Indivior Pharmaceuticals, Inc.

Previous wording

For the periods presented, the Company operated as one business segment, which is predominantly the development, manufacture and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence and related disorders, andnalmefene nasal spray for emergency opioid overdose reversal. Substantially all our net revenue for such periods were derived from sales of SUBLOCADE and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE Tablet). SUBLOCADE accounted for 64%, 58%, and 45% of our net revenue in 2024, 2023, and 2022, respectively. Other buprenorphine-based sublingual products accounted for 32%, 38%, and 52% of our net revenue in 2024, 2023, and 2022, respectively. In the U.S. market for buprenorphine-based treatments for opioid dependence, SUBOXONE Film had an average market share of 16%, 19% and 20% in 2024, 2023, and 2022, respectively, according to data from IQVIA.

Current wording

The Company operates as one business segment, which is predominantly the development, manufacture and sale of buprenorphine-based prescription drugs for the treatment of opioid dependence and related disorders. Substantially all our net revenue for 2025 and 2024 was derived from sales of SUBLOCADE and other buprenorphine-based sublingual products (including SUBOXONE Film and SUBOXONE Tablet). SUBLOCADE accounted for 69% and 64% of our net revenue in 2025 and 2024, respectively. Other buprenorphine-based sublingual products accounted for 28% and 32% of our net revenue in 2025 and 2024, respectively.

Previous wording

In the U.S., we have distribution agreements with the three largest wholesalers, which accounted for 55%,54%, and 55% of our global net revenue in 2024, 2023, and 2022, respectively. These wholesalers, in turn, distribute our products through various channels including the following:

Current wording

In the U.S., we have distribution agreements with the three largest wholesalers, which accounted for 51% and 55% of our global net revenue in 2025 and 2024, respectively. These wholesalers, in turn, distribute our products through various channels including the following:

Previous wording

•Commercial managed care. This category comprises insurance programs intended to reduce the cost of providing health benefits and improve the quality of care to their members. One of the most common forms of managed care is the use of a panel or network of healthcare providers that provide care to enrollees. Also within commercial managed care is the Medicare Part D Program, a social insurance program administered by the U.S. government.

Current wording

•Commercial managed care. This category comprises insurance programs intended to reduce the cost of providing health benefits and improve the quality of care to their members. One of the most common forms of managed care is the use of a panel or network of healthcare providers that provide care to enrollees. Also within commercial managed care is the Medicare Part D Program, a program regulated and funded by the U.S. government generally for senior citizens and administered by private insurance companies.

Previous wording

•Pharmacy. This channel covers end customers paying cash directly at the pharmacy. Often, we provide discount coupons to customers where cash is used for payment.

Current wording

•Pharmacy. This channel covers end-customers paying cash directly at the pharmacy. Often, we provide discount coupons to customers who buy our products without pharmaceutical benefit coverage.

Previous wording

In the Most of World, distribution channels differ by country. For example, in France, we engage with different wholesalers, hospitals, pharmacies and individuals, while in Australia, we engage with a single pre-wholesaler that negotiates the import and onward distribution of the products across the country.

Current wording

In the Rest of World, distribution channels differ by country and we may engage with different wholesalers, pre-wholesalers, hospitals, pharmacies and individuals.

Previous wording

•Medicaid, Medicare Part D, and Commercial rebates. These are rebates granted to Medicaid, U.S. federal agencies and commercial managed care providers that purchase products from us. The level of these rebates varies by channel and product. Patients covered by commercial insurance often benefit from coupons to reduce any out-of-pocket payments they would otherwise be required to make.

Current wording

•Medicaid, Medicare Part D, and Commercial rebates. These are rebates granted to Medicaid, U.S. federal agencies and commercial managed care providers that purchase products from us. The level of these rebates varies by channel and product. Patients covered by commercial insurance often benefit from coupons to reduce out-of-pocket payments they would otherwise be required to make.

Previous wording

•Chargebacks. Discounts that occur when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Company the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer.

Current wording

•Chargebacks. Discounts are provided when contracted indirect customers purchase directly from wholesalers and specialty distributors. Contracted customers generally purchase a product at its contracted price. The wholesaler or specialty distributor, in turn, then generally charges back to the Company the difference between the wholesale acquisition cost and the contracted price paid to the wholesaler or specialty distributor by the customer.

Previous wording

For further information regarding accrued litigation settlement expenses and other legal proceedings, refer to Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 11. Accrued Litigation Settlement Expenses and Note 16. Commitments and Contingencies.

Current wording

For further information regarding accrued litigation settlement expenses and other legal proceedings, refer to Item 8. Financial Statements—Audited Consolidated Financial Statements— Note 2: Summary of Significant Accounting Poli cies, Note 11. Accrued Litigation Settlement Expenses and Note 16. Commitments and Contingencies.

Previous wording

In 2024, net revenue attributable to Most of World decreased slightly from 2023 to $179 million. In 2024 and 2023, positive contributions from newer products (SUBLOCADE / SUBUTEX® Prolonged Release and SUBOXONE Film) were more than offset by the ongoing generic erosion of the legacy tablet business. In 2024 and 2023, SUBLOCADE / SUBUTEX Prolonged Release net revenue in Most of World was $52 million and $41 million, respectively.

Current wording

In 2025, net revenue attributable to Rest of World increased 4% from 2024 to $186 million. In 2025, positive contributions from newer products (SUBLOCADE and SUBOXONE Film) were partially offset by the ongoing generic erosion of the legacy tablet business. In 2025 and 2024, SUBLOCADE net revenue in Rest of World was $61 million and $52 million, respectively. Rest of World net revenue in 2026 will be impacted by our plansto exit several non-U.S. markets. The countries in which we will continue operations or product distribution represent 76% of 2025 Rest of World net revenue.

Previous wording

We estimate provisions for rebates, discounts and returns based on contractual arrangements with customers or terms of the regulations and/or agreements applicable for transactions with healthcare authorities, and in some cases on assumptions about the attainment of targeted volumes. We recognize returns, discounts, incentives and rebates in the period in which we recognize the underlying sales, as a reduction of gross revenues and as current liabilities on our Consolidated Balance Sheets under trade and other payables or reductions of accounts receivable. The outstanding amounts are affected by changes in gross sales, the provision for net product sales deductions and timing of payments/credits. Estimates, assumptions and judgements applied to determine the provision for rebates, discounts and returns are set out in Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 2. Summary of Significant Accounting Policies.”

Current wording

We estimate provisions for rebates, discounts and returns based on contractual arrangements with customers or terms of the regulations and/or agreements applicable for transactions with healthcare authorities, and in some cases on assumptions about the attainment of targeted volumes. We recognize returns, discounts, incentives and rebates in the period in which we recognize the underlying sales, as a reduction of gross revenues and as current liabilities on our Consolidated Balance Sheets as accrued rebates and product returns or reductions of accounts receivable. The outstanding amounts are affected by the provision for net product sales deductions which management reassesses based on historical data and estimated future activities and the timing of payments/credits. Estimates, assumptions and judgements applied to determine the provision for rebates, discounts and returns are set out in Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 2. Summary of Significant Accounting Policies.

Previous wording

Accrued rebates and product returns includes chargebacks as these are paid by Indivior. Prompt pay discounts are recorded as offsets to accounts receivable as of December 31, 2024. Accrued rebates and product returns and prompt pay discounts increased to $565 million as of December 31, 2024 from $535 million as of December 31, 2023, primarily due to strong SUBLOCADE volume growth.

Current wording

Accrued rebates and product returns includes chargebacks as these are paid by Indivior. Prompt pay discounts are recorded as offsets to accounts receivable as of December 31, 2025. Accrued rebates and product returns and prompt pay discounts increased to $585 million as of December 31, 2025, from $565 million as of December 31, 2024, primarily due to increased SUBLOCADE volume growth.

Previous wording

Discontinuation of marketing and promotion of PERSERIS (2024)

Current wording

Cost of sales increased by $15 million, or 7%, to $246 million in 2025 from $231 million in 2024. The increase reflects higher sales volumes as well as $39 million of expenses related to the discontinuation of sales and marketing of OPVEE, $10 million of SUBLOCADE inventory write-downs for finished goods expected to approach expiration prior to sale, $9 million of inventory write-downs and other costs related to the exit from certain non-U.S. markets, and $5 million for the manufacturing transition of the Company's aseptic facility. Cost of sales in 2024 includes $41 million of expenses related to the discontinuation of marketing and promotion of PERSERIS.

Previous wording

Gross margin, which we define as gross profit divided by net revenue, was 81% in 2024 as compared to 84% in 2023. The decrease in 2024 gross margin included the impact of $41 million of costs related to the discontinuation of sales and promotional activities for PERSERIS and cost inflation, partially offset by improved product mix from the continued growth of SUBLOCADE.

Current wording

Gross margin, defined as gross profit divided by net revenue, was 80% in 2025 as compared to 81% in 2024. The decrease in 2025 gross margin included the impact of the 2025 and 2024 cost of sales factors described above, partially offset by improved product mix reflecting SUBLOCADE volume growth and the benefit of changes in estimates related to rebate accruals.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased by $49 million, or 9%, to $618 million in 2024 from $569 million in 2023. In 2024, selling, general and administrative costs reflect $12 million of costs related to the discontinuation of sales and marketing for PERSERIS and $12 million of severance costs. Higher sales and marketing investments related to SUBLOCADE and OPVEE and cost inflation were partially offset by lower sales and marketing costs due to discontinuation of PERSERIS. Prospectively, savings resulting from restructuring actions and discontinuation of PERSERIS marketing will be partially reinvested to support long-term SUBLOCADE growth.

Current wording

Selling, general and administrative expenses increased by $22 million, or 4%, to $634 million in 2025 from $612 million in 2024. In 2025, selling, general and administrative costs include $61 million associated with corporate initiatives, due to headcount reductions and external legal and consulting support primarily related to Phase I of the Indivior Action Agenda announced in August 2025. The 2025 increase also reflected $62 million higher investments in U.S. SUBLOCADE marketing, including the launch of a new direct to consumer campaign for SUBLOCADE in October 2025. Selling, general and administrative expenses in 2025 also benefited from streamlining actions taken in 2024, including narrowing the Company's commercial focus on OUD treatments and discontinuing marketing and promotion of PERSERIS. Prospectively, savings resulting from restructuring actions and discontinuation of sales and marketing of OPVEE will be used to support long-term SUBLOCADE growth.

Previous wording

Acquired in-process research and development expenses. Acquired in-process research and development expenses decreased by $161 million, or 99%, to $1 million in 2024 from $162 million in 2023. The decrease is primarily due to the 2023 acquisition of OPVEE and Orexin-1 receptor antagonist INDV-2000.

Current wording

Acquired in-process research and development expenses

Previous wording

Litigation settlement expenses. Litigation settlement expenses decreased by $44 million, or 18%, to $195 million in 2024 from $239 million in 2023. The decrease is primarily due to variability in, and unpredictability of, the timing of settlements of major contingencies. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 11. Accrued Litigation Settlement Expenses.

Current wording

Litigation settlement expenses decreased by $192 million, to $3 million in 2025 from $195 million in 2024. The decrease is primarily due to variability in, and unpredictability of, the timing of settlements of major contingencies. See Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 11. Accrued Litigation Settlement Expenses.

Previous wording

Net interest (expense) income. Net interest expense was $18 million in 2024 as compared to net interest income of $8 million in 2023. The increase in net interest expense reflected a $4 million write-off of unamortized deferred financing costs due to early extinguishment of the previous term loan, a decrease in earned interest income on lower cash and investment balances and increased borrowings under the Company's new debt facility. We expect interest expense to continue to exceed investment income.

Current wording

Net interest expense was $23 million in 2025 as compared to $18 million in 2024. Higher net interest expense in 2025 reflects interest expense on the larger amount borrowed under the Company's new borrowing arrangement secured in late 2024. Net interest expense in 2025 includes $4 million related to an expected U.K. tax settlement, and net interest expense in 2024 reflects a $4 million write-off of unamortized deferred financing costs due to early extinguishment of the previous term loan. We expect interest expense on our borrowings to continue to exceed investment income.

Previous wording

Income tax (expense) benefit. Income tax expense in 2024 was $11 million, resulting in an effective tax rate of 76.0%, on the Company's earnings for 2024. The income tax benefit of $20 million in 2023 reflected an effective tax rate of 13.2% on the Company’s earnings for 2023.

Current wording

Income tax expense in 2025 was $29 million, resulting in an effective tax rate of 12%, on the Company's earnings for 2025, driven primarily by tax incentive innovation benefits of which $45 million is related to a one-time royalty payment, offset by an HMRC tax settlement and changes in valuation allowances. Income tax expense of $13 million in 2024 reflected an effective tax rate of 65% on the Company’s earnings for 2024, driven primarily by changes in valuation allowances, offset by a net finance structure benefit.

Previous wording

Net cash provided by operating activities was $36 million in 2024, an increase of $336 million, compared to net cash used in operating activities of $300 million in 2023. The increase was primarily due to 2023 litigation settlement outflows of $387 million, including the State, end payor and direct purchaser Antitrust MDL settlements. Net cash provided by operations in 2024 reflected ongoing operating performance partially offset by scheduled litigation settlement payments of $173 million. Refer to Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 10. Accrued Litigation Expenses for additional details on the litigation-related settlement payments.

Current wording

Net cash used in operating activities was $27 million in 2025, a decrease of $63 million, compared to net cash provided by operating activities of $36 million in 2024. The decrease was driven by $208 million higher litigation settlement payments in 2025, including the optional prepayment of the Company's remaining liability with the U.S. Department of Justice (DOJ), partly offset by higher cash generated from operations in 2025. Refer to Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 10. Accrued Litigation Expenses for additional details on litigation-related settlement payments.

Previous wording

Net cash provided by investing activities was $69 million in 2024, an increase of $164 million, compared to net cash used in investing activities of $95 million in 2023. The prior year use of cash reflects a $129 million outflow for the Opiant acquisition, net of cash acquired. The current year inflows primarily reflect proceeds from maturity of debt investments, partly offset by capital expenditures.

Current wording

Net cash used in investing activities was $66 million in 2025, a decrease of $135 million, compared to net cash provided by investing activities of $69 million in 2024. The decrease primarily reflects lower proceeds from maturities of investments, partly offset by an increase in capital expenditures in 2025 related to the Raleigh Manufacturing Facility SUBLOCADE suite.

Previous wording

Our current liabilities exceed our current assets by over $100 million and total liabilities exceed our total assets by over $300 million. Additionally, the Company could sustain negative working capital because of the timing of rebate payments relative to the collection of accounts receivable (see Item 1A Risk Factors, "Our balance sheet is leveraged, and any reduction in annual sales may adversely affect our liquidity.")

Current wording

Our current liabilities exceed our current assets by over $250 million and total liabilities exceed our total assets by approximately $100 million. The Company sustains negative working capital because of the timing of rebate payments relative to the collection of accounts receivable. See Item 1A Risk Factors, "Our balance sheet is leveraged, and any reduction in annual sales may adversely affect our liquidity.".

Previous wording

In November 2024, the Company refinanced its term loan, repaying in full the previous term loan and replacing it with a new Note Purchase Agreement with principal amount of $350 million that matures in November 2030 and a committed, revolving credit facility of $50 million. As of December 31, 2024, the revolver was undrawn. The Note Purchase Agreement contains financial and non-financial covenants customary for facilities of this nature, including a maximum leverage ratio, a minimum interest coverage ratio, a limitation on disposal of assets, prepayments and redemptions of certain indebtedness, further indebtedness, liens, negative pledges, and limits on share buybacks and redemptions, dividends and other “restricted payments,” subsidiary distributions, investments, mergers and acquisitions and other fundamental changes, sale and lease-back transactions, and a restriction on changes to any material line of business, most of which are subject to various carve-outs, grace periods and qualifications. The Company was in compliance with all covenants as of December 31, 2024. See Item 1A. Risk Factors at "Our term loan contains certain covenants that could limit our ability to plan for or respond to changes in our business."and Item 8. Financial Statements—Audited Consolidated Financial Statements -Note 12. Debtfor additional information. In addition, substantially all of the assets of the Company are pledged to secure this debt. The restrictions under the Note Purchase Agreement substantially limit our ability to obtain other financing, other than the $50 million revolving credit facility.

Current wording

As of December 31, 2025, the Company is subject to a Note Purchase Agreement term loan with an outstanding balance of $333 million. The Note Purchase Agreement matures in November 2030 and includes a committed, revolving credit facility of $50 million of which $50 million is available to be drawn. The Note Purchase Agreement contains financial and non-financial covenants customary for facilities of this nature, including a maximum leverage ratio, a minimum interest coverage ratio, a limitation on disposal of assets, prepayments and redemptions of certain indebtedness, further indebtedness, liens, negative pledges, and limits on share buybacks and redemptions, dividends and other “restricted payments,” subsidiary distributions, investments, mergers and acquisitions and other fundamental changes, sale and lease-back transactions, and a restriction on changes to any material line of business, most of which are subject to various carve-outs, grace periods and qualifications. The Company was in compliance with all covenants as of December 31, 2025. See Item 1A. Risk Factors at "Our term loan contains certain covenants that could limit our ability to plan for or respond to changes in our business."and Item 8. Financial Statements—Audited Consolidated Financial Statements -Note 12. Debt for additional information. In addition, substantially all of the assets of the Company are pledged to secure this debt, and the restrictions under the Note Purchase Agreement substantially limit our ability to obtain other financing, other than the $50 million revolving credit facility.

Previous wording

The Company believes its existing cash and cash equivalents and investments together with cash generated from operations and debt will enable its anticipated cash needs to be met, including working capital, capital expenditures, litigation settlement payments, milestone payments, income taxes, repurchase of ordinary shares, debt repayments and other funding requirements, for at least the twelve-month period following the issuance of this Form 10-K. The Company will have to sustain sales volume performance with no material change in the timing of its collections and rebate payments to maintain necessary liquidity in the near term and to meet our obligations in the long term. The Company is also subject to contingent liabilities as described in Item 8. Financial Statements—Audited Consolidated Financial Statements—Note 16. Commitments and Contingencies.

Current wording

The Company believes its existing cash and cash equivalents and investments, together with cash generated from operations, will meet its anticipated cash needs, including working capital, capital expenditures, litigation settlement payments, milestone payments, income taxes, repurchase of common stock, debt repayments and other funding requirements, for at least the twelve-month period following the issuance of this Form 10-K. The Company relies on cash generated from operation to meet our obligations. The Company is also subject to contingent liabilities as described in Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies.

Previous wording

The Company’s capital expenditures for 2024 reflected the expansion of the Raleigh Manufacturing plant. Capital expenditures in 2023 and 2022 were primarily for equipment used in the manufacture of our products. The Company funded these expenditures from its existing cash balances.

Current wording

Capital expenditures of $66 million in 2025 and $29 million on in 2024 primarily reflect investments in the expansion of the Raleigh Manufacturing Facility. The Company funded these expenditures from its existing cash balances.

Previous wording

The table below sets forth the Company’s anticipated contractual cash flows including bank debt, legal settlement payments (including expected interest payments), share repurchase liabilities and lease liabilities on an undiscounted basis as of December 31, 2024.

Current wording

The table below sets forth the Company’s anticipated contractual cash flows on an undiscounted basis as of December 31, 2025.

Previous wording

The Company is party to collaboration and license arrangements for the development of pharmaceutical and digital products. Milestone payments will be due if various developmental, regulatory and commercial goals are achieved and in certain cases royalties will be payable as a percentage of net revenue, although the Company generally has the right to terminate these agreements at no cost. The Company has no significant milestone payments expected in 2025.

Current wording

The Company is party to collaboration and license arrangements for the development of pharmaceutical products. Milestone payments will be due if various developmental, regulatory and commercial goals are achieved and in certain cases royalties will be payable as a percentage of net revenue, although the Company generally has the right to terminate these agreements at no cost. No material milestone payments are expected in 2026.

Previous wording

The Company is obligated to purchase specified amounts of goods or services under various contract manufacturing and material supply agreements over periods ranging from 1 to 6 years. These agreements could require us to pay approximately $210 million (before annual price index adjustments).

Current wording

The Company is obligated to purchase specified amounts of goods or services under various contract manufacturing and material supply agreements over periods ranging from 1 to 4 years. These agreements could require us to pay approximately $68 million in total over the next 4 years (before annual price index adjustments).

Previous wording

The Company offers various types of reductions from list prices on its products. Products sold in the U.S. are covered by various programs (such as Medicare and Medicaid) under which products are sold at a discount. Rebates are granted to healthcare authorities, and under contractual arrangements with certain customers. Some wholesalers are entitled to chargeback incentives under specific contractual arrangements. Cash discounts may also be granted for prompt payment.

Current wording

The Company offers various types of reductions from list prices on its products. Products sold in the U.S. are covered by various programs (such as Medicare and Medicaid) under which products are provided at a discount. Rebates are granted to healthcare authorities, and under contractual arrangements with certain customers. Some wholesalers are entitled to chargeback incentives under specific contractual arrangements. Cash discounts may also be granted for prompt payment.

Previous wording

The discounts, incentives and rebates described above are estimated based on contractual arrangements with customers or terms of the relevant regulations and/or agreements applicable for transactions with healthcare authorities, and in some cases on assumptions about the attainment of targeted volumes. Several months may pass between the original estimate of rebates due and confirmation of the amount, which may increase the estimation risk. Please refer to the revenue accounting policy for further details.

Current wording

The discounts, incentives and rebates described above are estimated based on contractual arrangements with customers or terms of the relevant regulations and/or agreements applicable for transactions with healthcare authorities. Several months may pass between the original estimate of rebates due and confirmation of the amount, which may increase the estimation risk. Please refer to the revenue accounting policy for further details.

Previous wording

Accruals for product returns are estimated based primarily on analysis of the Company’s historical product return patterns, expected future returns, and contractual agreement terms. Estimated returns are accrued in the period the related revenue is recognized.

Current wording

Accruals for product returns are estimated based primarily on analysis of the Company’s historical product return patterns, supplemented by expected future returns and contractual agreement terms. Estimated returns are accrued in the period the related revenue is recognized.

Previous wording

During 2024 and 2022, net revenue was increased by $28 million and $14 million, respectively, from performance obligations satisfied in prior years, primarily relating to changes in payor mix and resolution of aged accruals for U.S. government programs. During 2023, net revenue was reduced by $9 million from performance obligations satisfied in prior years, primarily relating to differences between invoices received from U.S. government programs as compared to the respective accruals held for those years. The estimates for U.S. governmental and commercial end-payor accruals are also reasonably expected to vary due to shifts between U.S. governmental end-payor sales and U.S. commercial end-payor sales. A 1 percentage point shift between these channels would impact the accrual by $4 million. Due to the number of variables contributing to the accruals for returns, incentives and rebates, further meaningful sensitivity is not able to be provided. Accruals for returns, incentives and rebates are disclosed in Item 8. Financial Statements—Audited Consolidated Financial Statements—Balance Sheet.

Current wording

During 2025 and 2024, net revenue was increased by $87 million and $28 million, respectively, from performance obligations satisfied in prior years, primarily relating to changes in payor mix, actual invoices received and payments made, and resolution of aged accruals for U.S. government and commercial programs. The estimates for U.S. governmental and commercial end-payor accruals are also reasonably expected to vary due to shifts between U.S. governmental end-payor sales and U.S. commercial end-payor sales. A one percentage point shift between these channels would impact the accrual by $4 million. Due to the number of variables contributing to the accruals for returns, incentives and rebates, further meaningful sensitivity is not able to be provided. Accruals for returns, incentives and rebates are disclosed in Item 8. Financial Statements—Audited Consolidated Financial Statements—Balance Sheet.

Previous wording

Also, we must assess the likelihood that we will be able to recover our deferred tax assets. If all or part of our deferred tax assets are not recoverable in the future, we must increase our provision for taxes and reduce our net deferred tax assets to the amount that is more likely than not to be recoverable. To recover deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions where the deferred tax assets are located. We consider forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, in determining the need for a valuation allowance. As of December 31, 2024, we believe our deferred tax assets are more likely than not to be recovered, with the exception of valuation allowance items as detailed in Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 4. Income Tax. Our ability to realize deferred tax assets could be reduced in the future if our estimates of future forecasted income do not support the realization of our deferred tax assets. Should there be a change in our ability to realize our deferred tax assets, our tax provision would be affected in the period in which such change takes place.

Current wording

We assess the likelihood of recoverability our deferred tax assets. If all or part of our deferred tax assets are not recoverable in the future, we increase our provision for taxes and reduce our net deferred tax assets to the amount that is more likely than not to be recoverable. To recover deferred tax assets, we must generate sufficient taxable income in the jurisdictions where the deferred tax assets are located. We consider forecasted income, including income that may be generated as a result of certain tax planning strategies, together with future reversals of existing taxable temporary differences, in determining the need for a valuation allowance. As of December 31, 2025, we believe our deferred tax assets are more likely than not to be recovered, with the exception of valuation allowance items as detailed in Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 4. Income Tax. The realization of our deferred tax assets depends on the generation of sufficient taxable income in future periods. If actual results differ from our estimates or if our assumptions regarding future taxable income change, we may conclude that some or all of our deferred tax assets are no longer 'more likely than not' to be realized. In that event, we would be required to record an increase to our valuation allowance, which could materially affect our income tax provision and results of operations in the period such determination is made.

Previous wording

The Company is involved in litigation, arbitration and other legal proceedings. These proceedings typically are related to compliance and trade practices, commercial claims, product liability claims, intellectual property rights, and employment and wrongful discharge claims. For each claim or grouping of similar claims, management makes judgments regarding the relative merits and risks within the claims. These judgments inform the Company’s defense strategies, whether a loss or settlement from the claims is probable and whether sufficient information exists to make a reliable estimate of he likely outcome of the claims. Provisions are recognized when the Company has a present legal or constructive obligation, an outflow of resource to settle the obligation when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. Management has assessed as “contingent” matters that cannot be reliably estimated or are not considered probable at the current time. For more details of all the outstanding legal proceedings including those that have been deemed contingent, see Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies.

Current wording

Litigation, arbitration and other legal proceedings against the Company may relate to compliance and trade practices, commercial claims, product liability claims, intellectual property rights, and employment and wrongful discharge claims. For each claim or grouping of similar claims, management makes judgments regarding the relative merits and risks within the claims. These judgments inform the Company’s defense strategies, whether a loss or settlement from the claims is probable and whether sufficient information exists to make a reliable estimate of the likely outcome of the claims. Provisions are recognized when it is probable that a liability will be incurred, and the amount of the loss can be reasonably estimated. Management has assessed as “contingent” matters that cannot be reliably estimated or are not considered probable at the current time. For more details of all the outstanding legal proceedings including those that have been deemed contingent, see Item 8. Financial Statements—Audited Consolidated Financial Statements - Note 16. Commitments and Contingencies.