What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-03-11 compared with 2025-12-17 · 129 added, 84 removed, 159 unchanged (57% 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 and wages), workforce interruptions, energy and certain commodities, geopolitical conditions (including tariffs), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to environmental and social matters, 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), workforce interruptions, energy and certain commodities, geopolitical conditions (including tariffs and global conflicts), the ability to maintain effective internal control over financial reporting, regulatory and other impacts related to environmental and social matters, 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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We believe that the most important driver of our profitability is increasing net sales, particularly comparable sales.

Net sales includes our core merchandise categories (foods and sundries, non-foods, and fresh foods), warehouse ancillary (gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and other businesses (e-commerce, business centers, travel, and other).

Net sales includes our core merchandise categories (foods and sundries, non-foods, and fresh foods), warehouse ancillary (gasoline, pharmacy, optical, food court, hearing aids, and tire

installation) and other businesses (e-commerce, business centers, travel, and other).

E-commerce and business center sales are allocated to the appropriate merchandise categories in the Net Sales discussion.

The 2% reward associated with Executive membership reduces net sales and is allocated to the category in which the reward is generated (core merchandise categories, warehouse ancillary, and

other businesses).

Comparable sales is defined as net sales from warehouses open for more than one year, including remodels, relocations and expansions, and digitally-enabled businesses operating for more than one year.

Starting this quarter, we changed our e-commerce comparable sales metric to digitally-enabled comparable sales.

The 2% reward associated with Executive membership reduces net sales and is allocated to the category in which the reward is generated (core merchandise categories, warehouse ancillary, and other businesses).

Comparable sales is defined as net sales from warehouses and digitally-enabled businesses operating for more than one year, including remodels, relocations and expansions.

Starting this year, we changed our e-commerce comparable sales metric to digitally-enabled comparable sales.

This metric represents sales delivered to members that are initiated through a digital device, whether fulfilled through a warehouse or a distribution center, as well as Costco Travel.

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

The comparable sales measures are intended as supplemental information and are 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.

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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 as a percentage of net sales (gross margin percentage) in the near term.

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

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

Government actions in various countries relating to tariffs affect the costs of some of our merchandise.

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As our warehouse base grows and available and desirable sites become more difficult to secure, square footage growth becomes a comparatively less substantial component of growth.

Negative aspects of such growth include lower initial operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing markets.

Negative aspects of such growth include lower initial

operating profitability relative to existing warehouses and cannibalization of sales at existing warehouses when openings occur in existing markets.

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

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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 Executive memberships, and sustain high renewal rates materially influences our profitability.

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

Our renewal rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.

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

References to the first quarter of 2026 and 2025 relate to the 12-week fiscal quarters ended November 23, 2025, and November 24, 2024.

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.

Highlights for the first quarter of 2026 versus 2025 include:

• We opened eight new warehouses, including one relocation, for a total of seven net new warehouses:

four in the U.S., two in our Canadian segment, and one in our Other International segment, compared to seven new warehouses, including one relocation;

• Net sales increased 8% to $65,978, driven by an increase in comparable sales and sales at 25 net new warehouses opened since the end of the first quarter of 2025;

• Membership fee revenue increased 14% to $1,329, primarily driven by membership fee increases and new member sign-ups;

• Gross margin as a percentage of net sales and excluding the impact of gasoline price deflation increased four basis points;

• SG&A expenses as a percentage of net sales and excluding the impact of gasoline price deflation increased one basis point;

Highlights for the second quarter of 2026 versus 2025 include:

• 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.;

• 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;

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

• Gross margin as a percentage of net sales and excluding the impact of gasoline price deflation increased 11 basis points;

• SG&A expenses as a percentage of net sales and excluding the impact of gasoline price deflation increased eight basis points;

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

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

• A quarterly cash dividend of $1.30 per share was declared on October 15, 2025, and paid on November 14, 2025.

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

RESULTS OF OPERATIONS

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

$ 68,242 $ 62,530 $ 134,220 $ 123,515

Increases in net sales:

7 % 11 % 8 % 9 %

Canada 12 % 5 % 10 % 6 %

2 unchanged sentences

Increases in comparable sales:

6 % 8 % 6 % 7 %

Canada 10 % 5 % 8 % 5 %

2 unchanged sentences

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

6 % 9 % 6 % 8 %

Canada 8 % 10 % 8 % 9 %

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Total Company 7 % 9 % 7 % 8 %

Net sales increased $4,993 or 8% during the first quarter of 2026.

The improvement was primarily attributable to an increase in comparable sales of $3,879 or 6%.

Comparable sales were positively impacted by increases of approximately 3% in shopping frequency and average ticket.

The remaining increase was driven by sales at the 25 net new warehouses opened since the end of the first quarter of 2025.

Digitally-enabled comparable sales increased 21% with and without the impact of changes in foreign-currencies.

Sales increased $3,948 or 8% in core merchandise categories, increasing in all categories.

Sales increased $1,045 or 9% in warehouse ancillary and other businesses.

The volume of gasoline sold increased approximately 4%, positively impacting net sales by $234, or 38 basis points.

Lower gasoline prices negatively impacted net sales by five basis points.

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.

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.

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.

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.

Changes in foreign-currencies relative to the U.S.

dollar attributable to our Other International operations, partially offset by our Canadian operations, positively impacted net sales by six basis points.

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.

Membership Fees

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

Membership fees $ 1,355 $ 1,193 $ 2,684 $ 2,359

1 unchanged sentence

Total cardholders (000s) 147,200 140,600 — —

Membership fee revenue increased 14%, driven by membership fee increases and new member sign-ups.

At the end of the first quarter of 2026, our renewal rates were 92.2% in the U.S.

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.

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We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period.

The fee income increase accounted for slightly less than half of membership income growth during the first quarter of 2026.

12 Weeks Ended

2025 November 24,

The fee income increase accounted for approximately 35% and 40% of membership income growth during the second quarter and first half of 2026.

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

Net sales $ 68,242 $ 62,530 $ 134,220 $ 123,515

4 unchanged sentences

Quarterly Results

Gross margin as a percentage of net sales increased by four basis points, and increased by the same amount when excluding the impact of gasoline price deflation.

This increase was positively impacted by seven basis points in our warehouse ancillary and other businesses, primarily due to pharmacy and hearing aids.

Gross margin percentage was negatively impacted by three basis points due to a smaller LIFO benefit in the first quarter of 2026 compared to the first quarter of 2025.

Margin in our core merchandise categories was flat.

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.

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.

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), 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.

Year-to-date Results

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.

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.

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

segment due to a smaller LIFO benefit and core merchandise categories, partially offset by warehouse ancillary and other businesses.

Our Canadian segment gross margin percentage increased, primarily due to increases in warehouse ancillary and other businesses.

Segment gross margin percentage increased in all segments.

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.

Selling, General and Administrative Expenses

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

SG&A expenses $ 6,272 $ 5,663 $ 12,606 $ 11,509

1 unchanged sentence

Quarterly Results

SG&A expenses as a percentage of net sales increased by one basis point, and increased by the same amount when excluding the impact of gasoline price deflation.

Compared to last year, results were negatively impacted by four basis points attributable to a charge related to a tax assessment for prior

years, and one basis point from warehouse operations and other businesses.

Preopening costs were also higher by one basis point.

Central operating costs and stock compensation had favorable impacts of three and two basis points, respectively.

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.

Year-to-date Results

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 and lower in our Canadian and Other International segments.

segment, flat in our Canadian segment, and lower in our Other International segment.

Interest Expense

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

Interest expense $ 33 $ 36 $ 68 $ 73

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Interest Income and Other, Net

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

Interest income $ 140 $ 109 $ 262 $ 205

Foreign-currency transaction gains, net 25 43

Foreign-currency transaction gains (losses), net

Other, net 12 10 20 18

Interest income and other, net $ 148 $ 142 $ 303 $ 289

The increase in interest income in the first quarter of 2026 was due to higher cash balances, partially offset by lower interest rates.

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

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.

Provision for Income Taxes

12 Weeks Ended

2025 November 24,

12 Weeks Ended 24 Weeks Ended

2026 February 16,

2025 February 15,

2026 February 16,

Provision for income taxes $ 686 $ 634 $ 1,268 $ 1,142

Effective tax rate 25.2 % 26.2 % 23.9 % 24.2 %

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

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.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

24 Weeks Ended

2025 November 24,

2026 February 16,

Net cash provided by operating activities $ 7,684 $ 6,008

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 $17,183 and $15,284 at November 23, 2025, and August 31, 2025.

Of these balances, unsettled credit and debit card receivables

represented approximately $3,095 and $2,670 at November 23, 2025, and August 31, 2025.

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.

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Cash Flows from Operating Activities

Net cash provided by operating activities totaled $4,688 in the first quarter of 2026, compared to $3,260 in the first quarter of 2025.

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 fr om net sales and membership fees.

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Cash Flows from Investing Activities

Net cash used in investing activities totaled $1,398 in the first quarter of 2026, compared to $985 in the first quarter of 2025, and is primarily related to capital expenditures.

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.

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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 quarter of 2026, we spent $1,526 on capital expenditures, and it is our current intention to spend approximately $6,500 during fiscal 2026.

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 eight new warehouses, includ ing one relocation, in the first quarter of 2026, and plan to open 25 additional new warehouses, including four 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.

We opened 12 new warehouses, includ ing two relocations, in the first half of 2026, and plan to open 21 additional new warehouses, including three relocations, in the remainder of fiscal 2026.

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 $1,167 in the first quarter of 2026, compared to $1,193 in the first quarter of 2025.

Cash flow used in financing activities during the first quarter of 2026 was primarily related to the payment of dividends, withholding taxes on stock-based awards, and repurchases of common stock.

A quarterly cash dividend of $1.30 per share was declared on October 15, 2025, and paid on November 14, 2025.

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.

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

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 quarter of 2026 and 2025, we repurchased 225,000 and 230,000 shares of common stock, at an average price per share of $932.02 and $899.23, totaling approximately $210 and $206.

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, in the open market or in block purchases, pursuant to plans under SEC Rule 10b5-1.

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 $1,752 at the end of the first quarter.

The remaining amount available to be purchased under our approved plan was $1,542 at the end of the second quarter.

Bank Credit Facilities and Commercial Paper Programs

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

At November 23, 2025, we had borrowing capacity under these facilities of $1,320.

Our international operations maintain $821 of this capacity under bank credit facilities, of which $188 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 immaterial at the end of the first quarter of 2026 and at the end of 2025.

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.

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 first quarter of 2026 totaled $193, 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 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.

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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