COSTCO WHOLESALE CORP /NEW

Previous wording

Our operating models are generally the same across our U.S., Canadian, and Other International operating segments (see Note 9 to the condensed consolidated financial statements included in Part I, Item 1, of this Report). Certain operations in the Other International segment have relatively higher rates of square footage growth, lower wage and benefit costs as a percentage of sales, less or no direct membership warehouse competition, or lack e-commerce or business delivery.

Current wording

Our operating models are generally the same across our U.S., Canadian, and Other International operating segments (see Note 9 to the condensed consolidated financial statements included in Part I, Item 1, of this Report). Certain operations in our Other International segment have relatively higher rates of square footage growth, lower wage and benefit costs as a percentage of sales, less or no direct membership warehouse competition, or lack e-commerce or business delivery.

Previous wording

Our fiscal year ends on the Sunday closest to August 31. References to the second quarter of 2026 and 2025 relate to the 12-week fiscal quarters ended February 15, 2026, and February 16, 2025. References to the first half of 2026 and 2025 relate to the 24 weeks ended February 15, 2026, and February 16, 2025. Certain percentages presented are calculated using actual results prior to rounding.

Current wording

Our fiscal year ends on the Sunday closest to August 31. References to the third quarter of 2026 and 2025 relate to the 12-week fiscal quarters ended May 10, 2026, and May 11, 2025. References to the first thirty-six weeks of 2026 and 2025 relate to the 36 weeks ended May 10, 2026, and May 11, 2025. Certain percentages presented are calculated using actual results prior to rounding.

Previous wording

Highlights for the second quarter of 2026 versus 2025 include:

Current wording

Highlights for the third quarter of 2026 versus 2025 include:

Previous wording

•We opened four new warehouses, including one relocation, for a total of three net new warehouses: one in the U.S. and two in our Canadian segment, compared to one new warehouse in the U.S.;

Current wording

•We opened four new warehouses: three in the U.S. and one in Canada, compared to nine new warehouses, including one relocation;

Previous wording

•Net sales increased 9% to $68,242, driven by an increase in comparable sales and sales at 27 net new warehouses opened since the end of the second quarter of 2025;

Current wording

•Net sales increased 12% to $69,154, driven by an increase in comparable sales and sales at 23 net new warehouses opened since the end of the third quarter of 2025;

Previous wording

•Membership fee revenue increased 14% to $1,355, primarily driven by new member sign-ups and membership fee increases;

Current wording

•Membership fee revenue increased 11% to $1,373, primarily driven by new member sign-ups, membership fee increases, and upgrades to Executive Membership;

Previous wording

•The effective tax rate was 25.2%, compared to 26.2%;

Current wording

•The effective tax rate was 25.4%, compared to 26.2%;

Previous wording

•Net income increased to $2,035, $4.58 per diluted share, compared to $1,788, $4.02 per diluted share; and

Current wording

•Net income increased to $2,192, $4.93 per diluted share, compared to $1,903, $4.28 per diluted share; and

Previous wording

•A quarterly cash dividend of $1.30 per share was declared on January 15, 2026, and paid on February 13, 2026.

Current wording

•A quarterly cash dividend of $1.47 per share was declared on April 15, 2026, and paid on May 15, 2026.

Previous wording

Net sales increased $5,712 or 9%, and $10,705 or 9% during the second quarter and first half of 2026. The improvement was primarily attributable to an increase in comparable sales of $4,618 or 7% and $8,497 or 7% during the second quarter and first half of 2026. Comparable sales were positively impacted by increases of approximately 4% in average ticket and 3% in shopping frequency in both the second quarter and first half of 2026. The remaining increase was driven by sales at the 27 net new warehouses opened since the end of the second quarter of 2025.

Current wording

Net sales increased $7,189 or 12%, and $17,894 or 10% during the third quarter and first thirty-six weeks of 2026. The improvement was primarily attributable to an increase in comparable sales of $6,055 or 10% and $14,553 or 8% during the third quarter and thirty-six weeks of 2026. Comparable sales were positively impacted by increases of approximately 7% and 5% in average ticket and 2% and 3% in shopping frequency in thethird quarter and first thirty-six weeks of 2026. The remaining increase was driven by sales at the 23 net new warehouses opened since the end of the third quarter of 2025.

Previous wording

Digitally-enabled comparable sales increased 23% and 22% during the second quarter and first half of 2026 and increased 22% and 21% excluding the impact of changes in foreign-currencies.

Current wording

Digitally-enabled comparable sales increased 21% and 22% during the third quarter and first thirty-six weeks of 2026 and increased 21% for each period excluding the impact of changes in foreign currencies.

Previous wording

Sales increased $4,715 or 9% and $8,663 or 9% in core merchandise categories during the second quarter and first half of 2026, increasing in all categories. Sales increased $997 or 9% and $2,042 or 9% in warehouse ancillary and other businesses during the second quarter and first half of 2026.

Current wording

Sales increased $3,721 or 7% and $12,384 or 8% in core merchandise categories during the third quarter and first thirty-six weeks of 2026, increasing in all categories. Sales increased $3,468 or 29% and $5,510 or 16% in warehouse ancillary and other businesses during the third quarter and first thirty-six weeks of 2026, led by gasoline and pharmacy.

Previous wording

The volume of gasoline sold increased approximately 4%, positively impacting net sales by $209, or 33 basis points and $443 or 36 basis points during the second quarter and first half of 2026. Lower gasoline prices negatively impacted net sales by $402, or 64 basis points, and $431, or 35 basis points during the second quarter and first half of 2026, with a 5% and 3% decrease in the average price per gallon.

Current wording

The volume of gasoline sold increased approximately 10% and 6%, positively impacting net sales by $662, or 107 basis points and $1,105 or 60 basis points during the third quarter and first thirty-six weeks of 2026. Higher gasoline prices positively impacted net sales by $1,367, or 221 basis points, and $936, or 50 basis points during the third quarter and first thirty-six weeks of 2026, with a 20% and 5% increase in the average price per gallon.

Previous wording

Changes in foreign-currencies relative to the U.S. dollar attributable to our Other International and Canadian operations positively impacted net sales by approximately $899, or 144 basis points, and approximately $935, or 76 basis points, during the second quarter and first half of 2026.

Current wording

Changes in foreign currencies relative to the U.S. dollar attributable to our Other International and Canadian operations positively impacted net sales by approximately $643, or 104 basis points, and approximately $1,578, or 85 basis points, during the third quarter and first thirty-six weeks of 2026.

Previous wording

Membership fee revenue increased 14% in the second quarter and first half of 2026, driven by new member sign-ups and membership fee increases. At the end of the second quarter of 2026, our renewal rates were 92.1% in the U.S. and Canada and 89.7% worldwide. Renewal rates were negatively impacted by a higher number of memberships sold online, including through digital promotions, entering the renewal rate calculation. These memberships renew at a slightly lower rate on average.

Current wording

Membership fee revenue increased 11% and 13% in the third quarter and first thirty-six weeks of 2026, driven by new member sign-ups, membership fee increases and upgrades to Executive Membership. At the end of the third quarter of 2026, our renewal rates were 92.2% in the U.S. and Canada and 89.7% worldwide. Renewal rates were negatively impacted by a higher number of memberships sold online, including through digital promotions, entering the renewal rate calculation. These memberships renew at a slightly lower rate on average.

Previous wording

As previously reported, we increased our annual membership fees in the U.S. and Canada, effective September 1, 2024. We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period. The fee income increase accounted for approximately 35% and 40% of membership income growth during the second quarter and first half of 2026.

Current wording

As previously reported, we increased our annual membership fees in the U.S. and Canada, effective September 1, 2024. We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period. The fee income increase accounted for approximately 25% and 35% of membership income growth during the third quarter and first thirty-six weeks of 2026.

Previous wording

Gross margin as a percentage of net sales increased by 17 basis points. Excluding the impact of gasoline price deflation on net sales, gross margin percentage was 10.96%, an increase of 11 basis points. The increase was positively impacted by 17 basis points in our warehouse ancillary and other businesses, primarily gasoline and pharmacy, and five basis points from a non-recurring legal settlement. Gross margin percentage was negatively impacted by seven basis points in our core merchandise categories, primarily due to 2% rewards and our co-branded credit card program, partially offset by an increase in non-foods and fresh foods. A LIFO charge in the second quarter of 2026 compared to a benefit in the second quarter of 2025 also negatively impacted gross margin by four basis points. Changes in foreign currencies relative to the U.S. dollar positively impacted gross margin by approximately $97, compared to the second quarter of 2025, attributable to Other International and Canadian operations.

Current wording

Gross margin as a percentage of net sales decreased by 21 basis points. Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 11.26%, an increase of one basis point. The increase was positively impacted by 14 basis points in our warehouse ancillary and other businesses, primarily pharmacy and e-commerce. A smaller LIFO charge in the third quarter of 2026 compared to the third quarter of 2025 positively impacted gross margin by 14 basis points. The absence of a charge this quarter related to a one-time expense for increased employee vacation positively impacted gross margin by two basis points. Gross margin percentage was negatively impacted by 29 basis points in our core merchandise categories, primarily due to foods and sundries and fresh foods, partially offset by our co-branded credit card program and non-foods. Changes in foreign currencies relative to the U.S. dollar positively impacted gross margin by approximately $69, compared to the third quarter of 2025, attributable to our Other International and Canadian operations.

Previous wording

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 22 basis points, with increases in all categories. This measure eliminates the impact of changes in sales penetration and gross margin from our warehouse ancillary and other businesses.

Current wording

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased nine basis points. The decrease was primarily due to fresh foods and foods and sundries, partially offset by non-foods. This measure eliminates the impact of changes in sales penetration and gross margin from our warehouse ancillary and other businesses.

Previous wording

Gross margin percentage on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), increased in our U.S. segment, which performed similarly to the consolidated results above. Our Canadian segment gross margin percentage increased, primarily due to increases in warehouse ancillary and other businesses, partially offset by decreases in core merchandise categories. Gross margin increased in our Other International segment, primarily due to increases in warehouse ancillary and other businesses and core merchandise categories.

Current wording

Gross margin percentage on a segment basis, when expressed as a percentage of the segment's own sales and excluding the impact of changes in gasoline prices on net sales (segment gross margin percentage), decreased in our U.S. segment. The decrease was primarily due to a negative impact from core merchandise categories, partially offset by increases in warehouse ancillary and other businesses, a smaller LIFO charge and the absence of a charge related to a one-time expense for increased employee vacation. Our Canadian segment gross margin percentage increased, primarily due to increases in warehouse ancillary and other businesses, partially offset by decreases in core merchandise categories. Gross margin increased in our Other International segment, primarily due to increases in core merchandise categories.

Previous wording

Gross margin as a percentage of net sales increased by 11 basis points. Excluding the impact of gasoline price deflation on net sales, gross margin percentage was 11.13%, an increase of seven basis points. The increase was positively impacted by 12 basis points in our warehouse ancillary and other businesses, primarily gasoline and pharmacy, and two basis points from a non-recurring legal settlement. Gross margin percentage was negatively impacted by four basis points in our core merchandise categories, primarily due to our co-branded credit card program and 2% rewards, partially offset by increases in non-foods, fresh foods, and foods and sundries. A LIFO charge in the first half of 2026 compared to a benefit in the first half of 2025 also negatively impacted gross margin by three basis points. Changes in foreign currencies relative to the U.S. dollar positively impacted gross margin by approximately $101, compared to the first half of 2025, attributable to Other International and Canadian operations.

Current wording

Gross margin as a percentage of net sales increased by one basis point. Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 11.18%, an increase of six basis points. The increase was positively impacted by 13 basis points in our warehouse ancillary and other businesses, primarily pharmacy and gasoline, and three basis points from a smaller LIFO charge in the first thirty-six weeks of 2026 compared to the first thirty-six weeks of 2025. A non-recurring legal settlement also positively impacted gross margin by two basis points. Gross margin percentage was negatively impacted by 12 basis points in our core merchandise categories, primarily due to our co-branded credit card program, foods and sundries, and 2% rewards, partially offset by increases in non-foods. Changes in foreign currencies relative to the U.S. dollar positively impacted gross margin by approximately $170, compared to the first thirty-six weeks of 2025, attributable to our Other International and Canadian operations.

Previous wording

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 26 basis points. The increase was across all categories.

Current wording

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 14 basis points. The increase was primarily due to non-foods and foods and sundries, partially offset by fresh foods.

Previous wording

Segment gross margin percentage increased in all segments. Our U.S. segment performed similarly to the consolidated results above. Our Canadian segment gross margin percentage increased, primarily due to increases in warehouse ancillary and other businesses, partially offset by decreases in core merchandise categories. Gross margin increased in our Other International segment, primarily due to increases in warehouse ancillary and other businesses and core merchandise categories.

Current wording

Segment gross margin percentage increased in all segments. Our U.S. segment performed similarly to the consolidated results above. Our Canadian segment gross margin percentage increased, primarily due to increases in warehouse ancillary and other businesses, partially offset by decreases in core merchandise categories. Gross margin increased in our Other International segment, primarily due to increases in core merchandise categories and warehouse ancillary and other businesses.

Previous wording

SG&A expenses as a percentage of net sales increased by 13 basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was 9.14%, an increase of eight basis points. Compared to last year, results were negatively impacted by six basis points attributable to self-insured general liability claims expense and three basis points from central operating costs. Preopening costs were higher by one basis point. SG&A was favorably impacted by two basis points attributable to warehouse operations and other businesses. Changes in foreign currencies relative to the U.S. dollar increased SG&A expenses by approximately $65 compared to the second quarter of 2025, attributable to our Other International and Canadian operations. SG&A expenses as a percentage of net sales were higher in all segments.

Current wording

SG&A expenses as a percentage of net sales decreased by 20 basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflation was 9.14%, a decrease of two basis points. Compared to last year, results were favorably impacted by five basis points attributable to the absence of a charge related to a one-time expense for increased employee vacation and one basis point from central operating costs. SG&A was negatively impacted by three basis points attributable to warehouse operations and other businesses. Stock compensation was higher by one basis point. Changes in foreign currencies relative to the U.S. dollar increased SG&A expenses by approximately $48 compared to the third quarter of 2025, attributable to our Other International and Canadian operations. SG&A expenses as a percentage of net sales was lower in our U.S. segment and higher in our Canadian and Other International segments.

Previous wording

SG&A expenses as a percentage of net sales increased by seven basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was 9.36%, an increase of four basis points. Compared to last year, results were negatively impacted by three basis points attributable to self-insured general liability claims expense and two basis points due to a charge related to a tax assessment for prior years. Preopening costs were higher by one basis point. Warehouse operations and other businesses and stock compensation favorably impacted results by one basis point each. Changes in foreign currencies relative to the U.S. dollar increased SG&A expenses by approximately $65 compared to the first half of 2025, attributable to our Other International and Canadian operations. SG&A expenses as a percentage of net sales were higher in our U.S. segment, flat in our Canadian segment, and lower in our Other International segment.

Current wording

SG&A expenses as a percentage of net sales decreased by three basis points. SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflation was 9.29%, an increase of two basis points. Compared to last year, results were negatively impacted by two basis points attributable to self-insured general liability claims expense. A charge related to a tax assessment for prior years and warehouse operations and other businesses also negatively impacted SG&A by one basis point each. The absence of a charge related to a one-time expense for increased employee vacation favorably impacted SG&A by two basis points. Changes in foreign currencies relative to the U.S. dollar increased SG&A expenses by approximately $113 compared to the first thirty-six weeks of 2025, attributable to our Other International and Canadian operations. SG&A expenses as a percentage of net sales were higher in our U.S. and Canadian segments and lower in our Other International segment.

Previous wording

The increase in interest income in the second quarter and first half of 2026 was due to higher cash balances, partially offset by lower interest rates. Foreign-currency transaction gains (losses), net, include revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations and mark-to-market adjustments for forward foreign-exchange contracts. See Derivatives and Foreign Currency sections in Item 8, Note 1 of our Annual Report on Form 10-K, for the fiscal year ended August 31, 2025.

Current wording

The increase in interest income in the third quarter and first thirty-six weeks of 2026 was due to higher cash balances, partially offset by lower interest rates. Foreign-currency transaction gains (losses), net, include revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations and mark-to-market adjustments for forward foreign-exchange contracts. See Derivatives and Foreign Currency sections in Item 8, Note 1 of our Annual Report on Form 10-K, for the fiscal year ended August 31, 2025.

Previous wording

The effective tax rate for the first half of 2026 and 2025 was favorably impacted by discrete tax benefits of $72 and $100 related to stock compensation.

Current wording

The effective tax rate for the first thirty-six weeks of 2026 and 2025 was favorably impacted by discrete tax benefits of $72 and $100 related to stock compensation.

Previous wording

Our primary sources of liquidity are cash flows from operations, cash and cash equivalents, and short-term investments. Cash and cash equivalents and short-term investments were $18,240 and $15,284 at February 15, 2026, and August 31, 2025. Of these balances, unsettled credit and debit card receivables represented approximately $2,872 and $2,670 at February 15, 2026, and August 31, 2025. These receivables generally settle within four days.

Current wording

Our primary sources of liquidity are cash flows from operations, cash and cash equivalents, and short-term investments. Cash and cash equivalents and short-term investments were $19,996 and $15,284 at May 10, 2026, and August 31, 2025. Of these balances, unsettled credit and debit card receivables represented approximately $3,078 and $2,670 at May 10, 2026, and August 31, 2025. These receivables generally settle within four days.

Previous wording

Net cash provided by operating activities totaled $7,684 in the first half of 2026, compared to $6,008 in the first half of 2025. Our cash flow provided by operations is primarily from net sales and membership fees. Cash flow used in operations generally consists of payments to suppliers, warehouse operating costs, including wages and employee benefits, utilities, credit and debit card processing fees, and operating leases. Cash used in operations also includes payments for income taxes. Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is impacted by several factors, including inventory levels and turnover, payment terms with suppliers, and early payments to obtain discounts.

Current wording

Our cash flow provided by operations is primarily from net sales and membership fees. Cash flow used in operations generally consists of payments to suppliers, warehouse operating costs, including wages and employee benefits, utilities, credit and debit card processing fees, and operating leases. Cash used in operations also includes payments for income taxes. Changes in our net investment in merchandise inventories (the difference between merchandise inventories and accounts payable) is impacted by several factors, including inventory levels and turnover, payment terms with suppliers, and early payments to obtain discounts. Net cash provided by operating activities totaled $11,133 in the first thirty-six weeks of 2026, compared to $9,468 in the first thirty-six weeks of 2025. The increase was primarily due to higher cash flow provided from operating income, as well as reduced net investment in merchandise inventories. The latter was a result of faster inventory turns and improved payment terms with suppliers.

Previous wording

Net cash used in investing activities totaled $2,568 in the first half of 2026, compared to $2,007 in the first half of 2025, and is primarily related to capital expenditures. Net cash from investing activities also includes purchases and maturities of short-term investments.

Current wording

Net cash used in investing activities totaled $4,160 in the first thirty-six weeks of 2026, compared to $3,343 in the first thirty-six weeks of 2025, and is primarily related to capital expenditures. Net cash from investing activities also includes purchases and maturities of short-term investments.

Previous wording

Our primary requirements for capital are acquiring land, buildings, and equipment for new and remodeled warehouses, information systems, and manufacturing and distribution facilities. In the first half of 2026, we spent $2,815 on capital expenditures, and it is our current intention to spend approximately $6,500 during fiscal 2026, as we continue to invest in new warehouse openings, remodel existing locations, expand our depot network, and further develop our digitally-enabled businesses. These expenditures are expected to be financed with cash from operations, cash and cash equivalents, and short-term investments. We opened 12 new warehouses, includingtwo relocations, in the first half of 2026, and plan to open 21 additional new warehouses, including three relocations, in the remainder of fiscal 2026. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs and the economic environment.

Current wording

Our primary requirements for capital are acquiring land, buildings, and equipment for new and remodeled warehouses, information systems, and manufacturing and distribution facilities. In the first thirty-six weeks of 2026, we spent $4,228 on capital expenditures, and it is our current intention to spend approximately $6,500 during fiscal 2026, as we continue to invest in new warehouse openings, remodel existing locations, expand our depot network, and further develop our digitally-enabled businesses. These expenditures are expected to be financed with cash from operations, cash and cash equivalents, and short-term investments. We opened 16 new warehouses, includingtwo relocations, in the first thirty-six weeks of 2026, and plan to open 13 additional new warehouses, including one relocation, in the remainder of fiscal 2026. There can be no assurance that current expectations will be realized, and plans are subject to change upon further review of our capital expenditure needs and the economic environment.

Previous wording

Net cash used in financing activities totaled $1,897 in the first half of 2026, compared to $1,434 in the first half of 2025. Cash flow used in financing activities during the first half of 2026 was primarily related to the payment of dividends, repurchases of common stock, and withholding taxes on stock-based awards.

Current wording

Net cash used in financing activities totaled $2,175 in the first thirty-six weeks of 2026, compared to $2,182 in the first thirty-six weeks of 2025. Cash flow used in financing activities during the first thirty-six weeks of 2026 was primarily related to the payment of dividends, repurchases of common stock, repayments of short-term borrowings, withholding taxes on stock-based awards, and repayments of long-term debt. Cash flow provided by financing activities included proceeds from short-term borrowings.

Previous wording

A quarterly cash dividend of $1.30 per share was declared on January 15, 2026, and paid on February 13, 2026.

Current wording

A quarterly cash dividend of $1.47 per share was declared on April 15, 2026, and paid on May 15, 2026.

Previous wording

On January 19, 2023, the Board of Directors authorized a share repurchase program in the amount of $4,000, which expires in January 2027. During the first half of 2026 and 2025, we repurchased 454,000 and 443,000 shares of common stock, at an average price per share of $924.46 and $932.03, totaling approximately $420 and $413. These amounts may differ from the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter. Purchases are made from time to time, as conditions warrant, potentially including the open market, block purchases and pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act. The remaining amount available to be purchased under our approved plan was $1,542 at the end of the second quarter.

Current wording

On January 19, 2023, the Board of Directors authorized a share repurchase program in the amount of $4,000, which expires in January 2027. During the first thirty-six weeks of 2026 and 2025, we repurchased 638,000 and 658,000 shares of common stock, at an average price per share of $945.46 and $946.64, totaling approximately $603 and $623. These amounts may differ from the accompanying condensed consolidated statements of cash flows due to changes in unsettled repurchases at the end of a quarter. Purchases are made from time to time, as conditions warrant, potentially including the open market, block purchases and pursuant to plans under SEC Rule 10b5-1. Repurchased shares are retired, in accordance with the Washington Business Corporation Act. The remaining amount available to be purchased under our approved plan was $1,359 at the end of the third quarter.

Previous wording

We maintain bank credit facilities for working capital and general corporate purposes. At February 15, 2026, we had borrowing capacity under these facilities of $1,447. Our Canadian and Other International operations maintain $946 of this capacity under bank credit facilities, of which $293 is guaranteed by the Company. Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the condensed consolidated balance sheets, were $98 at the end of the second quarter of 2026 and immaterial at the end of 2025.

Current wording

We maintain bank credit facilities for working capital and general corporate purposes. At May 10, 2026, we had borrowing capacity under these facilities of $1,531. Our Canadian and Other International operations maintain $1,028 of this capacity under bank credit facilities, of which $338 is guaranteed by the Company. Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the condensed consolidated balance sheets, were $96 at the end of the third quarter of 2026 and immaterial at the end of 2025.

Previous wording

We have letter of credit facilities, for commercial and standby letters of credit, totaling $236. The outstanding commitments under these facilities at the end of the second quarter of 2026 totaled $204, most of which were standby letters of credit that do not expire or have expiration dates within one year. The bank credit facilities have various expiration dates, most within one year, and we generally intend to renew these facilities. The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercial letters of credit outstanding.

Current wording

We have letter of credit facilities, for commercial and standby letters of credit, totaling $242. The outstanding commitments under these facilities at the end of the third quarter of 2026 totaled $205, most of which were standby letters of credit that do not expire or have expiration dates within one year. The bank credit facilities have various expiration dates, most within one year, and we generally intend to renew these facilities. The amount of borrowings available at any time under our bank credit facilities is reduced by the amount of standby and commercial letters of credit outstanding.