What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-18 · 165 added, 92 removed, 135 unchanged (66% of the section changed)

14 unchanged sentences

The most dramatic growth in demand in recent years has been in e-commerce and related sectors, including omnichannel retail and other direct-to-consumer channels.

We expect to attract new customers and expand the services we provide to existing customers through new projects, thus earning more of their logistics spending.

We expect to attract new customers and expand the services we provide to existing customers through new projects;

thus earning more of their logistics spending.

We use technology to manage advanced automation, labor productivity, sustainability, safety and the complex flow of goods within sophisticated warehouse environments.

7 unchanged sentences

Cost-plus contracts provide for the payment of allowable costs incurred during the performance of the contract plus a specified margin.

On April 29, 2024, the Company completed the acquisition of Wincanton plc (“Wincanton”), a U.K.

In April 2024, the Company completed the acquisition of Wincanton plc (now “Wincanton Limited”), a U.K.

logistics provider specializing in both warehousing and transportation solutions (“the Wincanton Acquisition”).

On October 23, 2023, the Company completed the acquisition of PFSweb, Inc.

(“PFS”), an e-commerce order fulfillment company based in Irving, Texas (the “PFS Acquisition”).

Due to the acquisitions of Wincanton in 2024 and PFS in 2023, comparisons in our results of operations between 2024 and 2023 are less meaningful.

The Wincanton Acquisition was subject to review by the U.K.

Competition and Markets Authority (the “CMA”).

In June 2025, the CMA approved the Wincanton Acquisition, subject to the divestment of certain grocery contracts in the U.K.

We expect to complete the Wincanton Divestment in 2026.

Due to the acquisition of Wincanton in 2024, comparisons in our results of operations between 2025 and 2024 are less meaningful.

For additional information regarding our acquisitions, see Note 5.

“Acquisitions” to the Consolidated Financial Statements.

“Acquisition and Divestiture” to the Consolidated Financial Statements.

Results of Operations

4 unchanged sentences

Selling, general and administrative expense

1,106 1,061 45 4 %

Depreciation and amortization expense 457 415 42 10 %

Transaction and integration costs 76 34 42 n/m

Transaction and integration costs 54 76 (22) (29) %

Restructuring costs and other

Litigation expense 59 — 59 n/m

Regulatory matter and litigation expense 65 59 6 10 %

Net loss on divestiture of business

Operating income

Other income, net 31 1 30 n/m

245 218 27 12 %

Other income (expense), net

(8) 31 (39) n/m

Interest expense, net

(133) (103) (30) 29 %

Income before income taxes 104 146 (42) (29) %

Income tax expense

(68) (8) (60) n/m

Net income $ 36 $ 138 $ (102) (74) %

n/m - not meaningful

Revenue for 2024 increased by 20%, or $1.9 billion, to $11.7 billion compared with $9.8 billion for 2023.

The increase primarily reflects $1.6 billion from the acquisitions of Wincanton and PFS.

Also, revenue increased in our Continental Europe and U.K.

and Ireland businesses, mainly driven by higher pricing.

Foreign currency movements increased revenue by $109 million in 2024.

Direct operating expenses comprise both fixed and variable expenses and consist of operating costs related to our warehouse operations, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and supplies and information technology expenses.

Direct operating expense for 2024 increased by 23%, or $1.8 billion, to $9.9 billion compared with $8.0 billion for 2023.

The increase primarily reflects $1.4 billion from the acquisitions of Wincanton and PFS, and higher personnel and temporary labor expenses in the U.K.

and Ireland business from growth in the business.

Direct operating expense also increased due to foreign currency movement in our U.K.

and Ireland and Continental Europe businesses.

As a percentage of revenue, direct operating expense was 84.1% and 82.2% in 2024 and 2023, respectively.

The increase in Direct operating expense as a percentage of revenue was primarily related to the Wincanton Acquisition.

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefit costs for executive and certain administration functions, professional fees, bad debt expense and legal costs.

SG&A for 2024 increased by 6%, or $63 million, to $1.1 billion, compared with $998 million in 2023.

The increase was primarily driven by the acquisitions of Wincanton and PFS.

Depreciation and amortization expense for 2024 increased by $54 million to $415 million compared with $361 million for 2023.

Depreciation and amortization expense increased primarily due to the acquisitions of Wincanton and PFS.

Depreciation and amortization expense included amortization of intangible assets acquired of $108 million and $71 million in 2024 and 2023, respectively.

Transaction and integration costs were $76 million in 2024, compared with $34 million for 2023.

Transaction and integration costs in 2024 primarily included $61 million related to the Wincanton Acquisition and $8 million related to the integration of PFS.

Transaction and integration costs in 2023 primarily included $20 million related to the integration of Clipper Logistics plc and $12 million related to the PFS Acquisition.

Revenue for 2025 increased by 13%, or $1.5 billion, to $13.2 billion, up from $11.7 billion in 2024.

The increase primarily reflects $655 million from the Wincanton Acquisition and growth in our business from new contract implementations and pricing.

Favorable foreign currency movements increased revenue by $352 million in 2025.

Direct operating expense comprises both fixed and variable costs and include operating expenses related to our warehouse operations, including personnel costs, rent expenses, utility costs, equipment maintenance and repair costs, transportation costs, costs of materials and supplies, and information technology expenses.

Direct operating expense for 2025 increased by 14%, or $1.3 billion, to $11.2 billion, up from $9.9 billion in 2024.

The increase primarily reflects $595 million from the Wincanton Acquisition and higher personnel and temporary labor costs driven by business growth.

As a percentage of revenue, direct operating expense was 84.9% in 2025 and 84.1% in 2024.

Selling, general and administrative expense (“SG&A”) primarily consists of salary and benefit costs for executive and certain administrative functions, professional fees, bad-debt expense and legal costs.

SG&A for 2025 increased by 4%, or $45 million, to $1,106 million, up from $1,061 million in 2024.

The increase was primarily driven by the Wincanton Acquisition and higher personnel costs.

Depreciation and amortization expense for 2025 increased by $42 million, to $457 million, up from $415 million in 2024.

Amortization expense totaled $119 million and $108 million in 2025 and 2024, respectively.

Depreciation and amortization expense increased primarily due to the Wincanton Acquisition.

Transaction and integration costs totaled $54 million in 2025, compared with $76 million in 2024.

Transaction and integration costs in 2025 primarily included $48 million related to the Wincanton Acquisition.

Transaction and integration costs in 2024 primarily included $61 million related to the Wincanton Acquisition and $8 million for the PFSweb, Inc.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure.

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Restructuring costs and other were $27 million for 2025, compared with $25 million for 2024.

Restructuring costs and other in 2024 related to a restructuring plan designed to centralize certain finance, human resource and IT functions.

Restructuring costs and other for 2023 included $16 million related to severance, $11 million for impairment charges, and $5 million associated with the exit of a non-core businesses in Asia.

Litigation expense in 2024 related to a settlement agreement dated June 14, 2024.

We recognized $59 million for the settlement, associated legal fees, and other related expenses.

For additional information regarding our legal matters see Note 18.

“Commitments and Contingencies” to the Consolidated Financial Statements.

Other income, net increased due to higher pension income and foreign currency movements.

In 2024, pension income primarily increased due to a defined benefit plan assumed in connection with the Wincanton Acquisition.

In 2024, the Company recorded a gain of $8 million in connection with a real estate transaction.

Other income, net was as follows:

Restructuring costs and other in 2025 consisted of severance paid to exiting individuals from the Company’s leadership team and severance paid as part of an initiative to optimize corporate expenses.

Restructuring costs and other for 2024 related to a restructuring plan designed to centralize certain finance, human resource and IT functions from regional teams.

Regulatory matter and litigation expense totaled $65 million in 2025, compared with $59 million in 2024.

In 2025, we recorded $65 million of expense related to a regulatory matter regarding the deductibility of value-added tax payments we made to certain third-party service providers, which were challenged by the Italian authorities.

In 2024, we recorded $59 million of litigation expense related to a settlement agreement with one of our customers.

Net loss on divestiture of business in 2025 and 2024 was $34 million and $2 million, respectively.

In 2025, net loss on divestiture of business was primarily due to the write-down of certain grocery contract assets planned to be divested in 2026 as required under the CMA approval we received in 2025.

Other income (expense), net decreased from income to expense, primarily due to foreign currency loss on foreign currency contracts.

Other income (expense), net was as follows:

Year Ended December 31,

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Net periodic pension income

$ 21 $ 8 $ 13 n/m

$ 19 $ 21 $ (2) (10) %

Foreign currency gain (loss):

Realized foreign currency option and forward contracts loss (5) (13) 8 (62) %

Unrealized foreign currency option and forward contracts gain 11 4 7 n/m

Foreign currency transaction and remeasurement loss

(3) — (3) n/m

Realized loss on foreign currency contracts (12) (5) (7) n/m

Unrealized gain (loss) on foreign currency contracts (7) 11 (18) n/m

Foreign currency transaction and remeasurement loss, net of intercompany foreign currency contracts

(4) (3) (1) 33 %

Total foreign currency gain (loss) (23) 3 (26) n/m

Other income, net

(4) 7 (11) n/m

Other income (expense), net

$ (8) $ 31 $ (39) n/m

n/m - not meaningful

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Interest income (7) (6) (1) 17 %

(6) (10) 4 (40) %

Interest expense, net $ 133 $ 103 $ 30 29 %

Income before income taxes for 2024 decreased by $120 million, to $146 million, compared with $266 million for 2023.

The decrease was mainly driven by higher transaction and integration costs, litigation expense, and interest expense, partially offset by higher other income, net.

Income before income taxes for our domestic operations was a pre-tax loss of $88 million for 2024, compared with $97 million of pre-tax income in 2023.

The decrease from income to a loss in 2024 was primarily driven by higher transaction and integration costs, litigation expense and

interest expense for debt incurred for the Wincanton Acquisition.

Income before income taxes for 2025 decreased by $42 million, to $104 million, compared with $146 million in 2024.

The decrease was mainly driven by increased Other expense, net and Interest expense, net, partially offset by increased Operating income in 2025.

Income before income taxes for our domestic operations was $11 million for 2025, compared with an $88 million loss in 2024.

In 2024, our transaction and integration costs were higher, and we reached a settlement agreement with one of our domestic customers, resulting in a $59 million expense.

Income before income taxes for our foreign operations was $93 million for 2025, compared with $234 million in 2024.

The increase in 2024 was primarily driven by growth in the business and other income, net.

In 2025, we incurred a $65 million expense related to the settlement of a foreign regulatory matter and recorded a $34 million loss primarily due to a write-down loss on the divestment of certain grocery contracts.

Income tax expense was $68 million in 2025, compared with $8 million in 2024.

Our effective tax rate was 65.4% in 2025 and 5.6% in 2024.

The decrease in our effective income tax rate was driven by income tax benefits from the release of valuation allowances in 2024.

The change in the Company’s effective tax rate was primarily driven by non-deductible regulatory matter and transaction costs in 2025 and the release of a valuation allowance in France in 2024.

The Organisation for Economic Co-operation and Development (“OECD”) has introduced the Pillar Two Global Anti-Base Erosion rules (“Pillar Two”), which generally imposes a 15% global minimum tax on multinational companies.

While the Company expects to meet transitional safe harbor requirements in most jurisdictions, there are a limited number of jurisdictions where the Company expects Pillar Two taxes to apply.

The income tax provision for the year ended December 31, 2025, includes the effects of Pillar Two taxes.

This did not have a material impact on our fiscal 2024 or 2025 tax provision, and the Company continues to monitor Pillar Two developments, including the impact of the Side-by-Side Package published by the OECD on January 5, 2026, as it relates to the interplay between the U.S.

international tax system and Pillar Two for U.S.

headquartered companies.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

The legislation includes reinstatement of favorable tax treatment for certain business provisions, including 100% bonus depreciation for qualified property placed in service after January 19, 2025, immediate expensing of domestic research and experimental costs, and revisions to the business interest expense limitations.

The impact of OBBBA was limited to our current and deferred provision and did not have a material impact on the Company’s income tax expenses for the year ended December 31, 2025.

Liquidity and Capital Resources

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The timing and magnitude of our new contract start-ups can vary and may positively or negatively impact our cash flows.

We continually evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

As of December 31, 2024, we held cash and cash equivalents of $413 million, restricted cash of $72 million recorded in Other long-term assets, and we had $999 million of borrowing capacity available, net of letters of credit under our revolving credit facilities.

During 2024, we deposited €68 million ($70 million as of December 31, 2024) of restricted cash in relation to a contingency, and in January 2025, the Company deposited an additional amount of €16 million ($17 million).

We believe that our cash and cash equivalents on hand, our cash flows from operations, the borrowing capacity under our revolving credit facilities, and the use of our factoring programs will provide sufficient liquidity to operate our business and fund our current and assumed obligations for at least the next 12 months.

For additional information regarding our cash requirements from contractual obligations, indebtedness and lease obligations, and legal matters, see Note 18.

“Commitments and Contingencies,” Note 10.

“Debt and Financing Arrangements” and Note 9.

“Leases” to the Consolidated Financial Statements.

We continually

evaluate our liquidity requirements and capital structure in light of our operating needs, growth initiatives and capital resources.

As of December 31, 2025, we held cash and cash equivalents of $854 million and restricted cash of $3 million, and we have $794 million of borrowing capacity available, net of letters of credit under our revolving credit facility.

On February 18, 2025, our board of directors authorized and announced the repurchase of up to $500 million (the “Repurchase Plan”) of our common stock.

The Repurchase Plan permits shares of common stock to be repurchased from time to time in management’s discretion, through a variety of methods, including a 10b5-1 trading plan, open market purchases, privately negotiated transactions or otherwise.

The timing and number of shares of common stock repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations.

We expect to fund any remaining repurchases with existing cash on hand, borrowings on our revolving credit facility, and/or other financing sources.

The Repurchase Plan does not obligate the Company to repurchase any specific number of shares of common stock and may be suspended or discontinued at any time.

As of December 31, 2025, the remaining authorization under the Repurchase Plan was $300 million.

We believe that our cash and cash equivalents on hand, cash flows generated by our operations, borrowings available under our revolving credit facility, the use of our factoring programs, and refinancing options available to us in the capital markets, will provide sufficient liquidity to operate our business and meet our obligations for at least the next twelve months and for the foreseeable future thereafter.

For additional information regarding our cash requirements from contractual obligations, indebtedness and lease obligations, and legal matters, see “Contractual Obligations” below.

Capital Expenditures

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(In millions, except percentages) 2025 2024 $ Change % Change

Total current assets $ 2,641 $ 2,568 $ 73 3 %

Total long-term assets 8,625 6,939 1,686 24 %

Total current liabilities 3,189 2,626 563 21 %

Total long-term liabilities 5,042 3,935 1,107 28 %

Total assets and liabilities increased from December 31, 2023 to December 31, 2024 primarily due to the Wincanton Acquisition.

Total liabilities also increased due to issuance of $1.1 billion of unsecured notes to fund the Wincanton Acquisition.

Current assets $ 3,288 $ 2,641 $ 647 24 %

Long-term assets 8,974 8,625 349 4 %

Current liabilities 3,875 3,189 686 22 %

Long-term liabilities 5,372 5,042 330 7 %

Current assets increased mainly due to higher cash balances from the issuance of long-term debt and increased accounts receivable, net of factoring.

Current liabilities increased primarily due to accrued expenses and the current portion of our long-term debt.

Additionally, both assets and liabilities increased due to foreign currency translation, specifically the strengthening of the British pound sterling and the Euro against the U.S.

dollar compared to December 31, 2024.

Cash Flow Activity

Our cash flows from operating, investing and financing activities, as reflected on our Consolidated Statements of Cash Flows, were summarized as follows:

Our cash flows from operating, investing and financing activities, as reflected in our Consolidated Statements of Cash Flows, were summarized as follows:

Year Ended December 31,

1 unchanged sentence

Net cash provided by operating activities $ 434 $ 549 $ (115) (21) %

Net cash used in investing activities (1,157) (410) (747) n/m

Net cash provided by (used in) financing activities 636 (186) 822 n/m

Net cash used in investing activities (196) (1,157) 961 (83) %

Net cash provided by financing activities 111 636 (525) (83) %

Effect of exchange rates on cash and cash equivalents 23 (13) 36 n/m

Net increase (decrease) in cash, restricted cash and cash equivalents $ 15 $ (25) $ 40 n/m

Net increase in cash, restricted cash and cash equivalents $ 372 $ 15 $ 357 n/m

n/m - not meaningful

Operating Activities

Cash flows provided by operating activities for 2024 decreased by $9 million compared to 2023.

This decline was driven by decreased net income after adjustments for non-cash items, offset by benefits from working capital activity compared to the prior year.

Cash flows from operating activities decreased by $115 million in 2025 compared to 2024.

The decrease was due to lower net income adjusted for the net effect of non-cash items and increased working capital consumption in 2025.

Investing Activities

Investing activities used $1.2 billion of cash in 2024 compared with $410 million in 2023.

During 2024, we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $359 million of cash to purchase property and equipment, partially offset by $61 million of proceeds from the sales of property and equipment and $4 million in net proceeds from the settlement of cross-currency swap agreements, excluding accrued interest.

During 2023, we used $274 million of cash for capital expenditures, used $149 million in connection with the PFS Acquisition and $3 million in settlement of cross-currency swap agreements, excluding accrued interest, partially offset by $18 million of proceeds from the sales of property and equipment.

Investing activities used $196 million of cash in 2025 compared with $1.2 billion in 2024.

In 2025, we used $324 million to purchase property and equipment, paid $24 million to settle net investment hedges, and received $149 million from the sale of property and equipment.

In 2024, we used $863 million, net of cash received, to fund the Wincanton Acquisition, used $359 million to purchase property and equipment, received $61 million from the sale of property and equipment, and received $4 million from the settlement of net investment hedges.

Financing Activities

Financing activities generated $636 million of cash in 2024 and used $186 million in 2023.

The primary source of cash from financing activities in 2024 was the issuance of long-term debt of $1.1 billion, partially offset by cash used to repay $408 million of debt, $45 million to repay finance lease obligations and $8 million in payments for employee taxes on net settlement of equity awards.

The primary use of cash from financing activities in 2023 was

$140 million in repayment of debt, $29 million to repay finance lease obligations and $12 million in payments for employee taxes on net settlement of equity awards.

Financing activities generated $111 million of cash in 2025 compared with $636 million in 2024.

In 2025, we received $577 million in proceeds from the issuance of long-term debt, used $200 million to repurchase shares of our common stock under the stock repurchase plan, used $180 million to repay debt, used $50 million to repay finance lease obligations, used $25 million to repay revolving credit facilities, used $9 million to pay employee taxes on net settlement of equity awards, and used $2 million to pay debt issuance costs.

In 2024, we received $1.1 billion in proceeds from the issuance of long-term debt, used $286 million to repay debt, used $122 million to repay revolving credit facilities, used $45 million to repay finance lease obligations, used $9 million to pay debt issuance costs, and used $8 million to pay employee taxes on net settlement of equity awards.

Off-Balance Sheet Arrangements

1 unchanged sentence

Contractual Obligations

As of December 31, 2024, our outstanding obligations under operating and finance leases were $2.5 billion and $276 million, respectively.

For additional information see Note 9.

“Leases” to the Consolidated Financial Statements.

As of December 31, 2024, we had a total of $1.9 billion of Unsecured Notes outstanding, consisting of $1.1 billion Unsecured Notes with interest payable semiannually on May 6 and November 6 of each year and $800 million Unsecured Notes with interest payable semiannually on January 15 and July 15 of each year.

We also have $450 million of variable-rate term loans outstanding with interest payable in arrears at our option monthly, quarterly, or semiannually.

As of December 31, 2025, our outstanding obligations included $2.8 billion in operating leases, $326 million in finance leases, and $2.8 billion in long-term debt, including the current portion.

In addition, we have obligations under agreements to purchase goods or services entered into during the ordinary course of business, which are enforceable and legally binding.

For additional information regarding our cash requirements for operating and finance leases, indebtedness, and commitments and contingencies, see Note 9.

“Leases,” Note 10.

“Debt and Financing Arrangements,” and Note 18.

“Commitments and Contingencies” to the Consolidated Financial Statements.

Guaranteed Securities:

Summarized Financial Information

The following information is provided to comply with Rule 13-01 of Regulation S-X under the Securities Exchange Act of 1934, as amended for the €500 million 3.750% notes due 2030 issued by GXO Logistics Capital B.V.

(“GXO Capital”), a subsidiary of the Company incorporated under the laws of the Netherlands.

GXO Capital was incorporated on October 15, 2025.

The €500 million 3.750% notes due 2030 are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by GXO Logistics, Inc.

The €500 million 3.750% notes due 2030 are not guaranteed by any of GXO’s or GXO Capital’s subsidiaries (all GXO subsidiaries other than GXO Capital are referred to herein as "non-guarantor subsidiaries").

Holders of the €500 million 3.750% notes due 2030 will have a direct claim only against GXO Capital, as issuer, and GXO, as guarantor.

The following tables set forth the summarized financial information as of and for the years ended December 31, 2025 and 2024 of GXO, and as of and for the period ended December 31, 2025, of GXO Capital, on a standalone basis, which does not include the consolidated impact of the assets, liabilities, and financial results of their subsidiaries except as noted on the tables below, nor does it include any impact of intercompany eliminations as there were no intercompany transactions between GXO and GXO Capital.

This summarized financial information is not intended to present the financial position or results of operations of GXO or GXO Capital in accordance with U.S.

generally accepted accounting principles (“GAAP”).

For additional information, see “Note 10.

Debt and Financing Arrangements” to the Consolidated Financial Statements.

In addition, we have obligations for agreements to purchase goods or services entered into in the ordinary course of business that are enforceable and legally binding.

Summarized Results of Operations

Standalone and Unconsolidated (Unaudited)

Year Ended December 31,

(In millions) 2025 2024

Revenue $ — $ —

Costs and expenses 32 53

Operating loss (32) (53)

Dividend income and other income from non-guarantor subsidiaries 133 137

Other income (expense), net (15) 4

Interest expense, net (94) (72)

Income tax benefit 21 13

Net income attributable to GXO standalone $ 13 $ 29

Summarized Assets and Liabilities

Standalone and Unconsolidated (Unaudited)

(In millions) 2025 2024

Current assets $ 519 $ 107

Investments in non-guarantor subsidiaries 2,361 3,819

Notes receivable from non-guarantor subsidiaries 860 1

Other noncurrent assets 81 56

Total assets $ 3,821 $ 3,983

Accounts payable to non-guarantor subsidiaries $ 384 $ 268

Current debt 400 50

Other current liabilities 93 59

Long-term debt 1,758 2,278

Notes payable to non-guarantor subsidiaries 210 127

Other noncurrent liabilities 167 5

Total liabilities $ 3,012 $ 2,787

Summarized Results of Operations

Standalone and Unconsolidated (Unaudited)

(In millions) December 31, 2025

Costs and expenses —

Operating income —

Interest expense, net (2)

Income tax (expense) benefit —

Loss attributable to GXO Capital standalone $ (2)

Summarized Assets and Liabilities

Standalone and Unconsolidated (Unaudited)

(In millions) 2025

Current assets $ 3

Investments in non-guarantor subsidiaries 2,350

Other noncurrent assets 1

Total assets $ 2,354

Current liabilities $ 6

Long-term debt 580

Total liabilities $ 586

Critical Accounting Policies and Estimates

14 unchanged sentences

For additional information, see Note 5.

“Acquisitions” to the Consolidated Financial Statements.

“Acquisition and Divestiture” to the Consolidated Financial Statements.

Evaluation of Goodwill

We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination.

Goodwill is tested at the reporting unit level, which is an operating segment or one level below, on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

reduce the fair value of a reporting unit below its carrying value.

We have three reporting units:

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Assumptions are determined based on company data and appropriate market indicators and are evaluated each year at December 31.

The December 31, 2025 pension funded status and 2026 expense are affected by year-end 2025 assumptions.

A change in any of these assumptions would have an effect on the net periodic pension cost reported in the Consolidated Financial Statements.

Sensitivity Analysis .

The discount rate is determined based on the yield on a portfolio of high-quality bonds, constructed to provide cash flows necessary to meet our pension plans’ expected future benefit payments, as determined for the accumulated benefit obligation.

A 50-basis-point decrease in the discount rate of the U.K.

Retirement Plans would result in an estimated increase in the accumulated benefit obligation of approximately $91 million.

The expected return on plan assets assumption is derived using the current and expected asset allocation of the pension plan assets and considering historical as well as expected returns on various classes of plan assets.

Retirement Plans would have resulted in an estimated increase in the accumulated benefit obligation of approximately $94 million in 2025.

The expected return on plan assets assumption is derived from the current and expected asset allocation of the pension plan assets, and it considers historical and expected returns for various classes of plan assets.

An increase or decrease of 50 basis points in the expected return on plan assets for the U.K.

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis