What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-06-01 compared with 2023-03-09 · 89 added, 104 removed, 186 unchanged (51% of the section changed)

27 unchanged sentences

We do not focus in the short-term on maximizing prices charged, but instead seek to maintain what we believe is a perception among our members of our “pricing authority” – consistently providing the most competitive values.

Merchandise costs in the second quarter of 2023 continued to be impacted by inflation.

Merchandise costs in the third quarter of 2023 continued to be impacted by inflation.

The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to cost increases.

Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, offering seasonal merchandise outside its season, as well as passing cost increases on to our members.

Those strategies can include, but are not limited to, working with our suppliers to share in absorbing cost increases, earlier-than-usual purchasing and in greater volumes, as well as passing cost increases on to our members.

Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, all negatively impacting gross margin and gross margin as a percentage of net sales (gross margin percentage).

15 unchanged sentences

This format is designed to reinforce member loyalty and provide continuing fee revenue.

The extent to which we achieve growth in our membership base, increase the penetration of our Executive members, and sustain high renewal rates materially influences our profitability.

The extent to which we achieve growth in our membership base, increase the penetration of our Executive members,

and sustain high renewal rates materially influences our profitability.

Our paid-membership growth rate may be adversely impacted when warehouse openings occur in existing markets as compared to new markets.

12 unchanged sentences

Our fiscal year ends on the Sunday closest to August 31.

References to the second quarter of 2023 and 2022 relate to the 12-week fiscal quarters ended February 12, 2023, and February 13, 2022.

References to the first half of 2023 and 2022 relate to the 24 weeks ended February 12, 2023, and February 13, 2022.

References to the third quarter of 2023 and 2022 relate to the 12-week fiscal quarters ended May 7, 2023, and May 8, 2022.

References to the first thirty-six weeks of 2023 and 2022 relate to the 36 weeks ended May 7, 2023, and May 8, 2022.

Certain percentages presented are calculated using actual results prior to rounding.

Unless otherwise noted, references to net income relate to net income attributable to Costco.

Highlights for the second quarter of 2023 versus 2022 include:

• Net sales increased 6% to $54,239, driven by an increase in comparable sales of 5% and sales at 20 net new warehouses opened since the end of the second quarter of 2022;

Highlights for the third quarter of 2023 versus 2022 include:

• Net sales increased 2% to $52,604, driven by sales at 23 net new warehouses opened since the end of the third quarter of 2022;

• Membership fee revenue increased 6% to $1,044, driven by new member sign-ups, upgrades to Executive Membership, and a higher renewal rate;

• Gross margin percentage increased eight basis points, driven primarily by a LIFO charge recorded in the second quarter of 2022.

This was partially offset by decreases in core merchandise categories;

• SG&A expenses as a percentage of net sales increased 13 basis points, primarily due to central operating costs;

• Gross margin percentage increased 13 basis points, driven primarily by our core merchandise categories and the absence of a LIFO charge as was recorded in the third quarter of 2022.

This was partially offset by a charge of $298, $0.50 per diluted share, predominantly related to the discontinuation of our charter shipping activities;

• SG&A expenses as a percentage of net sales increased 49 basis points, due to increased costs in warehouse operations and other businesses, primarily wages and benefits, driven by various wage increases effective in March and July 2022, and March 2023, as well as slower sales growth;

• In the third quarter of 2022 we incurred a one-time $77 pretax charge, $0.13 per diluted share, related to granting our employees additional vacation;

• Net income was $1,302, $2.93 per diluted share, compared to $1,353, $3.04 per diluted share in 2022;

• A quarterly cash dividend of $0.90 per share was declared on January 19, 2023 and paid on February 17, 2023.

• A quarterly cash dividend of $1.02 per share was declared on April 19, 2023 and paid on May 19, 2023.

RESULTS OF OPERATIONS

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

$ 52,604 $ 51,612 $ 160,280 $ 151,966

Changes in net sales:

U.S 7 % 17 % 9 % 17 %

1 % 18 % 6 % 17 %

Canada — % 16 % 2 % 17 %

2 unchanged sentences

Changes in comparable sales:

U.S 6 % 16 % 8 % 15 %

— % 17 % 5 % 16 %

Canada (1) % 15 % 2 % 16 %

3 unchanged sentences

Changes in comparable sales excluding the impact of changes in foreign-currency and gasoline prices:

U.S 6 % 11 % 6 % 11 %

2 % 11 % 5 % 11 %

Canada 7 % 13 % 8 % 11 %

2 unchanged sentences

E-commerce (9) % 8 % (7) % 11 %

Net sales increased $3,302 or 6%, and $7,322 or 7% during the second quarter and first half of 2023.

This improvement was attributable to an increase in comparable sales of 5% and 6% in the second quarter and first half of 2023, and sales at the 20 net new warehouses opened since the end of the second quarter of 2022.

Sales increased $2,490, or 6% and $4,523, or 6% in core merchandise categories during the second quarter and first half of 2023, led by foods and sundries and fresh foods;

Net sales increased $992 or 2%, and $8,314 or 5% during the third quarter and first thirty-six weeks of 2023.

The improvement in the third quarter of 2023 was attributable to sales at the 23 net new warehouses opened since the end of the third quarter of 2022.

The increase in net sales for the first thirty-six weeks of 2023 was driven primarily by a 4% increase in comparable sales.

Sales increased $1,362, or 3% and $5,885, or 5% in core merchandise categories during the third quarter and first thirty-six weeks of 2023, led by foods and sundries and fresh foods;

while non-foods decreased.

Sales increased $812, or 9% and $2,799, or 15% in warehouse ancillary and other businesses during the second quarter and first half of 2023, led by gasoline, pharmacy and travel.

During the second quarter of 2023, c hanges in foreign currencies relative to the U.S.

dollar negatively impacted net sales by approximately $937, 184 basis points, compared to the second quarter of 2022, attributable to our Canadian and Other International operations.

Sales in warehouse ancillary and other businesses decreased $370, or 3% during the third quarter of 2023, due to lower gasoline prices, partially offset by increases in pharmacy, travel, food court and optical.

Sales increased $2,429, or 8% in warehouse ancillary and other businesses during the first thirty-six weeks of 2023, led by gasoline, pharmacy and travel.

During the third quarter of 2023, l ower gasoline prices negatively impacted net sales by $862, 167 basis points, compared to 2022, with a 12% decrease in the average price per gallon.

T he volume of gasoline sold increased approximately 1%, positively impacting net sales by $86, 17 basis points.

Changes in gasoline prices did not materially impact net sales for the current quarter.

During the first half of 2023, changes in foreign currencies relative to the U.S.

dollar negatively impacted net sales by approximately $2,471, 246 basis points, compared to the first half of 2022, attributable to our Canadian and Other International Operations.

Higher gasoline prices positively impacted net sales by $1,254, 125 basis points, compared to 2022, with a 9% increase in the average price per gallon.

C hanges in foreign currencies relative to the U.S.

dollar negatively impacted net sales by approximately $782, 152 basis points, compared to the third quarter of 2022, attributable to our Canadian and Other International operations.

During the first thirty-six weeks of 2023, higher gasoline prices positively impacted net sales by $392, 26 basis points, compared to 2022, with a slight increase in the average price per gallon.

The volume of gasoline sold increased approximately 7%, positively impacting net sales by $1,301, 86 basis points.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted net sales by approximately $3,253, 214 basis points, compared to the first thirty-six weeks of 2022, attributable to our Canadian and Other International operations.

Comparable Sales

Comparable sales increased 5% and 6% in the second quarter and first half of 2023 and were positively impacted by increases in shopping frequency and the average ticket, which includes the effects of inflation and changes in foreign currency.

Comparable sales were positively impacted by an increase in shopping frequency, largely offset by a decrease in average ticket in the third quarter of 2023.

Comparable sales increased 4% in the first thirty-six weeks of 2023, driven by an increase in shopping frequency.

Membership Fees

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Membership fees $ 1,044 $ 984 $ 3,071 $ 2,897

2 unchanged sentences

Total cardholders (000s) 124,700 116,600 — —

Membership fee revenue increased 6% in both the second quarter and first half of 2023, driven by sign-ups, upgrades to Executive Membership, and a higher renewal rate.

Membership fee revenue increased 6% in both the third quarter and first thirty-six weeks of 2023, driven by new member sign-ups, upgrades to Executive Membership, and a higher renewal rate.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted membership fees by $20 and $52 in the second quarter and first half of 2023.

At the end of the second quarter of 2023, our renewal rates were 92.6% in the U.S.

dollar negatively impacted membership fees by $17 and $70 in the third quarter and first thirty-six weeks of 2023.

At the end of the third quarter of 2023, our renewal rates were 92.6% in the U.S.

and Canada and 90.5% worldwide.

4 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Net sales $ 52,604 $ 51,612 $ 160,280 $ 151,966

4 unchanged sentences

Quarterly Results

Total gross margin percentage increased eight basis points compared to the second quarter of 2022.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 10.73%, an increase of nine basis points.

This was driven primarily by a 14 basis-point increase due to a LIFO charge recorded in the second quarter of 2022.

Warehouse ancillary and other business also positively impacted gross margin by three basis points, predominantly gasoline, partially offset by e-commerce and pharmacy.

Core merchandise categories negatively impacted gross margin by six basis points, predominantly in non-foods and fresh foods, partially offset by foods and sundries.

Gross margin was negatively impacted by two basis points due to increased 2% rewards.

Total gross margin percentage increased 13 basis points compared to the third quarter of 2022.

Excluding the impact of gasoline price deflation on net sales, gross margin percentage was 10.16%, a decrease of three basis points.

This was driven by a net 52 basis-point decrease due to a charge, primarily for the discontinuation of our charter shipping activities and the benefit from the absence of a charge related to granting employees additional vacation as was recorded in the third quarter of 2022.

Increased 2% rewards negatively impacted gross margin by nine basis points.

Gross margin was positively impacted by 25 basis points due to the absence of a LIFO charge as was recorded in the third quarter of 2022.

Core merchandise categories positively impacted gross margin by 24 basis points, due to foods and sundries,

partially offset by non-foods.

Warehouse ancillary and other businesses positively impacted gross margin by nine basis points.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted gross margin by approximately $91, compared to the second quarter of 2022, attributable to our Canadian and Other International operations.

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

The decrease was across all categories, most significantly in fresh foods.

dollar negatively impacted gross margin by approximately $81, compared to the third quarter of 2022, attributable to our Canadian and Other International operations.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 17 basis points.

The increase was primarily due to foods and sundries and non-foods, partially offset by fresh foods.

This measure eliminates the impact of changes in sales penetration and gross margins from our warehouse ancillary and other businesses.

Gross margin 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, largely due to the LIFO charge discussed above and an increase in our warehouse ancillary and other businesses, predominantly gasoline, partially offset by e-commerce.

Gross margin percentage decreased in our Canadian and Other International segment due to decreases in core merchandise categories and increased 2% rewards, partially offset by warehouse ancillary and other businesses.

Gross margin percentage increased in our Canadian and Other International segment due to increases in core merchandise categories and warehouse ancillary and other businesses.

All segments were negatively impacted by increased 2% rewards.

Year-to-date Results

Total gross margin percentage decreased 18 basis points compared to the first half of 2022.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 10.79%, a decrease of six basis points.

This was primarily due to an 18 basis-point decrease in core merchandise categories, predominantly in non-foods and fresh foods, partially offset by foods and sundries, and a nine basis-point charge primarily related to downsizing our charter shipping activities during the first quarter of 2023.

Gross margin was also negatively impacted by three basis points due to increased 2% rewards.

Total gross margin percentage decreased seven basis points compared to the first thirty-six weeks of 2022.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 10.58%, a decrease of four basis points.

This was driven by charges in the first and third quarters of 2023 related to the downsizing and then discontinuation of our charter shipping activities, totaling 24 basis points.

Gross margin was also negatively impacted by five basis points due to increased 2% rewards and three basis points due to decreases in core merchandise categories, predominantly in non-foods and fresh foods, partially offset by foods and sundries.

Warehouse ancillary and other businesses, positively impacted gross margin by 14 basis points, predominantly gasoline, partially offset by e-commerce.

A smaller LIFO charge in the first half of 2023 compared to the first half of 2022 positively contributed eight basis points.

A smaller LIFO charge in the first thirty-six weeks of 2023 compared to the first thirty-six weeks of 2022 also positively impacted gross margin by 14 basis points.

Changes in foreign currencies relative to the U.S.

dollar negatively impacted gross margin by approximately $244, compared to the first half of 2022, attributable to our Canadian and Other International operations.

dollar negatively impacted gross margin by approximately $325, compared to the first thirty-six weeks of 2022, attributable to our Canadian and Other International operations.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased 14 basis points.

The decrease was primarily due to fresh foods and non-foods.

This measure eliminates the impact of changes in sales penetration and gross margins from our warehouse ancillary and other businesses.

Segment gross margin percentage increased in our U.S.

segment, due to warehouse ancillary and other businesses and a smaller LIFO charge, partially offset by the charge related to downsizing our charter shipping activities and decreases in certain core merchandise categories, non-foods and fresh foods, partially offset by foods and sundries.

Gross margin decreased in our Canadian and Other International segment due to decreases in core merchandise categories, partially offset by warehouse ancillary and other businesses.

The decrease was primarily due to fresh foods and non-foods, partially offset by foods and sundries.

Gross margin percentage was flat in our U.S.

segment due to the charge related to the discontinuation of our charter shipping activities discussed above, offset by a smaller LIFO charge and increases in warehouse ancillary and other businesses, primarily gasoline.

Gross margin percentage decreased in our Canadian and Other International segment due to decreases in core merchandise categories, partially offset by warehouse ancillary and other businesses.

All segments were negatively impacted by increased 2% rewards.

1 unchanged sentence

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

SG&A expenses $ 4,794 $ 4,450 $ 14,651 $ 13,743

2 unchanged sentences

SG&A expenses as a percentage of net sales increased 49 basis points.

The effect of gasoline price inflation had no impact on SG&A expenses as a percentage of sales.

The comparison to last year was negatively impacted by nine basis points in central operating costs partially attributable to a charge related to a tax audit covering multiple years.

Warehouse operations and other businesses and stock compensation were both higher by two basis points.

SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was 8.96%, an increase of 34 basis points.

The comparison to last year was negatively impacted by 35 basis points in warehouse operations and other businesses, largely attributable to the increased wages and benefits that were effective in March and July 2022, and March 2023 and slower sales growth.

Central operating costs were also higher by nine basis points, and preopening costs were higher by one basis point.

SG&A was positively impacted by 11 basis points due to the absence of a charge related to granting our employees additional vacation as was recorded in the prior year.

Changes in foreign currencies relative to the U.S.

dollar decreased SG&A expenses by approximately $75 compared to the second quarter of 2022.

dollar decreased SG&A expenses by approximately $65 compared to the third quarter of 2022.

Year-to-date Results

SG&A expenses as a percentage of net sales decreased 11 basis points.

SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflation was flat compared to the first half of 2022.

The comparison to last year was favorably impacted by 12 basis points from a write-off of certain information technology assets in the prior year.

Warehouse operations and other businesses were higher by six basis points, largely attributable to the wage increases we instituted in 2022.

Central operating costs were also higher by six basis points.

SG&A expenses as a percentage of net sales increased 10 basis points.

SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflation was 9.16%, an increase of 12 basis points.

The comparison to last year was negatively impacted by 16 basis points in warehouse operations and other businesses, largely attributable to the increased wages and benefits that were effective in March and July 2022, and March 2023 and slower sales growth.

Central operating costs were also higher by seven basis points.

SG&A was positively impacted by 11 basis points due to the absence of a write-off of certain information technology assets and a charge related to granting our employees additional vacation as were recorded in the prior year.

Changes in foreign currencies relative to the U.S.

dollar decreased SG&A expenses by approximately $196 compared to the first half of 2022.

dollar decreased SG&A expenses by approximately $261 compared to the first thirty-six weeks of 2022.

Interest Expense

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Interest expense $ 36 $ 35 $ 104 $ 110

Interest expense is primarily related to Senior Notes and financing leases.

The decrease in interest expense for the first half of 2023 was due to repayment of the 2.300% Senior Notes on December 1, 2021.

The decrease in interest expense for the first thirty-six weeks of 2023 was due to repayment of the 2.300% Senior Notes on December 1, 2021.

Interest Income and Other, Net

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Interest income $ 110 $ 6 $ 269 $ 21

2 unchanged sentences

Interest income and other, net $ 128 $ 71 $ 295 $ 138

The increase in interest income in the second quarter and first half of 2023 was due to higher global interest rates.

The increase in interest income in the third quarter and first thirty-six weeks of 2023 was due to higher global interest rates.

Foreign-currency transaction gains (losses), net, include mark-to-market adjustments for forward foreign-exchange contracts and the revaluation or settlement of monetary assets and liabilities by our Canadian and Other International operations.

2 unchanged sentences

12 Weeks Ended 36 Weeks Ended

2023 February 13,

2022 February 12,

2023 February 13,

Provision for income taxes $ 469 $ 455 $ 1,392 $ 1,287

Effective tax rate 26.5 % 24.9 % 25.2 % 24.2 %

The effective tax rate for the first half of 2023 was impacted by net discrete tax benefits of $57, primarily due to excess tax benefits related to stock compensation.

Excluding discrete net tax benefits, the tax rate was 26.1% for the first half of 2023.

The effective tax rate for the first half of 2022 was impacted by net discrete tax benefits of $91, primarily due to excess tax benefits related to stock compensation.

Excluding discrete net tax benefits, the tax rate was 26.4% for the first half of 2022.

The effective tax rate for the first thirty-six weeks of 2023 was impacted by net discrete tax benefits of $57, primarily due to excess tax benefits related to stock compensation.

Excluding discrete net tax benefits, the tax rate was 26.2%.

The effective tax rate for the first thirty-six weeks of 2022 was impacted by net discrete tax benefits of $114, primarily due to excess tax benefits related to stock compensation.

Excluding discrete net tax benefits, the tax rate was 26.3%.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

36 Weeks Ended

2023 February 13,

Net cash provided by operating activities $ 7,343 $ 4,886

2 unchanged sentences

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 $13,705 and $11,049 at February 12, 2023, and August 28, 2022.

Of these balances, unsettled credit and debit card receivables represented approximately $2,083 and $2,010 at February 12, 2023, and August 28, 2022.

Cash and cash equivalents and short-term investments were $13,708 and $11,049 at May 7, 2023, and August 28, 2022.

Of these balances, unsettled credit and debit card receivables represented approximately $2,236 and $2,010 at May 7, 2023, and August 28, 2022.

These receivables generally settle within four days.

7 unchanged sentences

Cash Flows from Operating Activities

Net cash provided by operating activities totaled $5,802 in the first half of 2023, compared to $3,659 in the first half of 2022.

Net cash provided by operating activities totaled $7,343 in the first thirty-six weeks of 2023, compared to $4,886 in the first thirty-six weeks of 2022.

Our cash flow provided by operations is primarily from net sales and membership fees.

3 unchanged sentences

Cash Flows from Investing Activities

Net cash used in investing activities totaled $1,865 in the first half of 2023, compared to $1,393 in the first half of 2022, and is primarily related to capital expenditures.

Net cash used in investing activities totaled $3,147 in the first thirty-six weeks of 2023, compared to $2,428 in the first thirty-six weeks of 2022, and is primarily related to capital expenditures.

Net cash from investing activities also includes purchases and maturities of short-term investments.

2 unchanged sentences

Capital is also required for information systems, manufacturing and distribution facilities, initial warehouse operations, and working capital.

In the first half of 2023, we spent $1,947 on capital expenditures, and it is our current intention to spend approximately $3,800 to $4,200 during fiscal 2023.

In the first thirty-six weeks of 2023, we spent $2,767 on capital expenditures, and it is our current intention to spend approximately $3,800 to $4,200 during fiscal 2023.

These expenditures are expected to be financed with cash from operations, existing cash and cash equivalents, and short-term investments.

We opened 12 new warehouses, including two relocations, in the first half of 2023 and plan to open 15 additional new warehouses, including one relocation, in the remainder of fiscal 2023.

We opened 17 new warehouses, including three relocations, in the first thirty-six weeks of 2023 and plan to open nine additional new warehouses in the remainder of fiscal 2023.

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.

Cash Flows from Financing Activities

Net cash used in financing activities totaled $1,215 in the first half of 2023, compared to $1,667 in the first half of 2022.

Cash flow used in financing activities during the first half of 2023 was primarily related to the payment of dividends, withholding taxes on stock-based awards, and repurchases of common stock.

In the first half of 2022, cash flow used in financing activities was primarily due to the repayment of our 2.300% Senior Notes.

A quarterly cash dividend of $0.90 per share was declared on January 19, 2023, payable to shareholders of record on February 3, 2023, which was paid on February 17, 2023.

Net cash used in financing activities totaled $1,950 in the first thirty-six weeks of 2023, compared to $2,343 in the first thirty-six weeks of 2022.

Cash flow used in financing activities during the first thirty-six weeks of 2023 was primarily related to the payment of dividends, repurchases of common stock, and withholding taxes on stock-based awards.

In the first thirty-six weeks of 2022, cash flow used in financing activities included the repayment of our 2.300% Senior Notes and the payment of dividends.

A quarterly cash dividend of $1.02 per share was declared on April 19, 2023, payable to shareholders of record on May 5, 2023, which was paid on May 19, 2023.

Share Repurchase Program

On January 19, 2023, the Board of Directors authorized a new share repurchase program in the amount of $4,000, which expires in January 2027.

During the first half of 2023 and 2022, we repurchased 579,000 and 236,000 shares of common stock, at an average price per share of $492.06 and $498.00, totaling approximately $285 and $118.

During the first thirty-six weeks of 2023 and 2022, we repurchased 908,000 and 490,000 shares of common stock, at an average price per share of $492.30 and $523.61, totaling approximately $447 and $257.

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.

1 unchanged sentence

Repurchased shares are retired, in accordance with the Washington Business Corporation Act.

The remaining amount available to be purchased under our approved plan was $3,955 at the end of the second quarter.

The remaining amount available to be purchased under our approved plan was $3,793 at the end of the third quarter.

Bank Credit Facilities and Commercial Paper Programs

We maintain bank credit facilities for working capital and general corporate purposes.

At February 12, 2023, we had borrowing capacity under these facilities of $1,269.

At May 7, 2023, we had borrowing capacity under these facilities of $1,312.

Our international operations maintain $824 of this capacity under bank credit facilities, of which $174 is guaranteed by the Company.

Short-term borrowings outstanding under the bank credit facilities were $45 and $88 at the end of the second quarter of 2023 and at the end of fiscal 2022.

Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the consolidated balance sheets, were $54 and $88 at the end of the third quarter of 2023 and at the end of fiscal 2022.

The Company has letter of credit facilities, for commercial and standby letters of credit, totaling $226.

The outstanding commitments under these facilities at the end of the second quarter of 2023 totaled $191, most of which were standby letters of credit that do not expire or have expiration dates within one year.

The outstanding commitments under these facilities at the end of the third quarter of 2023 totaled $189, 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.

12 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-Q

Item 2. Management’s Discussion and Analysis