What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-06-06 compared with 2024-03-13 · 83 added, 105 removed, 181 unchanged (51% of the section changed)

6 unchanged sentences

Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements.

These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, inflation or deflation, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (generally including health-care costs), energy and certain commodities, geopolitical conditions (including tariffs and the Ukraine conflict), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, public-health related factors, and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission.

These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, inflation or deflation, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real estate, capital spending, actions of vendors, rising costs associated with employees (generally including health-care costs and wages), energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to climate change, public-health related factors, and other risks identified from time to time in the Company's public statements and reports filed with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update these statements, except as required by law.

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MD&A is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q), as well as our consolidated financial statements, the accompanying Notes to Financial Statements, and the related Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal year 2023 Form 10-K, filed with the United States Securities and Exchange Commission on October 11, 2023.

We operate membership warehouses and e-commerce websites based on the concept that offering members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.

We operate membership warehouses and e-commerce sites based on the concept that offering members low prices on a limited selection of quality nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.

When combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, these volumes and turnover enable us to operate profitably at significantly lower gross margins (net sales less merchandise costs) than most other retailers.

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Comparable sales is

defined as net sales from warehouses open for more than one year, including remodels, relocations and expansions, and sales related to e-commerce websites operating for more than one year.

defined as net sales from warehouses open for more than one year, including remodels, relocations and expansions, and sales related to e-commerce sites operating for more than one year.

The measure is intended as supplemental information and is not a substitute for net sales presented in accordance with U.S.

GAAP and should be reviewed in conjunction with results reported in accordance with U.S.

Comparable sales growth is achieved through increasing shopping frequency from new and existing members and the amount they spend on each visit (average ticket).

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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.

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).

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, negatively impacting gross margin and gross margin in the near term as a percentage of net sales (gross margin percentage).

We believe our gasoline business enhances traffic in our warehouses;

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Our rate of square footage growth is generally higher in foreign markets, due to the smaller base in those markets, and we expect that to continue.

Our e-commerce business, domestically and internationally, generally has a lower gross-margin percentage than our warehouse operations.

The membership format is an integral part of our business and has a significant effect on our profitability.

Our e-commerce business, domestically and internationally, has a lower gross-margin percentage than our warehouse operations.

The membership format is an integral part of our business and our profitability.

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

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

Our worldwide

renewal rate may be adversely impacted by lower renewal rates in newer markets, which historically have been less than rates in mature markets.

Our financial performance depends heavily on controlling costs.

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With respect to the compensation of our employees, our philosophy is not to seek to minimize their wages and benefits.

Rather, we believe that achieving our longer-term objectives of reducing employee turnover and enhancing employee satisfaction requires maintaining compensation levels that are better than the industry average for much of our workforce.

Rather, we believe that achieving our longer-term objectives of reducing employee turnover, increasing productivity and enhancing employee satisfaction requires maintaining compensation levels that are better than the industry average for much of our workforce.

This may cause us, for example, to absorb costs that other employers might seek to pass through to their workforces.

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dollar, which are differences between the foreign-exchange rates we use to convert the financial results of our international operations from local currencies into U.S.

This impact of foreign-exchange rate changes is calculated based on the difference between the current and prior period's exchange rates.

This impact is calculated based on the difference between the current and prior period's exchange rates.

The impact of changes in gasoline prices on net sales is calculated based on the difference between the current and prior period's average price per gallon sold.

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

References to the second quarter of 2024 and 2023 relate to the 12-week fiscal quarters ended February 18, 2024, and February 12, 2023.

References to the first half of 2024 and 2023 relate to the 24 weeks ended February 18, 2024, and February 12, 2023.

References to the third quarter of 2024 and 2023 relate to the 12-week fiscal quarters ended May 12, 2024, and May 7, 2023.

References to the first thirty-six weeks of 2024 and 2023 relate to the 36 weeks ended May 12, 2024, and May 7, 2023.

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

Highlights for the second quarter of 2024 versus 2023 include:

• Net sales increased 6% to $57,331, driven by an increase in comparable sales and sales at 26 net new warehouses opened since the end of the second quarter of 2023;

• Membership fee revenue increased 8% to $1,111, 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 our warehouse ancillary and other businesses and core merchandise categories, partially offset by an increase in 2% rewards;

• SG&A expenses as a percentage of net sales increased three basis points, primarily due to increased costs in warehouse operations and other businesses, including the impact of wage increases in March and September 2023, partially offset by central operating costs;

• A quarterly cash dividend of $1.02 per share was declared on January 18, 2024, and paid on February 16, 2024.

On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special cash dividend of $15.00 per share, declared on December 13, 2023;

• Our effective tax rate was 22.1% and was positively impacted by a $94 benefit, or $0.21 per diluted share, related to the special cash dividend;

Highlights for the third quarter of 2024 versus 2023 include:

• Net sales increased 9% to $57,392, driven by an increase in comparable sales and sales at 24 net new warehouses opened since the end of the third quarter of 2023;

• Membership fee revenue increased 8% to $1,123, driven by new member sign-ups and upgrades to Executive Membership;

• Gross margin percentage increased 52 basis points, driven primarily by the absence of a charge of $298, $0.50 per diluted share, recorded in the third quarter of 2023 predominantly related to the discontinuation of our charter shipping activities;

• SG&A expenses as a percentage of net sales decreased 15 basis points, primarily due to warehouse operations and other businesses, largely attributable to improved productivity;

• A quarterly cash dividend of $1.16 per share was declared on April 10, 2024, and paid on May 10, 2024;

• Net income was $1,681, $3.78 per diluted share, compared to $1,302, $2.93 per diluted share in 2023.

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12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

$ 57,392 $ 52,604 $ 171,440 $ 160,280

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_______________

(1) Comparable sales for the second quarter and first half of 2024 were calculated using comparable retail weeks.

Net sales increased $3,092 or 6%, and $6,372 or 6% during the second quarter and first half of 2024.

The improvement was attributable to an increase in comparable sales of 6% and 5% in the second quarter and first half of 2024, and sales at the 26 net new warehouses opened since the end of the second quarter of 2023.

Sales increased $2,645, or 6% and $5,566, or 6% in core merchandise categories during the second quarter and first half of 2024 , due to increases in all categories.

Sales in warehouse ancillary and other businesses increased $447 or 4%, and $806, or 4% during the second quarter and first half of 2024 , led by pharmacy.

During the second quarter of 2024, l ower gasoline prices negatively impacted net sales by $231, 43 basis points, compared to 2023, with a 3% decrease in the average price per gallon.

(1) Comparable sales for the third quarter and first thirty-six weeks of 2024 were calculated using comparable retail weeks.

The improvement in net sales for the third quarter and first thirty-six weeks of 2024 was attributable to an increase in comparable sales and sales at the 24 net new warehouses opened since the end of the third quarter of 2023.

Sales increased $3,892 or 9% and $9,458 or 7% in core merchandise categories during the third quarter and first thirty-six weeks of 2024, due to increases in all categories.

Sales in warehouse ancillary and other businesses increased $896 or 8% during the third quarter of 2024, led by gasoline, and $1,702 or 5% during the first thirty-six weeks of 2024, led by pharmacy.

During the third quarter of 2024, higher gasoline prices positively impacted net sales by $149, 28 basis points, compared to 2023, with a 2% increase in the average price per gallon.

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

dollar positively impacted net sales by approximately $94, 17 basis points, compared to the second quarter of 2023, attributable to our Canadian and Other International operations.

During the first half of 2024 , l ower gasoline prices negatively impacted net sales by $572, 53 basis points, compared to 2023, with a 4% decrease in the average price per gallon.

dollar negatively impacted net sales by approximately $108, 21 basis points, compared to the third quarter of 2023, primarily attributable to our Other International operations.

During the first thirty-six weeks of 2024 , l ower gasoline prices negatively impacted net sales by $423, 26 basis points, compared to 2023, with a 2% decrease in the average price per gallon.

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

dollar positively impacted net sales by approximately $289, 27 basis points, compared to the second quarter of 2023, attributable to our Other International operations, partially offset by our Canadian operations.

dollar positively impacted net sales by approximately $180, 11 basis points, compared to the first thirty-six weeks of 2023, attributable to our Other International operations, partially offset by our Canadian operations.

Comparable Sales

Comparable sales increased 6% and 5% in the second quarter and first half of 2024 and were positively impacted by increased shopping frequen cy and a slightly higher average ticket.

Comparable sales increased 7% in the third quarter of 2024 and were positively impacted by increased shopping frequen cy and a slightly higher average ticket.

Comparable sales increased 5% in the first thirty-six weeks of 2024 and were positively impacted by increased shopping frequency, partially offset by a slight decrease in average ticket.

Membership Fees

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Membership fees $ 1,123 $ 1,044 $ 3,316 $ 3,071

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Total cardholders (000s) 133,900 124,700 — —

Membership fee revenue increased 8% in both the second quarter and first half of 2024, driven by new member sign-ups, upgrades to Executive Membership, and a higher renewal rate.

At the end of the second quarter of 2024, our renewal rates were 92.9% in the U.S.

Membership fee revenue increased 8% in both the third quarter and first thirty-six weeks of 2024, driven by new member sign-ups and upgrades to Executive Membership.

At the end of the third quarter of 2024, our renewal rates were 93.0% in the U.S.

and Canada and 90.5% worldwide.

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12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Net sales $ 57,392 $ 52,604 $ 171,440 $ 160,280

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Quarterly Results

Gross margin percentage increased eight basis points.

Excluding the impact of gasoline price deflation on net sales, gross margin percentage was 10.76%, an increase of four basis points.

The four basis-point increase was positively impacted by:

six basis points due to warehouse ancillary and other businesses, primarily e-commerce;

three basis points due to a LIFO benefit;

and two basis points due to core merchandise categories.

This increase was partially offset by seven basis points due to increased 2% rewards.

Gross margin percentage increased 52 basis points.

Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 10.86%, an increase of 54 basis points.

The 54 basis-point increase was positively impacted by:

56 basis points due to the absence of a charge related to the discontinuation of our charter shipping activities that was recorded in the third quarter of 2023;

two basis points due to core merchandise categories, and two basis points due to a LIFO benefit.

This increase was partially offset by five basis points due to warehouse ancillary and other businesses, predominantly gasoline, partially offset by e-commerce, and one basis point due to increased 2% rewards.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 10 basis points.

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

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

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

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 due to core merchandise categories and increased 2% rewards, partially offset by warehouse ancillary and other businesses and a LIFO benefit.

Gross margin increased in our Canadian segment, largely due to core merchandise categories.

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

and Canadian segments.

segment performed similarly to the consolidated results above.

Our Canadian segment gross margin increased primarily due to increases in

core merchandise categories, partially offset by increased 2% rewards.

Gross margin decreased in our Other International segment, due to decreases in core merchandise categories and increased 2% rewards.

Year-to-date Results

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The 31 basis-point increase was positively impacted by:

15 basis points due to warehouse ancillary and other business, primarily e-commerce;

nine basis points due to the absence of a charge related to the discontinuation of our charter shipping activities that was recorded in the first quarter of 2023;

24 basis points due to the absence of charges related to the discontinuation of our charter shipping activities that were recorded in the first and third quarters of 2023;

nine basis points due to warehouse ancillary and other business, primarily e-commerce;

and two basis points due to a LIFO benefit.

This increase was partially offset by five basis point s due to increased 2% rewards and two basis points due to core merchandise categories .

This increase was partially offset by four basis point s due to increased 2% rewards.

Our core merchandise categories were flat.

The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), increased 13 basis points.

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segment performed similarly to the consolidated results above.

Our Canadian segment gross margin increased at a greater rate compared to our consolidated results, primarily due to increases in core merchandise categories, partially offset by increased 2% rewards.

Gross margin percentage was flat in our Other International segment, positively impacted by core merchandise categories, offset by increased 2% rewards.

Our Canadian segment gross margin increased, primarily due to increases in core merchandise categories and warehouse ancillary and other businesses, partially offset by increased 2% rewards.

Gross margin percentage decreased in our Other International segment, primarily due to decreases in core merchandise categories and increased 2% rewards.

Selling, General and Administrative Expenses

12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

SG&A expenses $ 5,145 $ 4,794 $ 15,743 $ 14,651

1 unchanged sentence

Quarterly Results

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

SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was 9.10%, a decrease of one basis point.

The comparison to last year was favorably impacted by five basis points due to central operating costs and four basis points due to lower stock compensation expense.

Warehouse operations and other businesses were higher by eight basis points, driven by our U.S.

operations, which included the impact of wage increases in March and September 2023.

SG&A expenses as a percentage of net sales were lower in our Canadian and Other International operations.

SG&A expenses as a percentage of net sales decreased 15 basis points.

SG&A expenses as a percentage of net sales excluding the impact of gasoline price inflation was 8.99%, a decrease of 12 basis points.

The comparison to last year was favorably impacted by 12 basis points due to warehouse operations and other businesses, largely attributable to improved productivity.

Year-to-date Results

SG&A expenses as a percentage of net sales increased 14 basis points.

SG&A expenses as a percentage of net sales excluding the impact of gasoline price deflation was 9.25%, an increase of 10 basis points.

The comparison to last year was negatively impacted by 11 basis points in warehouse operations and other businesses, driven by our U.S.

operations, which included the impact of wage increases in March and September 2023.

Preopening costs were also higher by one basis point.

SG&A was positively impacted by two basis points due to central operating costs.

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

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

The comparison to last year was negatively impacted by three basis points in warehouse operations and other businesses, driven by our U.S.

operations, which included the impact of wage increases in March and September 2023, partially offset by one basis point due to central operating costs.

SG&A expenses as a percentage of net sales were lower in our Canadian and Other International operations.

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12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Interest expense $ 41 $ 36 $ 120 $ 104

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12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Interest income $ 94 $ 110 $ 395 $ 269

Foreign-currency transaction gains (losses), net 31 3 34 (6)

Foreign-currency transaction gains, net 20 9 54 3

Other, net 14 9 55 23

Interest income and other, net $ 128 $ 128 $ 504 $ 295

The increase in interest income in the second quarter and first half of 2024 was due to higher global interest rates and higher average cash and investment balances, prior to the payment of the special cash dividend.

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.

The decrease in interest income in the third quarter was due to lower average cash and investment balances, caused by the payment of the special dividend.

The increase in interest income in the first thirty-six weeks of 2024 was primarily due to higher global interest rates and higher average cash and investment balances, prior to the payment of the special dividend.

Foreign-currency transaction gains, 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 September 3, 2023.

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12 Weeks Ended 36 Weeks Ended

2024 February 12,

2023 February 18,

2024 February 12,

Provision for income taxes $ 603 $ 469 $ 1,614 $ 1,392

Effective tax rate 26.4 % 26.5 % 24.4 % 25.2 %

The effective tax rate for the first half of 2024 was favorably impacted by net discrete tax benefits of $139.

This included $94 related to the portion of the special cash dividend payable through our 401(k) plan in the second quarter and $44 of excess tax benefits related to stock compensation in the first quarter.

The effective tax rate for the first thirty-six weeks of 2024 was favorably impacted by net discrete tax benefits of $146.

This included $94 related to the portion of the special dividend payable through our 401(k) plan in the second quarter and $44 of excess tax benefits related to stock compensation in the first quarter.

Excluding discrete net tax benefits, the tax rate was 26.6%.

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 in the first quarter.

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 in the first quarter.

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

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36 Weeks Ended

2024 February 12,

Net cash provided by operating activities $ 8,381 $ 7,343

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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 $10,321 and $15,234 at February 18, 2024, and September 3, 2023.

Of these balances, unsettled credit and debit card receivables represented approximately $2,069 and $2,282 at February 18, 2024, and September 3, 2023.

Cash and cash equivalents and short-term investments were $11,499 and $15,234 at May 12, 2024, and September 3, 2023.

Of these balances, unsettled credit and debit card receivables represented approximately $2,391 and $2,282 at May 12, 2024, and September 3, 2023.

These receivables generally settle within four days.

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Cash Flows from Operating Activities

Net cash provided by operating activities totaled $5,382 in the first half of 2024, compared to $5,802 in the first half of 2023.

Net cash provided by operating activities totaled $8,381 in the first thirty-six weeks of 2024, compared to $7,343 in the first thirty-six weeks of 2023.

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

Cash flow used in operations generally consists of payments to mercha ndise suppliers, warehouse operating costs, including payroll and employee benefits, utilities, and credit and debit card processing fees.

Cash flow used in operations generally consists of payments to mercha ndise 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, the forward deployment of inventory to accelerate delivery times, payment terms with suppliers, and early payments to obtain discounts.

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.

Cash Flows from Investing Activities

Net cash used in investing activities totaled $1,752 in the first half of 2024, compared to $1,865 in the first half of 2023, and is primarily related to capital expenditures.

Net cash used in investing activities totaled $2,706 in the first thirty-six weeks of 2024, compared to $3,147 in the first thirty-six weeks of 2023, and is primarily related to capital expenditures.

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

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

In the first half of 2024, we spent $2,071 on capital expenditures, and it is our current intention to spend a total of approximately $4,400 to $4,600 during fiscal 2024.

In the first thirty-six weeks of 2024, we spent $3,133 on capital expenditures, and it is our current intention to spend a total of approximately $4,300 to $4,500 during fiscal 2024.

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

We opened 14 new warehouses, includ ing one relocation, in the first half of 2024 and plan to open 16 additional new warehouses, including one relocation, in the remainder of fiscal 2024.

We opened 16 new warehouses, includ ing one relocation, in the first thirty-six weeks of 2024 and plan to open 14 additional new warehouses in the remainder of fiscal 2024.

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 $8,250 in the first half of 2024, compared to $1,215 in the first half of 2023.

Cash flow used in financing activities during the first half of 2024 was primarily related to the payment of dividends, repayments of short-term borrowings, and repurchases of common stock.

I n November 2023, the Company's Japan subsidiary issued four Guaranteed Senior Notes totaling approximately $500 at fixed interest rates ranging from 1.400% to 2.120%.

A quarterly cash dividend of $1.02 per share was declared on January 18, 2024, payable to shareholders of record on February 2, 2024, which was paid on February 16, 2024.

On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special cash dividend of $15.00 per share, declared on December 13, 2023.

Net cash used in financing activities totaled $8,948 in the first thirty-six weeks of 2024, compared to $1,950 in the first thirty-six weeks of 2023.

Cash flow used in financing activities during the first thirty-six weeks of 2024 was primarily related to the payment of dividends, repayments of short-term borrowings, repurchases of common stock, and withholding taxes on stock-based awards.

Cash flow provided by financing activities included proceeds from short-term borrowings and four Guaranteed Senior Notes totaling approximately $500, at fixed interest rates ranging from 1.400% to 2.120% issued by our Japan subsidiary.

Subsequent to the end of the quarter on May 18, 2024, we paid the outstanding principal balance and interest on the 2.750% Senior Notes using cash and cash equivalents and short-term investments.

A quarterly cash dividend of $1.16 per share was declared on April 10, 2024, payable to shareholders of record on April 26, 2024, which was paid on May 10, 2024.

On January 12, 2024, an aggregate payment of approximately $6,655 was made in connection with a special dividend of $15.00 per share, declared on December 13, 2023.

Share Repurchase Program

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 2024 and 2023, we repurchased 528,000 and 579,000 shares of common stock, at an average price per share of $609.51 and $492.06, totaling approximately $322 and $285.

During the first thirty-six weeks of 2024 and 2023, we repurchased 749,000 and 908,000 shares of common stock, at an average price per share of $646.07 and $492.30, totaling approximately $484 and $447.

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 $3,241 at the end of the second quarter.

The remaining amount available to be purchased under our approved plan was $3,079 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 18, 2024, we had borrowing capacity under these facilities of $1,237.

At May 12, 2024, we had borrowing capacity under these facilities of $1,145.

Our international operations maintain $656 of this capacity under bank credit facilities, of which $160 is guaranteed by the Company.

Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the consolidated balance sheets, were immaterial at the end of the second quarter of 2024 and at the end of fiscal 2023.

Short-term borrowings outstanding under the bank credit facilities, which are included in other current liabilities on the consolidated balance sheets, were immaterial at the end of the third quarter of 2024 and at the end of fiscal 2023.

The Company has letter of credit facilities, for commercial and standby letters of credit, totaling $204.

The outstanding commitments under these facilities at the end of the second quarter of 2024 totaled $184, 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 2024 totaled $187, 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.

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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