DUCOMMUN INC /DE/

Previous wording

The Boeing Company (“Boeing”) is one of our largest customers and was notified by the Federal Aviation Administration (“FAA”) in early January 2024 that the FAA had initiated an investigation into Boeing’s quality control system. This notification was followed by the FAA announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. In addition, in July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process. Further, in Boeing’s Q1 2025 Quarterly Report on Form 10-Q, it stated various countries have announced plans for and/or have already implemented new or modified tariffs (discussed further below). Boeing’s first quarter results reflect its best estimate of the impacts of the tariffs enacted as of March 31, 2025, and certain potential mitigations. These tariffs and any retaliatory actions from other countries could have a material impact on Boeing’s financial position, results of operations and/or cash flows. In April 2025, certain customers in China informed Boeing they will not accept deliveries. Since Boeing is one of our largest customers, if Boeing is unable to meet the full compliance of the Federal Aviation Administration’s required quality control procedures, along with the tariffs (already imposed or will be imposed), it could have a material adverse impact on our business, results of operations and financial condition.

Current wording

The Boeing Company (“Boeing”) is one of our largest customers and was notified by the Federal Aviation Administration (“FAA”) in early January 2024 that the FAA had initiated an investigation into Boeing’s quality control system. This notification was followed by the FAA announcing actions to increase its oversight of Boeing as well as not approving production rate increases or additional production lines for the 737 MAX until it is satisfied that Boeing is in full compliance with required quality control procedures. In addition, in July 2024, Boeing also pleaded guilty to conspiracy fraud charges, which may result in additional external oversight on its manufacturing and quality control process. As discussed further below under “U.S. Government Tariffs,” during the second quarter of 2025, the United States adjusted various tariff rates, including on aluminum and steel imports, and announced broad reciprocal tariffs on imports from all countries. The United States has asserted that reciprocal tariff rates for many trade partners could increase from the 10% baseline tariff on August 1, 2025, unless agreements are reached. In Boeing’s Q2 2025 Quarterly Report on Form 10-Q, it stated that collectively, these tariffs and any retaliatory actions taken by countries in response to the United States tariffs could have a material impact on Boeing’s financial position, results of operations and/or cash flows. Recently, Boeing announced the FAA has cleared Boeing’s plan to raise 737 MAX production from 38 airplanes to 42 airplanes per month. Since Boeing is one of our largest customers, if Boeing is unable to meet the full compliance of the Federal Aviation Administration’s required quality control procedures, along with the tariffs (already imposed or will be imposed), it could have a material adverse impact on our business, results of operations and financial condition.

Previous wording

Net revenues by end-use market and operating segment during the fiscal three and six months ended June 28, 2025 and June 29, 2024, respectively, were as follows:

Current wording

Net revenues by end-use market and operating segment during the fiscal three and nine months ended September 27, 2025 and September 28, 2024, respectively, were as follows:

Previous wording

Net revenues for the three months ended June 28, 2025 were $202.3 million, compared to $197.0 million for the three months ended June 29, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the three months ended September 27, 2025 were $212.6 million, compared to $201.4 million for the three months ended September 28, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

Net revenues for the six months ended June 28, 2025 were $396.4 million, compared to $387.8 million for the six months ended June 29, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:

Current wording

Net revenues for the nine months ended September 27, 2025 were $608.9 million, compared to $589.3 million for the nine months ended September 28, 2024. The year-over-year increase in our key end-use markets were primarily due to the following:

Previous wording

•$16.5 million higher revenues in our military and space end-use markets due to higher rates on a classified program, selected missile, rotary-wing aircraft, and radar platforms; partially offset by

Current wording

•$45.3 million higher revenues in our military and space end-use markets due to higher rates on selected missile, rotary-wing aircraft, a classified program, radar, and ground vehicle weapon platforms; partially offset by

Previous wording

•$17.2 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and in-flight entertainment products, and lower rates on rotary-wing aircraft platforms, partially offset by growth in selected business jet platforms.

Current wording

•$25.3 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and in-flight entertainment products, and lower rates on rotary-wing aircraft platforms.

Previous wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), Spirit AeroSystems Holdings, Inc. (“Spirit”), and Viasat, Inc. (“Viasat”) for the three and six months ended June 28, 2025 and June 29, 2024.

Current wording

(1)Includes The Boeing Company (“Boeing”), Lockheed Martin Corporation (“Lockheed”), Northrop Grumman Corporation (“Northrop”), RTX Corporation (“RTX”), and Spirit AeroSystems Holdings, Inc. (“Spirit”) for the three and nine months ended September 27, 2025 and September 28, 2024.

Previous wording

Boeing, Lockheed, Northrop, RTX, Spirit, and Viasat represented the following percentages of total accounts receivable:

Current wording

Boeing, Lockheed, Northrop, RTX, and Spirit represented the following percentages of total accounts receivable:

Previous wording

The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, Spirit, and Viasat were diversified over a number of commercial, military and space programs and were generated by both operating segments.

Current wording

The net revenues and accounts receivable from Boeing, Lockheed, Northrop, RTX, and Spirit were diversified over a number of commercial, military and space programs and were generated by both operating segments.

Previous wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended June 28, 2025 of 26.6%, compared to the three months ended June 29, 2024 of 26.0% primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix and lower manufacturing volume.

Current wording

Gross profit consists of net revenues less cost of sales. Cost of sales includes the cost of production of finished products and other expenses related to inventory management, manufacturing quality, and order fulfillment. Gross profit as a percentage of net revenues increased year-over-year with the three months ended September 27, 2025 of 26.6%, compared to the three months ended September 28, 2024 of 26.2% primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix.

Previous wording

Gross profit as a percentage of net revenues increased year-over-year with the six months ended June 28, 2025 of 26.6%, compared to the six months ended June 29, 2024 of 25.3% primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix.

Current wording

Gross profit as a percentage of net revenues increased year-over-year with the nine months ended September 27, 2025 of 26.6%, compared to the nine months ended September 28, 2024 of 25.6% primarily due to lower other manufacturing costs, lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, and favorable product mix.

Previous wording

SG&A expenses decreased $0.1 million year-over-year in the three months ended June 28, 2025 compared to the three months ended June 29, 2024, primarily due to lower professional services fees of $0.9 million, partially offset by higher other SG&A expenses of $0.6 million.

Current wording

SG&A expenses increased $0.8 million year-over-year in the three months ended September 27, 2025 compared to the three months ended September 28, 2024, primarily due to higher compensation and benefit costs of $1.0 million and higher other SG&A expenses of $0.9 million, partially offset by lower professional services fees of $1.1 million.

Previous wording

SG&A expenses increased $1.5 million year-over-year in the six months ended June 28, 2025 compared to the six months ended June 29, 2024, primarily due to higher compensation and benefits expense of $2.0 million.

Current wording

SG&A expenses increased $2.3 million year-over-year in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024, primarily due to higher compensation and benefits expense of $3.0 million and other SG&A expenses of $0.7 million, partially offset by lower professional services fees of $1.4 million.

Previous wording

Restructuring charges decreased $1.5 million and $2.4 million (including $0.9 million recorded as cost of sales in both periods) year-over-year in the three and six months ended June 28, 2025, compared to the three and six months ended June 29, 2024, respectively, primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 2 for further information.

Current wording

Restructuring charges decreased $1.3 million and $3.8 million (including $0.9 million recorded as cost of sales during the nine months ended September 28, 2024) year-over-year in the three and nine months ended September 27, 2025, compared to the three and nine months ended September 28, 2024, respectively, primarily due to the winding down of the previously disclosed restructuring plan that was approved and commenced in April 2022. See Note 2 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

Interest expense decreased $1.0 million and $1.6 million year-over-year in the three and six months ended June 28, 2025, compared to the three and six months ended June 29, 2024, respectively, primarily due to lower interest rates along with a lower debt balance.

Current wording

Interest expense decreased $0.9 million and $2.5 million year-over-year in the three and nine months ended September 27, 2025, compared to the three and nine months ended September 28, 2024, respectively, primarily due to lower interest rates along with a lower debt balance.

Previous wording

We recorded income tax expense of $3.4 million for the three months ended June 28, 2025 compared to $2.2 million for the three months ended June 29, 2024. The increase in income tax expense for the second quarter of 2025 compared to the second quarter of 2024 was primarily due to higher pre-tax income in the second quarter of 2025 compared to the second quarter of 2024.

Current wording

We recorded an income tax benefit of $18.5 million for the three months ended September 27, 2025 compared to income tax expense of $1.3 million for the three months ended September 28, 2024. The change to income tax benefit from income tax expense for the third quarter of 2025 compared to the third quarter of 2024 was primarily due to pre-tax loss, driven by litigation settlement and related costs, net of insurance recovery, in the third quarter of 2025 compared to pre-tax income in the third quarter of 2024. We recorded a discrete income tax benefit of $23.0 million related to litigation settlement and related costs, net of insurance recovery, for the third quarter of 2025.

Previous wording

We recorded income tax expense of $6.2 million for the six months ended June 28, 2025 compared to $4.1 million for the six months ended June 29, 2024. The increase in income tax expense for the six months ended June 28, 2025 compared to the six months ended June 29, 2024 was primarily due to higher pre-tax income in the six months ended June 28, 2025 compared to the six months ended June 29, 2024.

Current wording

We recorded an income tax benefit of $12.4 million for the nine months ended September 27, 2025 compared to income tax expense of $5.4 million for the nine months ended September 28, 2024. The change to income tax benefit from income tax expense for the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 was primarily due to pre-tax loss, driven by litigation settlement and related costs, net of insurance recovery, in the nine months ended September 27, 2025 compared to pre-tax income in the nine months ended September 28, 2024. We recorded a discrete income tax benefit of $23.0 million related to litigation settlement and related costs, net of insurance recovery, for the nine months ended September 27, 2025.

Previous wording

Our total amount of unrecognized tax benefits was $4.9 million and $4.5 million as of June 28, 2025 and December 31, 2024, respectively. If recognized, $2.9 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of June 28, 2025 and December 31, 2024 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2025, we expect decreases to our unrecognized tax benefits of approximately $0.5 million in the next twelve months.

Current wording

Our total amount of unrecognized tax benefits was $5.0 million and $4.5 million as of September 27, 2025 and December 31, 2024, respectively. If recognized, $3.1 million would affect the effective tax rate. We record interest and penalty charges, if any, related to uncertain tax positions as a component of tax expense and unrecognized tax benefits. The amounts accrued for interest and penalty charges as of September 27, 2025 and December 31, 2024 were not significant. As a result of statute of limitations set to expire in the fourth quarter of 2025, we expect decreases to our unrecognized tax benefits of approximately $0.5 million in the next twelve months.

Previous wording

On July 4, 2025, the U.S. enacted the OBBBA. Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We are evaluating the impact of the OBBBA to our financial statements and will begin reflecting its effects in the third quarter of 2025. We do not expect the new provisions of the OBBBA to have a material impact to income tax expense for 2025. However, we expect the OBBBA to decrease our cash liability for 2025.

Current wording

On July 4, 2025, the U.S. enacted the OBBBA. Amongst other things, the OBBBA provides for several corporate tax provision changes including restoring the full expensing of qualified property placed in service after January 19, 2025, reinstating the immediate expensing of U.S. research and development expenditures paid or incurred for tax years beginning after December 31, 2024, and changes in the computations of U.S. taxation on international earnings for tax years beginning after December 31, 2025. We completed the initial assessment of the OBBBA corporate tax provisions as they relate to our financial statements in the third quarter of 2025. The enactment of the OBBBA did not have a material impact to our effective tax rate for the three and nine months ended September 27, 2025. However, we expect the OBBBA to decrease our cash tax liability for 2025.

Previous wording

Net income, net income as a percentage of revenues, and earnings per share for the six months ended June 28, 2025 were $23.1 million, or 5.8% of revenues, or $1.52 per diluted share, respectively, compared to $14.6 million, or 3.8% of revenues, or $0.97 per diluted share, respectively, for the six months ended June 29, 2024. The increase in net income for the six months ended June 28, 2025 compared to the six months ended June 29, 2024 was primarily due to higher gross profit of $7.2 million, lower restructuring charges of $2.4 million (the prior year included $0.9 million recorded as cost of sales), and higher other income of $1.7 million, partially offset by higher income tax expense of $2.0 million and higher SG&A expenses of $1.5 million.

Current wording

Net (loss) income, net (loss) income as a percentage of revenues, and (loss) earnings per share for the three months ended September 27, 2025 were a net loss of $(64.4) million, or (30.3)% of revenues, or $(4.30) per share, respectively, compared to net income of $10.1 million, or 5.0% of revenues, or $0.67 per diluted share, respectively, for the three months ended September 28, 2024. The decrease in net income for the three months ended September 27, 2025 compared to the three months ended September 28, 2024 was primarily due to higher litigation settlement and related costs, net, of $99.7 million discussed above, partially offset by lower income tax expense of $19.8 million discussed above and higher gross profit of $3.8 million.

Previous wording

Net income, net income as a percentage of revenues, and earnings per share for the three months ended June 28, 2025 were $12.6 million, or 6.2% of revenues, or $0.82 per diluted share, respectively, compared to $7.7 million, or 3.9% of revenues, or $0.52 per diluted share, respectively, for the three months ended June 29, 2024. The increase in net income for the three months ended June 28, 2025 compared to the three months ended June 29, 2024 was primarily due to higher gross profit of $2.5 million, higher other income of $1.7 million, and lower restructuring charges of $1.5 million (the prior year included $0.9 million recorded as cost of sales), partially offset by higher income tax expense of $1.1 million.

Current wording

Net (loss) income, net (loss) income as a percentage of revenues, and (loss) earnings per share for the nine months ended September 27, 2025 were a net loss of $(41.4) million, or (6.8)% of revenues, or $(2.77) per share, respectively, compared to net income of $24.7 million, or 4.2% of revenues, or $1.65 per diluted share, respectively, for the nine months ended September 28, 2024. The decrease in net income for the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 was primarily due to higher litigation settlement and related costs, net, of $99.7 million, partially offset by lower income tax expense of $17.8 million, higher gross profit of $11.0 million, and lower restructuring charges of $3.8 million (the prior year period included $0.9 million recorded as cost of sales).

Previous wording

We report our financial performance based upon our two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and six months ended June 28, 2025 and June 29, 2024:

Current wording

We report our financial performance based upon our two reportable operating segments: Electronic Systems and Structural Systems. The results of operations differ between our reportable operating segments due to differences in competitors, customers, extent of proprietary deliverables and performance. The following table summarizes our business segment performance for the three and nine months ended September 27, 2025 and September 28, 2024:

Previous wording

(3)The three and six months ended June 28, 2025 each included $0.1 million of stock-based compensation expense recorded as cost of sales. The three and six months ended June 29, 2024 included less than $0.1 million and $0.1 million, respectively, of stock-based compensation expense recorded as cost of sales.

Current wording

(3)The three and nine months ended September 27, 2025 included $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 28, 2024 included $0.1 million and $0.2 million, respectively, of stock-based compensation expense recorded as cost of sales.

Previous wording

(4)The three and six months ended June 28, 2025 included $0.6 million and $1.4 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 29, 2024 included $0.5 million and $1.9 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Current wording

(4)The three and nine months ended September 27, 2025 included $0.6 million and $2.0 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 28, 2024 included $0.9 million and $2.8 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash.

Previous wording

Electronic Systems net revenues in the three months ended June 28, 2025 compared to the three months ended June 29, 2024 increased $8.8 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the three months ended September 27, 2025 compared to the three months ended September 28, 2024 increased $7.7 million primarily due to the following in our key end-use markets:

Previous wording

•$13.8 million higher revenues in our military and space end-use markets due to higher rates on selected missiles, classified program, radar, and fixed-wing aircraft platforms, partially offset by lower rates on electronic warfare platforms; partially offset by

Current wording

•$8.2 million higher revenues in our military and space end-use markets due to higher rates on selected missile and fixed-wing aircraft platforms, partially offset by lower rates on electronic warfare platforms; partially offset by

Previous wording

Electronic Systems net revenues in the six months ended June 28, 2025 compared to the six months ended June 29, 2024 increased $11.0 million primarily due to the following in our key end-use markets:

Current wording

Electronic Systems net revenues in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 increased $18.7 million primarily due to the following in our key end-use markets:

Previous wording

•$2.7 million lower revenues in our commercial aerospace end-use markets due to lower in-flight entertainment revenues and lower rates on large aircraft platforms.

Current wording

•$15.3 million lower revenues in our commercial aerospace end-use markets due to lower rates on large aircraft platforms and lower in-flight entertainment revenues.

Previous wording

Electronic Systems segment operating income in the three months ended June 28, 2025 compared to the three months ended June 29, 2024 increased $4.2 million primarily due to favorable product mix, higher manufacturing volume, and lower other manufacturing costs.

Current wording

Electronic Systems segment operating income in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 increased $5.5 million primarily due to higher manufacturing volume, favorable product mix, and lower other manufacturing costs.

Previous wording

Structural Systems net revenues in the three months ended June 28, 2025 compared to the three months ended June 29, 2024 decreased $3.5 million primarily due to the following:

Current wording

Structural Systems net revenues in the three months ended September 27, 2025 compared to the three months ended September 28, 2024 increased $3.5 million primarily due to the following:

Previous wording

•$2.7 million higher revenues in our military and space end-use markets due to higher rates on selected rotary-wing aircraft platforms, partially offset by lower rates on selected fixed-wing aircraft platforms.

Current wording

•$11.0 million higher revenues in our military and space end-use markets due to higher rates on selected rotary-wing aircraft and ground vehicle weapons platforms, partially offset by lower rates on selected fixed-wing aircraft platforms; partially offset by

Previous wording

•$7.5 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and lower rates on rotary-wing aircraft platforms, partially offset by growth in selected business jet platforms; partially offset by

Current wording

•$10.0 million lower revenues in our commercial aerospace end-use markets due to lower revenues from Boeing 737 MAX and lower rates on rotary-wing aircraft platforms.

Previous wording

The Structural Systems segment operating income in the three months ended June 28, 2025 compared to the three months ended June 29, 2024 decreased $1.0 million primarily due to unfavorable product mix and lower manufacturing volume, partially offset by lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center.

Current wording

The Structural Systems segment operating income in the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024 increased $10.1 million primarily due to lower other manufacturing costs and lower restructuring charges as a result of nearing the completion of the wind down of our Monrovia performance center, partially offset by unfavorable product mix and lower manufacturing volume.

Previous wording

A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and, in November 2023, the occupant of the neighboring facility filed suit against us in U.S. District Court for the Central District of California seeking unspecified amounts for damages relating to the fire. See Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Current wording

A neighboring, non-related manufacturing facility, also suffered fire damage during the same time as the fire that severely damaged our Guaymas performance center and, in November 2023, the occupant of the neighboring facility filed suit against us in U.S. District Court for the Central District of California seeking unspecified amounts for damages relating to the fire. Subsequent to our quarter ended September 27, 2025, on October 3, 2025, we entered into a binding settlement term sheet (the “Term Sheet”) to resolve the Guaymas fire litigation against us. The Term Sheet provides for, among other things, the final dismissal of the Guaymas fire litigation against us with prejudice and a release of claims against us in exchange for us issuing a payment of $150.0 million, $56.0 million of which is expected to be funded by our insurance carriers. Also subsequent to our quarter ended September 27, 2025, on October 9, 2025, we settled an ancillary subrogation claim related to the fire for $1.4 million. See Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Previous wording

CG&A expenses increased $2.6 million for the six months ended June 28, 2025 compared to the six months ended June 29, 2024, primarily due to higher compensation and benefits costs of $2.3 million and higher other corporate expenses of $1.3 million, partially offset by lower professional services fees of $0.9 million.

Current wording

CG&A expenses increased $103.8 million for the nine months ended September 27, 2025 compared to the nine months ended September 28, 2024, primarily due to the litigation settlement and related costs, net, of $99.7 million discussed above and higher compensation and benefits costs of $4.2 million, partially offset by lower professional services fees of $2.0 million.

Previous wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $32.4 million and $30.0 million for the three months ended June 28, 2025 and June 29, 2024, respectively.

Current wording

Adjusted earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, restructuring charges, and inventory purchase accounting adjustments (“Adjusted EBITDA”) were $34.4 million and $31.9 million for the three months ended September 27, 2025 and September 28, 2024, respectively.

Previous wording

•Income tax expense may be useful to investors because it represents the taxes which may be payable for the period and the change in deferred taxes during the period, and may reduce cash flow available for use in our business;

Current wording

•Income tax (benefit) expense may be useful to investors because it represents the taxes which may be (receivable) payable for the period and the change in deferred taxes during the period, and may (increase) reduce cash flow available for use in our business;

Previous wording

•Purchase accounting inventory step-ups may be useful to our investors as they do not necessarily reflect the current or on-going cash charges related to our core operating performance; and

Current wording

•Purchase accounting inventory step-ups may be useful to our investors as they do not necessarily reflect the current or on-going cash charges related to our core operating performance;

Previous wording

•Gain on sale of property and other assets may be useful to our investors in evaluating our core operating performance.

Current wording

•Gain on sale of property and other assets may be useful to our investors in evaluating our core operating performance; and

Previous wording

(1) The three and six months ended June 28, 2025 included $0.6 million and $1.4 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 29, 2024 included $0.5 million and $1.9 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and six months ended June 28, 2025 each included $0.2 million of stock-based compensation expense recorded as cost of sales. The three and six months ended June 29, 2024 each included $0.1 million of stock-based compensation expense recorded as cost of sales.

Current wording

(1) The three and nine months ended September 27, 2025 included $0.6 million and $2.0 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 28, 2024 included $0.9 million and $2.8 million, respectively, of stock-based compensation expense for awards with both performance and market conditions that will be settled in cash. The three and nine months ended September 27, 2025 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales. The three and nine months ended September 28, 2024 included $0.1 million and $0.3 million, respectively, of stock-based compensation expense recorded as cost of sales.