The trades in the above chart indicate that a more reactive indicator such as Relative Strength Index (RSI) woorks best for Wyndham. Profits were exceptional using it up to recent date. Stoplosses should be carefully adjusted.

All three charts above are interpreted as predicting future down movement.

Zenith Index

WH  Wyndham Hotels & Resorts
------------------------------------------------------------------------------
Parameter (ideal threshold)                           Score         Value
------------------------------------------------------------------------------
Gross Profit Margin > 35%?                                1      88.24352
Operating Profit Margin > 10%?                            1      28.13156
Net Profit Margin > 5%?                                   1      13.50595
Return on Assets > 4%?                                    1      4.615016
Return on Equity > 12%?                                   1       41.2393
Return on Capital Employed > 10%?                         1      10.93877
Current Ratio > 1.5?                               .5719921      .8579882
Quick Ratio > 0.8?                                        1      .8579882
Cash Ratio > 0.2?                                  .6311637      .1262327
Debt to Equity Ratio < 1.1?                        .1386107      7.935893
Debt to Assets Ratio < 0.4?                        .4504039      .8880917
Interest Coverage Ratio > 3.0?                     .9640286      2.892086
Debt Service Coverage Ratio > 1.5?                 .8589742      1.288461
Asset Turnover Ratio > 0.5?                         .683405      .3417025
Inventory Turnover Ratio > 5?                             1             5
Receivables Turnover Ratio > 5?                    .9821305      4.910653
Payables Turnover Ratio > 7?                       .6315789      4.421052
P/E Ratio < 15?                                           1         14.35
Price / Book < 1.0?                               28358E-02         10.72
Price / Sales < 1.0?                               .2777778           3.6
Price / CashFlow < 5?                              .3961965         12.62
Earnings Yield > 5%?                                      1       6.96864
Dividend Yield > 5%?                               .1670531      .8352657
Dividend Payout > 30%?                             .3995354      11.98606
Operating Cash Flow Ratio > 0.5?                          1      .7238659
Free Cash Flow to Firm > 5% of Revenue?                   1      22.46326
Free Cash Flow to Equity > 10% of Revenue?                1      22.46326
Sales Growth > 5%?                                 .2982945      1.491473
Earnings Growth > 5%?                                     1             5
Market Capitalization > $5B?                              1      15.28172
------------------------------------------------------------------------------

Zenith Index for Wyndham Hotels & Resorts (WH) = .7514809

SCORING: each metric's Z-score = 1.00 exactly at its ideal threshold above;
an average ZIndex greater than 1.00 leans BUY, less than 1.00 leans SELL.

This run's ZIndex => SELL candidate

---

A second version of Zenith Index is shown below for confirmation or lack thereof:

	Zenith Index for Wyndham Hotels & Resorts Inc on 09/25/26
    ------------------------------------------------------------------------
    Metric                              Score     Value
Analysts Rating ?                           1     Strong Buy
P/E Ratio < 26 ?                            1     14.35
Price/Sales < 3 ?                           0     3.6
Market Capitaliztion > $33 billion ?        0     5139111000
Sales > $20 billion ?                       0     1429000000
Price/Book Value < 2.9 ?                    0     10.72
Avg. Day Trading Volume > 600 million ?     0     1236015
Price/Cash Flow < 30 ?                      1     12.62
Implied Vol'ty / Historic Vol'ty < 1 ?      0     1.399
Dividend Yield > 1% ?                       1     2.48
EPS Growth Rate (YoY) % Estimate > 6% ?     0    -10.27
Option Put/Call Ratio < 0.7 ?               0     1.94
Beta < 1 ?                                  1     .62
Shares Outstanding > 100 Million ?          0     74211000
Depr'n & Amort'zn (EBITDA/EBIT) < 100% ?    0     1.126
Absurd val'ns: PE, PS, PCSH, D/E Exist ?   -1     14.35,  12.62,
Debt to Equity < 1.5 ?                      0     7.9358974358974
Return on Equity > 12% ?                    1     .41239316239316

      Zenith Index (scale of 0 to 100) =   29     SELL

      (Below 50 is sell, Above 50 is buy candidate)

The two versions of Zenith Index rating system are such that the second version above favors shorter term predictions while the first version favors longer-term predictions. That is because of the nature of the financial parameters they each are using.

---

Beginning with the first quarter of 2023, as a result of the changes in our Hotel Management segment including the exit from the select-service management business, the sale of our two owned hotels and the exit from substantially all of its U.S. full-service management business, the Hotel Management segment no longer met the quantitative thresholds to be disclosed as a reportable segment. As a result, we aggregated, on a prospective basis, the remaining hotel management business, which is predominately the full-service international managed business within our Hotel Franchising segment.

Beginning in the second quarter of 2025, we revised our reporting methodology to exclude the impact of all rooms under the Super 8 China master license agreement from our reported system size, RevPAR and royalty rate, and corresponding growth metrics. Our financial results will continue to reflect fees due from the Super 8 master licensee in China, which contributed approximately $2 million to our full-year 2025 consolidated adjusted EBITDA. All system size, RevPAR and royalty rates presented for prior years have been recasted throughout this Annual Report to exclude the impact from all rooms associated with our Super 8 master licensee in China to conform to current year presentation.

During the preparation of our year-end 2025 financial statements, we became aware that a large European franchisee, Revo Hospitality Group (Revo) filed for insolvency proceedings under self-administration for most of its operating entities. As a result, we have evaluated the recoverability of the carrying value of assets associated with Revo as of December 31, 2025 and have recorded charges of $160 million, of which $86 million were reported within impairments and $74 million were reported within operating expenses on the Consolidated Statements of Income.

RESULTS OF OPERATIONS

Discussed below are our key operating statistics, consolidated results of operations and the results of operations for our reportable segment. The reportable segment presented below represents our operating segment for which discrete financial information is available and used on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segment, we also consider the nature of services provided by our operating segment. Management evaluates the operating results of our reportable segment based upon net revenues and adjusted EBITDA. Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment and other-related charges (including Revo-related charges), restructuring and other-related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. Adjusted EBITDA is reported on a consolidated basis, while Hotel Franchising adjusted EBITDA and Corporate adjusted EBITDA are reported at a segment level. We believe that Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are useful measures of performance and, when considered with U.S. Generally Accepted Accounting Principles (GAAP) measures, gives a more complete understanding of our operating performance. We use these measures internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. Our presentation of Hotel Franchising adjusted EBITDA, Corporate adjusted EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
We generate royalties and franchise fees, management fees and other revenues from hotel franchising and hotel management activities, as well as fees from licensing our "Wyndham" trademark, certain other trademarks and intellectual property. In addition, pursuant to our franchise and management contracts with third-party hotel owners, we generate
marketing, reservation and loyalty fee revenues and cost reimbursement revenues that over time are offset, respectively, by the marketing, reservation and loyalty costs and property operating costs that we incur.
		
Neet revenues during 2025 increased by $21 million, or 1%, compared to the prior year primarily driven by $41 million of higher ancillary revenues due to growth in our co-branded credit card program, as well as a larger global system and higher pass-through revenues due to our global franchisee conference in May, partially offset by lower global RevPAR.

Total expenses during 2025 increased $114 million, or 12%, compared to the prior year, primarily driven by:
$82 million of higher operating and general and administrative expenses primarily due to a $74 million loss provision on accounts and loans receivables from Revo, higher costs associated with growth in our co-branded credit card program and the absence of a benefit from insurance recoveries, and elevated costs associated with insurance, litigation defense and employee benefits, all of which were partially offset by cost containment measures, including both operational efficiencies and one-time variable cost reductions;
$74 million of higher impairment charges due to $86 million of charges in 2025 associated with our Vienna House trademark and related-franchise agreements as well as development advance notes of which all were related to the insolvency filing of Revo compared to a $12 million impairment charge incurred in 2024, primarily related to development advance notes;
$12 million of higher separation-related expenses primarily due to a benefit received in 2024 in connection with the reversal of a spin-off related matter; and
$3 million of higher restructuring and other-related costs; partially offset by
$45 million of lower transaction-related expenses primarily due to the failed hostile takeover attempt in 2024;
$9 million of lower depreciation and amortization expense; and
$4 million of lower cost reimbursement expenses which have no impact on net income.

Interest expense, net increased $15 million, or 12% in 2025, compared to the prior year primarily due to a higher average debt balance and higher weighted average interest rate.
Early extinguishment of debt was $3 million in 2024 which was related to the repricing of our term loan B.
Our effective tax rate increased to 26.6% in 2025 from 21.5% in 2024. During 2024 the effective rate was lower primarily due to tax credits received in Puerto Rico and a non-taxable reversal of a separation-related reserve.

As a result of these items, net income decreased $96 million during 2025.

Hotel Franchising
Net revenues during 2025 increased $21 million, or 1% compared to the prior year as discussed above.
Adjusted EBITDA during 2025 increased $14 million compared to the prior-year period primarily driven by:
$32 million of higher fee-related revenues, excluding development advance note amortization, as discussed above; partially offset by
$17 million of higher operating expenses primarily due to higher costs associated with growth in our co-branded credit card program, the absence of a benefit from insurance recoveries, and elevated costs associated with insurance, litigation defense and employee benefits, which were partially offset by cost containment measures, including both operational efficiencies and one-time variable cost reductions.

Corporate
Corporate adjusted EBITDA during 2025 was favorable by $10 million compared to the prior year due to one-time variable cost reductions.
		
DEVELOPMENT
On December 31, 2025, our global development pipeline consisted of approximately 2,200 hotels and 259,000 rooms, representing another record-high level and a 3% year-over-year increase, including 3% growth in both the U.S. and internationally. Approximately 70% of our pipeline is in the midscale and above segments and 17% is in the extended stay segment. Approximately 42% of our pipeline is in the U.S. Additionally, approximately 77% of our pipeline is new construction, of which approximately 36% has broken ground.
		
RESTRUCTURING AND OTHER-RELATED
Restructuring
During the second quarter of 2025, the Company approved a restructuring plan focused on streamlining our organizational structure, primarily within our marketing, reservation and loyalty functions. As a result, we incurred $16 million of restructuring expenses, primarily in our Hotel Franchising segment and impacting a total of 181 employees. Such expenses included $8 million related to the closure of a leased call center facility in Canada, of which $3 million were personnel-related and impacting 74 employees. We expect that annualized savings realized will be approximately $15 million primarily in marketing, reservation and loyalty expenses which will be reinvested for other revenue-generating activities.
During the first quarter of 2024, the Company approved a restructuring plan focused on enhancing our organizational efficiency. As a result, we incurred $15 million of restructuring expenses, all of which were personnel-related and primarily in our Hotel Franchising segment. Such plan resulted in a reduction of 135 employees in 2024.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Total assets decreased $41 million from December 31, 2024 to December 31, 2025 primarily related to the impairment and other charges related to the insolvency filing of Revo which resulted in a $160 million reduction in the carrying values of the related assets, partially offset by an increase in development advance notes in support of our growth strategy. Total liabilities increased $141 million year-over-year primarily related to a $97 million increase in our outstanding debt and an increase in deferred revenues. Total equity decreased $182 million year-over-year primarily due to $266 million of stock repurchases and $127 million of dividends declared, partially offset by our net income.

We have outstanding development advance notes, loans and accounts receivables with Revo that has filed for insolvency. Such insolvency proceeding may not be resolved for several years and thus we are subject to uncertainty with respect to the value of our collateral and any potential recovery we may receive, as well as the ongoing viability of our franchise agreements and related loss of rooms and any future revenues.

Liquidity and Capital Resources
Historically, our business generates sufficient cash flow to support current operations, future growth initiatives, and dividend payments to stockholders, while also enabling us to create additional value for our stockholders in the form of share repurchases.
In October 2025, we completed an amendment and extension of our revolving credit facility, increasing the capacity under this facility to $1.0 billion, extending the maturity to 2030 and reducing borrowing costs by 35 basis points.
As of December 31, 2025, our liquidity approximated $840 million. Given the minimal capital needs and flexible cost structure of our business, we believe that our existing cash, cash equivalents, cash generated through operations, together with funding through our revolving credit facility, will be sufficient to fund our operating activities, anticipated capital expenditures and growth needs.

As of December 31, 2025, we were in compliance with the financial covenants of our credit agreement and expect to remain in such compliance. As of December 31, 2025, we had a term loan B with a principal outstanding balance of $1.5 billion maturing in 2030, a term loan A with a principal outstanding balance of $337 million maturing in 2027, $500 million senior unsecured notes due in August 2028 and a five-year revolving credit facility maturing in 2030 with a maximum aggregate principal amount of $1.0 billion, of which $224 million was outstanding.

The interest rate per annum applicable to our term loan B is equal to, at our option, either a base rate plus an applicable rate of 0.75% or the Secured Overnight Financing Rate (SOFR) plus an applicable rate of 1.75%. Our revolving credit facility is subject to an interest rate per annum equal to, at our option, either SOFR, plus a margin of 1.75%, subject to reductions to 1.50%, 1.25%, and 1.00% or a base rate, plus a margin of 0.75%, subject to reductions to 0.50%, 0.25% and 0.00%, in either case based upon our total leverage ratio and our restricted subsidiaries. Our term loan A is subject to an interest rate per annum equal to, at our option, either a base rate plus a margin ranging from 0.50% to 1.00% or SOFR plus a 0.10% SOFR adjustment, plus a margin ranging from 1.50% to 2.00%, in either case based upon our total leverage ratio and the total leverage of our restricted subsidiaries. As of December 31, 2025 the margin on our term loan A was 1.75%.

As of December 31, 2025, we had pay-fixed/receive-variable interest rate swaps which hedge the interest rate exposure on $1.4 billion, effectively representing nearly 95% of the outstanding amount of our term loan B. The interest rate swaps have weighted average fixed rates (plus applicable spreads) ranging from 3.31% to 3.84% based on various effective dates for each of the swap agreements, with $475 million expiring in the fourth quarter of 2027, $600 million expiring in the second quarter of 2028 and $350 million expiring in the third quarter of 2028.

As of December 31, 2025, our credit rating was Ba1 from Moody's Investors Service and BB+ from both Standard and Poor's Rating Agency and Fitch Ratings. A credit rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity or any future credit rating. Our liquidity and access to capital may be impacted by our credit ratings, financial performance and global credit market conditions.

CASH FLOW

During 2025, net cash provided by operating activities increased $77 million compared to the prior year primarily due to the absence of $47 million of transaction-related payments related to the unsuccessful hostile takeover attempt in 2024. Net cash used in investing activities increased $38 million compared to the prior year primarily due to an increase in cash used for loans in connection with development activities. Net cash used in financing activities increased $139 million compared to the prior year primarily due to a reduction in net borrowings, partially offset by $44 million of lower stock repurchases.

During 2024, net cash provided by operating activities decreased $86 million compared to the prior year primarily due to $47 million of transaction-related payments related to the unsuccessful hostile takeover attempt and $37 million of higher development advance notes provided to franchisees in support of system growth. Net cash used in investing activities decreased $1 million compared to the prior year primarily due to the purchase of our corporate headquarters, partially offset by lower loan advances. Net cash used in financing activities decreased $227 million compared to the prior year primarily due to $163 million of higher net debt borrowings, $83 million of lower stock repurchases and $22 million of stock options exercises, partially offset by a $34 million finance lease payment associated with the purchase of our corporate headquarters.

Capital Deployment
Our first priority is to invest in the business in support of our strategies in driving long-term growth and enhancing our competitive position. This includes deploying capital to attract high quality assets into our system, funding technology initiatives aligned with our strategic objectives, supporting brand refresh programs that improve quality and protect brand equity, and pursuing acquisitions or similar transactions that are accretive and strategically enhancing to our business. We also expect to maintain a regular dividend payment. Excess cash generated beyond these needs is expected to be available for enhanced stockholder return in the form of stock repurchases.

During 2025, we invested $46 million in capital expenditures primarily related to information technology, including digital innovation. For 2026, we anticipate total capital expenditures of approximately $45 million.
In addition, we deployed $105 million during 2025 in development advance notes (net of repayments) and expect to invest approximately $110 million for 2026. These investments play a crucial role in attracting higher fee-per-available-room (FeePAR) hotels into our system, strengthening our portfolio with more premium properties. We may also offer other forms of financial support, such as enhanced credit support, to drive our business growth and increase our competitive position.
We allocated $57 million on loans, net of repayments, to franchisees during 2025 to support hotel development activities.
We expect all our cash needs to be funded from cash on hand, cash generated through operations, and/or availability under our revolving credit facility.

Contractual Obligations
Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, purchase commitments and lease payments. See Note 11 - Long-Term Debt and Borrowing Arrangements and Note 18 - Leases to the Consolidated Financial Statements contained in Part IV of this report for more information. As of December 31, 2025, we had future long-term interest payment obligations of approximately $515 million, of which $141 million is payable within twelve months. 

As of December 31, 2025, we had purchase commitments primarily consisting of
non-cancelable obligations for marketing and technology related services of $168 million, of which $79 million is payable within twelve months.

Stock Repurchase Program
In May 2018, our Board approved a share repurchase plan pursuant to which we were authorized to purchase up to $300 million of our common stock. Our Board has increased the capacity of the program by $300 million in 2019, $800 million in 2022, $400 million in 2023 and $400 million in 2024. Under the plan, we may, from time to time, purchase our common stock through various means, including, without limitation, open market transactions, privately negotiated transactions or tender offers, subject to the terms of the tax matters agreement entered into in connection with our spin-off.

Under our current stock repurchase program, we repurchased approximately 3.1 million shares at an average price of $85.73 for a cost of $266 million during 2025. Since inception of our stock repurchase program, we repurchased 27.9 million shares at an average price of $69.37 per share for a cost of $1.9 billion. As of December 31, 2025, we had $274 million of remaining availability under our program.

In the fourth quarter of 2025, we retired 28 million treasury shares with a cost of $1.9 billion.

Dividend Policy
We declared cash dividends of $0.41 per share in each of the first, second, third and fourth quarters of 2025 ($127 million in aggregate). In February 2026, the Board approved an increase in the quarterly cash dividend to $0.43 per share.
The declaration and payment of future dividends to holders of our common stock is at the discretion of our Board and depends upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Foreign Earnings
Although the one-time mandatory deemed repatriation tax during 2017 and the territorial tax system created as a result of U.S. tax reform generally eliminate U.S. federal income taxes on dividends from foreign subsidiaries, we continue to assert that all of our undistributed foreign earnings will be reinvested indefinitely as of December 31, 2025. In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes and U.S. taxes on currency transaction gains and losses, the determination of which is not practicable due to the complexities associated with the hypothetical calculation.

		
LONG-TERM DEBT COVENANTS
Our credit facilities contain customary covenants that, among other things, impose limitations on indebtedness; liens; mergers, consolidations, liquidations and dissolutions; dispositions, restricted debt payments, restricted payments and transactions with affiliates. Events of default in these credit facilities include, among others, failure to pay interest, principal and fees when due; breach of a covenant or warranty; acceleration of or failure to pay other debt in excess of a threshold amount; unpaid judgments in excess of a threshold amount; insolvency matters; and a change of control. The credit facilities require us to comply with a financial covenant to be tested quarterly, consisting of a maximum first-lien leverage ratio of 5.0 times. The ratio is calculated by dividing consolidated first lien indebtedness (as defined in the credit agreement) net of consolidated unrestricted cash as of the measurement date by consolidated EBITDA (as defined in the credit agreement), as measured on a trailing four-fiscal-quarter basis preceding the measurement date. As of December 31, 2025, our annualized first-lien leverage ratio was 2.8 times.
The indenture, as supplemented, under which the senior notes due 2028 were issued, contains covenants that limit, among other things, our ability and that of certain of our subsidiaries to (i) create liens on certain assets; (ii) enter into sale and leaseback transactions; and (iii) merge, consolidate or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.
		
SEASONALITY

While the hotel industry is seasonal in nature, periods of higher revenues vary property-by-property and performance is dependent on location and guest base. Based on historical performance, revenues from franchise contracts are generally higher in the second and third quarters than in the first or fourth quarters due to increased leisure travel during the spring and summer months. Our cash from operating activities may not necessarily follow the same seasonality as our revenues and may vary due to timing of working capital requirements and other investment activities. The seasonality of our business may cause fluctuations in our quarterly operating results, earnings, profit margins and cash flows. As we expand into new markets and geographical locations, we may experience increased or different seasonality dynamics that create fluctuations in operating results different from the fluctuations we have experienced in the past.

		
COMMITMENTS AND CONTINGENCIES
We are involved in claims, legal and regulatory proceedings and governmental inquiries related to our business. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to us with respect to earnings and/or cash flows in any given reporting period. As of December 31, 2025, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $7 million in excess of recorded accruals. However, we do not believe that the impact of such litigation should result in a material liability to us in relation to our financial position or liquidity. 

		
Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.
For tax positions we have taken or expect to take in our tax return, we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold. A change in the assumptions and estimates utilized could materially impact our results of operations.

Quantitative and Qualitative Disclosures About Market Risk.

We use various financial instruments, including interest swap contracts, to reduce the interest rate risk related to our debt. We also use foreign currency forwards to manage and reduce the foreign currency exchange rate risk associated with our foreign currency denominated receivables and payables, forecasted royalties, forecasted earnings and cash flows of foreign subsidiaries and 
other transactions.

We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in Note 12 - Fair Value to the Consolidated Financial Statements. Our principal market exposures are interest rate and currency exchange rate risks.

We assess our exposures to changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. Our variable-rate borrowings, which include our term loan, a portion of which has been swapped to a fixed interest rate, and any borrowings we make under our revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable-rate borrowings, net of swaps, was $649 million as of December 31, 2025. A hypothetical 10% change in our effective weighted average interest rate on our variable-rate borrowings would result in a $2 million increase or decrease to our annual long-term debt interest expense, and a one-point change in the underlying interest rates would result in approximately a $6 million increase or decrease in our annual interest expense.

The fair values of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate their carrying values due to the short-term nature of these assets and liabilities.
We have foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, the Chinese Yuan, the Euro, the Brazilian Real, the British Pound and the Argentine Peso. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.

We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used by us to hedge underlying exposure that primarily consists of our non-functional-currency current assets and liabilities. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2025. The gains and losses on the hedging instruments are largely offset by the gains and losses on the underlying assets, liabilities or expected cash flows. As of December 31, 2025, the absolute notional amount of our outstanding foreign exchange hedging instruments was $294 million. We have determined through such analyses that a hypothetical 10% change in foreign currency exchange rates would have resulted in approximately an $8 million increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.

Argentina is considered to be a highly inflationary economy. As of December 31, 2025, we had total net exposure in Argentina relating to foreign currency of approximately $8 million. Foreign currency exchange losses related to Argentina were immaterial during both 2025 and 2024 and $14 million during 2023.

Our total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these "shock tests" are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.