What changed in this filing

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Item 1. Legal Proceedings

2026-07-29 compared with 2026-04-30 · 27 added, 10 removed, 77 unchanged (32% of the section changed)

1 unchanged sentence

Information regarding reportable legal proceedings is contained in Part I, “Item 3.

Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2025, as updated in Part II, “Item 1.

Legal Proceedings” in our Quarterly Report on Form 10-Q for the quarter ended April 3, 2026.

The following updates and restates the description of the previously reported U.S.

Federal Income Tax Dispute matter.

Federal Income Tax Dispute matter and provides updates to a previously reported environmental matter.

Management believes that, except as disclosed in “U.S.

21 unchanged sentences

Litigation designation is an IRS determination that forecloses to a company any and all alternative means for resolution of a tax dispute.

As a result of the IRS’ designation of the Company’s matter for litigation, the Company was forced to either accept the IRS’ newly imposed tax assessment and pay the full amount of the asserted tax or litigate the matter in the federal courts.

As a result of the IRS’ designation of the Company’s matter for litigation, the Company was forced to either accept the IRS’ newly imposed tax assessment and pay

the full amount of the asserted tax or litigate the matter in the federal courts.

The matter remains subject to the IRS’ litigation designation, preventing the Company from any attempt to settle or otherwise mutually resolve the matter with the IRS.

27 unchanged sentences

That amount, plus interest earned, would be refunded in full or in part if the Company’s tax positions are ultimately sustained on appeal.

For the three months ended April 3, 2026 and March 28, 2025, the Company recorded net interest income of $55 million and $53 million, respectively, related to this tax payment in the line item income taxes in our consolidated statements of income, in accordance with our accounting policy.

The payment of the IRS invoices and the related accrued interest were recorded in the line item other noncurrent assets in our consolidated balance sheets as of April 3, 2026 and December 31, 2025.

For the three and six months ended July 3, 2026, the Company recorded net interest income of $43 million and $98 million, respectively, related to this tax payment.

For the three and six months ended June 27, 2025, the Company recorded net interest income of $54 million and $107 million, respectively, related to this tax payment.

These amounts were recorded in the line item income taxes in our consolidated statements of income, in accordance with our accounting policy.

The payment of the IRS invoices and the related accrued interest were recorded in the line item other noncurrent assets in our consolidated balance sheets as of July 3, 2026 and December 31, 2025.

On October 22, 2024, the Company appealed the Tax Court’s decision to the U.S.

4 unchanged sentences

The Company filed its reply brief on August 27, 2025.

Court of Appeals for the Eleventh Circuit heard the case on June 25, 2026.

In determining the amount of tax reserve to be recorded as of December 31, 2020, the Company completed the required two-step evaluation process prescribed by Accounting Standards Codification 740, Accounting for Income Taxes .

6 unchanged sentences

parent company by its foreign licensees, in reliance upon the Closing Agreement, that would be recharacterized as royalties in accordance with the Opinions and the Company’s analysis.

The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of April 3, 2026.

However, based on the required probability analysis and the accrual of interest through the current reporting period, we updated our tax reserve as of April 3, 2026 to $520 million.

The Company’s conclusion that it is more likely than not the Company’s tax positions will ultimately be sustained on appeal is unchanged as of July 3, 2026.

However, based on the required probability analysis and the accrual of interest through the current reporting period, we updated our tax reserve as of July 3, 2026 to $529 million.

While the Company strongly disagrees with the IRS’ positions and the portions of the Opinions affirming such positions, it is possible that some portion or all of the adjustments proposed by the IRS and sustained by the Tax Court could ultimately be upheld.

In that event, the Company would not receive a refund of the applicable portion or all of the $6.0 billion it paid in

response to the IRS invoices issued in September 2024 and the related accrued interest receivable of $457 million as of April 3, 2026.

In that event, the Company would not receive a refund of the applicable portion or all of the $6.0 billion it paid in response to the IRS invoices issued in September 2024 and the related accrued interest receivable of $514 million as of July 3, 2026.

Additionally, the Company would likely be subject to significant additional liabilities for subsequent years, which could have a material adverse impact on the Company’s financial position, results of operations and cash flows.

4 unchanged sentences

Additional income tax and interest on any unpaid potential liabilities for the 2010 through 2025 tax years would continue to accrue until the time any such potential liability, or portion thereof, were to be paid.

The Company estimates the impact of the continued application of the Tax Court Methodology for the three months ended April 3, 2026 would increase the potential aggregate incremental tax and interest liability by approximately $450 million.

The Company estimates the impact of the continued application of the Tax Court Methodology for the three and six months ended July 3, 2026 would increase the potential aggregate incremental tax and interest liability by approximately $450 million and $900 million, respectively.

We currently project the continued application of the Tax Court Methodology in 2026, assuming similar facts and circumstances as of December 31, 2025 and reflecting changes enacted under the One Big Beautiful Bill Act effective in 2026, would result in an incremental annual tax liability that would increase the Company’s effective tax rate by approximately 3.8%.

Environmental Matter

On June 20, 2024, the Mayor and City Council of Baltimore filed a lawsuit against the Company and several unrelated parties in the Circuit Court for Baltimore City, Maryland (“Baltimore Circuit Court”), concerning the environmental impacts of plastic packaging on the city’s lands and waterways.

The complaint asserts claims for (a) violations of various state statutes and local ordinances that prohibit littering or improper dumping of waste on public or private property;

(b) unfair, abusive or deceptive trade practices;

(d) design defects;

(e) public nuisance;

(f) failure to warn;

and (g) negligence.

The complaint seeks injunctive relief, compensatory damages and punitive damages but does not specify an amount of damages sought.

The Company believes it has strong defenses to the claims.

On July 21, 2025, the Baltimore Circuit Court granted in part the Company’s Motion to Dismiss, dismissing with prejudice all claims except the public nuisance claim.

On July 23, 2026, the court dismissed the remaining public nuisance claim.

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-Q

Item 1. Legal Proceedings