CarParts.com, Inc.

Previous wording

We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and other parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. We principally sell our products to individual consumers through our flagship website atwww.carparts.com**,our app, and online marketplaces. Our corporate website is located atwww.carparts.com**/investor. The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites.

Current wording

We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and other parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. We principally sell our products to individual consumers through our flagship website atwww.carparts.com**,our mobile app, online marketplaces and our wholesale platform. Our corporate website is located atwww.carparts.com**/investor. The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites.

Previous wording

1.Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,544,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.

Current wording

1.Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,660,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.

Previous wording

2.U.S. vehicle fleet expanding and aging. The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.6 years in 2024, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs. In many cases we believe these older vehicles are driven by DIY car owners who are more likely to handle any necessary repairs themselves rather than taking their car to the professional repair shop.

Current wording

2.U.S. vehicle fleet expanding and aging. The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.8 years in 2025, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall

Previous wording

3.Growth of online sales. The U.S. Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach over $23 billion by 2026. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales. We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces.

Current wording

3.Growth of online sales. The U.S. Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach over $27 billion by 2028. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales. We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces.

Previous wording

For fiscal year 2024, the Company’s operations generated net sales of $588,846, compared to $675,729 for fiscal year 2023, representing a decrease of 12.9%. The Company incurred a net loss of $40,601 for fiscal year 2024 compared to a net loss of $8,223 for fiscal year 2023. The Company’s net loss before interest (income) expense, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, share-based compensation expense, workforce transition costs, and distribution center costs ("Adjusted EBITDA"), was $(7,055) in

Current wording

For fiscal year 2025, the Company’s operations generated net sales of $547,525, compared to $588,846 for fiscal year 2024, representing a decrease of 7.0%. The Company incurred a net loss of $50,443 for fiscal year 2025 compared to a net loss of $40,601 for fiscal year 2024. The Company’s net loss before interest expense (income), net, income tax provision, depreciation and amortization expense, amortization of intangible assets, impairment of long-lived assets, share-based compensation expense, workforce transition costs, distribution center costs and strategic alternatives exploration costs ("Adjusted EBITDA"), was $(14,008) in fiscal year 2025 compared to $(7,055) in fiscal year 2024. Refer to the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss.

Previous wording

Net sales decreased in fiscal year 2024 compared to fiscal year 2023 primarily driven by the continued challenging consumer environment and our re-pricing strategy to focus on higher value customers. Gross profit decreased by 14.2% to $196,739. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023. The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy.

Current wording

Net sales decreased in fiscal year 2025 compared to fiscal year 2024 primarily driven by our efforts to increase profitability by rationalizing marketing spend. Gross profit decreased by 8.8% to $179,348. Gross margin decreased 60 basis points to 32.8% in fiscal year 2025 compared to 33.4% in fiscal year 2024. The decrease in gross margin was primarily driven by product mix and the impact from tariffs, partially offset by our pricing increases.

Previous wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, and distribution center costs.

Current wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before (a) interest (expense) income, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, distribution center costs, strategic alternatives exploration costs and impairment of long-lived assets.

Previous wording

The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the accounting principles generally accepted in the United States (“GAAP”) results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company’s business and results of operations.

Current wording

We believe that these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with the accounting principles generally accepted in the United States (“GAAP”) results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the our business and results of operations.

Previous wording

Management uses Adjusted EBITDA as one measure of the Company’s operating performance because it assists in comparing the Company’s operating performance on a consistent basis by removing the impact of stock compensation expense, as well as other items that we do not believe are representative of our ongoing operating performance. Internally, this non-GAAP measure is also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; and for evaluating the effectiveness of operational strategies. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the ongoing operations of companies in our industry.

Current wording

Management uses Adjusted EBITDA as one measure of our operating performance because it assists in comparing our operating performance on a consistent basis by removing the impact of stock compensation expense, as well as other items that we do not believe are representative of our ongoing operating performance. Internally, this non-GAAP measure is also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; and for evaluating the effectiveness of operational strategies. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the ongoing operations of companies in our industry.

Previous wording

This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company’s non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

Current wording

This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review our consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. In addition, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

Previous wording

Net Sales. Online and offline sales represent two different sales channels for our products. Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website atwww.carparts.com, our app, and online marketplaces. Online marketplaces consist primarily of sales of our products on online marketplace websites, where we sell through online storefronts that we maintain on third-party owned websites such as eBay and Amazon. Our offline sales channel represents our distribution of products directly to commercial customers by selling auto parts to collision repair shops. Our offline sales channel also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which include the replacement collision parts and our Kool-Vue® mirror line.

Current wording

Net Sales. Online and offline sales represent two different sales channels for our products. Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website atwww.carparts.com, our mobile app, online marketplaces, and our wholesale platform. Online marketplaces consist primarily of sales of our products on online marketplace websites, where we sell through online storefronts that we maintain on third-party owned websites such as eBay and Amazon. Our offline sales channel represents our distribution of products directly to commercial customers by selling auto parts to collision repair shops through our wholesale platform. Our offline sales channel also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which includes replacement parts, hard parts (maintenance and repair components), other parts (performance upgrades) and specialty products across domestic and import vehicle applications.

Previous wording

Operating Expense. Operating expense consists of marketing, general and administrative, fulfillment, and technology expense. We also include share-based compensation expense in the applicable operating expense category based on the respective equity award recipient’s function. Marketing expense consists of online advertising spend, television advertising, internet commerce facilitator fees and other advertising costs, as well as payroll and related expenses associated with our customer service and marketing personnel. General and administrative expense consists primarily of administrative payroll and related expenses, merchant processing fees, legal and professional fees and other administrative costs. Fulfillment expense consists primarily of payroll and related costs associated with our warehouse employees and our purchasing group, facilities rent, building maintenance, depreciation and other costs associated with inventory management and our wholesale operations. Technology expense consists primarily of payroll and related expenses of our information technology personnel, the cost of hosting our servers, communications expenses and internet connectivity costs, computer support and software development amortization expense. Marketing expense, general and administrative expense, and fulfillment expense also includes depreciation and amortization expense.

Current wording

television advertising, internet commerce facilitator fees and other advertising costs, as well as payroll and related expenses associated with our customer service and marketing personnel. General and administrative expense consists primarily of administrative payroll and related expenses, merchant processing fees, legal and professional fees and other administrative costs. Fulfillment expense consists primarily of payroll and related costs associated with our warehouse employees and our purchasing group, facilities rent, building maintenance, depreciation and other costs associated with inventory management and our wholesale operations. Technology expense consists primarily of payroll and related expenses of our information technology personnel, the cost of hosting our servers, communications expenses and internet connectivity costs, computer support and software development amortization expense. Marketing expense, general and administrative expense, and fulfillment expense also includes depreciation and amortization expense. In fiscal year 2025, operating expense also consists of impairment loss on long-lived assets. See further information of impairment in*“Note 3 – Property and Equipment, Net”* in the Notes to the Consolidated Financial Statements included in Part II, Item 8, of this report

Previous wording

Fifty-Two Weeks Ended December 28, 2024 Compared to the Fifty-Two Weeks Ended December 30, 2023

Current wording

Fifty-Three Weeks Ended January 3, 2026 Compared to the Fifty-Two Weeks Ended December 28, 2024

Previous wording

Gross profit decreased $32,667, or 14.2%, in fiscal year 2024 compared to fiscal year 2023. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023. The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy.

Current wording

Gross profit decreased $17,391, or 8.8%, in fiscal year 2025 compared to fiscal year 2024. Gross margin decreased 60 basis points to 32.8% in fiscal year 2025 compared to 33.4% in fiscal year 2024. The decrease in gross margin was primarily driven by product mix and the impact from tariffs, partially offset by our pricing increases.

Previous wording

Total other income, net, decreased $1,502, or 83.3%, for fiscal year 2024 compared to fiscal year 2023 primarily driven by a decrease in interest income due to a lower cash balance during 2024.

Current wording

Total other (expense) income, net, decreased $1,507, or 500.7%, for fiscal year 2025 compared to fiscal year 2024 primarily driven by an increase in interest expense due to higher borrowings on the revolving loan payable and a decrease in interest income due to a lower cash balance throughout 2025.

Previous wording

The Company accounts for income taxes in accordance with ASC 740* - Income Taxes* (“ASC 740”). Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 28, 2024, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $45,463 against deferred tax assets that were not more likely than not to be realized.

Current wording

planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of January 3, 2026, due to cumulative losses in recent years, we maintained a valuation allowance in the amount of $55,405 against deferred tax assets that were not more likely than not to be realized.

Previous wording

As of December 28, 2024, the Company had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of December 28, 2024, the Company’s federal and state NOL carryforwards were $127,019 and $93,822, respectively. Federal NOL carryforwards of $891 were acquired in the acquisition of WAG which are subject to Section 382 of the Code and limited to an annual usage limitation of $135. The Company’s federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029.

Current wording

As of January 3, 2026, we had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of January 3, 2026, our federal and state NOL carryforwards were $152,613 and $108,281, respectively. Federal NOL carryforwards of $622 were acquired in the acquisition of WAG which are subject to Section 382 of the Code and limited to an annual usage limitation of $135. Our federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029.

Previous wording

During the fifty-two weeks ended December 28, 2024, we primarily funded our operations with cash and cash equivalents generated from operations. We had cash and cash equivalents of $36,397 as of December 28, 2024, representing a $14,554 decrease from $50,951 of cash and cash equivalents as of December 30, 2023. Based on our

Current wording

During the fifty-three weeks ended January 3, 2026, we primarily funded our operations with cash and cash equivalents generated from operations, borrowings from our revolving loan, the issuance of the Convertible Notes with an aggregate principal amount of $25,000 (see “Note 4 - Borrowings”) and the issuance of common stock for $10,733 of gross proceeds (see “Note 5 – Stockholders’ Equity and Share-Based Compensation”). We had cash and cash equivalents of $25,821 as of January 3, 2026, representing a $10,576 decrease from $36,397 of cash and cash equivalents as of December 28, 2024. Based on our current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Amended Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “Debt and Available Borrowing Resources” and “Funding Requirements” below).

Previous wording

As of December 28, 2024 and December 30, 2023, our working capital was $48,445 and $80,352, respectively.

Current wording

As of January 3, 2026 and December 28, 2024, our working capital was $53,817 and $48,445, respectively.

Previous wording

Net cash provided by operating activities for the fiscal years ended December 28, 2024 and December 30, 2023 was $10,338 and $50,001, respectively. The decrease in net cash provided by operating activities was primarily driven by a lower net cash inflow from the change in working capital, in addition to the higher net loss for 2024.

Current wording

Net cash (used in) provided by operating activities for the fiscal years ended January 3, 2026 and December 28, 2024 was $(34,076) and $10,338, respectively. The decrease was primarily driven by a higher net loss in fiscal year 2025, in addition to the decrease in net cash outflow from the change in working capital, mainly attributable to moderating our inventory position in fiscal year 2025 due to the uncertainty from tariffs.

Previous wording

For the fiscal year ended December 28, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $20,573, which are mainly related to capitalized website and software development costs and machinery and equipment additions, primarily related to the new Las Vegas distribution center. For the fiscal year ended December 30, 2023, net cash used in investing activities was primarily the result of additions to property and equipment of $11,879, which are mainly related to capitalized website and software development costs.

Current wording

For the fiscal year ended January 3, 2026, net cash used in investing activities was primarily the result of additions to property and equipment of $7,961, which are mainly related to capitalized website and software development costs. For the fiscal year ended December 28, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $20,573, which are mainly related to capitalized website and software development costs and machinery and equipment additions, primarily related to the new Las Vegas distribution center.

Previous wording

Net cash used in financing activities was $4,422 and $5,916 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively. The decrease was primarily attributable to the absence of proceeds from the exercise of stock options in 2024.

Current wording

Net cash provided by (used in) financing activities was $31,397 and $(4,422) for the fiscal years ended January 3, 2026 and December 28, 2024, respectively. The increase was primarily attributable to the issuance of the Convertible Notes with an aggregate principal amount of $25,000 and $10,733 of gross proceeds from the issuance of common stock in September 2025.

Previous wording

Total debt was $12,313 as of December 28, 2024 compared to $16,635 as of December 30, 2023 and primarily consists of right-of-use obligations-finance.

Current wording

Total debt was $34,010 as of January 3, 2026, which primarily consists of Convertible Notes payable and right-of-use obligations-finance. Total debt was $12,313 as of December 28, 2024, which primarily consists of right-of-use obligations-finance.

Previous wording

The Company maintains an asset-based revolving Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived from certain receivables, inventory and property and equipment. On June 17, 2022, the Company and JPMorgan entered into an Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) amending and restating in its entirety the original Credit Agreement dated April 26, 2012. As amended, the Credit Agreement provides for the revolving commitment in an aggregate principal amount of up to $75,000 (formerly $30,000) and allows for an uncommitted ability to increase the aggregate principal amount by an additional $75,000 to $150,000 (formerly $40,000 maximum), subject to certain terms and conditions. The Credit Facility matures on June 17, 2027.

Current wording

We maintain an Amended Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived from certain receivables, inventory and property and equipment. On September 8, 2025, we and JPMorgan entered into the First Amendment to the existing Amended and Restated Credit Agreement, dated as of June 17, 2022. The First Amendment provides for the revolving commitment in an aggregate principal amount of $25,000 (formerly $75,000), a sublimit of $2,500 for the issuance of letters of credit and allows for an uncommitted ability to increase the revolving commitment by an additional $125,000, subject to certain terms and conditions. The Amended Credit Facility now matures on September 8, 2026 (formerly June 17, 2027).

Previous wording

and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. We use the trade letters of credit in the ordinary course of business to satisfy certain vendor obligations.

Current wording

As of January 3, 2026 and December 28, 2024, our outstanding revolving loan balance was $0 and $0, respectively. During the fiscal years ended January 3, 2026 and December 28, 2024, we borrowed and paid down $20,675 and $0, respectively, from the revolving loan under the Amended Credit Facility. The outstanding standby letters of credit balance as of December 28, 2024 and December 28, 2024 were $680 and $680, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. We use the trade letters of credit in the ordinary course of business to satisfy certain vendor obligations.

Previous wording

Loans drawn under the Credit Facility bear interest at a per annum rate equal to either (a) SOFR plus an applicable margin of 1.50% to 2.00% per annum based on the Company’s fixed charge coverage ratio, or (b) an “alternate prime base rate” subject to an increase from 0.00% to 0.50% per annum based on the Company’s fixed charge coverage ratio. As of December 28,2024, the Company’s SOFR based interest rate was 6.46% and the Company’s prime based rate was 8.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly. Under the terms of the Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement. The cash dominion period is triggered in an event of default or if “excess availability,” as defined under the Credit Agreement, is less than the $9,000 (12% of the aggregate revolving commitment) for three consecutive business days, and will continue until, during the preceding 45 consecutive days, no event of default existed and excess availability has been greater than $9,000 at all times (with the trigger subject to adjustment based on the Company’s revolving commitment). The Company’s required excess availability related to the “Covenant Testing Trigger Period” (as defined under the Credit Agreement) is less than $7,500 (10% of the aggregate revolving commitment) for three consecutive business days, the Company shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, and continuing until excess availability has been greater than or equal to $7,500 at all times for 45 consecutive days (with the trigger subject to adjustment based on the Company’s revolving commitment).

Current wording

Loans drawn under the Amended Credit Facility bear interest, at our option, at a per annum rate equal to either (a) Adjusted Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 3.00% per annum, or (b) an “alternate prime base rate” plus an applicable margin of 1.50% per annum. As of September 27, 2025, the SOFR based interest rate was 6.78% and the prime based rate was 8.25%. A commitment fee, based upon unused availability under the Amended Credit Facility bearing interest at a rate of 0.50% per annum, is payable monthly. The Covenant Testing Trigger Period (as defined under the Amended Credit Agreement) means the period commencing on any day that excess availability is less than $5,000 for three consecutive business days and will continue until excess availability has been greater than, or equal to, $5,000 at all times for 45 consecutive days. In addition, upon the occurrence of a Covenant Testing Trigger Period, we shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, continuing until excess availability has been greater than or equal to $5,000 for 45 consecutive days.

Previous wording

Certain of the Company’s domestic subsidiaries are co-borrowers (together with the Company, the “Borrowers”) under the Credit Agreement, and certain other domestic subsidiaries are guarantors (the “Guarantors” and, together with the Borrowers, the “Loan Parties”) under the Credit Agreement. The Borrowers and the Guarantors are jointly and severally liable for the Borrowers’ obligations under the Credit Agreement. The Loan Parties’ obligations under the Credit Agreement are secured, subject to customary permitted liens and certain exclusions, by a perfected security interest in (a) all tangible and intangible assets and (b) all of the capital stock owned by the Loan Parties (limited, in the case of foreign subsidiaries, to 65% of the capital stock of such foreign subsidiaries). The Borrowers may voluntarily prepay the loans at any time. The Borrowers are required to make mandatory prepayments of the loans (without payment of a premium) with net cash proceeds received upon the occurrence of certain “prepayment events,” which include certain sales or other dispositions of collateral, certain casualty or condemnation events, certain equity issuances or capital contributions, and the incurrence of certain debt.

Current wording

the Borrowers, the “Loan Parties”) under the Amended Credit Agreement. The Borrowers and the Guarantors are jointly and severally liable for the Borrowers’ obligations under the Amended Credit Agreement. The Loan Parties’ obligations under the Amended Credit Agreement are secured, subject to customary permitted liens and certain exclusions, by a perfected security interest in (a) all tangible and intangible assets and (b) all of the capital stock owned by the Loan Parties (limited, in the case of foreign subsidiaries, to 65% of the capital stock of such foreign subsidiaries). The Borrowers may voluntarily prepay the loans at any time. The Borrowers are required to make mandatory prepayments of the loans (without payment of a premium) with net cash proceeds received upon the occurrence of certain “prepayment events,” which include certain sales or other dispositions of collateral, certain casualty or condemnation events, certain equity issuances or capital contributions, and the incurrence of certain debt.

Previous wording

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, fundamental changes, investments, dispositions, prepayment of other indebtedness, mergers, and dividends and other distributions.

Current wording

The Amended Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us and our subsidiaries, including, among other things, restrictions on indebtedness, liens, fundamental changes, investments, dispositions, prepayment of other indebtedness, mergers, and dividends and other distributions.

Previous wording

Events of default under the Credit Agreement include: failure to timely make payments due under the Credit Agreement; material misrepresentations or misstatements under the Credit Agreement and other related agreements; failure to comply with covenants under the Credit Agreement and other related agreements; certain defaults in respect of other material indebtedness; insolvency or other related events; certain defaulted judgments; certain ERISA-related events; certain security interests or liens under the loan documents cease to be, or are challenged by the Company or any of its subsidiaries as not being, in full force and effect; any loan document or any material provision of the same ceases to be in full force and effect; and certain criminal indictments or convictions of any Loan Party. As of December 28, 2024, the Company was in compliance with all covenants under the Credit Agreement.

Current wording

Events of default under the Amended Credit Agreement include: failure to timely make payments due under the Amended Credit Agreement; material misrepresentations or misstatements under the Amended Credit Agreement and other related agreements; failure to comply with covenants under the Amended Credit Agreement and other related agreements; certain defaults in respect of other material indebtedness; insolvency or other related events; certain defaulted judgments; certain ERISA-related events; certain security interests or liens under the loan documents cease to be, or are challenged by us or any of our subsidiaries as not being, in full force and effect; any loan document or any material provision of the same ceases to be in full force and effect; and certain criminal indictments or convictions of any Loan Party. As of January 3, 2026, we were in compliance with all covenants under the Amended Credit Agreement.

Previous wording

*Impairment of Long-Lived Assets.*We assess potential impairments whenever events or changes in circumstances indicate that the carrying value of our long-lived assets, or asset group, may not be recoverable. If an indicator of impairment exists, we review the recoverability of our long-lived assets by estimating the undiscounted future cash flows compared to the carrying value of such assets. An impairment loss will result when the carrying value of the asset group exceeds the undiscounted future cash flows of the asset group. Impairment losses will be recognized in operating results. No impairment charges were recorded for the fiscal years ended December 28, 2024 and December 30, 2023.

Current wording

*Impairment of Long-Lived Assets.*We assess potential impairments whenever events or changes in circumstances indicate that the carrying value of our long-lived assets, or asset group, may not be recoverable. If an indicator of impairment exists, we review the recoverability of our long-lived assets by estimating the future undiscounted cash flows compared to the carrying value of such assets, or asset group. An impairment loss will result when the carrying value of the asset group exceeds the undiscounted future cash flows of the asset group.