous wording

Selling, general, and administrative expenses decreased by $0.6 million, or 0.8%, for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This decrease was driven by lower stock-based compensation expense due to certain awards becoming fully vested in fiscal 2025 combined with the awards granted during the three months ended April 4, 2026 at a lower fair value than previously granted awards.

Current wording

Selling, general, and administrative expenses decreased by $6.2 million, or 4.1%, for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025. This decrease was driven by lower personnel costs primarily due to reduced incentive compensation expense reflective of operating performance, as well as lower stock-based compensation due to certain awards becoming fully vested combined with awards granted during the current period at a lower fair value than previously granted awards.

Previous wording

Impairment losses increased by $290.0 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. This increase was driven by a $273.5 million goodwill impairment as a result of testing performed during the first quarter of fiscal 2026 triggered by the further deterioration in our market capitalization from a continued decline in our stock price. Additionally, impairment of long-lived assets increased by $16.5 million due to more centers with reduced cash flow projections as a result of lower operational performance and centers identified for closure during the three months ended April 4, 2026.

Current wording

Impairment losses increased by $310.7 million, for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025. This increase was driven by a $273.5 million goodwill impairment as a result of testing performed during the first quarter of fiscal 2026 triggered by the further deterioration in our market capitalization from a continued decline in our stock price. Additionally, impairment of long-lived assets increased by $37.1 million due to more centers with reduced cash flow projections as a result of lower operational performance as well as centers closed or identified for closure and early lease terminations executed during the six months ended July 4, 2026.

Previous wording

Other expense, net remained relatively consistent for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025 and was primarily comprised of net changes in realized and unrealized losses from investments held in deferred compensation asset trusts.

Current wording

Other income, net remained relatively consistent for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025 and was primarily comprised of net changes in realized and unrealized gains from investments held in deferred compensation asset trusts.

Previous wording

Income taxes decreased $8.4 million to an income tax benefit for the three months ended April 4, 2026 as compared to income tax expense for the three months ended March 29, 2025. The effective tax rate was 0.2% for the three months ended April 4, 2026 as compared to 27.0% for the three months ended March 29, 2025. Compared to the statutory rate, the difference in the effective tax rate for the three months ended April 4, 2026 was primarily due to nondeductible goodwill impairment, partially offset by state and local taxes. The effective tax rate for the three months ended March 29, 2025, was primarily driven by state and local taxes, nondeductible compensation and fringe benefit expenses, as well as changes in uncertain tax reserves.

Current wording

Income taxes decreased $24.6 million to an income tax benefit for the six months ended July 4, 2026, as compared to income tax expense for the six months ended June 28, 2025. The effective tax rate was 0.8% for the six months ended July 4, 2026 as compared to 27.2% for the six months ended June 28, 2025. Compared to the statutory rate, the reduction in the effective tax rate for the six months ended July 4, 2026 was primarily due to nondeductible goodwill impairment recorded during the first quarter of the fiscal year ending January 2, 2027. Compared to the statutory rate, the difference in the effective tax rate for the six months ended June 28, 2025, was due to state and local income taxes.

Previous wording

EBIT is defined as net (loss) income adjusted for interest and income tax (benefit) expense. EBITDA is defined as EBIT adjusted for depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for impairment losses, stock-based compensation, COVID-19 Related Stimulus, net, and other costs because these charges do not relate to the core operations of our business. We present EBIT, EBITDA, and adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are useful to securities analysts, investors, and other interested parties. We believe adjusted EBITDA is helpful to investors in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.

Current wording

We present EBIT, EBITDA, and adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe they are useful to securities analysts, investors, and other interested parties. We believe adjusted EBITDA is helpful to investors in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.

Previous wording

Represents impairment charges for goodwill and long-lived assets. Goodwill impairment recognized during the three months ended April 4, 2026 was $273.5 million and was driven by the further deterioration in our market capitalization from a continued decline in our stock price. Impairments of long-lived assets for the periods presented was a result of reduced operating performance at certain centers due to the impact of changing demographics in certain locations in which we operate and current macroeconomic conditions on our overall operations, as well as centers closed or identified for closure. Refer to Note 4 of our unaudited condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q for further information on our goodwill impairment analysis.

Current wording

Represents impairment charges for goodwill and long-lived assets. Goodwill impairment recognized during the six months ended July 4, 2026 of $273.5 million was driven by the further deterioration in our market capitalization from a continued decline in our stock price during the first quarter of fiscal 2026. Impairments of long-lived assets for the periods presented was a result of reduced operating performance at certain centers due to the impact of changing demographics in certain locations in which we operate and current macroeconomic conditions on our overall operations, as well as centers closed or identified for closure and early lease terminations executed. Refer to Note 5 and Note 10 of our unaudited condensed consolidated financial statements, included elsewhere in this Quarterly Report on Form 10-Q for further information on our goodwill and long-lived asset impairment analysis.

Previous wording

Includes expense reimbursements and revenue arising from the COVID-19 pandemic, net of pass-through expenses incurred as a result of certain grant requirements. We recognized $0.7 million during the three months ended March 29, 2025 in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment).

Current wording

Includes expense reimbursements and revenue arising from the COVID-19 pandemic, net of pass-through expenses incurred as a result of certain grant requirements. During both the three and six months ended June 28, 2025, we recognized $30.1 million of ERC offsetting cost of services (excluding depreciation and impairment) as well as $2.1 million in professional fees in selling, general, and administrative expenses as a result of calculating and filing for ERC. COVID-19 Related Stimulus is net of pass-through expenses incurred as stipulated within certain grants of $1.9 million during both the three and six months ended June 28, 2025. Additionally, we recognized $0.7 million during the six months ended June 28, 2025 in funding for reimbursement of center operating expenses in cost of services (excluding depreciation and impairment).

Previous wording

Includes certain professional fees incurred for both contemplated and completed debt and equity transactions. For the three months ended March 29, 2025, other costs include $0.2 million in costs related to our IPO. These costs represent items management believes are not indicative of core operating performance.

Current wording

For the six months ended June 28, 2025, other costs include $0.2 million in costs related to our IPO. These costs represent items management believes are not indicative of core operating performance.

Previous wording

Includes the tax effect of the non-GAAP adjustments, calculated using the appropriate federal and state statutory tax rate and the applicable tax treatment for each adjustment. The non-GAAP tax rate was 25.8% for the three months ended April 4, 2026 and March 29, 2025. Our statutory rate is re-evaluated at least annually.

Current wording

Includes the tax effect of the non-GAAP adjustments, calculated using the appropriate federal and state statutory tax rate and the applicable tax treatment for each adjustment. The non-GAAP tax rate was 38.6% and 35.3% for the three and six months ended July 4, 2026, respectively, and 25.8% for both the three and six months ended June 28, 2025. Our statutory rate is re-evaluated at least annually.

Previous wording

We expect to continue to meet our liquidity requirements for at least the next 12 months under current operating conditions with cash generated from operations, cash on hand, and to the extent necessary and available, through borrowings under the Credit Agreement. If the need arises for additional expenditures, we may seek additional funding. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q as well as “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2026. In the future, we may attempt to raise additional capital through the sale of equity securities or debt financing arrangements. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. We cannot provide assurance that we will be able to raise additional capital in the future on favorable terms, or at all. Any inability to raise capital could adversely affect our ability to achieve our business objectives.

Current wording

We expect to continue to meet our liquidity requirements for at least the next 12 months under current operating conditions with cash generated from operations, cash on hand, and to the extent necessary and available, through borrowings under the Credit Agreement. If the need arises for additional expenditures, we may seek additional funding. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 3, 2026. In the future, we may attempt to raise additional capital through the sale of equity securities or debt financing arrangements. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. We cannot provide assurance that we will be able to raise additional capital in the future on favorable terms, or at all. Any inability to raise capital could adversely affect our ability to achieve our business objectives.

Previous wording

As of April 4, 2026, there were no outstanding borrowings under the First Lien Revolving Credit Facility and we had an available borrowing capacity of $189.7 million after giving effect to the outstanding letters of credit under the Credit Agreement of $72.8 million.

Current wording

As of July 4, 2026, there were no outstanding borrowings under the First Lien Revolving Credit Facility and we had an available borrowing capacity of $187.7 million after giving effect to the outstanding letters of credit under the Credit Agreement of $74.8 million.

Previous wording

The interest rates effective as of April 4, 2026 were 6.45% on the First Lien Term Loan Facility, 2.00% on outstanding letters of credit in addition to a 0.125% fronting fee, and 0.25% on the unused portion of the First Lien Revolving Credit Facility.

Current wording

The interest rates effective as of July 4, 2026 were 6.48% on the First Lien Term Loan Facility, 2.00% on outstanding letters of credit in addition to a 0.125% fronting fee, and 0.25% on the unused portion of the First Lien Revolving Credit Facility.

Previous wording

The weighted average interest rate during the three months ended April 4, 2026 for the First Lien Term Loan Facility was 6.42%.

Current wording

The weighted average interest rate during the six months ended July 4, 2026 for the First Lien Term Loan Facility was 6.44%.

Previous wording

Cash used in investing activities increased by $0.3 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The increase was driven by $6.6 million higher capital expenditures, partially offset by a $5.5 million decrease in payments for acquisitions.

Current wording

Cash used in investing activities decreased by $13.7 million for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025, primarily driven by lower payments for acquisitions.

Previous wording

Cash used in financing activities increased by $1.7 million for the three months ended April 4, 2026 as compared to the three months ended March 29, 2025. The increase was primarily due to one principal payment on the First Lien Term Loan made during the three months ended April 4, 2026, while no principal payment was made during the three months ended March 29, 2025 due to the timing of our fiscal period ends.

Current wording

Cash used in financing activities increased by $1.0 million for the six months ended July 4, 2026 as compared to the six months ended June 28, 2025. The increase was primarily due to higher principal payments on the First Lien Term Loan Facility driven by the timing of fiscal quarter ends.

Previous wording

Total lease obligations, including imputed interest, of $2.4 billion expected to be paid out as follows: $211.0 million for the remainder of fiscal 2026, $587.5 million in years two to three, $508.7 million in years four to five, and $1.1 billion thereafter through the maturity of our lease agreements. Refer to Note 5 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

Total lease obligations, including imputed interest, of $2.3 billion expected to be paid out as follows: $143.5 million for the remainder of fiscal 2026, $591.5 million in years two to three, $513.2 million in years four to five, and $1.1 billion thereafter through the maturity of our lease agreements. Refer to Note 6 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

Long-term debt obligations, including interest, of $1.2 billion expected to be paid out as follows: $55.5 million for the remainder of fiscal 2026, $142.3 million in years two to three, and $1,014.3 million in years four to five through June 2030 when the First Lien Term Loan Facility matures. Refer to Note 6 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Current wording

Long-term debt obligations, including interest, of $1.2 billion expected to be paid out as follows: $37.6 million for the remainder of fiscal 2026, $151.7 million in years two to three, and $1,021.4 million in years four to five through June 2030 when the First Lien Term Loan Facility matures. Refer to Note 8 of our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Previous wording

Self-insurance obligations of $121.8 million expected to be paid out as claims are settled and cash outflows cannot be estimated reliably.

Current wording

Self-insurance obligations of $83.4 million expected to be paid out as claims are settled and cash outflows cannot be estimated reliably.

Previous wording

Deferred compensation plan of $41.3 million expected to be paid out based on the individual plan participant and cash outflows cannot be estimated reliably.

Current wording

Deferred compensation plan of $45.8 million expected to be paid out based on the individual plan participant and cash outflows cannot be estimated reliably.

Previous wording

Service arrangements which include certain information technology (“IT”), labor software, and maintenance services of $67.9 million expected to be paid out as follows: $14.7 million for the remainder of fiscal 2026, $31.6 million in years two to three, $12.5 million in years four to five, and $9.1 million thereafter.

Current wording

Service arrangements which include certain information technology (“IT”), labor software, and maintenance services of $59.6 million expected to be paid out as follows: $7.2 million for the remainder of fiscal 2026, $32.2 million in years two to three, $12.5 million in years four to five, and $7.7 million thereafter.

Previous wording

Certain agreements may have cancellation penalties for which, if we were to cancel, we would be required to pay up to approximately $5.2 million. Other cancellation penalties cannot be estimated as we cannot predict the occurrence of future agreement cancellations. Refer to Note 11 and Note 13 of our audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026 for additional detail related to our contractual obligations.

Current wording

Certain agreements may have cancellation penalties for which, if we were to cancel, we would be required to pay up to approximately $5.3 million. Other cancellation penalties cannot be estimated as we cannot predict the occurrence of future agreement cancellations. Refer to Note 11 and Note 13 of our audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2026 for additional detail related to our contractual obligations.