EXPONENT INC

Previous wording

There have been no significant changes in our critical accounting estimates during the six months ended July 3, 2026, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report.

Current wording

There have been no significant changes in our critical accounting estimates during the nine months ended October 2, 2026, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report.

Previous wording

Revenues for the second quarter of 2026 increased 21% to $171,612,000 as compared to $141,962,000 during the same period last year. Revenues before reimbursements for the second quarter of 2026 increased 12% to $148,860,000 as compared to $132,868,000 during the same period last year. Our proactive work experienced strong growth in the quarter, led by demand for user research studies as clients accelerate the development of AI-enabled products across an increasingly diverse range of hardware form factors and applications, with engagements continuing to expand in scope, scale and complexity. This work includes a large study that represented approximately 4% of our net revenues during the quarter. Proactive activity was also supported by increased risk management and

Current wording

Revenues for the third quarter of 2026 increased 18% to $173,733,000 as compared to $147,120,000 during the same period last year. Revenues before reimbursements for the third quarter of 2026 increased 12% to $153,063,000 as compared to $137,073,000 during the same period last year. Our proactive work experienced strong growth in the quarter, led by demand for user research studies as clients accelerate the development of AI-enabled products across an increasingly diverse range of hardware form factors and applications. Reactive work also grew, with increased dispute-related and failure analysis demand in the chemical, consumer products, and transportation industries.

Previous wording

Net income increased 11% to $29,395,000 during the second quarter of 2026 as compared to $26,553,000 during the same period last year. Diluted earnings per share increased to $0.60 per share during the second quarter of 2026 as compared to $0.52 in the same period last year.

Current wording

Net income increased 10% to $30,943,000 during the third quarter of 2026 as compared to $28,044,000 during the same period last year. Diluted earnings per share increased during the third quarter of 2026 to $0.64 per share as compared to $0.55 in the same period last year. The increase in net income was primarily due to the 12% increase in revenues before reimbursements.

Previous wording

During the second quarter of 2026, billable hours increased 9% to 390,000 as compared to 359,000 during the same period last year. Our utilization increased to 74% during the second quarter of 2026 as compared to 72% during the same period last year. Average technical full-time equivalent employees increased 6% to 1,012 during the second quarter of 2026 as compared to 958 during the same period last year.

Current wording

During the third quarter of 2026, billable hours increased 8% to 405,000 as compared to 376,000 during the same period last year. Our utilization increased to 77% during the third quarter of 2026 as compared to 74% during the same period last year. Average technical full-time equivalent employees increased by 4% to 1,016 during the third quarter of 2026 as compared to 976 during the same period last year due to our recruiting and retention efforts.

Previous wording

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours, increase in billing rates and an increase in revenues from reimbursements associated with user research projects. Growth during the quarter was driven by user research studies in consumer electronics and risk management in the utilities industry, along with reactive engagements across the consumer products, chemicals, and transportation industries. During the second quarter of 2026, billable hours for this segment increased by 10% to 320,000 as compared to 291,000 during the same period last year. Utilization for this segment increased to 76% during the second quarter of 2026 as compared to 74% during the same period last year. Average technical full-time equivalent employees in this segment increased 7% to 810 during the second quarter of 2026 as compared to 756 for the same period last year.

Current wording

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours, an increase in billing rates and an increase in revenues from reimbursements associated with user research projects. Growth during the quarter was driven by user research studies in consumer electronics along with reactive engagements across the chemical, consumer products, and transportation industries. During the third quarter of 2026, billable hours for this segment increased by 10% to 334,000 as compared to 305,000 during the same period last year. Utilization for this segment increased to 79% during the third quarter of 2026 as compared to 76% during the same period last year. Average technical full-time equivalent employees in this segment increased 5% to 812 during the third quarter of 2026 as compared to 775 for the same period last year.

Previous wording

The increase in compensation and related expense during the second quarter of 2026 was due to an increase in payroll expense and an increase in bonus expense partially offset by a change in the value of assets associated with our deferred compensation plan. During the second quarter of 2026 payroll expense increased by $4,849,000 due to the impact of our annual salary increase and an increase in technical full-time equivalent employees. During the second quarter of 2026, bonus expense increased by $2,990,000 due to a corresponding increase in our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. During the second quarter of 2026, deferred compensation expense decreased by $5,180,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. During the second quarter of 2026, the value of plan assets increased by $11,783,000 as compared to an increase of $16,963,000 during the same period last year. We expect our compensation expense, excluding the change in value of deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.

Current wording

The increase in compensation and related expenses during the third quarter of 2026 was due to an increase in payroll expense, fringe benefits and an increase in bonus expense partially offset by a change in the value of assets associated with our deferred compensation plan. During the third quarter of 2026, payroll expense increased by $4,498,000 and fringe benefits increased by $1,111,000 due to the impact of our annual salary increase and an increase in average technical full-time equivalent employees. During the third quarter of 2026, bonus expense increased by $3,368,000 due to a corresponding increase in our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. During the third quarter of 2026, deferred compensation expense decreased by $6,846,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. This decrease consisted of an increase in the value of plan assets of $159,000 during the third quarter of 2026 as compared to an increase in the value of plan assets of $7,005,000 during the same period last year. We expect our compensation expense, excluding the change in value of deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.

Previous wording

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the second quarter of 2026 was primarily due to an increase in computer-related expenses of $354,000 and an increase in occupancy expense of $270,000. The increase in computer-related expenses and occupancy expenses were due to continued investments in our corporate infrastructure. We expect other operating expenses to grow as we selectively add new talent and make investments in our corporate infrastructure.

Current wording

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the third quarter of 2026 was primarily due to an increase in computer-related expenses of $527,000 and an increase in facilities-related expenses of $405,000. The increases in computer-related expenses and facilities-related expenses were due to continued investments in our corporate infrastructure. We expect other operating expenses to grow as we selectively add new talent and make investments in our corporate infrastructure.

Previous wording

The increase in general and administrative expenses was primarily due to an increase in personnel expenses of $498,000, an increase in travel and meals of $246,000, and several other individually insignificant increases. The increase in personnel expenses was primarily due to an increase in relocation expenses. The increase in travel and meals was due to an increase in client and business development activities. We expect general and administrative expenses to increase as we selectively add new talent and expand our business development and staff development initiatives.

Current wording

The decrease in general and administrative expenses was primarily due to a decrease in travel and meals of $581,000 partially offset by several individually insignificant increases. The decrease in travel and meals was primarily due to a company-wide principals' meeting held during the third quarter of 2026 which was smaller than the company-wide managers' meeting we held during the third quarter of 2025. We expect general and administrative expenses to increase as we add new talent and expand our business development and staff development initiatives.

Previous wording

The increase in operating income for our Engineering and Other Scientific segment during the first six months of 2026 as compared to the same period last year was due to an increase in utilization. The increase in operating income for our Environmental and Health segment during the first six months of 2026 was due to an increase in billing rates.

Current wording

The increase in operating income for our Engineering and Other Scientific segment during the third quarter of 2026 as compared to the same period last year was due to an increase in utilization. The decrease in operating income for our Environmental and Health segment was due to a decrease in utilization during the third quarter of 2026 as compared to the same period last year.

Previous wording

The decrease in corporate operating expenses during the second quarter of 2026 as compared to the same period last year was primarily due to a decrease in deferred compensation expense. During the second quarter of 2026, deferred compensation expense decreased by $5,180,000, with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. During the second quarter of 2026, the value of plan assets increased by $11,783,000 as compared to an increase of $16,963,000 during the same period last year.

Current wording

The decrease in corporate operating expense during the third quarter of 2026 as compared to the same period last year was primarily due to a decrease in deferred compensation expense. During the third quarter of 2026, deferred compensation expense decreased by $6,846,000, with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. This decrease consisted of an increase in the value of plan assets of $159,000 during the third quarter of 2026 as compared to an increase in the value of plan assets of $7,005,000 during the same period last year.

Previous wording

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The decrease in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and a decrease in interest income. During the second quarter of 2026, deferred compensation expense decreased by $5,180,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. During the second quarter of 2026, the value of plan assets increased by $11,783,000 as compared to an increase of $16,963,000 during the same period last year. During the second quarter of 2026, interest income decreased by $1,628,000 due to lower average cash equivalent balances.

Current wording

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The decrease in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and a decrease in interest income. During the third quarter of 2026, deferred compensation expense decreased by $6,846,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This decrease consisted of an increase in the value of plan assets of $159,000 during the third quarter of 2026 as compared to an increase in the value of plan assets of $7,005,000 during the same period last year. During the third quarter of 2026, interest income decreased by $1,644,000 due to lower average cash equivalent balances.

Previous wording

The tax impact associated with share-based awards was immaterial in both the second quarters of 2026 and 2025.

Current wording

The increase in income tax expense was due to an increase in pre-tax income. The tax impact associated with stock-based awards was immaterial in both the third quarters of 2026 and 2025.

Previous wording

Six Months Ended July 3, 2026 compared to Six Months Ended July 4, 2025

Current wording

Nine Months Ended October 2, 2026 compared to Nine Months Ended October 3, 2025

Previous wording

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours, an increase in billing rates and an increase in revenues from reimbursements associated with user research projects. Growth during the first six months of 2026 was primarily driven by user research studies in consumer electronics and risk management in the utilities industry, along with reactive engagements across the consumer products, construction, and transportation industries. During the first six months of 2026, billable hours for this segment increased by 10% to 648,000 as compared to 591,000 during the same period last year. Utilization for this segment increased to 77% during the first six months of 2026 as compared to 75% during the same period last year. Average technical full-time equivalent employees in this segment increased 7% to 812 during the first six months of 2026 as compared to 759 for the same period last year.

Current wording

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours, an increase in billing rates and an increase in revenues from reimbursements associated with user research projects. Growth during the first nine months of 2026 was driven by user research activity, spanning health applications, dynamic and unstructured real-world environments, and sensory perception. Dispute-related services involving chemical facilities, consumer products and advanced transportation technologies also drove growth in the first nine months of 2026, as clients rely on us in critical, high-stakes situations. During the first nine months of 2026, billable hours for this segment increased by 10% to 983,000 as compared to 896,000 during the same period last year. Utilization for this segment increased to 78% during the first nine months of 2026 as compared to 75% during the same period last year. Average technical full-time equivalent employees in this segment increased 6% to 813 during the first nine months of 2026 as compared to 764 for the same period last year.

Previous wording

The increase in revenues for our Environmental and Health segment was due to an increase in billing rates partially offset by a decrease in billable hours. During the first six months of 2026, billable hours for this segment decreased by 2% to 141,000 as compared to 144,000 during the same period last year. Utilization in this segment was flat at 68% during the first six months of 2026 and 2025. Average technical full-time equivalent employees in this segment decreased by 1% to 200 during the first six months of 2026 as compared to 203 during the same period last year.

Current wording

The increase in revenues for our Environmental and Health segment was due to an increase in billing rates partially offset by a decrease in billable hours. During the first nine months of 2026, billable hours for this segment decreased by 2% to 211,000 as compared to 215,000 during the same period last year. Utilization in this segment decreased to 67% during the first nine months of 2026 as compared to 68% during the same period last year. Average technical full-time equivalent employees in this segment decreased by 1% to 201 during the first nine months of 2026 as compared to 202 during the same period last year.

Previous wording

The increase in compensation and related expenses during the first six months of 2026 was due to an increase in payroll, an increase in bonuses and the change in the value of assets associated with our deferred compensation plans. During the first six months of 2026, payroll expense increased by $9,008,000 due to an increase in technical full-time equivalent employees and the impact of annual salary increases. During the first six months of 2026, bonus expense increased by $5,928,000 due to a corresponding increase in our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. During the first six months of 2026, deferred compensation expense increased by $3,018,000 with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of $10,645,000 during the first six months of 2026 as compared to an increase in the value of plan assets of $7,627,000 during the same period last year.

Current wording

The increase in compensation and related expenses during the first nine months of 2026 was due to increases in payroll expense, fringe benefits, and bonus expense partially offset by the change in the value of assets associated with our deferred compensation plans. During the first nine months of 2026, payroll expense increased by $13,506,000 and fringe benefits increased by $1,376,000 due to the impact of our annual salary adjustments and an increase in average technical full-time equivalent employees. During the first nine months of 2026, bonus expense increased by $9,297,000 due to a corresponding increase in our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. During the first nine months of 2026, deferred compensation expense decreased by $3,828,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This decrease consisted of an increase in the value of plan assets of $10,804,000 during the first nine months of 2026 as compared to an increase in the value of plan assets of $14,632,000 during the same period last year.

Previous wording

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the first six months of 2026 was primarily due to an increase in occupancy expense of $658,000 and an increase in computer-related expenses of $608,000. The increase in occupancy expense and computer-related

Current wording

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the first nine months of 2026 was primarily due to an increase in computer-related expenses of $1,135,000, an increase in facilities-related expenses of $1,062,000 and an increase in depreciation expense of $301,000. These increases were due to continued investments in our corporate infrastructure. We expect other operating expenses to grow as we selectively add new talent and make investments in our corporate infrastructure.

Previous wording

The increase in general and administrative expenses was primarily due to an increase in personnel expenses of $676,000 and an increase in travel and meals of $654,000. The increase in personnel expenses was due to an increase in relocation expenses. The increase in travel and meals was due to an increase in client and business development activities. We expect general and administrative expenses to increase as we expand our business development and staff development initiatives.

Current wording

The increase in general and administrative expenses was primarily due to an increase in personnel expenses of $872,000, an increase in marketing and promotion expense of $321,000 and an increase in other professional services of $314,000. The increase in personnel expenses was due to an increase in relocation expenses. The increase in marketing and promotion expenses was due to higher spending on business development initiatives. We expect general and administrative expenses to increase as we expand our business development and staff development initiatives.

Previous wording

The increase in operating income for our Engineering and Other Scientific segment and our Environmental and Health segment during the second quarter of 2026 was due to an increase in utilization.

Current wording

The increase in operating income for our Engineering and Other Scientific segment during the first nine months of 2026 as compared to the same period last year was due to an increase in utilization.

Previous wording

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, legal, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

Current wording

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, legal, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with

Previous wording

The increase in corporate operating expenses during the first six months of 2026 as compared to the same period last year was primarily due to an increase in deferred compensation expense. During the first six months of 2026, deferred compensation expense increased by $3,018,000, with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. During the first six months of 2026, the value of plan assets increased by $10,645,000 as compared to an increase of $7,627,000 during the same period last year.

Current wording

The decrease in corporate operating expense during the first nine months of 2026 as compared to the same period last year was primarily due to a decrease in deferred compensation expense partially offset by an increase in the costs associated with our human resources, legal, finance, information technology and business development groups. During the first nine months of 2026, deferred compensation expense decreased by $3,828,000, with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. This decrease consisted of an increase in the value of plan assets of $10,804,000 during the first nine months of 2026 as compared to an increase in the value of plan assets of $14,632,000 during the same period last year.

Previous wording

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The increase in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan partially offset by a decrease in interest income. During the first six months of 2026, deferred compensation expense increased by $3,018,000 with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. During the first six months of 2026, the value of plan assets increased by $10,645,000 as compared to an increase of $7,627,000 during the same period last year. During the first six months of 2026, interest income decreased by $2,624,000 due to a decrease in interest rates and lower average cash equivalent balances.

Current wording

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The decrease in other income, net, was primarily due to a decrease in interest income of $4,268,000 and a change in the value of assets associated with our deferred compensation plans. The decrease in interest income was due to lower average cash equivalent balances. During the first nine months of 2026, deferred compensation expense decreased by $3,828,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plans. This decrease consisted of an increase in the value of plan assets of $10,804,000 during the first nine months of 2026 as compared to an increase in the value of plan assets of $14,632,000 during the same period last year.

Previous wording

During the first six months of 2026, we realized a negative tax impact associated with stock-based awards of $843,000 as compared to a negative tax impact of $485,000 during the same period last year. The change in the tax impact associated with stock-based awards was due to the change in the difference of the value of our common stock between the grant date and the release date for the restricted stock units released during the first six months of 2026 as compared to the same period last year. Excluding the negative tax impact, our consolidated tax rate was 28.0% in the first six months of 2026 and 2025.

Current wording

During the first nine months of 2026, we realized a negative tax impact associated with stock-based awards of $754,000 as compared to a negative tax impact of $354,000 during the same period last year. The change in the tax impact associated with stock-based awards was due to the change in the difference of the value of our common stock between the grant date and the release date for the restricted stock units released during the first nine months of 2026 as compared to the same period last year. Excluding the negative tax impact, the effective tax rate would have been 28.1% during the first nine months of 2026 as compared to 27.9% during the same period last year.

Previous wording

We believe our existing balances of cash, cash equivalents, short-term investments and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next 12 months.

Current wording

We believe our existing balances of cash, cash equivalents, and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next 12 months.

Previous wording

We financed our business during the first six months of 2026 through available cash. As of July 3, 2026, our cash and cash equivalents were $66,629,000 as compared to $221,930,000 at January 2, 2026. The decrease in cash and cash equivalents was primarily due to an increase in repurchases of our common stock. During the first six months of 2026, we repurchased $146,138,000 of our common stock as compared to $32,680,000 during the same period last year.

Current wording

We financed our business during the first nine months of 2026 through available cash. As of October 2, 2026, our cash and cash equivalents were $114,689,000 as compared to $221,930,000 at January 2, 2026. The decrease in cash and cash equivalents was primarily due to an increase in repurchases of our common stock. During the first nine months of 2026, we repurchased $146,138,000 of our common stock as compared to $72,712,000 during the same period last year.

Previous wording

Generally, our net cash provided by operating activities is used to fund our day-to-day operating activities. First quarter operating cash requirements are generally higher due to payment in the first quarter of annual bonuses accrued during the prior year. The largest source of operating cash flows is collections from our clients. Our primary

Current wording

Generally, our net cash provided by operating activities is used to fund our day-to-day operating activities. First quarter operating cash requirements are generally higher due to payment in the first quarter of annual bonuses accrued during the prior year. The largest source of operating cash flows is collections from our clients. Our primary uses of cash from operating activities are for employee-related expenditures, leased facilities, taxes, and general operating expenses.

Previous wording

The increase in net cash used in investing activities during the first six months of 2026, as compared to the same period last year, was due to an increase in capital expenditures. The increase in capital expenditures was due to an increase in investment in our corporate infrastructure.

Current wording

The decrease in net cash used in investing activities during the first nine months of 2026, as compared to the same period last year, was due to a decrease in capital expenditures.

Previous wording

The increase in net cash used in financing activities during the first six months of 2026, as compared to the same period last year was primarily due to an increase in repurchases of our common stock. During the first six months of 2026, we repurchased $146,138,000 of our common stock as compared to $32,680,000 during the same period last year.

Current wording

The increase in net cash used in financing activities during the first nine months of 2026, as compared to the same period last year was due to an increase in repurchases of our common stock. During the first nine months of 2026, we repurchased $146,138,000 of our common stock as compared to $72,712,000 during the same period last year.

Previous wording

We lease office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Germany, Hong Kong, Switzerland, and the United Kingdom under non-cancellable operating lease arrangements that expire at various dates through 2033. On June 19, 2024, we entered into an agreement with the State of Arizona to extend our land lease for 15 years beginning on January 17, 2028. We are currently obligated to make payments under the lease of $1,009,000 per year, which obligation will continue at that level until January 16, 2028. Beginning on January 17, 2028, our payments under the lease will increase to approximately $6,183,000 per year for the 15-year extension term with adjustments to the annual rent payment in 2033 and 2038 based on the consumer price index.

Current wording

We lease office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Hong Kong, Switzerland, and the United Kingdom under non-cancellable operating lease arrangements that expire at various dates through 2043. On June 19, 2024, we entered into an agreement with the State of Arizona to extend our land lease for 15 years beginning on January 17, 2028. We are currently obligated to make payments under the lease of $1,009,000 per year, which obligation will continue at that level until January 16, 2028. Beginning on January 17, 2028, our payments under the lease will increase to approximately $6,183,000 per year for the 15-year extension term with adjustments to the annual rent payment in 2033 and 2038 based on the consumer price index.

Previous wording

We maintain nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Vested amounts due under the plans of $127,839,000 were recorded as a deferred compensation plan liability on our unaudited condensed consolidated balance sheet at July 3, 2026. Vested amounts due under the plans of $18,609,000 were recorded as an accrued payroll and employee benefits on our unaudited condensed consolidated balance sheet at July 3, 2026. Company assets that are designated to fund the benefits under the plans are held in a rabbi trust and are subject to the claims of our creditors. As of July 3, 2026, invested amounts under the plans of $122,823,000 were recorded as a non-current asset on our unaudited condensed consolidated balance sheet. As of July 3, 2026, invested amounts under the plans of $19,274,000 were recorded as other current assets on our unaudited condensed consolidated balance sheet.

Current wording

We maintain nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Vested amounts due under the plans of $124,391,000 were recorded as a deferred compensation plan liability on our unaudited condensed consolidated balance sheet at October 2, 2026. Vested amounts due under the plans of $18,219,000 were recorded as an accrued payroll and employee benefits on our unaudited condensed consolidated balance sheet at October 2, 2026. Company assets that are designated to fund the benefits under the plans are held in a rabbi trust and are subject to the claims of our creditors. As of October 2, 2026, invested amounts under the plans of $122,620,000 were recorded as a non-current asset on our unaudited condensed consolidated balance sheet. As of October 2, 2026, invested amounts under the plans of $18,566,000 were recorded as other current assets on our unaudited condensed consolidated balance sheet.

Previous wording

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was serving, at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Current wording

-27 - indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Previous wording

Regulation G, Conditions for Use of Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures, and other U.S. Securities and Exchange Commission (“SEC”) rules and regulations define and prescribe the conditions for use of Non-GAAP financial information. Generally, a Non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We closely monitor two financial measures, EBITDA and EBITDAS, which meet the definition of Non-GAAP financial measures. We define EBITDA as net income before net interest income, income taxes, depreciation and amortization. We define EBITDAS as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. These measures are used to evaluate our financial results, develop budgets and determine employee compensation. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows,

Current wording

Regulation G, Conditions for Use of Non-Generally Accepted Accounting Principles (“Non-GAAP”) Financial Measures, and other U.S. Securities and Exchange Commission (“SEC”) rules and regulations define and prescribe the conditions for use of Non-GAAP financial information. Generally, a Non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We closely monitor two financial measures, EBITDA and EBITDAS, which meet the definition of Non-GAAP financial measures. We define EBITDA as net income before net interest income, income taxes, depreciation and amortization. We define EBITDAS as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. These measures are used to evaluate our financial results, develop budgets and determine employee compensation. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the Non-GAAP measures to the nearest comparable GAAP measure is set forth below.

Previous wording

The following table is a reconciliation of EBITDA and EBITDAS to the most comparable GAAP measure, net income, for the three and six months ended July 3, 2026 and July 4, 2025:

Current wording

The following table is a reconciliation of EBITDA and EBITDAS to the most comparable GAAP measure, net income, for the three and nine months ended October 2, 2026 and October 3, 2025:

Previous wording

The following table shows EBITDA (determined as shown in the reconciliation table below) as a percentage of revenues before reimbursements for the three and six months ended July 3, 2026 and July 4, 2025:

Current wording

The following table shows EBITDA (determined as shown in the reconciliation table above) as a percentage of revenue before reimbursement, for the three and nine months ended October 2, 2026 and October 3, 2025:

Previous wording

The increase in EBITDA as a percentage of revenues before reimbursements during the three and six months ended July 3, 2026 as compared to the same periods last year was primarily due to an increase in net revenues and an increase in utilization.

Current wording

The increase in EBITDA as a percentage of revenues before reimbursements during the three and nine months ended October 2, 2026 as compared to the same periods last year was primarily due to an increase in revenues before reimbursements and an increase in utilization.