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Debt instrument, interest rate (as a percent) | 2.625 | SEC-NUM |
EOG RESOURCES, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued) (Unaudited)
9. Pension and Postretirement Benefits
Pension Plans. EOG has a defined contribution pension plan in place for most of its employees in the United States. EOG's contributions to the pension plan are based on various percentages of compensation and, in some instances, are based upon the amount of the employees' contributions. EOG's total costs recognized for the pension plan were $37 million and $36 million for the nine months ended September 30, 2022 and 2021. In addition, EOG's Trinidadian subsidiary maintains a contributory defined benefit pension plan and a matched savings plan, both of which are available to most of the employees of the Trinidadian subsidiary, the costs of which are not material.
Postretirement Health Care. EOG has postretirement medical and dental benefits in place for eligible United States and Trinidad employees and their eligible dependents, the costs of which are not material.
10. Long-Term Debt and Common Stock
Long-Term Debt. EOG had no outstanding commercial paper borrowings at September 30, 2022 and December 31, 2021, and did not utilize any commercial paper borrowings during the nine months ended September 30, 2022 and 2021.
At September 30, 2022, the $1,250 million aggregate principal amount of EOG's 2.625% Senior Notes due 2023 were classified as Current Portion of Long-Term Debt on the Condensed Consolidated Balance Sheets.
EOG currently has a $2.0 billion senior unsecured Revolving Credit Agreement (Agreement) with domestic and foreign lenders (Banks). The Agreement has a scheduled maturity date of June 27, 2024, and includes an option for EOG to extend, on up to two occasions, the term for successive one-year periods subject to certain terms and conditions. The Agreement (i) commits the Banks to provide advances up to an aggregate principal amount of $2.0 billion at any one time outstanding, with an option for EOG to request increases in the aggregate commitments to an amount not to exceed $3.0 billion, subject to certain terms and conditions and (ii) includes a swingline subfacility and a letter of credit subfacility. Advances under the Agreement will accrue interest based, at EOG's option, on either LIBOR plus an applicable margin (Eurodollar rate) or the base rate (as defined in the Agreement) plus an applicable margin. The Agreement contains representations, warranties, covenants and events of default that EOG believes are customary for investment-grade, senior unsecured commercial bank credit agreements, including a financial covenant for the maintenance of a ratio of total debt-to-capitalization (as such terms are defined in the Agreement) of no greater than 65%. At September 30, 2022, EOG was in compliance with this financial covenant. At September 30, 2022 and December 31, 2021, there were no borrowings or letters of credit outstanding under the Agreement. The Eurodollar rate and base rate (inclusive of the applicable margin), had there been any amounts borrowed under the Agreement at September 30, 2022, would have been 4.04% and 6.25%, respectively.
Common Stock. On February 24, 2022, the Board declared a quarterly cash dividend on the common stock of $0.75 per share paid on April 29, 2022, to stockholders of record as of April 15, 2022. The Board also declared on such date a special dividend of $1.00 per share paid on March 29, 2022, to stockholders of record as of March 15, 2022.
On May 5, 2022, the Board declared a quarterly cash dividend on the common stock of $0.75 per share paid on July 29, 2022, to stockholders of record as of July 15, 2022. The Board also declared on such date a special dividend of $1.80 per share paid on June 30, 2022, to stockholders of record as of June 15, 2022.
On August 4, 2022, the Board declared a special dividend on the common stock of $1.50 per share paid on September 29, 2022, to stockholders of record as of September 15, 2022.
On September 29, 2022, the Board declared a quarterly cash dividend on the common stock of $0.75 per share payable on October 31, 2022, to stockholders of record as of October 17, 2022. At September 30, 2022, this quarterly cash dividend was accrued as Dividends Payable on the Condensed Consolidated Balance Sheets.
On November 3, 2022, the Board (i) increased the quarterly cash dividend on the common stock from the previous $0.75 per share to $0.825 per share, effective beginning with the dividend payable on January 31, 2023, to stockholders of record as of January 17, 2023, and (ii) declared a special cash dividend on the common stock of $1.50 per share, payable on December 30, 2022, to stockholders of record as of December 15, 2022.
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Total premium for reactor under secondary financial protection program | 13 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
Management cannot predict the timing or amount of any potential recoveries on other claims filed by Entergy subsidiaries, and cannot predict the timing of any eventual receipt from the DOE of the U.S. Court of Federal Claims damage awards.
Nuclear Insurance
Third Party Liability Insurance
The Price-Anderson Act requires that reactor licensees purchase insurance and participate in a secondary insurance pool that provides insurance coverage for the public in the event of a nuclear power plant accident. The costs of this insurance are borne by the nuclear power industry. Congress amended and renewed the Price-Anderson Act in 2005 for a term through 2025. The Price-Anderson Act requires nuclear power plants to show evidence of financial protection in the event of a nuclear accident. This protection must consist of two layers of coverage:
1.The primary level is private insurance underwritten by American Nuclear Insurers (ANI) and provides public liability insurance coverage of $450 million for each operating reactor. If this amount is not sufficient to cover claims arising from an accident, the second level, Secondary Financial Protection, applies.
2.Secondary Financial Protection: Currently, 95 nuclear reactors participate in the Secondary Financial Protection program, which provides approximately $13 billion in secondary layer insurance coverage to compensate the public in the event of a nuclear power reactor accident. The Price-Anderson Act provides that all potential liability for a nuclear accident is limited to the amounts of insurance coverage available under the primary and secondary layers.
Within the Secondary Financial Protection program, each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident or fault, up to a maximum of approximately $137.6 million per reactor per incident (Entergy’s maximum total contingent obligation per incident is $826 million following the recent sale of the Indian Point Energy Center in May 2021). This retrospective premium is assessable at approximately $21 million per year per incident per nuclear power reactor.
3.Total insurance coverage available is approximately $13.5 billion, among the primary ANI coverage and the Secondary Financial Protection program, to respond to a nuclear power plant accident that causes third-party damages (e.g. off-site property and environmental damage, off-site bodily injury and on-site third-party bodily injury (i.e. contractors)). These coverages also respond to an accident caused by terrorism. The Terrorism Risk Insurance Reauthorization Act of 2007 created a government program that provides for up to $100 billion in coverage in excess of existing coverage for a terrorist event. Under current law, the Terrorism Risk Insurance Act extends through 2027.
The shutdown Big Rock Point facility maintains its site-specific statutory nuclear liability insurance requirement limit of $44.4 million, as designated by the NRC.
Entergy Arkansas and Entergy Louisiana each have two licensed reactors. System Energy has one licensed reactor (10% of Grand Gulf is owned by a non-affiliated company (Cooperative Energy) that would share on a pro-rata basis in any retrospective premium assessment to System Energy under the Price-Anderson Act). The Entergy Wholesale Commodities segment includes the ownership, operation, and decommissioning of one remaining nuclear power reactor at Palisades and the ownership of the shutdown Big Rock Point facility. The Indian Point Energy Center was sold to Holtec in late May 2021, following the final shutdown of Indian Point Unit 2 and Indian Point Unit 3 in April 2020 and 2021, respectively. Palisades is scheduled for shutdown in May 2022, with sale of Palisades and Big Rock to follow soon thereafter. The Entergy Wholesale Commodities segment previously 148
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Shares granted (in shares) | 3,322 | SEC-NUM |
The following table is a summary of the Company’s stock option and SAR activity for the year ended December 31, 2021:
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| | | | | | | | | | | | | | | | | | | | | | | | |
| In thousands, except weighted average exercise price and remaining contractual term | Shares | | WeightedAverageExercise Price | | WeightedAverageRemainingContractualTerm | | AggregateIntrinsicValue |
| Outstanding at beginning of year | 23,955 | | | $ | 69.62 | | | | | |
| Granted | 3,322 | | | $ | 74.66 | | | | | |
| Exercised | (6,366) | | | $ | 63.41 | | | | | |
| Forfeited | (694) | | | $ | 62.66 | | | | | |
| Expired | (1,156) | | | $ | 87.42 | | | | | |
| Outstanding at end of year | 19,061 | | | $ | 71.74 | | | 4.75 | | $ | 603,137 | |
| Exercisable at end of year | 9,704 | | | $ | 79.99 | | | 2.61 | | 229,034 | |
| Vested at end of year and expected to vest in the future | 18,709 | | | $ | 71.82 | | | 4.69 | | 590,514 | |
12.Shareholders’ Equity
Share Repurchases
The following share repurchase programs have been authorized by the Board:
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| | | | | | | | | | | | |
| In billionsAuthorization Date | Authorized | | Remaining as ofDecember 31, 2021 |
| December 9, 2021 (“2021 Repurchase Program”) | $ | 10.0 | | | $ | 10.0 | |
| November 2, 2016 (“2016 Repurchase Program”) | 15.0 | | | — | |
| | | | |
Each of the share Repurchase Programs was effective immediately. The 2016 Repurchase program was terminated effective December 9, 2021. The 2021 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions. The 2021 Repurchase Program can be modified or terminated by the Board at any time.
During the years ended December 31, 2021, 2020 and 2019, the Company did not repurchase any shares of common stock pursuant to the 2016 or 2021 Repurchase Programs.
Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $1.5 billion fixed dollar ASR with Barclays Bank PLC (“Barclays”). Upon payment of the $1.5 billion purchase price on January 4, 2022, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $1.5 billion notional amount of the ASR or approximately 11.6 million shares at a price of $103.34 per share, which were placed into treasury stock in January 2022. At the conclusion of the ASR, the Company may receive additional shares equal to the remaining 20% of the $1.5 billion notional amount. The ultimate number of shares the Company may receive will depend on the daily volume-weighted average price of the Company’s stock over an averaging period, less a discount. It is also possible, depending on such weighted average price, that the Company will have an obligation to Barclays which, at the Company’s option, could be settled in additional cash or by issuing shares. Under the terms of the ASR, the maximum number of shares that could be delivered to the Company is 29.0 million.
Dividends
The quarterly cash dividend declared by the Board was $0.50 per share in 2021 and 2020. In December 2021, the Board authorized a 10% increase in the quarterly cash dividend to $0.55 per share effective in 2022. CVS Health Corporation has paid cash dividends every quarter since becoming a public company. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.
Regulatory Requirements
The Company’s insurance business operations are conducted through subsidiaries that principally consist of health maintenance organizations (“HMOs”) and insurance companies. The Company’s HMO and insurance subsidiaries report their financial 159
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Selling Expense | 5 | SEC-NUM |
13 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2022 and 2021The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of September 30, 2022 (in millions, except range amounts):
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| Type of Derivative | | Fair Value | | Unobservable Input | | Amount or Range (Weighted Average) |
| Interest rate | | $ | (1) | | | Subsidiaries’ credit spreads | | 1% - 2.2% (2.1%) |
| | | | | | | |
| Foreign currency: | | | | | | |
| Argentine peso | | 70 | | | Argentine peso to U.S. dollar currency exchange rate after one year | | 272 - 748 (498) |
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| Commodity: | | | | | | |
| Other | | 2 | | | | | |
| Total | | $ | 71 | | | | | |
For interest rate derivatives and foreign currency derivatives, increases (decreases) in the estimates of the Company’s own credit spreads would decrease (increase) the value of the derivatives in a liability position. For foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative.Nonrecurring MeasurementsThe Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount and is included in Asset impairment expense or Other non-operating expense, as applicable, on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of assets measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions).
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| | Measurement Date | | Carrying Amount (1) | | Fair Value | | Pre-tax Loss |
| Nine Months Ended September 30, 2022 | | Level 1 | | Level 2 | | Level 3 | |
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| Long-lived assets held and used: | | | | | | | | | | | |
| Maritza | 4/30/2022 | | $ | 920 | | | $ | — | | | $ | — | | | $ | 452 | | | $ | 468 | |
| Held-for-sale businesses: (2) | | | | | | | | | | | |
| Jordan (3) | 9/30/2022 | | $ | 216 | | | $ | — | | | $ | 170 | | | $ | — | | | $ | 51 | |
| | Measurement Date | | Carrying Amount (1) | | Fair Value | | Pre-tax Loss |
| Nine Months Ended September 30, 2021 | | Level 1 | | Level 2 | | Level 3 | |
| Long-lived assets held and used: | | | | | | | | | | | |
| Puerto Rico | 3/31/2021 | | $ | 548 | | | $ | — | | | $ | — | | | $ | 73 | | | $ | 475 | |
| Mountain View I & II | 4/30/2021 | | 78 | | | — | | | — | | | 11 | | | 67 | |
| Ventanas 3 & 4 | 6/30/2021 | | 661 | | | — | | | — | | | 12 | | | 649 | |
| Angamos | 6/30/2021 | | 241 | | | — | | | — | | | 86 | | | 155 | |
| | | | | | | | | | | | |
| Dispositions: (2) | | | | | | | | | | | |
| Estrella del Mar I | 9/30/2021 | | $ | 17 | | | $ | — | | | $ | 6 | | | $ | — | | | $ | 11 | |
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\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Represents the carrying values at the dates of measurement, before fair value adjustment.(2)See Note 17 — Held-for-Sale and Dispositions for further information.(3)The Jordan disposal group was written down to it’s fair value of $170 million. The resulting pre-tax loss of $51 million includes costs to sell of $5 million.The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived assets held and used measured on a nonrecurring basis during the nine months ended September 30, 2022 (in millions, except range amounts):
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| | Fair Value | | Valuation Technique | | Unobservable Input | | Range (Weighted Average) |
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| | | | | | | | |
| | | | | | | | |
| Long-lived assets held and used: | | | | | | | |
| Maritza | $ | 452 | | | Discounted cash flow | | Annual revenue growth | | (66)% to 11% (-11%) |
| | | | | | Annual variable margin | | (66)% to 23% (-1%) |
| | | | | | Weighted-average cost of capital | | 20% to 25% (21%) |
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| Total | $ | 452 | | | | | | | |
Financial Instruments not Measured at Fair Value in the Condensed Consolidated Balance SheetsThe following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of the periods indicated, but for which fair value is disclosed:
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Debt repurchased | 33 | SEC-NUM |
Note 14 - Debt
The following is a summary of the Company's debt:
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| | | | | | | | As of |
| | (in millions) | | Interest Rates | | Fiscal Year Maturities | | March 31, 2022(1) | | March 31, 2021(1) |
| | Short-term debt and current maturities of long-term debt | | | | | | | | |
| | Commercial paper(2) | | (0.40)% - (0.27)% | | 2023 | | $ | 362 | | | $ | 213 | |
| | Current maturities of long-term debt | | Various | | 2023 | | 249 | | | 556 | |
| | Current maturities of finance lease liabilities | | 0.23% - 12.79% | | 2023 | | 289 | | | 398 | |
| | Short-term debt and current maturities of long-term debt | | | | | | $ | 900 | | | $ | 1,167 | |
| | | | | | | | | | |
| | Long-term debt, net of current maturities | | | | | | | | |
| | €650 million Senior notes | | 1.75% | | 2026 | | 720 | | | 760 | |
| | $700 million Senior notes | | 1.80% | | 2027 | | 694 | | | — | |
| | €750 Senior notes | | 0.45% | | 2028 | | 828 | | | — | |
| | $650 million Senior notes | | 2.375% | | 2029 | | 644 | | | — | |
| | €600 Senior notes | | 0.95% | | 2032 | | 661 | | | — | |
| | EUR term loan | | 0.80% | | 2023 - 2024 | | — | | | 469 | |
| | $274 million Senior notes | | 4.45% | | 2023 | | — | | | 154 | |
| | $171 million Senior notes | | 4.45% | | 2023 | | — | | | 165 | |
| | $500 million Senior notes | | 4.25% | | 2025 | | — | | | 504 | |
| | | | | | | | | | |
| | $500 million Senior notes | | 4.13% | | 2026 | | — | | | 496 | |
| | £250 million Senior notes | | 2.75% | | 2025 | | — | | | 343 | |
| | $500 million Senior notes | | 4.75% | | 2028 | | — | | | 506 | |
| | $234 million Senior notes | | 7.45% | | 2030 | | — | | | 268 | |
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| | | | | | | | | | |
| | Finance lease liabilities | | 0.23% - 12.79% | | 2023 - 2027 | | 643 | | | 894 | |
| | Borrowings for assets acquired under long-term financing | | 0.00% - 6.78% | | 2023 - 2026 | | 344 | | | 672 | |
| | Mandatorily redeemable preferred stock outstanding | | 6.00% | | 2023 | | 63 | | | 63 | |
| | Other borrowings | | Various | | 2023 - 2024 | | 6 | | | 5 | |
| | Long-term debt | | | | | | 4,603 | | | 5,299 | |
| | Less: current maturities | | | | | | 538 | | | 954 | |
| | Long-term debt, net of current maturities | | | | | | $ | 4,065 | | | $ | 4,345 | |
.
(1)The carrying amounts of the senior term loans and notes as of March 31, 2022 and March 31, 2021, include the remaining principal outstanding of $3,575 million and $3,631 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $(28) million and $34 million, respectively.(2) At DXC's option, DXC can borrow up to a maximum of €1 billion or its equivalent in €, £, and $.
Senior Notes and Term Loans
During the first quarter of fiscal 2022, the Company used the proceeds from the sale of its HPS business to complete the redemption of the remaining $319 million of the two series of 4.45% senior notes due fiscal 2023. The Company also repurchased $33 million of its 4.125% senior notes due fiscal 2026 using the proceeds from the divestitures of other insignificant businesses and existing cash on hand and the remainder of these notes were subsequently redeemed in full.
105
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2026 | 180.9 | SEC-NUM |
THE COOPER COMPANIES, INC. AND SUBSIDIARIESNotes to Consolidated Condensed Financial Statements(Unaudited)The Company evaluates goodwill for impairment annually during the third quarter of the fiscal year and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist. The Company accounts for goodwill, evaluates and tests goodwill balances for impairment in accordance with related accounting standards.
The Company performed an annual impairment assessment in the third quarter of fiscal 2021, and its analysis indicated that there was no impairment of goodwill in its reporting units. Other Intangible Assets
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| | April 30, 2022 | | October 31, 2021 | | |
| (In millions) | Gross CarryingAmount | | AccumulatedAmortization | | Gross CarryingAmount | | AccumulatedAmortization | | Weighted Average Amortization Period(in years) |
| | | | | | | | | | |
| Intangible assets with definite lives: | | | | | | | | | |
| Composite intangible asset | $ | 1,061.9 | | | $ | 318.6 | | | $ | 1,061.8 | | | $ | 283.2 | | | 15 |
| Customer relationships | 1,048.6 | | | 265.6 | | | 378.4 | | | 240.1 | | | 13 |
| Technology | 504.0 | | | 299.3 | | | 513.0 | | | 287.9 | | | 10 |
| Trademarks | 210.6 | | | 55.5 | | | 156.7 | | | 49.1 | | | 14 |
| License and distribution rights and other | 32.6 | | | 22.1 | | | 33.4 | | | 21.6 | | | 11 |
| | 2,857.7 | | | $ | 961.1 | | | 2,143.3 | | | $ | 881.9 | | | 14 |
| Less: accumulated amortization and translation | 961.1 | | | | | 881.9 | | | | | |
| Intangible assets with definite lives, net | 1,896.6 | | | | | 1,261.4 | | | | | |
| Intangible assets with indefinite lives, net (1) | 10.8 | | | | | 10.1 | | | | | |
| Total other intangibles, net | $ | 1,907.4 | | | | | $ | 1,271.5 | | | | | |
(1) Intangible assets with indefinite lives include technology and trademarks.Balances include foreign currency translation adjustments. Intangible assets with definite lives are amortized over the estimated useful life of the assets. As of April 30, 2022, the estimate of future amortization expenses for intangible assets with definite lives is as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Fiscal Years: | (In millions) |
| Remainder of 2022 | $ | 101.9 | |
| 2023 | 202.0 | |
| 2024 | 198.1 | |
| 2025 | 188.2 | |
| 2026 | 180.9 | |
| Thereafter | 1,025.5 | |
| Total remaining amortization for intangible assets with definite lives | $ | 1,896.6 | |
The Company assesses definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset (asset group) may not be recoverable. When events or changes in circumstances indicate that the carrying amount of a definite-lived intangible asset may not be recoverable, in accordance with related accounting standards, the Company evaluates whether the definite-lived intangible asset is impaired by comparing its carrying value to its undiscounted future cash flows.The Company assesses indefinite-lived intangible assets annually in the third quarter of the fiscal year, or whenever events or circumstances indicate that the carrying amount of an indefinite-lived intangible asset (asset group) may not be recoverable. The Company evaluates whether the indefinite-lived intangible asset is impaired by comparing its carrying value to its fair value.The Company performed an annual impairment assessment in the third quarter of fiscal 2021 and did not recognize any intangible asset impairment charges.14
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Other - assets | 35 | SEC-NUM |
[Table of Co](#i2c056a9f8317485ea6601862f5b0559f_7)[ntents](#i2c056a9f8317485ea6601862f5b0559f_7)The following table presents the components of income tax expense (benefit) for the years ended December 31, 2021, 2020, and 2019:
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| | Ameren Missouri | | Ameren Illinois | | Other | | Ameren |
| 2021 | | | | | | | |
| Current taxes: | | | | | | | |
| Federal | $ | — | | | $ | (15) | | | $ | 22 | | | $ | 7 | |
| State | — | | | (7) | | | 1 | | | (6) | |
| Deferred taxes: | | | | | | | |
| Federal | 65 | | | 120 | | | (15) | | | 170 | |
| State | 23 | | | 59 | | | 4 | | | 86 | |
| Amortization of excess deferred income taxes | (81) | | | (14) | | | (1) | | | (96) | |
| Amortization of deferred investment tax credits | (4) | | | — | | | — | | | (4) | |
| Total income tax expense | $ | 3 | | | $ | 143 | | | $ | 11 | | | $ | 157 | |
| 2020 | | | | | | | |
| Current taxes: | | | | | | | |
| Federal | $ | 14 | | | $ | 12 | | | $ | (24) | | | $ | 2 | |
| State | 3 | | | (6) | | | 8 | | | 5 | |
| Deferred taxes: | | | | | | | |
| Federal | 82 | | | 81 | | | 24 | | | 187 | |
| State | 15 | | | 52 | | | (10) | | | 57 | |
| Amortization of excess deferred income taxes | (75) | | | (15) | | | (1) | | | (91) | |
| Amortization of deferred investment tax credits | (5) | | | — | | | — | | | (5) | |
| Total income tax expense (benefit) | $ | 34 | | | $ | 124 | | | $ | (3) | | | $ | 155 | |
| 2019 | | | | | | | |
| Current taxes: | | | | | | | |
| Federal | $ | 65 | | | $ | 19 | | | $ | (88) | | | $ | (4) | |
| State | 22 | | | 11 | | | (14) | | | 19 | |
| Deferred taxes: | | | | | | | |
| Federal | 37 | | | 66 | | | 82 | | | 185 | |
| State | 5 | | | 29 | | | 25 | | | 59 | |
| Amortization of excess deferred income taxes | (56) | | | (15) | | | (1) | | | (72) | |
| Amortization of deferred investment tax credits | (5) | | | — | | | — | | | (5) | |
| Total income tax expense | $ | 68 | | | $ | 110 | | | $ | 4 | | | $ | 182 | |
The following table presents the accumulated deferred income tax assets and liabilities recorded as a result of temporary differences and accumulated deferred investment tax credits at December 31, 2021 and 2020:
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| | Ameren Missouri | | Ameren Illinois | | Other | | Ameren |
| 2021 | | | | | | | |
| Accumulated deferred income taxes, net liability (asset): | | | | | | | |
| Plant-related | $ | 2,188 | | | $ | 1,715 | | | $ | 226 | | | $ | 4,129 | |
| | | | | | | | |
| | | | | | | | |
| Regulatory assets and liabilities, net | (259) | | | (199) | | | (25) | | | (483) | |
| Deferred employee benefit costs | (52) | | | 17 | | | (53) | | | (88) | |
| | | | | | | | |
| Tax carryforwards | (68) | | | (46) | | | (84) | | | (198) | |
| Other | 13 | | | 71 | | | 25 | | | 109 | |
| Total net accumulated deferred income tax liabilities (assets) | 1,822 | | | 1,558 | | | 89 | | | 3,469 | |
| Accumulated deferred investment tax credits | 30 | | | — | | | — | | | 30 | |
| Accumulated deferred income taxes and investment tax credits | $ | 1,852 | | | $ | 1,558 | | | $ | 89 | | | $ | 3,499 | |
| 2020 | | | | | | | |
| Accumulated deferred income taxes, net liability (asset): | | | | | | | |
| Plant-related | $ | 2,112 | | | $ | 1,559 | | | $ | 205 | | | $ | 3,876 | |
| | | | | | | | |
| | | | | | | | |
| Regulatory assets and liabilities, net | (285) | | | (207) | | | (23) | | | (515) | |
| Deferred employee benefit costs | (58) | | | 8 | | | (54) | | | (104) | |
| | | | | | | | |
| Tax carryforwards | (26) | | | (6) | | | (65) | | | (97) | |
| Other | (35) | | | 13 | | | 39 | | | 17 | |
| Total net accumulated deferred income tax liabilities (assets) | 1,708 | | | 1,367 | | | 102 | | | 3,177 | |
| Accumulated deferred investment tax credits | 34 | | | — | | | — | | | 34 | |
| Accumulated deferred income taxes and investment tax credits | $ | 1,742 | | | $ | 1,367 | | | $ | 102 | | | $ | 3,211 | |
143
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Increase (decrease) in valuation allowance | 23.8 | SEC-NUM |
[Table of Contents](#i4552998170a04ab690e0e4bebd2d8dfd_7)
FMC CORPORATIONNotes to Condensed Consolidated Financial Statements (unaudited) — (Continued)Roll forward of restructuring reservesThe following table shows a roll forward of restructuring reserves, that will result in cash spending. These amounts exclude asset retirement obligations.
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| (in Millions) | Balance at12/31/21 (4) | | Change inreserves (5) | | Cashpayments (6) | | Other | | Balance at9/30/22 (4) |
| DuPont Crop restructuring (1) | $ | 8.6 | | | $ | 0.6 | | | $ | (4.0) | | | $ | (0.1) | | | $ | 5.1 | |
| Regional realignment (2) | 4.0 | | | 6.0 | | | (5.4) | | | — | | | 4.6 | |
| | | | | | | | | | |
| Other workforce related and facility shutdowns (3) | 2.3 | | | 1.8 | | | (3.3) | | | — | | | 0.8 | |
| | | | | | | | | | |
| Total | $ | 14.9 | | | $ | 8.4 | | | $ | (12.7) | | | $ | (0.1) | | | $ | 10.5 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1)Primarily consists of exit costs and severance associated with DuPont Crop restructuring activities.(2)Primarily consists of severance and employee relocation costs as well as other costs associated with the relocation of our European headquarters and the consolidation of our Asia Pacific operations into a single regional headquarters in Singapore.(3)Primarily severance costs related to workforce reductions and facility shutdowns. (4)Included in "Accrued and other liabilities" and "Other long-term liabilities" on the condensed consolidated balance sheets. (5)Primarily severance and other miscellaneous exit costs. Any accelerated depreciation and impairment charges noted above that impacted our property, plant and equipment balances or other long-term assets are not included in this table.(6)In addition to the spend above, for the nine months ended September 30, 2022 there was also approximately $6.7 million of spending related to the Furadan® asset retirement obligation as well as $6.3 million of additional spending for items in therestructuring and other charge line item that are not in the rollforward above.Other charges (income), net
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| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in Millions) | 2022 | | 2021 | | 2022 | | 2021 |
| Environmental charges, net | $ | 3.4 | | | $ | 3.7 | | | $ | 1.0 | | | $ | 3.3 | |
| Exit from Russian Operations | — | | | — | | | 76.1 | | | — | |
| Other items, net | 3.6 | | | 27.0 | | | 5.2 | | | 30.1 | |
| Other charges (income), net | $ | 7.0 | | | $ | 30.7 | | | $ | 82.3 | | | $ | 33.4 | |
Environmental charges, netEnvironmental charges represent the net charges associated with environmental remediation at continuing operating sites. See Note 12 for additional details. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.
Exit from Russian OperationsAs the Russia-Ukraine war continues, our values as a company as well as the sanctions imposed on, and cross-sanctions imposed and announced by, the Russian Federation led us to cease operations and business in Russia. This decision was made in mid-April when we concluded that it was not sustainable to continue operations. As a result of this decision, we recorded a charge of approximately $76.1 million during the nine months ended September 30, 2022. The charge primarily consists of noncash asset write offs, mainly working capital as well as the value of a packaging and formulation facility. This charge included approximately $7 million of cash that was stranded and not accessible to us.
Other Items, netOther items, net for the three and nine months ended September 30, 2021 includes $23.8 million of charges for the establishment of reserves for certain historical India indirect tax matters that were triggered during the period.
Note 10: DebtDebt maturing within one year:29
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Thereafter | 821 | SEC-NUM |
NOTE 5. INVENTORIES, INCLUDING DEFERRED INVENTORY COSTS
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| | | | | | | | | |
| | December 31, 2021 | December 31, 2020 |
| Raw materials and work in process | $ | 8,710 | | $ | 7,937 | |
| Finished goods | 4,927 | | 5,654 | |
| Deferred inventory costs(a) | 2,210 | | 2,299 | |
| Inventories, including deferred inventory costs | $ | 15,847 | | $ | 15,890 | |
(a) Represents cost deferral for shipped goods (such as components for wind turbine assemblies within our Renewable Energy segment) and labor and overhead costs on time and material service contracts (primarily originating in Power and Aviation) and other costs for which the criteria for revenue recognition has not yet been met.
NOTE 6. PROPERTY, PLANT AND EQUIPMENT AND OPERATING LEASES
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| | Depreciable lives | Original Cost | | Net Carrying Value |
| December 31 | (in years) | 2021 | 2020 | | 2021 | 2020 |
| Land and improvements | 8 | $ | 585 | | $ | 602 | | | $ | 576 | | $ | 592 | |
| Buildings, structures and related equipment | 8 - 40 | 8,311 | | 8,295 | | | 3,728 | | 3,841 | |
| Machinery and equipment | 4 - 20 | 21,036 | | 21,151 | | | 7,356 | | 7,968 | |
| Leasehold costs and manufacturing plant under construction | 1 - 10 | 1,971 | | 2,051 | | | 1,343 | | 1,447 | |
| ROU operating lease assets | | | | | 2,606 | | 2,852 | |
| Property, plant and equipment - net | | $ | 31,904 | | $ | 32,098 | | | $ | 15,609 | | $ | 16,699 | |
In the third quarter of 2020, we recognized a non-cash pre-tax impairment charge of $316 million related to property, plant and equipment at our Steam business within our Power segment due to our announcement to exit the new build coal power market. We determined the fair value of these assets using an income approach. This charge was recorded by Corporate in Selling, general, and administrative expenses in our Statement of Earnings (Loss).
Operating Lease Liabilities. Our consolidated operating lease liabilities, included in All other liabilities in our Statement of Financial Position, were $2,848 million and $3,195 million, as of December 31, 2021 and 2020, respectively. Substantially all of our operating leases have remaining lease terms of 14 years or less, some of which may include options to extend.
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| OPERATING LEASE EXPENSE | 2021 | 2020 | 2019 |
| Long-term (fixed) | $ | 770 | | $ | 827 | | $ | 893 | |
| Long-term (variable) | 119 | | 143 | | 175 | |
| Short-term | 192 | | 206 | | 201 | |
| Total operating lease expense | $ | 1,081 | | $ | 1,176 | | $ | 1,269 | |
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| MATURITY OF LEASE LIABILITIES | 2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total |
| Undiscounted lease payments | $ | 729 | | $ | 620 | | $ | 504 | | $ | 353 | | $ | 262 | | $ | 821 | | $ | 3,289 | |
| Less: imputed interest | | | | | | | 442 | |
| Total lease liability as of December 31, 2021 | | | | | | | $ | 2,848 | |
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| SUPPLEMENTAL INFORMATION RELATED TO OPERATING LEASES | 2021 | 2020 | 2019 |
| Operating cash flows used for operating leases | $ | 834 | | $ | 835 | | $ | 961 | |
| Right-of-use assets obtained in exchange for new lease liabilities | 603 | | 594 | | 739 | |
| Weighted-average remaining lease term | 7.2 years | 6.7 years | 7.1 years |
| Weighted-average discount rate | 4.0 | % | 4.6 | % | 4.9 | % |
NOTE 7. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS ACQUISITIONS. On December 21, 2021 our Healthcare business acquired BK Medical, a leader in surgical ultrasound imaging and guidance technology, for $1,455 million. The preliminary purchase price allocation resulted in goodwill of approximately $1,020 million and amortizable intangible assets of approximately $393 million. The allocation of the purchase price will be finalized upon completion of post-closing procedures.2021 FORM 10-K 61
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Noncontrolling Interest, Ownership Percentage by Parent | 51 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 21. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES
We record costs associated with voluntary separations at the time of employee acceptance, unless the acceptance requires explicit approval by the Company. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.
Company Excluding Ford Credit
Global Redesign and Other Actions
Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., impairment, accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses. Below are actions we have initiated, primarily related to the global redesign of our business.
Brazil. In February 2019, Ford Motor Company Brasil Ltda. (“Ford Brazil”), our subsidiary in Brazil, committed to a plan to exit the commercial heavy truck business in South America. As a result, Ford Brazil ceased production at the São Bernardo do Campo plant in Brazil during 2019. Ford Brazil completed a sale of the plant machinery and equipment in the third quarter of 2020 and the land and buildings in the fourth quarter of 2020.
In December 2020, Ford Brazil committed to a plan to exit manufacturing operations in Brazil, which resulted in the closure of facilities in Camaçari, Taubaté, and Troller in 2021. These actions will not result in Ford Brazil being substantially liquidated, as it will continue imported vehicle sales and customer support operations, and maintain the product development center in Bahia, the proving grounds in Tatuí, São Paulo, and the regional headquarters in São Paulo.
Russia. In March 2019, Ford Sollers Netherlands B.V. (“Ford Sollers”), a joint venture between Ford and Sollers PJSC (“Sollers”) in which Ford had control, announced its plan to restructure its business in Russia to focus exclusively on commercial vehicles and to exit the passenger car segment. As a result of these actions, Ford acquired 100% ownership of Ford Sollers and ceased production at the Naberezhnye Chelny and St. Petersburg vehicle assembly plants and the Elabuga engine plant during the second quarter of 2019.
Subsequent to completion of the restructuring actions, in July 2019, Ford sold a 51% controlling interest in the restructured entity to Sollers, which resulted in deconsolidation of the Ford Sollers subsidiary. Our continued involvement in Ford Sollers is accounted for as an equity method investment.
In the fourth quarter of 2020, we also completed a sale of certain manufacturing assets.
United Kingdom. In June 2019, Ford of Britain announced its plan to exit the Ford Bridgend plant in South Wales in 2020. Ford of Britain ceased production at the Bridgend plant and the facility was closed in September 2020.
India. In the third quarter of 2019, Ford committed to a plan to sell specific net assets in our India Automotive operations as part of a plan to establish a joint venture with Mahindra & Mahindra Limited (“Mahindra”). In December 2020, Ford and Mahindra mutually determined that we would not complete the joint venture (see Note 22). Subsequently, in September 2021, Ford India Private Limited (“Ford India”), our subsidiary in India, announced its plans to exit the engine and vehicle manufacturing operations at its facilities in Chennai and its vehicle manufacturing operation at its facility in Sanand. Ford India ceased vehicle manufacturing in Sanand in fourth quarter 2021 and plans to cease engine and vehicle manufacturing in Chennai by second quarter 2022. These actions will not result in Ford India being substantially liquidated, as it will continue with its powertrain operations at its engine plant in Sanand to support certain products, including those manufactured by our affiliate in Thailand, and it will continue its imported vehicle sales and customer support operations.165
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2023 | 40 | SEC-NUM |
[Table of Contents](#id353055757fb42afb305a023bc295188_7)Intangible Assets, NetFinite-lived intangible assets are as follows:
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| | Licenses | | Customer-RelatedIntangibleAssets | | DevelopedTechnology | | CovenantsNot toCompeteand Other | | Total |
| | (In $ millions) |
| Gross Asset Value | | | | | | | | | |
| As of December 31, 2021 | 45 | | | 996 | | | 45 | | | 55 | | | 1,141 | |
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| Exchange rate changes | (2) | | | (57) | | | (1) | | | — | | | (60) | |
| As of June 30, 2022 | 43 | | | 939 | | | 44 | | | 55 | | | 1,081 | |
| Accumulated Amortization | | | | | | | | | |
| As of December 31, 2021 | (41) | | | (543) | | | (42) | | | (39) | | | (665) | |
| Amortization | (2) | | | (19) | | | (1) | | | — | | | (22) | |
| Exchange rate changes | 3 | | | 32 | | | 1 | | | — | | | 36 | |
| As of June 30, 2022 | (40) | | | (530) | | | (42) | | | (39) | | | (651) | |
| Net book value | 3 | | | 409 | | | 2 | | | 16 | | | 430 | |
Indefinite-lived intangible assets are as follows:
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| | Trademarksand Trade Names | |
| | (In $ millions) | |
| As of December 31, 2021 | 259 | | |
| | | |
| | | |
| Exchange rate changes | (14) | | |
| As of June 30, 2022 | 245 | | |
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During the six months ended June 30, 2022, the Company did not renew or extend any intangible assets.Estimated amortization expense for the succeeding five fiscal years is as follows:
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| | (In $ millions) |
| 2023 | 40 | |
| 2024 | 39 | |
| 2025 | 39 | |
| 2026 | 39 | |
| 2027 | 39 | |
12
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Business combination, contingent consideration | 1.5 | SEC-NUM |
The guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations. Recognition and Measurement of Revenue Contracts with Customers Acquired in a Business Combination: In October 2021, the FASB issued guidance to improve comparability after a business combination is reported in the acquirer’s financial statements by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. Generally, the acquirer will recognize the acquired contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically, such amounts were recognized by the acquirer at fair value in the acquisition accounting. Under the amended guidance, the acquirer should account for the acquired revenue contracts as if it had originated the contracts. The amendments provide certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendment is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The adoption of this standard is expected to have no material impact on the Company’s financial position and results of operations.
3. Acquisitions HYLAOn December 1, 2020, the Company acquired HYLA, a leading provider of smartphone software, trade-in and upgrade services. The total consideration was $346.9 million, comprised of a base purchase price of $325.0 million and purchase price adjustments of $21.9 million, including excess cash in the business. The Company recorded $39.5 million in net assets, $213.4 million of goodwill and $94.0 million of other intangible assets (net of deferred tax liability of $19.2 million), which are primarily customer relationships and software amortizable over 15 and 6 years, respectively.American Financial & Automotive ServicesOn May 1, 2020, the Company acquired AFAS, a provider of automotive finance and insurance products and services, including vehicle service contracts, guaranteed asset protection insurance and other ancillary products. The total consideration was $176.9 million, comprised of a base purchase price of $157.5 million, contingent consideration of $1.5 million and other purchase price adjustments of $17.9 million, including excess cash in the business. The transaction resulted in $2.9 million in net liabilities, $104.0 million of goodwill and $75.8 million of other intangible assets, which are primarily dealer relationships amortizable over 15 years.
4. Dispositions and Exit Activities Sale of Global PreneedOn August 2, 2021, the Company completed its sale of the legal entities which comprise the businesses previously reported as the Global Preneed segment and certain businesses previously disposed of through reinsurance, which were previously reported in the Corporate and Other segment (collectively, the “disposed Global Preneed business”), to subsidiaries of CUNA Mutual Group (“CUNA”) for an aggregate purchase price at closing of $1.34 billion in cash. The aggregate purchase price was comprised of a base purchase price of $1.25 billion, adjusted for (i) the amount of Leakage (as defined in the Equity Purchase Agreement, dated as of March 8, 2021, by and among the Company, Interfinancial Inc., CMFG Life Insurance Company and TruStage Global Holdings, ULC (the “Equity Purchase Agreement”)) paid by the disposed Global Preneed business after December 31, 2020 and at or prior to the closing of the transaction, (ii) the amount of any Transaction Related Expenses (as defined in the Equity Purchase Agreement) paid by the disposed Global Preneed business after the closing of the transaction, (iii) the difference between the book value of certain assets in the disposed Global Preneed business’s investment portfolio as of December 31, 2020 and the value of cash paid in substitution for the fair market value of such assets by the Company and (iv) the accrual of interest on the base purchase price, as adjusted pursuant to clauses (i) to (iii), at a rate of 6% F-19
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Operating loss carryforwards subject to expire between fiscal 2028 and fiscal 2041 | 900.0 | SEC-NUM |
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| PART II | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | Table of Contents |
Significant components of deferred tax assets (liabilities) consist of the following:
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| | February 28,2022 | | February 28,2021 |
| (in millions) | | | |
| Deferred tax assets | | | |
| Intangible assets | $ | 2,188.8 | | | $ | 1,852.0 | |
| Loss carryforwards | 349.8 | | | 233.1 | |
| Stock-based compensation | 22.9 | | | 30.1 | |
| Lease liabilities | 69.0 | | | 83.1 | |
| Inventory | 51.8 | | | 26.6 | |
| | | | |
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| | | | |
| | | | |
| Investments in unconsolidated investees | 541.0 | | | 36.7 | |
| Other accruals | 67.8 | | | 33.7 | |
| Gross deferred tax assets | 3,291.1 | | | 2,295.3 | |
| Valuation allowances | (552.1) | | | (78.6) | |
| Deferred tax assets, net | 2,739.0 | | | 2,216.7 | |
| | | | |
| Deferred tax liabilities | | | |
| Intangible assets | (522.1) | | | — | |
| Property, plant, and equipment | (186.0) | | | (200.3) | |
| Investments in unconsolidated investees | (58.9) | | | — | |
| Provision for unremitted earnings | (26.0) | | | (23.0) | |
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| | | | |
| Right-of-use assets | (59.8) | | | (70.6) | |
| Other accruals | (50.5) | | | — | |
| Total deferred tax liabilities | (903.3) | | | (293.9) | |
| Deferred tax assets (liabilities), net | $ | 1,835.7 | | | $ | 1,922.8 | |
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the projected reversal of deferred tax liabilities and projected future taxable income as well as tax planning strategies. Based upon this assessment, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of any valuation allowances.
As of February 28, 2022, operating loss carryforwards, which are primarily state and foreign, totaling $3.2 billion are being carried forward in a number of jurisdictions where we are permitted to use tax operating losses from prior periods to reduce future taxable income. Of these operating loss carryforwards, $1.8 billion will expire by fiscal 2029, $900.0 million will expire between fiscal 2030 and fiscal 2042, and $500.0 million may be carried forward indefinitely in certain jurisdictions.
We have recognized valuation allowances for operating loss carryforwards and other deferred tax assets when we believe it is more likely than not that these items will not be realized. The increase in our valuation allowances as of February 28, 2022, primarily related to the unrealized net gain (loss) from changes in fair value of our investment in Canopy and Canopy equity in earnings (losses).
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| Constellation Brands, Inc. FY 2022 Form 10-K | #WORTHREACHINGFOR I 98 |
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Loss contingency, value of damages sought | 12 | SEC-NUM |
[Table of Contents](#i84fa46872c0e4324b82e25f92cc079f4_7)FIDELITY NATIONAL INFORMATION SERVICES, INC.AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Cross-Currency Interest Rate Swap Designations
The Company holds cross-currency interest rate swaps and designates them as net investment hedges of its investment in Euro- and Pound Sterling-denominated operations.
As of September 30, 2022, and December 31, 2021, aggregate notional amounts of €6,343 million and €5,906 million, respectively, were designated as net investment hedges of the Company's investment in Euro-denominated operations, and aggregate notional amounts of £2,386 million and £2,345 million, respectively, were designated as net investment hedges of the Company's Pound Sterling-denominated operations. The cross-currency interest rate swap fair values were net assets of $950 million at September 30, 2022, and net assets of $258 million at December 31, 2021, respectively.
During the nine months ended September 30, 2022, the Company entered into transactions to cash settle existing cross-currency interest rate swaps designated as net investment hedges and received net proceeds of approximately $684 million for the fair values of the cross-currency interest rate swaps as of the termination dates. The proceeds were recorded within investing activities on the consolidated statements of cash flows. Following the settlement of the existing cross-currency interest rate swaps, the Company entered into new cross-currency interest rate swaps at current market terms with similar notional amounts and maturity dates as the settled cross-currency interest rate swaps.
(8) Commitments and Contingencies
Brazilian Tax Authorities Claims
In 2004, Proservvi Empreendimentos e Servicos, Ltda., the predecessor to Fidelity National Servicos de Tratamento de Documentos e Informatica Ltda. ("Servicos"), a subsidiary of Fidelity National Participacoes Ltda., our former item processing and remittance services operation in Brazil, acquired certain assets and employees and leased certain facilities from the Transpev Group ("Transpev") in Brazil. Transpev's remaining assets were later acquired by Prosegur, an unrelated third party. When Transpev discontinued its operations after the asset sale to Prosegur, it had unpaid federal taxes and social contributions owing to the Brazilian tax authorities. The Brazilian tax authorities brought a claim against Transpev and, beginning in 2012, brought claims against Prosegur and Servicos on the grounds that Prosegur and Servicos were successors in interest to Transpev. To date, the Brazilian tax authorities filed 14 claims against Servicos asserting potential tax liabilities of approximately $12 million. There are potentially 24 additional claims against Transpev/Prosegur for which Servicos is named as a co-defendant or may be named but for which Servicos has not yet been served. These additional claims amount to approximately $33 million, making the total potential exposure for all 38 claims approximately $45 million. We do not believe a liability for these 38 total claims is probable and, therefore, have not recorded a liability for any of these claims.
Tax Receivable Agreement
The Company assumed in the Worldpay acquisition a Tax Receivable Agreement ("TRA") under which the Company agreed to make payments to Fifth Third Bank ("Fifth Third") of 85% of the federal, state, local and foreign income tax benefits realized by the Company as a result of certain tax deductions. In December 2019, the Company entered into a Tax Receivable Purchase Addendum (the "Amendment") that provides written call and put options (collectively "the options") to terminate certain estimated obligations under the TRA in exchange for fixed cash payments.
The remaining TRA obligations not subject to the Amendment are based on the cash savings realized by the Company by comparing the actual income tax liability of the Company to the amount of such taxes the Company would have been required to pay had there been no deductions related to the tax attributes. Under the TRA, in certain specified circumstances, such as certain changes of control, the Company may be required to make payments in excess of such cash savings.
Obligations recorded in our consolidated financial statements pursuant to the TRA are based on estimates of future deductions and future tax rates and, in the case of the obligations subject to the Amendment, reflect management's expectation that the options will be exercised. In January 2022, the Company exercised its second call option pursuant to the Amendment,which results in fixed cash payments to Fifth Third of $186 million. The timing and/or amount of aggregate payments due under the TRA may vary based on a number of factors, including the exercise of options, the amount and timing of taxable income the Company generates in the future and the tax rate then applicable, the use of loss carryforwards and amortizable basis. Each reporting period, the Company evaluates the assumptions underlying the TRA obligations.
17
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Deferred tax | 92 | SEC-NUM |
[Table of Contents](#ie64973d8440d48dda3b140796cb1bc77_7)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)The following table summarizes the values assigned to assets acquired and liabilities assumed:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | | | At June 13, 2022 |
| | | | (Millions of dollars) |
| Current assets | | | $ | 1,584 | |
| Properties, plant and equipment | | | 1,778 | |
| Deferred tax | | | 92 | |
| Other assets | | | 374 | |
| Total assets acquired | | | 3,828 | |
| Current liabilities | | | 301 | |
| Long-term debt and finance leases | | | 590 | |
| Other liabilities | | | 75 | |
| Total liabilities assumed | | | 966 | |
| Net assets acquired | | | $ | 2,862 | |
| Goodwill | | | 293 | |
| Purchase Price | | | $ | 3,155 | |
Pro forma financial information is not disclosed as the acquisition was deemed not to have a material impact on the company’s results of operations.22
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Revenue Recognition for Fiber Solutions Tenants | three to 20 years | SEC-NUM |
2.Summary of Significant Accounting Policies Recently Adopted Accounting Pronouncements No accounting pronouncements adopted during the three months ended March 31, 2022 had a material impact on the Company's condensed consolidated financial statements.Recent Accounting Pronouncements Not Yet AdoptedNo new accounting pronouncements issued but not yet adopted are expected to have a material impact on the Company's condensed consolidated financial statements.3.RevenuesSite Rental RevenuesThe Company generates site rental revenues from its core business by providing tenants with access, including space or capacity, to its shared communications infrastructure via long-term tenant contracts in various forms, including lease, license, sublease and service agreements. Providing such access over the length of the tenant contract term represents the Company’s sole performance obligation under its tenant contracts. Site rental revenues from the Company's tenant contracts are recognized on a straight-line, ratable basis over the fixed, non-cancelable term of the relevant tenant contract, which generally ranges from five to 15 years for wireless tenants and three to 20 years for the Company's fiber solutions tenants (including from organizations with high-bandwidth and multi-location demands), regardless of whether the payments from the tenant are received in equal monthly amounts during the life of the tenant contract. Certain of the Company's tenant contracts contain (1) fixed escalation clauses (such as fixed dollar or fixed percentage increases) or inflation-based escalation clauses (such as those tied to the CPI), (2) multiple renewal periods exercisable at the tenant's option and (3) only limited termination rights at the applicable tenant's option through the current term. If the payment terms call for fixed escalations, upfront payments, or rent-free periods, the revenue is recognized on a straight-line basis over the fixed, non-cancelable term of the agreement. When calculating its straight-line rental revenues, the Company considers all fixed elements of tenant contractual escalation provisions, even if such escalation provisions contain a variable element in addition to a minimum. The Company's assets related to straight-line site rental revenues include current amounts of $105 million included in "Other current assets" and non-current amounts of $1.7 billion included in "Deferred site rental receivables" as of March 31, 2022. Amounts billed or received prior to being earned are deferred and reflected in "Deferred revenues" and "Other long-term liabilities." Amounts to which the Company has an unconditional right to payment, which are related to both satisfied or partially satisfied performance obligations, are recorded within "Receivables, net" on the Company's condensed consolidated balance sheet.Services and Other RevenuesAs part of the Company’s effort to provide comprehensive communications infrastructure solutions, as an ancillary business, the Company offers certain services primarily relating to its Towers segment, predominately consisting of (1) site development services and (2) installation services. Upon contract commencement, the Company assesses its services to tenants and identifies performance obligations for each promise to provide a distinct service. The Company may have multiple performance obligations for site development services, which primarily include: structural analysis, zoning, permitting and construction drawings. For each of these performance obligations, services revenues are recognized at completion of the applicable performance obligation, which represents the point at which the Company believes it has transferred goods or services to the tenant. The revenue recognized is based on an allocation of the transaction price among the performance obligations in a respective contract based on estimated standalone selling price. The volume and mix of site development services may vary among contracts and may include a combination of some or all of the above performance obligations. Payments generally are due within 45 to 60 days and generally do not contain variable-consideration provisions. The transaction price for the Company's tower installation services consists of amounts for (1) permanent improvements to the Company's towers that represent a lease component and (2) the performance of the service. Amounts under the Company's tower installation service agreements that represent a lease component are recognized as site rental revenues on a straight-line basis over the length of the associated estimated lease term. For the performance of the installation service, the Company has one performance obligation, which is satisfied at the time of the applicable installation or augmentation and recognized as services and other revenues. Since performance obligations are typically satisfied prior to receiving payment from tenants, the unconditional right to payment is recorded within "Receivables, net" on the Company’s 8
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General Partner of Consolidated Operating Partnerships, Ownership Interest | 1 | SEC-NUM |
[Table of Contents](#ie7fd49285ee64ca9b19be8c003cdb9a8_7)CAMDEN PROPERTY TRUSTNotes to Condensed Consolidated Financial Statements(Unaudited)
1. Description of BusinessBusiness. Formed on May 25, 1993, Camden Property Trust ("CPT"), a Texas real estate investment trust ("REIT"), and all consolidated subsidiaries are primarily engaged in the ownership, management, development, reposition, redevelopment, acquisition, and construction of multifamily apartment communities. Our multifamily apartment communities are referred to as "communities," "multifamily communities," "properties," or "multifamily properties" in the following discussion. As of September 30, 2022, we owned interests in, operated, or were developing 178 multifamily properties comprised of 60,652 apartment homes across the United States. Of the 178 properties, seven properties were under construction as of September 30, 2022, and will consist of a total of 2,219 apartment homes when completed. We also own land holdings which we may develop into multifamily communities in the future.2. Summary of Significant Accounting Policies and Recent Accounting PronouncementsPrinciples of Consolidation. Our condensed consolidated financial statements include our accounts and the accounts of other subsidiaries and joint ventures (including partnerships and limited liability companies) over which we have control. All intercompany transactions, balances, and profits have been eliminated in consolidation. Investments acquired or created are evaluated based on the accounting guidance relating to variable interest entities ("VIEs"), which requires the consolidation of VIEs in which we are considered to be the primary beneficiary. If the investment is determined not to be a VIE, then the investment is evaluated for consolidation primarily using a voting interest model. In determining if we have a controlling financial interest, we consider factors such as ownership interests, decision making authority, kick-out rights and participating rights. As of September 30, 2022, two of our consolidated operating partnerships were VIEs. We are considered the primary beneficiary of both consolidated operating partnerships and therefore consolidate these operating partnerships. As of September 30, 2022, we held between approximately 93% and 95% of the outstanding common limited partnership units and the sole 1% general partnership interest in each of these consolidated operating partnerships. Interim Financial Reporting. We have prepared these unaudited financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and the applicable rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, these statements do not include all information and footnote disclosures required for annual statements. While we believe the disclosures presented are adequate for interim reporting, these interim unaudited financial statements should be read in conjunction with the audited financial statements and notes included in our 2021 Annual Report on Form 10-K.Acquisitions of Real Estate. Upon an acquisition of real estate, we determine the fair value of tangible and intangible assets, which includes land, buildings (as-if-vacant), furniture and fixtures, the value of in-place leases, including above and below market leases, and acquired liabilities. In estimating these values, we apply methods similar to those used by independent appraisers of income-producing property. Estimates of fair value of acquired debt are based upon interest rates available for the issuance of debt with similar terms and remaining maturities. Depreciation is computed on a straight-line basis over the remaining useful lives of the related tangible assets. The value of in-place leases and above or below market leases is amortized over the estimated average remaining life of leases in place at the time of acquisition; the net carrying value of in-place leases are included in other assets, net and the net carrying value of above or below market leases are included in other liabilities, net in our condensed consolidated balance sheets.We recognized amortization expense related to in-place leases of approximately $19.3 million and $8.4 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $44.9 million and $10.9 million for the nine months ended September 30, 2022 and 2021, respectively. The unamortized value of in-place leases at September 30, 2022 was approximately $5.6 million, and is expected to be fully amortized by December 31, 2022. We recognized revenue related to net below-market leases of $3.4 million and $7.8 million for the three and nine months ended September 30, 2022, respectively, and approximately $0.2 million of revenue related to net below-market leases for each of the three and nine months ended September 30, 2021.During the three and nine months ended September 30, 2022, the weighted average amortization periods for in-place leases were approximately nine months and eight months, respectively, and were approximately ten months for each of the three and nine months ended September 30, 2021. During the three and nine months ended September 30, 2022, the weighted average amortization periods for net below-market leases were approximately eight months and seven months, respectively, and were approximately ten months for each of the three and nine months ended September 30, 2021.8
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Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | 24 | SEC-NUM |
[Table of Contents](#i3788981a52d64e719f4aa81d6ab63fcb_7)The following table summarizes the financial assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2021:
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| (in millions) | Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 507 | | | $ | — | | | $ | — | | | $ | 507 | |
| Time deposits | — | | | 4 | | | — | | | 4 | |
| Commercial paper | — | | | 266 | | | — | | | 266 | |
| Short-term investments: | | | | | | | |
| Time deposits | — | | | 554 | | | — | | | 554 | |
| Equity investment security | 26 | | | — | | | — | | | 26 | |
| Available-for-sale investment securities: | | | | | | | |
| Commercial paper | — | | | 310 | | | — | | | 310 | |
| Other current assets: | | | | | | | |
| Foreign exchange forward and option contracts | — | | | 54 | | | — | | | 54 | |
| Long-term investments: | | | | | | | |
| Restricted time deposits(1) | — | | | 397 | | | — | | | 397 | |
| Other noncurrent assets: | | | | | | | |
| Foreign exchange forward and option contracts | — | | | 15 | | | — | | | 15 | |
| Accrued expenses and other current liabilities: | | | | | | | |
| Foreign exchange forward and option contracts | — | | | (7) | | | — | | | (7) | |
| Contingent consideration liabilities | — | | | — | | | (14) | | | (14) | |
| Other noncurrent liabilities: | | | | | | | |
| | | | | | | | |
| Contingent consideration liabilities | — | | | — | | | (21) | | | (21) | |
| | | |
| --- | --- | --- |
| | | |
| |
(1)See [Note 6](#i3788981a52d64e719f4aa81d6ab63fcb_64).The following table summarizes the changes in Level 3 contingent consideration liabilities for the nine months ended September 30:
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| | | | | | | | | | | | | | | |
| (in millions) | | 2022 | | 2021 |
| Beginning balance | | $ | 35 | | | $ | 54 | |
| Initial measurement recognized at acquisition | | 1 | | | 11 | |
| Change in fair value recognized in SG&A expenses | | — | | | (24) | |
| Payments | | (12) | | | (3) | |
| Ending balance | | $ | 24 | | | $ | 38 | |
We measure the fair value of money market funds based on quoted prices in active markets for identical assets and measure the fair value of our equity investment security based on the published daily net asset value at which investors can freely subscribe to or redeem from the fund. The fair value of certificates of deposit and commercial paper is measured based on relevant trade data, dealer quotes, or model-driven valuations using significant inputs derived from or corroborated by observable market data, such as yield curves and credit spreads. The carrying value of the time deposits approximated fair value as of September 30, 2022 and December 31, 2021.We estimate the fair value of each foreign exchange forward contract by using a present value of expected cash flows model. This model calculates the difference between the current market forward price and the contracted forward price for each foreign exchange forward contract and applies the difference in the rates to each outstanding contract. The market forward rates include a discount and credit risk factor. We estimate the fair value of each foreign exchange option contract by using a variant of the Black-Scholes model. This model uses present value techniques and reflects the time value and intrinsic value based on observable market rates.We estimate the fair value of contingent consideration liabilities associated with acquisitions using a variation of the income approach, which utilizes one or more significant inputs that are unobservable. This approach calculates the fair value of such liabilities based on the probability-weighted expected performance of the acquired entity against the target performance metric, discounted to present value when appropriate. During the nine months ended September 30, 2022 and the year ended December 31, 2021, there were no transfers among Level 1, Level 2 or Level 3 financial assets and liabilities.
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| Cognizant Technology Solutions | 17 | September 30, 2022 Form 10-Q |
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Compensation expense related to nonvested awards not yet recognized (in shares) | 1,555,736 | SEC-NUM |
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| [Table of Contents](#i4a1c883199354127b0e9b0ddb9e84eb8_7) | | Notes to Consolidated Financial Statements — (continued)(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) | |
| ACCENTURE 2022 FORM 10-K | | F-36 |
| | | | |
13. Share-Based CompensationShare Incentive Plans The Amended and Restated Accenture plc 2010 Share Incentive Plan, as amended and approved by our shareholders in 2022 (the “Amended 2010 SIP”), is administered by the Compensation, Culture & People Committee of the Board of Directors of Accenture and provides for the grant of nonqualified share options, incentive stock options, restricted share units and other share-based awards. A maximum of 127,000,000 Accenture plc Class A ordinary shares are currently authorized for awards under the Amended 2010 SIP. As of August 31, 2022, there were 27,381,461 shares available for future grants. Accenture plc Class A ordinary shares covered by awards that terminate, lapse or are cancelled may again be used to satisfy awards under the Amended 2010 SIP. We issue new Accenture plc Class A ordinary shares and shares from treasury for shares delivered under the Amended 2010 SIP.A summary of information with respect to share-based compensation is as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Fiscal |
| | 2022 | | 2021 | | 2020 |
| Total share-based compensation expense included in Net income | $ | 1,679,789 | | | $ | 1,342,951 | | | $ | 1,197,806 | |
| Income tax benefit related to share-based compensation included in Net income | 680,335 | | | 486,980 | | | 430,290 | |
Restricted Share Units Under the Amended 2010 SIP, participants may be, and previously under the predecessor 2001 Share Incentive Plan were, granted restricted share units, each of which represent an unfunded, unsecured right to receive an Accenture plc Class A ordinary share on the date specified in the participant’s award agreement. The fair value of the awards is based on our stock price on the date of grant. The restricted share units granted under these plans are subject to cliff or graded vesting, generally ranging from two to five years. For awards with graded vesting, compensation expense is recognized over the vesting term of each separately vesting portion. Compensation expense is recognized on a straight-line basis for awards with cliff vesting. Restricted share unit activity during fiscal 2022 is as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Number of RestrictedShare Units | | Weighted AverageGrant-Date Fair Value |
| Nonvested balance as of August 31, 2021 | 16,235,385 | | | $ | 207.26 | |
| Granted (1) | 6,047,849 | | | 387.73 | |
| Vested (2) | (6,701,738) | | | 200.46 | |
| Forfeited | (994,604) | | | 237.37 | |
| Nonvested balance as of August 31, 2022 | 14,586,892 | | | $ | 283.16 | |
(1)The weighted average grant-date fair value for restricted share units granted for fiscal 2022, 2021 and 2020 was $387.73, $263.83 and $206.05, respectively. (2)The total grant-date fair value of restricted share units vested for fiscal 2022, 2021 and 2020 was $1,343,403, $1,156,501 and $1,066,622, respectively. As of August 31, 2022, there was $1,555,736 of total unrecognized restricted share unit compensation expense related to nonvested awards, which is expected to be recognized over a weighted average period of 1.2 years. As of August 31, 2022, there were 255,196 restricted share units vested but not yet delivered as Accenture plc Class A ordinary shares.
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Matching participant's contribution, percentage on compensation, range high | 8 | SEC-NUM |
The Company sponsors a qualified defined contribution plan covering substantially all U.S. employees. Under this plan, the Company matches 100% of participants’ contributions up to 4% of compensation and 75% of participants’ contributions from over 4% to 8%. Employees that are still eligible to accrue benefits under the pension plans are limited to a 50% match of up to 6% of the participants’ compensation.In addition to pension benefits, certain health care and life insurance benefits are provided to qualifying U.S. employees upon retirement from IFF. Such coverage is provided through insurance plans with premiums based on benefits paid. The Company does not generally provide health care or life insurance coverage for retired employees of foreign subsidiaries; such benefits are provided in most foreign countries by government-sponsored plans, and the cost of these programs is not material.The Company offers a non-qualified Deferred Compensation Plan ("DCP") for certain key employees and non-employee directors. Eligible employees and non-employee directors may elect to defer receipt of salary, incentive payments and Board of Directors’ fees into participant-directed investments which are generally invested by the Company in individual variable life insurance contracts it owns that are designed to informally fund savings plans of this nature. The cash surrender value of life insurance is based on the net asset values of the underlying funds available to plan participants. At December 31, 2021 and December 31, 2020, the Consolidated Balance Sheets reflect liabilities of approximately $64 million and $59 million, respectively, related to the DCP in Other liabilities and approximately $26 million and $29 million, respectively, included in Capital in excess of par value related to the portion of the DCP that will be paid out in IFF shares.The total cash surrender value of life insurance contracts the Company owns in relation to the DCP and post-retirement life insurance benefits amounted to $52 million and $49 million at December 31, 2021 and 2020, respectively, and are recorded in Other assets in the Consolidated Balance Sheets.The plan assets and benefit obligations of the defined benefit pension plans are measured at December 31 of each year.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | U.S. Plans | | Non-U.S. Plans |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 | | 2019 | | 2021 | | 2020 | | 2019 |
| Components of net periodic benefit cost | | | | | | | | | | | |
| Service cost for benefits earned(1) | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 41 | | | $ | 24 | | | $ | 19 | |
| Interest cost on projected benefit obligation(2) | 71 | | | 17 | | | 22 | | | 10 | | | 13 | | | 18 | |
| Expected return on plan assets(2) | (106) | | | (28) | | | (28) | | | (55) | | | (46) | | | (43) | |
| Net amortization of deferrals(2) | 29 | | | 8 | | | 6 | | | 19 | | | 15 | | | 11 | |
| Settlements and curtailments(2) | — | | | — | | | — | | | (10) | | | 5 | | | — | |
| | | | | | | | | | | | |
| Net periodic benefit cost | (5) | | | (2) | | | 1 | | | 5 | | | 11 | | | 5 | |
| Defined contribution and other retirement plans | 36 | | | 13 | | | 9 | | | 33 | | | 7 | | | 9 | |
| Total expense | $ | 31 | | | $ | 11 | | | $ | 10 | | | $ | 38 | | | $ | 18 | | | $ | 14 | |
| Changes in plan assets and benefit obligations recognized in OCI | | | | | | | | | | | |
| Net actuarial (gain) loss | $ | 12 | | | $ | (1) | | | | | $ | (135) | | | $ | 70 | | | |
| Recognized actuarial loss | (9) | | | (8) | | | | | (10) | | | (20) | | | |
| Prior service cost | — | | | — | | | | | (2) | | | — | | | |
| Recognized prior service (cost) credit | — | | | — | | | | | 1 | | | — | | | |
| Currency translation adjustment | — | | | — | | | | | (16) | | | 28 | | | |
| Total (gain) loss recognized in OCI (before tax effects) | $ | 3 | | | $ | (9) | | | | | $ | (162) | | | $ | 78 | | | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ (1)Included as a component of Operating Profit.(2)Included as a component of Other Income (Expense), net. 90
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Preferred stock, par value (in dollars per share) | 1 | SEC-NUM |
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| AT&T INC. |
| CONSOLIDATED BALANCE SHEETS |
| Dollars in millions except per share amounts |
| (Unaudited) | | | |
| | September 30, | | December 31, |
| | 2022 | | 2021 |
| Assets | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 2,423 | | | $ | 19,223 | |
| Accounts receivable – net of related allowances for credit loss of $646 and $658 | 11,384 | | | 12,313 | |
| Inventories | 3,935 | | | 3,325 | |
| Prepaid and other current assets | 14,553 | | | 16,131 | |
| Assets from discontinued operations | — | | | 119,776 | |
| Total current assets | 32,295 | | | 170,768 | |
| | | | |
| Property, plant and equipment | 327,903 | | | 324,613 | |
| Less: accumulated depreciation and amortization | (200,858) | | | (202,964) | |
| Property, Plant and Equipment – Net | 127,045 | | | 121,649 | |
| Goodwill | 92,725 | | | 92,740 | |
| Licenses – Net | 123,856 | | | 113,830 | |
| | | | |
| | | | |
| Other Intangible Assets – Net | 5,362 | | | 5,391 | |
| Investments in and Advances to Equity Affiliates | 3,964 | | | 6,168 | |
| Operating Lease Right-Of-Use Assets | 21,782 | | | 21,824 | |
| | | | |
| Other Assets | 19,434 | | | 19,252 | |
| Total Assets | $ | 426,463 | | | $ | 551,622 | |
| Liabilities and Stockholders’ Equity | | | |
| Current Liabilities | | | |
| Debt maturing within one year | $ | 9,626 | | | $ | 24,620 | |
| Note payable to DIRECTV | 271 | | | 1,245 | |
| Accounts payable and accrued liabilities | 36,642 | | | 39,095 | |
| Advanced billings and customer deposits | 3,705 | | | 3,966 | |
| Dividends payable | 2,013 | | | 3,749 | |
| Liabilities from discontinued operations | — | | | 33,555 | |
| Total current liabilities | 52,257 | | | 106,230 | |
| Long-Term Debt | 123,854 | | | 151,011 | |
| Deferred Credits and Other Noncurrent Liabilities | | | |
| Deferred income taxes | 56,055 | | | 53,767 | |
| Postemployment benefit obligation | 6,152 | | | 12,560 | |
| Operating lease liabilities | 18,741 | | | 18,956 | |
| Other noncurrent liabilities | 29,426 | | | 25,243 | |
| | | | |
| Total deferred credits and other noncurrent liabilities | 110,374 | | | 110,526 | |
| Stockholders’ Equity | | | |
| Preferred stock ($1 par value, 10,000,000 authorized at September 30, 2022 and December 31, 2021): | | | |
| Series A (48,000 issued and outstanding at September 30, 2022 and December 31, 2021) | — | | | — | |
| Series B (20,000 issued and outstanding at September 30, 2022 and December 31, 2021) | — | | | — | |
| Series C (70,000 issued and outstanding at September 30, 2022 and December 31, 2021) | — | | | — | |
| Common stock ($1 par value, 14,000,000,000 authorized at September 30, 2022 andDecember 31, 2021: issued 7,620,748,598 at September 30, 2022 and December 31, 2021) | 7,621 | | | 7,621 | |
| Additional paid-in capital | 122,933 | | | 130,112 | |
| Retained earnings | 6,127 | | | 42,350 | |
| Treasury stock (494,560,271 at September 30, 2022 and 479,684,705 at December 31, 2021, at cost) | (17,148) | | | (17,280) | |
| Accumulated other comprehensive income | 2,873 | | | 3,529 | |
| Noncontrolling interest | 17,572 | | | 17,523 | |
| Total stockholders’ equity | 139,978 | | | 183,855 | |
| Total Liabilities and Stockholders’ Equity | $ | 426,463 | | | $ | 551,622 | |
See Notes to Consolidated Financial Statements.5
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Unrecognized tax benefit that could be reduced in next 12 months | 1 | SEC-NUM |
Unrecognized Tax Benefits The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in millions):
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| Years Ended | July 30, 2022 | | July 31, 2021 | | July 25, 2020 |
| Beginning balance | $ | 3,106 | | | $ | 2,518 | | | $ | 1,925 | |
| Additions based on tax positions related to the current year | 157 | | | 224 | | | 188 | |
| Additions for tax positions of prior years | 74 | | | 618 | | | 554 | |
| Reductions for tax positions of prior years | (81) | | | (122) | | | (136) | |
| Settlements | (69) | | | (93) | | | (4) | |
| Lapse of statute of limitations | (86) | | | (39) | | | (9) | |
| Ending balance | $ | 3,101 | | | $ | 3,106 | | | $ | 2,518 | |
As of July 30, 2022, $2.2 billion of the unrecognized tax benefits would affect the effective tax rate if realized. We recognized net interest expense of $33 million, $74 million and $104 million during fiscal 2022, 2021, and 2020, respectively. Our net penalty expense for fiscal 2022, 2021, and 2020 was not material. Our total accrual for interest and penalties was $486 million, $444 million, and $340 million as of the end of fiscal 2022, 2021, and 2020, respectively. We are no longer subject to U.S. federal income tax audit for returns covering tax years through fiscal 2013. We are no longer subject to foreign or state income tax audits for returns covering tax years through fiscal 2003 and fiscal 2008, respectively.We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We believe it is reasonably possible that certain federal, foreign, and state tax matters may be concluded in the next 12 months. Specific positions that may be resolved include issues involving transfer pricing and various other matters. We estimate that the unrecognized tax benefits at July 30, 2022 could be reduced by $1 billion in the next 12 months.(b)Deferred Tax Assets and LiabilitiesThe following table presents the breakdown for net deferred tax assets (in millions):
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | July 30, 2022 | | July 31, 2021 |
| Deferred tax assets | $ | 4,449 | | | $ | 4,360 | |
| Deferred tax liabilities | (55) | | | (134) | |
| Total net deferred tax assets | $ | 4,394 | | | $ | 4,226 | |
99
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Lessee, Operating Lease, Liability, Payments, Due Year Four | 161 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 18. LEASE COMMITMENTS (Continued)
Lease right-of-use assets and liabilities at December 31 were as follows (in millions):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | 2020 | | 2021 |
| Operating leases | | | | |
| Other assets, non-current | | $ | 1,287 | | | $ | 1,337 | |
| | | | | |
| Other liabilities and deferred revenue, current | | $ | 323 | | | $ | 345 | |
| Other liabilities and deferred revenue, non-current | | 991 | | | 1,048 | |
| Total operating lease liabilities | | $ | 1,314 | | | $ | 1,393 | |
| | | | | |
| Finance leases | | | | |
| Property and equipment, gross | | $ | 540 | | | $ | 715 | |
| Accumulated depreciation | | (50) | | | (68) | |
| Property and equipment, net | | $ | 490 | | | $ | 647 | |
| | | | | |
| Company excluding Ford Credit debt payable within one year | | $ | 46 | | | $ | 76 | |
| Company excluding Ford Credit long-term debt | | 368 | | | 489 | |
| Total finance lease liabilities | | $ | 414 | | | $ | 565 | |
The amounts contractually due on our lease liabilities as of December 31, 2021 were as follows (in millions):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Operating Leases (a) | | Finance Leases |
| 2022 | | $ | 385 | | | $ | 94 | |
| 2023 | | 307 | | | 88 | |
| 2024 | | 223 | | | 70 | |
| 2025 | | 161 | | | 62 | |
| 2026 | | 128 | | | 57 | |
| Thereafter | | 335 | | | 288 | |
| Total | | 1,539 | | | 659 | |
| Less: Present value discount | | 146 | | | 94 | |
| Total lease liabilities | | $ | 1,393 | | | $ | 565 | |
\_\_\_\_\_\_\_\_\_\_(a) Excludes approximately $252 million in future lease payments for various operating leases commencing in a future period.153
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Lessee, Operating Lease, Liability, Payments, Due Year Five | 11 | SEC-NUM |
millions):
| | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | |
| | | | Fiscal Year Ended June 30, 2022 |
| Cash paid for amounts included in lease liabilities: | | | |
| Financing cash flows used for finance leases | | | $ | 15 | |
| Operating cash flows used for finance leases | | | 11 | |
| Operating cash flows used for operating leases | | | 19 | |
| | | | |
| Non-cash transactions: | | | |
| Right-of-use assets obtained in exchange for new finance lease liabilities | | | 59 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | | | $ | 31 | |
As of June 30, 2022, the Company expects that its future minimum lease payments will become due and payable as follows:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | Financing Leases | | Operating Leases | | Total |
| 2023 | $ | 29 | | | $ | 17 | | | $ | 46 | |
| 2024 | 28 | | | 14 | | | 42 | |
| 2025 | 25 | | | 11 | | | 36 | |
| 2026 | 22 | | | 11 | | | 33 | |
| 2027 | 22 | | | 11 | | | 33 | |
| Thereafter | 238 | | | 74 | | | 312 | |
| Total minimum lease payments | 364 | | | 138 | | | 502 | |
| Less: interest | 130 | | | 39 | | | 169 | |
| Total lease liabilities | $ | 234 | | | $ | 99 | | | $ | 333 | |
17. COMMITMENTS AND CONTINGENCIESContingent LossesFrom time to time, the Company may be involved in legal proceedings arising in the ordinary course of business, including, without limitation, inquiries and claims concerning environmental contamination as well as litigation and allegations in connection with acquisitions, product liability, manufacturing or packaging defects, and claims for reimbursement for the cost of lost or damaged active pharmaceutical ingredients, the cost of any of which could be significant. The Company intends to vigorously defend itself against any such litigation and does not currently believe that the outcome of any such litigation will have a material adverse effect on the Company’s financial statements. In addition, the healthcare industry is highly regulated and government agencies continue to scrutinize certain practices affecting government programs and otherwise.From time to time, the Company receives subpoenas or requests for information relating to the business practices and activities of customers or suppliers from various governmental agencies or private parties, including from state attorneys general, the U.S. Department of Justice, and private parties engaged in patent infringement, antitrust, tort, and other litigation. The Company generally responds to such subpoenas and requests in a timely and thorough manner, which responses sometimes require considerable time and effort and can result in considerable costs being incurred. The Company expects to incur costs in future periods in connection with future requests.18. SEGMENT AND GEOGRAPHIC INFORMATIONAs discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, the Company conducted its business within the following segments in fiscal 2022: Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services. The Company evaluates the performance of its segments based on segment earnings before other (income) expense, impairments, restructuring costs, interest expense, income tax expense, and depreciation and amortization (“Segment EBITDA”). Segment EBITDA is subject to important limitations as it is not defined under U.S. GAAP and is not a measure of operating income, operating performance, or liquidity presented in accordance with U.S. GAAP. These consolidated financial 114
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Contingent acquisition liability, total change | 12.8 | SEC-NUM |
[Table of Contents](#i7b123d2c40e141848818780e535fa94e_7)Notes to Consolidated Financial Statements – (continued) (Amounts in Millions, Except Per Share Amounts) (Unaudited)
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2022 | | Balance Sheet Classification |
| | Level 1 | | Level 2 | | Level 3 | | Total | |
| Assets | | | | | | | | | |
| Cash equivalents | $ | 1,078.1 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 1,078.1 | | | Cash and cash equivalents |
| Liabilities | | | | | | | | | |
| Contingent acquisition obligations 1 | $ | 0.0 | | | $ | 0.0 | | | $ | 20.7 | | | $ | 20.7 | | | Accrued liabilities and Other non-current liabilities |
| | | | | | | | | | |
| | December 31, 2021 | | Balance Sheet Classification |
| | Level 1 | | Level 2 | | Level 3 | | Total | |
| Assets | | | | | | | | | |
| Cash equivalents | $ | 2,391.8 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 2,391.8 | | | Cash and cash equivalents |
| Liabilities | | | | | | | | | |
| Contingent acquisition obligations 1 | $ | 0.0 | | | $ | 0.0 | | | $ | 33.5 | | | $ | 33.5 | | | Accrued liabilities and Other non-current liabilities |
| | | |
| --- | --- | --- |
| | | |
| |
1Contingent acquisition obligations includes deferred acquisition payments and unconditional obligations to purchase additional non-controlling equity shares of consolidated subsidiaries. Fair value measurement of the obligations is based upon actual and projected operating performance targets as specified in the related agreements. The decrease in this balance of $12.8 from December 31, 2021 to September 30, 2022 is primarily due to payments related to our deferred acquisitions payments from prior-year acquisitions and valuation adjustments, partially offset by the exercises of redeemable non-controlling interest. The amounts payable within the next twelve months are classified in accrued liabilities; any amounts payable thereafter are classified in other non-current liabilities.Financial Instruments that are not Measured at Fair Value on a Recurring BasisThe following table presents information about our financial instruments that are not measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2022 | | December 31, 2021 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| Total long-term debt | $ | 0.0 | | | $ | 2,452.3 | | | $ | 33.4 | | | $ | 2,485.7 | | | $ | 0.0 | | | $ | 3,295.6 | | | $ | 41.8 | | | $ | 3,337.4 | |
Our long-term debt is comprised of senior notes and other notes payable. The fair value of our senior notes, which are traded over-the-counter, is based on quoted prices in markets that are not active. Therefore, these senior notes are classified as Level 2. Our other notes payable are not actively traded, and their fair value is not solely derived from readily observable inputs. The fair value of our other notes payable is determined based on a discounted cash flow model and other proprietary valuation methods, and therefore is classified as Level 3. See Note 3 for further information on our long-term debt.The discount rates used as significant unobservable inputs in the Level 3 fair value measurements of our contingent acquisition obligations and long-term debt as of September 30, 2022 ranged from 3.0% to 6.0% and 0.4% to 3.4%, respectively. Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring BasisCertain non-financial assets and liabilities are measured at fair value on a nonrecurring basis, primarily goodwill (Level 3), intangible assets, and property and equipment. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.
23
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Other operating expenses | 547 | SEC-NUM |
[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)DANAHER CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF EARNINGS($ and shares in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31 | |
| | 2021 | | 2020 | | 2019 | |
| Sales | $ | 29,453 | | | $ | 22,284 | | | $ | 17,911 | | |
| Cost of sales | (11,501) | | | (9,809) | | | (7,927) | | |
| Gross profit | 17,952 | | | 12,475 | | | 9,984 | | |
| Operating costs: | | | | | | |
| Selling, general and administrative expenses | (8,198) | | | (6,896) | | | (5,589) | | |
| Research and development expenses | (1,742) | | | (1,348) | | | (1,126) | | |
| Other operating expenses | (547) | | | — | | | — | | |
| Operating profit | 7,465 | | | 4,231 | | | 3,269 | | |
| Nonoperating income (expense): | | | | | | |
| Other income (expense), net | 456 | | | 494 | | | 12 | | |
| | | | | | | |
| Loss on early extinguishment of borrowings | (96) | | | (26) | | | (7) | | |
| Interest expense | (238) | | | (275) | | | (108) | | |
| Interest income | 11 | | | 71 | | | 139 | | |
| Earnings from continuing operations before income taxes | 7,598 | | | 4,495 | | | 3,305 | | |
| Income taxes | (1,251) | | | (849) | | | (873) | | |
| Net earnings from continuing operations | 6,347 | | | 3,646 | | | 2,432 | | |
| Earnings from discontinued operations, net of income taxes | 86 | | | — | | | 576 | | |
| Net earnings | 6,433 | | | 3,646 | | | 3,008 | | |
| Mandatory convertible preferred stock dividends | (164) | | | (136) | | | (68) | | |
| Net earnings attributable to common stockholders | $ | 6,269 | | | $ | 3,510 | | | $ | 2,940 | | |
| | | | | | | |
| Net earnings per common share from continuing operations: | | | | | | |
| Basic | $ | 8.65 | | | $ | 4.97 | | | $ | 3.31 | | |
| Diluted | $ | 8.50 | | | $ | 4.89 | | | $ | 3.26 | | |
| Net earnings per common share from discontinued operations: | | | | | | |
| Basic | $ | 0.12 | | | $ | — | | | $ | 0.81 | | |
| Diluted | $ | 0.12 | | | $ | — | | | $ | 0.79 | | |
| Net earnings per common share: | | | | | | |
| Basic | $ | 8.77 | | | $ | 4.97 | | | $ | 4.11 | | \* |
| Diluted | $ | 8.61 | | \* | $ | 4.89 | | | $ | 4.05 | | |
| Average common stock and common equivalent shares outstanding: | | | | | | |
| Basic | 714.6 | | | 706.2 | | | 715.0 | | |
| Diluted | 736.8 | | | 718.7 | | | 725.5 | | |
\* Net earnings per common share amount does not add due to rounding.See the accompanying Notes to the Consolidated Financial Statements.63
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Preferred Stock, Shares Authorized | 10,000,000 | SEC-NUM |
[Table of Contents](#i1d117440a79147f69db4408bc4f22334_10)Part IV
| | | |
| --- | --- | --- |
| | | |
| |
IRON MOUNTAIN INCORPORATEDCONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | DECEMBER 31, |
| | 2021 | | 2020 |
| ASSETS | | | |
| Current Assets: | | | |
| Cash and cash equivalents | $ | 255,828 | | | $ | 205,063 | |
| | | | |
| Accounts receivable (less allowances of $62,009 and $56,981 as of December 31, 2021 and 2020, respectively) | 961,419 | | | 859,344 | |
| | | | |
| Prepaid expenses and other | 224,020 | | | 205,380 | |
| Total Current Assets | 1,441,267 | | | 1,269,787 | |
| | | | |
| Property, plant and equipment | 8,647,303 | | | 8,246,337 | |
| Less—Accumulated depreciation | (3,979,159) | | | (3,743,894) | |
| Property, Plant and Equipment, net | 4,668,144 | | | 4,502,443 | |
| Other Assets, Net: | | | |
| Goodwill | 4,463,531 | | | 4,557,609 | |
| Customer relationships, customer inducements and data center lease-based intangibles | 1,181,043 | | | 1,326,977 | |
| | | | |
| Operating lease right-of-use assets | 2,314,422 | | | 2,196,502 | |
| Other | 381,624 | | | 295,949 | |
| Total Other Assets, Net | 8,340,620 | | | 8,377,037 | |
| Total Assets | $ | 14,450,031 | | | $ | 14,149,267 | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities: | | | |
| Current portion of long-term debt | $ | 309,428 | | | $ | 193,759 | |
| Accounts payable | 369,145 | | | 359,863 | |
| Accrued expenses and other current liabilities (includes current portion of operating lease liabilities) | 1,032,537 | | | 1,146,288 | |
| Deferred revenue | 307,470 | | | 295,785 | |
| Total Current Liabilities | 2,018,580 | | | 1,995,695 | |
| Long-term Debt, net of current portion | 8,962,513 | | | 8,509,555 | |
| Long-term Operating Lease Liabilities, net of current portion | 2,171,472 | | | 2,044,598 | |
| Other Long-term Liabilities | 144,053 | | | 204,508 | |
| | | | |
| Deferred Income Taxes | 223,934 | | | 198,377 | |
| Commitments and Contingencies | | | |
| Redeemable Noncontrolling Interests | 72,411 | | | 59,805 | |
| Equity: | | | |
| Iron Mountain Incorporated Stockholders’ Equity: | | | |
| Preferred stock (par value $0.01; authorized 10,000,000 shares; none issued and outstanding) | — | | | — | |
| Common stock (par value $0.01; authorized 400,000,000 shares; issued and outstanding 289,757,061 shares and 288,273,049 shares as of December 31, 2021 and 2020, respectively) | 2,898 | | | 2,883 | |
| Additional paid-in capital | 4,412,553 | | | 4,340,078 | |
| (Distributions in excess of earnings) Earnings in excess of distributions | (3,221,152) | | | (2,950,339) | |
| Accumulated other comprehensive items, net | (338,347) | | | (255,893) | |
| Total Iron Mountain Incorporated Stockholders’ Equity | 855,952 | | | 1,136,729 | |
| Noncontrolling Interests | 1,116 | | | — | |
| Total Equity | 857,068 | | | 1,136,729 | |
| Total Liabilities and Equity | $ | 14,450,031 | | | $ | 14,149,267 | |
The accompanying notes are an integral part of these consolidated financial statements.
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| 69 | IRON MOUNTAIN 2021 FORM 10-K | |
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Impairment charge | 10 | SEC-NUM |
[Table of Contents](#iedef37dc53354d4baa10c50c5095e29f_25)Consumers estimates that its liability to perform remediation and other response activities at NREPA sites other than the MGP sites could reach $3 million. At June 30, 2022, Consumers had a recorded liability of less than $1 million, the minimum amount in the range of its estimated probable liability, as no amount in the range was considered a better estimate than any other amount.Ray Compressor Station: On January 30, 2019, Consumers experienced a fire at the Ray Compressor Station, which resulted in the Ray Storage Field being off‑line or operating at significantly reduced capacity, which negatively affected Consumers’ natural gas supply and delivery capacity. This incident, which occurred during the extreme polar vortex weather condition, required Consumers to request voluntary reductions in customer load, to implement contingency gas supply purchases, and to implement a curtailment of natural gas deliveries for industrial and large commercial customers pursuant to Consumers’ MPSC curtailment tariff. The curtailment and request for voluntary reductions of customer loads were canceled as of midnight, February 1, 2019. Consumers investigated the cause of the incident, and filed a report on the incident with the MPSC in April 2019. In response, the MPSC issued an order in July 2019, directing Consumers to file additional reports regarding the incident and to include detail of the resulting costs in a future rate proceeding. The compressor station is presently operating at full capacity. In September 2020, the MPSC disallowed the recovery of $7 million in incremental gas purchases related to the fire. In January 2021, the MPSC denied Consumers’ petition for a rehearing challenging this disallowance. In February 2021, Consumers filed an appeal of the MPSC’s denial with the Michigan Court of Appeals. In December 2021, Consumers filed a gas rate case with the MPSC that included a request for recovery of the capital expenditures incurred to restore and modify the compressor station. Consumers incurred capital expenditures of $17 million during 2020 and 2021 to restore and modify the compressor station.During the six months ended June 30, 2022, Consumers received insurance proceeds of $13 million, representing recovery of costs incurred to restore the compressor station and incremental gas purchases related to the fire. Consumers had recognized the insurance recovery during 2021.In June 2022, Consumers, the MPSC Staff, and other intervenors reached a settlement of the gas rate case and the MPSC approved it in July 2022. As a part of the settlement agreement, Consumers agreed, at this time, to not seek recovery of the capital expenditures, net of insurance proceeds, related to restoring and modifying the Ray Compressor Station. As a result, Consumers recorded an impairment charge of $10 million within maintenance and other operating expenses on its consolidated statements of income for the three and six months ended June 30, 2022.68
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Amount recognized in other comprehensive income on interest rate swap contracts, gross ($50.2 million, net of tax) | 66.3 | SEC-NUM |
THE COOPER COMPANIES, INC. AND SUBSIDIARIESNotes to Consolidated Condensed Financial Statements(Unaudited)
The following table details the changes in accumulated other comprehensive income:
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| (In millions) | | Amount |
| Beginning balance gain as of October 31, 2021 | | $ | 17.2 | |
| Amount recognized in other comprehensive income on interest rate swap contracts, gross ($50.2 million, net of tax) | | 66.3 | |
| Amount reclassified from other comprehensive income into earnings, gross ($2.5 million, net of tax) | | 3.3 | |
| Ending balance gain as of April 30, 2022 | | $ | 86.8 | |
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Payments for Legal Settlements | 27 | SEC-NUM |
[Table of Contents](#i6603aeb911854ef785a9b575909b38eb_7)NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)class members. As of September 30, 2022, approximately $2 million had been disbursed from the account since its establishment in 2012 and the remaining balance is approximately $1 million.
The Leach settlement permits class members to pursue personal injury claims for six health conditions (and no others) that an expert panel appointed under the settlement reported in 2012 had a “probable link” (as defined in the settlement) with PFOA: pregnancy-induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis; and diagnosed high cholesterol. After the panel reported its findings, approximately 3,550 personal injury lawsuits were filed in federal and state courts in Ohio and West Virginia and consolidated in multi-district litigation in the U.S. District Court for the Southern District of Ohio (“Ohio MDL”). The Ohio MDL was settled in early 2017 for $670.7 million in cash, with Chemours and EID (without indemnification from Chemours) each paying half.
Post-MDL Settlement PFOA Personal Injury ClaimsThe 2017 Ohio MDL settlement did not resolve claims of plaintiffs who did not have claims in the Ohio MDL or whose claims are based on diseases first diagnosed after February 11, 2017. The first was a consolidated trial of two cases; the first, a kidney cancer case, which resulted in a hung jury, while the second, Travis and Julie Abbot v. E.I du Pont de Nemours and Company (the “Abbot Case”), a testicular cancer case, resulted in a jury verdict of $40 million in compensatory damages and $10 million for loss of consortium. The loss of consortium award was subsequently reduced to $250,000 in accordance with state law limitations. Following entry of the judgment by the court, EID filed post-trial motions to reduce the verdict, and to appeal the verdict on the basis of procedural and substantive legal errors made by the trial court. The company believes the merits of the appeal will be successful in reducing the jury verdict or eliminating its liability, in whole or part.
In January 2021, Chemours, DuPont and Corteva agreed to settle the remaining approximately 95 matters, as well as unfiled matters, remaining in the Ohio MDL, with the exception of the Abbot case, for $83 million, with Chemours contributing $29 million to the settlement, and DuPont and Corteva contributing $27 million each. The company paid $27 million during the year ended December 31, 2021. As agreed to in the settlement, the plaintiffs' counsel filed a motion to dissolve the MDL. EID has sought dissolution of the MDL from the judicial oversight panel responsible for the MDL.
Other PFOA MattersEID is a party to other PFOA lawsuits involving claims for property damage, medical monitoring and personal injury. Defense costs and any future liabilities that may arise out of these lawsuits are subject to the MOU and the cost sharing arrangement disclosed above. Under the MOU, fraudulent conveyance claims associated with these matters are not qualified expenses, unless Corteva, Inc. and EID would prevail on the merits of these claims.
New York. EID is a defendant in about 45 lawsuits, including a putative class action (the "Baker Class Action"), brought by persons who live in and around Hoosick Falls, New York. These lawsuits assert claims for medical monitoring, property damage and personal injury based on alleged PFOA releases from manufacturing facilities owned and operated by co-defendants in Hoosick Falls. The lawsuits allege that EID and others supplied materials used at these facilities resulting in PFOA air and water contamination. A court approved settlement was reached between the plaintiffs and the other co-defendants regarding the Baker Class Action case. In September 2022, the class certification of the Baker Class Action was granted, with the court certifying three separate classes consisting of a private well property damage class, a medical monitoring class and a nuisance class. EID will challenge the certification, and continue to defend itself on the merits of the case, while seeking an out of court resolution.
EID is also one of more than ten defendants in a lawsuit brought by the Town of East Hampton, New York alleging PFOA and PFOS contamination of the town’s well water. Additionally, EID along with Chemours and others, have been named defendants in complaints filed by 11 water districts in Nassau County, New York alleging that the drinking water they provide to customers is contaminated with PFAS and seeking reimbursement for clean-up costs. The water district complaints also include allegations of fraudulent transfer.
New Jersey. As of September 30, 2022, two lawsuits were pending, one brought by a local water utility and the second a putative class action, against EID alleging that PFOA from EID’s former Chambers Works facility contaminated drinking water sources. The putative class action was voluntarily dismissed without prejudice by the plaintiff.
In late March of 2019, the New Jersey State Attorney General filed four lawsuits against EID, Chemours, and others alleging that operations at and discharges from former EID sites in New Jersey (Chambers Works, Pompton Lakes, Parlin and Repauno) damaged the State’s natural resources. Two of these lawsuits (those involving the Chambers Works and Parlin sites) allege contamination from PFAS. The Ridgewood Water District in New Jersey filed suit in the first quarter 2019 against EID, Chemours, and others alleging losses related to the investigation, remediation and monitoring of polyfluorinated surfactants, including PFOA, in water supplies. DuPont and Corteva were subsequently 26
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Price Risk Cash Flow Hedge Unrealized Gain to be Reclassified During Next 12 Months | 42 | SEC-NUM |
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| [Table of Contents](#i35a0317244714ddbbfcfc1f7731c8932_7) | emn-20220630_g1.jpg | |
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSThe following table presents the effect of fair value and cash flow hedge accounting in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for first six months 2022 and 2021.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | | | | | | | | | | | | |
| Location and Amount of Gain or (Loss) Recognized in Earnings from Fair Value and Cash Flow Hedging Relationships |
| | | First Six Months |
| | | 2022 | | 2021 |
| (Dollars in millions) | | Sales | | Cost of Sales | | Net Interest Expense | | Sales | | Cost of Sales | | Net Interest Expense |
| Total amounts of income and expense line items presented in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings in which the effects of fair value or cash flow hedges are recognized | | $ | 5,498 | | | $ | 4,278 | | | $ | 91 | | | $ | 5,062 | | | $ | 3,783 | | | $ | 101 | |
| | | | | | | | | | | | | |
| The effects of fair value and cash flow hedging: | | | | | | | | | | | | |
| Gain or (loss) on fair value hedging relationships: | | | | | | | | | | | | |
| Interest contracts (fixed-for-floating interest rate swaps): | | | | | | | | | | | | |
| Hedged items | | | | | | 1 | | | | | | | 1 | |
| Derivatives designated as hedging instruments | | | | | | (1) | | | | | | | (1) | |
| Gain or (loss) on cash flow hedging relationships: | | | | | | | | | | | | |
| Interest contracts (forward starting interest rate and treasury lock swap contracts): | | | | | | | | | | | | |
| Amount reclassified from AOCI into earnings | | | | | | (5) | | | | | | | (5) | |
| Commodity Contracts: | | | | | | | | | | | | |
| Amount reclassified from AOCI into earnings | | | | 37 | | | | | | | (5) | | | |
| Foreign Exchange Contracts: | | | | | | | | | | | | |
| Amount reclassified from AOCI into earnings | | 15 | | | | | | | (10) | | | | | |
The Company enters into foreign exchange derivatives denominated in multiple currencies which are transacted and settled in the same quarter. These derivatives are not designated as hedges due to the short-term nature and the gains or losses on these derivatives are marked-to-market in line item "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings. As a result of these derivatives, the Company recognized a net loss of $6 million during both second quarter and first six months 2022, and recognized a net loss of $5 million during second quarter 2021 and no gain or loss during first six months 2021.
Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI included net gains of $223 million and net losses of $7 million at June 30, 2022 and December 31, 2021, respectively. Gains in AOCI increased between June 30, 2022 and December 31, 2021 primarily as a result of an increase in euro to U.S. dollar exchange rates. If recognized, approximately $42 million in pre-tax gains, as of June 30, 2022, would be reclassified into earnings during the next 12 months.
8.RETIREMENT PLANS
Defined Benefit Pension Plans and Other Postretirement Benefit Plans
Eastman maintains defined benefit pension plans that provide eligible employees with retirement benefits. In addition, Eastman provides life insurance for eligible retirees hired prior to January 1, 2007. The Company provided a subsidy for pre-Medicare health care and dental benefits to eligible retirees hired prior to January 1, 2007 that ended on December 31, 2021. Company funding is also provided for eligible Medicare retirees hired prior to January 1, 2007 with a health reimbursement arrangement. Costs recognized for these benefits are estimated amounts, which may change as actual costs for the year are determined.
For additional information regarding retirement plans, see Note 11, "Retirement Plans", to the consolidated financial statements in Part II, Item 8 of the Company's 2021 [Annual Report on Form 10-K](http://www.sec.gov/Archives/edgar/data/915389/000091538922000010/emn-20211231.htm).
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Decrease in unrecognized tax benefits that are reasonably possibly over the next twelve-month period | 10.6 | SEC-NUM |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Redeemable Noncontrolling InterestsThe Company has a 92% equity interest in Vital River with an 8% redeemable noncontrolling interest. The Company has the right to purchase, and the noncontrolling interest holders have the right to sell, the remaining 8% equity interest at a contractually defined redemption value, subject to a redemption floor, which represents a derivative embedded within the equity instrument. The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value ($24.2 million as of September 24, 2022) and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. As the noncontrolling interest holders have the ability to require the Company to purchase the remaining 8% interest, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. The amount that the Company could be required to pay to purchase the remaining 8% equity interest is not limited.Prior to June 2022, the Company had an 80% equity interest in a subsidiary with a 20% redeemable noncontrolling interest. In June 2022, the Company purchased an additional 10% interest in the subsidiary for $15.0 million. Beginning in 2024, the Company has the right to purchase, and the noncontrolling interest holders have the right to sell (Put/call option), the remaining 10% equity interest at its appraised value ($15.0 million as of September 24, 2022). The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the appraised value and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest or a predetermined floor value. As the noncontrolling interest holders have the ability to require the Company to purchase the remaining 10% interest, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. The amount that the Company could be required to pay to purchase the remaining 10% equity interest is not limited.The following table provides a rollforward of the activity related to the Company’s redeemable noncontrolling interests:
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| | | | | | | | | | | | |
| | Nine Months Ended |
| | September 24, 2022 | | September 25, 2021 |
| | (in thousands) |
| Beginning balance | $ | 53,010 | | | $ | 25,499 | |
| Purchase of a 10% redeemable noncontrolling interest | (15,000) | | | — | |
| Adjustments of noncontrolling interests to redemption values | 6,681 | | | 3,043 | |
| Net income attributable to noncontrolling interests | 2,963 | | | 3,674 | |
| Dividend to redeemable noncontrolling interest | (3,525) | | | — | |
| Foreign currency translation | (4,923) | | | 340 | |
| Ending balance | $ | 39,206 | | | $ | 32,556 | |
11. INCOME TAXESThe Company’s effective tax rates for the three months ended September 24, 2022 and September 25, 2021 were 20.7% and 14.7%, respectively. The Company’s effective tax rates for the nine months ended September 24, 2022 and September 25, 2021 were 19.7% and 18.3%, respectively. The increase in the three month effective tax rates from the prior year period was primarily attributable to a decreased tax benefit from stock-based compensation deductions, as well as lower research and development tax credits due to a discrete benefit in the three months ended September 25, 2021. The increase in the nine month effective tax rates is attributable primarily to the same reasons as above, partially offset with the deferred tax impact of tax law changes enacted during the nine months ended September 25, 2021.For the three months ended September 24, 2022, the Company’s unrecognized tax benefits decreased by $1.2 million to $33.3 million, primarily due to favorable foreign exchange, and the lapse of statutes of limitations, partially offset by increases in research and development tax credit reserves. For the three months ended September 24, 2022, the amount of unrecognized income tax benefits that would impact the effective tax rate decreased by $1.5 million to $29.6 million for the same reasons discussed above. The accrued interest on unrecognized tax benefits was $1.1 million as of September 24, 2022. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $10.6 million over the next twelve-month period, primarily due to audit settlements and expiring statutes of limitations.The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2018.The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, France, and India. The Company does not anticipate resolution of these audits will have a material impact on its consolidated financial statements.25
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Number of acres contributed to date | 206 | SEC-NUM |
CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)investment prior to the William Hill Acquisition. See Note 3 for further detail on the consideration transferred and the allocation of the purchase price.NeoGamesThe acquired net assets of William Hill included an investment in NeoGames S.A. (“NeoGames”), a global leader of iLottery solutions and services to national and state-regulated lotteries, and other investments. On September 16, 2021, the Company sold a portion of its shares of NeoGames common stock for $136 million which decreased its ownership interest from 24.5% to approximately 8.4%. As of December 31, 2021, the Company held approximately 2 million shares of NeoGames common stock with a fair value of $60 million. The shares have a readily determinable fair value and, accordingly, the Company remeasures the investment based on the publicly available share price (Level 1). See Note 8. For the year ended December 31, 2021, the Company recorded a loss related to the investment in NeoGames of $54 million, which is included within Other income (loss) on the Statements of Operations.Pompano Joint VentureIn April 2018, the Company entered into a joint venture with Cordish Companies (“Cordish”) to plan and develop a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the casino and racetrack at the Company’s Pompano property. As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project. Additionally, Cordish will be responsible for the development of the master plan for the project with the Company’s input and will submit it for the Company’s review and approval. In June 2021, the joint venture issued a capital call and we contributed $3 million, for a total of $4 million in cash contributions since inception of the joint venture. On February 12, 2021, the Company contributed 186 acres to the joint venture with a fair value of $61 million. Total contributions of approximately 206 acres of land have been made with a fair value of approximately $69 million, and the Company has no further obligation to contribute additional real estate or cash as of December 31, 2021. We entered into a short-term lease agreement in February 2021, which we can cancel at any time, to lease back a portion of the land from the joint venture.While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary; as such the investment in the joint venture is accounted for using the equity method. The Company participates evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction costs and other operating costs on the Statements of Operations. As of December 31, 2021 and December 31, 2020, the Company’s investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.Note 6. Property and EquipmentProperty and equipment are stated at cost, except for assets acquired in our business combinations which were adjusted for fair value under ASC 805. Depreciation is computed using the straight-line method over the estimated useful life of the asset as noted in the table below, or the term of the lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on the disposal of property and equipment are included in operating income.Our property and equipment is subject to various operating leases for which we are the lessor. We lease our property and equipment related to our hotel rooms, convention space and retail space through various short-term and long-term operating leases. See Note 10 for further discussion of our leases.
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| Buildings and improvements | 3 to 40 years |
| Land improvements | 12 to 40 years |
| Furniture, fixtures and equipment | 3 to 15 years |
| Riverboats | 30 years |
The Company evaluates its property and equipment and other long-lived assets for impairment based on its classification as held for sale or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively seeking a buyer. For assets held for sale, the Company recognizes the asset at the lower of carrying value or fair market value less costs to sell, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and used, the Company reviews for impairment whenever indicators of impairment exist. The Company then compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment charge may be recorded for any difference between fair value and the carrying value. All [Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)84
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Tax effect | 2 | SEC-NUM |
The following tables provide the effects of derivative instruments on AOCI and in the consolidated statements of income:
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| | | Location of Gain / (Loss) Reclassified from AOCI into Income (Effective Portion) | | Gain / (Loss) Reclassified from AOCI into Income (Effective Portion) |
| | | | Years ended June 30, |
| ($ in millions) | | | 2022 | | 2021 | | 2020 |
| Derivatives in cash flow hedging relationships | | | | | | | | |
| Commodity contracts | | Cost of sales | | $ | 20 | | | $ | 1 | | | $ | (6) | |
| Forward exchange contracts | | Net sales | | — | | | — | | | (1) | |
| | | | | | | | | |
| Treasury locks | | Interest expense | | (3) | | | (2) | | | — | |
| Total | | | | $ | 17 | | | $ | (1) | | | $ | (7) | |
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| | | Location of Gain / (Loss) Recognized in the Consolidated Income Statements | | Gain / (Loss) Recognized in Income for Derivatives not Designated as Hedging Instruments |
| | | | Years ended June 30, |
| ($ in millions) | | | 2022 | | 2021 | | 2020 |
| Derivatives not designated as hedging instruments | | | | | | | | |
| Forward exchange contracts | | Other income, net | | $ | (45) | | | $ | 11 | | | $ | (6) | |
| Cross currency interest rate swaps | | Other income, net | | — | | | (4) | | | — | |
| Total | | | | $ | (45) | | | $ | 7 | | | $ | (6) | |
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| | | Location of Loss Recognized in the Consolidated Income Statements | | Loss Recognized in Income for Derivatives in Fair Value Hedging Relationships |
| | | | Years ended June 30, |
| ($ in millions) | | | 2022 | | 2021 | | 2020 |
| Derivatives in fair value hedging relationships | | | | | | | | |
| Interest rate swaps | | Interest expense | | $ | (75) | | | $ | (14) | | | $ | (1) | |
| Forward exchange contracts | | Other income, net | | (11) | | | — | | | — | |
| Total | | | | $ | (86) | | | $ | (14) | | | $ | (1) | |
The changes in AOCI for effective derivatives were as follows:
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| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| ($ in millions) | | 2022 | | 2021 | | 2020 |
| Amounts reclassified into earnings | | | | | | |
| Commodity contracts | | $ | (20) | | | $ | (1) | | | $ | 6 | |
| Forward exchange contracts | | — | | | — | | | 1 | |
| Treasury locks | | 3 | | | 2 | | | — | |
| Change in fair value | | | | | | |
| Commodity contracts | | 9 | | | 22 | | | (7) | |
| Forward exchange contracts | | (1) | | | 3 | | | (2) | |
| Treasury locks | | — | | | — | | | (20) | |
| Tax effect | | 2 | | | — | | | — | |
| Total | | $ | (7) | | | $ | 26 | | | $ | (22) | |
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Vested, Weighted-Average Grant Date Fair Value | 61.61 | SEC-NUM |
[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)Cadence had total unrecognized compensation expense related to stock option grants of $32.8 million as of January 1, 2022, which will be recognized over the remaining vesting period. The remaining weighted average vesting period of unvested awards is 2.7 years.The total intrinsic value of and cash received from options exercised during fiscal 2021, 2020 and 2019 was:
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| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Intrinsic value of options exercised | $ | 129,403 | | | $ | 109,193 | | | $ | 51,625 | |
| Cash received from options exercised | 23,844 | | | 26,474 | | | 14,553 | |
Restricted StockGenerally, restricted stock, which includes restricted stock awards and restricted stock units, vests over three years to four years and is subject to the employee’s continuing service to Cadence. Stock-based compensation expense is recognized ratably over the vesting term. The vesting of certain restricted stock grants is subject to attainment of specified performance criteria. Each fiscal quarter, Cadence estimates the probability of the achievement of these performance goals and recognizes any related stock-based compensation expense using the graded-vesting method. The amount of stock-based compensation expense recognized in any one period can vary based on the attainment or expected attainment of the various performance goals. If such performance goals are not ultimately met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Certain long-term, market-based performance stock awards granted to executives vest over three to five years and are subject to certain market conditions and the executive’s continuing service to Cadence. Stock-based compensation expense is recognized straight-line over the vesting term. If the market-based performance conditions are not ultimately met, compensation expense previously recognized is not reversed. As of January 1, 2022, Cadence had 1.3 million shares of unvested long-term, market-based performance stock awards outstanding. Stock-based compensation expense related to performance-based and market-based performance restricted stock grants for fiscal 2021, 2020 and 2019 was as follows:
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| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Stock-based compensation expense related to performance-based restricted stock | $ | 16,225 | | | $ | 14,859 | | | $ | 12,640 | |
| Stock-based compensation expense related to market-based performance stock awards | 6,453 | | | 8,335 | | | 7,019 | |
A summary of the changes in restricted stock outstanding under Cadence’s equity incentive plans during fiscal 2021 is presented below:
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| | | | Weighted Average Grant Date | | Weighted AverageRemainingVesting Terms | | AggregateIntrinsic |
| | Shares | | Fair Value | | (Years) | | Value |
| | (In thousands) | | | | | | (In thousands) |
| Unvested shares as of January 2, 2021 | 6,239 | | | $ | 63.12 | | | | | |
| Granted | 1,688 | | | 141.97 | | | | | |
| Vested | (2,570) | | | 61.61 | | | | | |
| Forfeited | (426) | | | 75.92 | | | | | |
| Unvested shares as of January 1, 2022 | 4,931 | | | $ | 89.91 | | | 1.2 | | $ | 918,769 | |
Cadence had total unrecognized compensation expense related to restricted stock grants of $341.0 million as of January 1, 2022, which will be recognized over the remaining vesting period. The remaining weighted average vesting period of unvested awards is 2.0 years. The total fair value realized by employees upon vesting of restricted stock during fiscal 2021, 2020 and 2019 was:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Fair value of restricted stock realized upon vesting | $ | 365,298 | | | $ | 358,261 | | | $ | 298,320 | |
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Finance lease payments | 672 | SEC-NUM |
The weighted-average finance lease term was 2.8 years and 2.6 years as of March 31, 2022 and March 31, 2021, respectively. The weighted-average finance lease discount rate was 2.9% and 3.6% as of March 31, 2022 and March 31, 2021, respectively.
The following maturity analysis presents expected undiscounted cash payments for finance leases as of March 31, 2022:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Year | | |
| (in millions) | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter | | Total |
| Finance lease payments | | $ | 300 | | | $ | 195 | | | $ | 108 | | | $ | 50 | | | $ | 19 | | | $ | — | | | $ | 672 | |
| Less: imputed interest | | | | | | | | | | | | | | (29) | |
| Total finance lease liabilities | | | | | | | | | | | | | | $ | 643 | |
| | | | | | | | | | | | | | | |
Note 8 - Fair Value
Fair Value Measurements on a Recurring Basis
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis excluding pension assets and derivative assets and liabilities. See Note 15 - "Pension and Other Benefit Plans" and Note 9 - "Derivative Instruments" for information about these excluded assets and liabilities. There were no transfers between any of the levels during the periods presented.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Hierarchy |
| (in millions) | | As of March 31, 2022 |
| Assets: | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
| Money market funds and money market deposit accounts | | $ | 5 | | | $ | 5 | | | $ | — | | | $ | — | |
| | | | | | | | | |
| Time deposits(1) | | 51 | | | 51 | | | — | | | — | |
| | | | | | | | | |
| Other securities(2) | | 51 | | | — | | | 49 | | | 2 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Total assets | | $ | 107 | | | $ | 56 | | | $ | 49 | | | $ | 2 | |
| | | | | | | | | |
| Liabilities: | | | | | | | | |
| Contingent consideration | | $ | 8 | | | $ | — | | | $ | — | | | $ | 8 | |
| | | | | | | | | |
| Total liabilities | | $ | 8 | | | $ | — | | | $ | — | | | $ | 8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | As of March 31, 2021 |
| Assets: | | Fair Value | | Level 1 | | Level 2 | | Level 3 |
| Money market funds and money market deposit accounts | | $ | 12 | | | $ | 12 | | | $ | — | | | $ | — | |
| Time deposits(1) | | 78 | | | 78 | | | — | | | — | |
| Other securities(2) | | 57 | | | — | | | 55 | | | 2 | |
| | | | | | | | | |
| | | | | | | | | |
| Total assets | | $ | 147 | | | $ | 90 | | | $ | 55 | | | $ | 2 | |
| | | | | | | | | |
| Liabilities: | | | | | | | | |
| Contingent consideration | | $ | 27 | | | $ | — | | | $ | — | | | $ | 27 | |
| Total Liabilities | | $ | 27 | | | $ | — | | | $ | — | | | $ | 27 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
(1) Cost basis approximated fair value due to the short period of time to maturity.(2) Other securities include available-for-sale equity security investments with Level 2 inputs that have a cost basis of $53 million and $57 million, and losses of $4 million and $2 million, as of March 31, 2022 and March 31, 2021, respectively, included in other (income) expense, net in the Company’s statements of operations. During the third quarter of fiscal 2021, previously held investments were sold and the proceeds were used to purchase new investments.The gain of $17 million from the sale was included in other (income) expense, net.
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Other Nonoperating Expense | 2.2 | SEC-NUM |
Components of CAF Income
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Years Ended February 28 or 29 |
| (In millions) | 2022 | | % (1) | | 2021 | | % (1) | | 2020 | | % (1) |
| Interest margin: | | | | | | | | | | | |
| Interest and fee income | $ | 1,296.8 | | | 8.7 | | | $ | 1,142.0 | | | 8.5 | | | $ | 1,104.1 | | | 8.4 | |
| Interest expense | (228.8) | | | (1.5) | | | (314.1) | | | (2.3) | | | (358.1) | | | (2.7) | |
| Total interest margin | 1,068.0 | | | 7.2 | | | 827.9 | | | 6.1 | | | 746.0 | | | 5.7 | |
| Provision for loan losses | (141.7) | | | (0.9) | | | (160.7) | | | (1.2) | | | (185.7) | | | (1.4) | |
| Total interest margin after provision for loan losses | 926.3 | | | 6.2 | | | 667.2 | | | 5.0 | | | 560.3 | | | 4.3 | |
| | | | | | | | | | | | |
| Total other expense | — | | | — | | | (2.2) | | | — | | | — | | | — | |
| | | | | | | | | | | | |
| Direct expenses: | | | | | | | | | | | |
| Payroll and fringe benefit expense | (50.5) | | | (0.3) | | | (46.0) | | | (0.3) | | | (42.3) | | | (0.3) | |
| Depreciation and amortization | (6.6) | | | — | | | (0.8) | | | — | | | (0.7) | | | — | |
| Other direct expenses | (67.7) | | | (0.5) | | | (55.4) | | | (0.4) | | | (61.3) | | | (0.5) | |
| Total direct expenses | (124.8) | | | (0.8) | | | (102.2) | | | (0.8) | | | (104.3) | | | (0.8) | |
| CarMax Auto Finance income | $ | 801.5 | | | 5.4 | | | $ | 562.8 | | | 4.2 | | | $ | 456.0 | | | 3.5 | |
| | | | | | | | | | | | |
| Total average managed receivables | $ | 14,934.0 | | | | | $ | 13,463.3 | | | | | $ | 13,105.1 | | | |
(1) Percent of total average managed receivables.
5.AUTO LOANS RECEIVABLEAuto loans receivable include amounts due from customers related to retail vehicle sales financed through CAF and are presented net of an allowance for estimated loan losses. These auto loans represent a large group of smaller-balance homogeneous loans, which we consider to be part of one class of financing receivable and one portfolio segment for purposes of determining our allowance for loan losses. We generally use warehouse facilities to fund auto loans receivable originated by CAF until we elect to fund them through an asset-backed term funding transaction, such as a term securitization or alternative funding arrangement. We recognize transfers of auto loans receivable into the warehouse facilities and asset-backed term funding transactions (together, “non-recourse funding vehicles”) as secured borrowings, which result in recording the auto loans receivable and the related non-recourse notes payable on our consolidated balance sheets. The majority of the auto loans receivable serve as collateral for the related non-recourse notes payable of $15.47 billion as of February 28, 2022, and $13.76 billion as of February 28, 2021. See Notes 1(F) and 13 for additional information on securitizations and non-recourse notes payable.
Interest income and expenses related to auto loans are included in CAF income. Interest income on auto loans receivable is recognized when earned based on contractual loan terms. All loans continue to accrue interest until repayment or charge-off. When a charge-off occurs, accrued interest is written off by reversing interest income. Direct costs associated with loan originations are not considered material, and thus, are expensed as incurred. See Note 4 for additional information on CAF income.
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Common stock, shares authorized | 600 | SEC-NUM |
PART I—FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSCROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)(Amounts in millions, except par values)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | March 31,2022 | | December 31, 2021 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 312 | | | $ | 292 | |
| Restricted cash | 165 | | | 169 | |
| Receivables, net | 503 | | | 543 | |
| Prepaid expenses | 119 | | | 105 | |
| Other current assets | 162 | | | 145 | |
| Total current assets | 1,261 | | | 1,254 | |
| Deferred site rental receivables | 1,682 | | | 1,588 | |
| Property and equipment, net of accumulated depreciation of $12,220 and $11,937, respectively | 15,226 | | | 15,269 | |
| Operating lease right-of-use assets | 6,739 | | | 6,682 | |
| Goodwill | 10,078 | | | 10,078 | |
| Other intangible assets, net | 3,935 | | | 4,046 | |
| Other assets, net | 130 | | | 123 | |
| Total assets | $ | 39,051 | | | $ | 39,040 | |
| | | | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 224 | | | $ | 246 | |
| Accrued interest | 117 | | | 182 | |
| Deferred revenues | 721 | | | 776 | |
| Other accrued liabilities | 288 | | | 401 | |
| Current maturities of debt and other obligations | 71 | | | 72 | |
| Current portion of operating lease liabilities | 355 | | | 349 | |
| Total current liabilities | 1,776 | | | 2,026 | |
| Debt and other long-term obligations | 21,055 | | | 20,557 | |
| Operating lease liabilities | 6,078 | | | 6,031 | |
| Other long-term liabilities | 2,106 | | | 2,168 | |
| Total liabilities | 31,015 | | | 30,782 | |
| Commitments and contingencies (note 8) | | | |
| Stockholders' equity: | | | |
| Common stock, $0.01 par value; 600 shares authorized; shares issued and outstanding: March 31, 2022—433 and December 31, 2021—432 | 4 | | | 4 | |
| Additional paid-in capital | 18,006 | | | 18,011 | |
| Accumulated other comprehensive income (loss) | (3) | | | (4) | |
| Dividends/distributions in excess of earnings | (9,971) | | | (9,753) | |
| Total equity | 8,036 | | | 8,258 | |
| Total liabilities and equity | $ | 39,051 | | | $ | 39,040 | |
See notes to condensed consolidated financial statements.3
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Aggregate fair value | 79 | SEC-NUM |
CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)expenses and, in the case of certain property positions, general and administrative expenses in the Company’s Statements of Operations.Restricted Stock Unit ActivityDuring the year ended December 31, 2021, as part of the annual incentive program, the Company granted RSUs to employees of the Company with an aggregate fair value of $79 million. Each RSU represents the right to receive payment in respect of one share of the Company’s Common Stock. A summary of the RSUs activity for the year ended December 31, 2021 is presented in the following table:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Units | | Weighted Average Grant Date Fair Value (a) |
| Unvested outstanding as of December 31, 2020 | 2,414,111 | | | $ | 42.55 | |
| Granted (b) | 927,016 | | | 86.37 | |
| | | | |
| Vested | (1,136,673) | | | 33.49 | |
| Forfeited | (113,847) | | | 54.34 | |
| Unvested outstanding as of December 31, 2021 | 2,090,607 | | | 61.47 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Represents the weighted-average grant date fair value of RSUs, which is the share price of our common stock on the grant date.(b)Included are 23,139 RSUs granted to non-employee members of the Board during the year ended December 31, 2021.Performance Stock Unit ActivityDuring the year ended December 31, 2021, the Company granted approximately 81 thousand PSUs that are scheduled to vest in three years from the grant date. On the vesting date, recipients will receive between 0% and 200% of the target number of PSUs granted, in the form of Company Common Stock, based on the achievement of specified performance conditions. The fair value of the PSUs is based on the market price of our common stock when a mutual understanding of the key terms and conditions of the awards between the Company and recipient is achieved. The awards are remeasured each period until such an understanding is reached. The aggregate value of PSUs granted during the year ended December 31, 2021 was $9 million.A summary of the PSUs activity for the year ended December 31, 2021 is presented in the following table:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Units | | Weighted Average Grant Date Fair Value (a) |
| Unvested outstanding as of December 31, 2020 (b) | 500,483 | | | $ | 48.32 | |
| Granted | 81,006 | | | 112.28 | |
| | | | |
| Vested | (161,556) | | | 37.49 | |
| Forfeited | (2,864) | | | 73.21 | |
| Unvested outstanding as of December 31, 2021 | 417,069 | | | 62.20 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Grant date fair value, for which compensation expense of these unvested awards is measured, has not been achieved. This represents the quoted market price of our common stock on the dated indicated. (b)PSUs were presented with RSUs as of December 31, 2020 in the 2020 Annual Report.Market-Based Stock Unit ActivityDuring the year ended December 31, 2021, the Company granted approximately 147 thousand MSUs that are scheduled to cliff vest in three years from the grant date. On the vesting date, recipients will receive between 0% and 200% of the granted MSUs in the form of Company Common Stock based on the achievement of specified market and service conditions. Based on the terms and conditions of the awards, the grant date fair value of the MSUs was determined using a Monte Carlo simulation model. Key assumptions for the Monte Carlo simulation model are the risk-free interest rate, expected volatility, expected dividends and correlation coefficient. The effect of market conditions is considered in determining the grant date fair value, which is not subsequently revised based on actual performance. The aggregate value of MSUs granted during the year ended December 31, 2021 was $15 million.[Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)105
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Plus: Estimated fair value of non-controlling interest | 32,416 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This ASU requires that an acquirer entity in a business combination recognize and measure contract assets and liabilities acquired in a business combination at the acquisition date in accordance with Topic 606 as if the acquirer entity had originated the contracts. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those years. Early application of the amendments is permitted but should be applied to all acquisitions occurring in the annual period of adoption. The amendment should be applied prospectively to business combinations occurring on or after the effective date of the amendments. We are evaluating the effect that ASU 2021-08 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.In November 2021, the FASB issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” This ASU requires annual disclosures that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. This ASU is effective for fiscal years beginning after December 15, 2021. Early application is permitted. The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions. We are evaluating the effect that ASU 2021-10 will have on our consolidated financial statements and related disclosures, but do not expect it to have a material impact.4.Turner & Townsend AcquisitionOn November 1, 2021, we acquired a 60% ownership interest in, and entered into a strategic partnership with Turner & Townsend Holdings Limited (Turner & Townsend). Turner & Townsend is a leading professional services company specializing in program management, project management, cost and commercial management and advisory services across the real estate, infrastructure and natural resources sectors, and is reported in our Global Workplace Solutions segment. The combined partnership is expected to generate strategic growth opportunities in the project management space for both entities.The Turner & Townsend Acquisition was treated as a business combination under ASC 805 and was accounted for using the acquisition method of accounting. We were deemed the accounting acquirer as we obtained control through an all-cash transaction and were the larger entity by revenue and by assets. Operating results for Turner & Townsend are included in the consolidated statements of operations for the year ended December 31, 2021 from the date of the acquisition.The Turner & Townsend Acquisition was funded with cash on hand. The following summarizes the consideration transferred at closing for the Turner & Townsend Acquisition (dollars in thousands):
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Cash consideration (1) | $ | 722,595 | |
| Deferred consideration (2) | 494,349 | |
| Total consideration | $ | 1,216,944 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Represents cash paid at closing(2)Represents the fair value of deferred consideration, to be settled in cash, with the only remaining condition on such payments being the passage of timeThe deferred consideration amount above represents a total payment of $591.2 million less a discount of $96.9 million which will be accreted through the payment date. A portion of the discount is attributable to the time value associated with the contractual payment dates of 3-4 years and will be recorded as interest expense. The remaining discount is attributable to the time value associated with the deferred payment date (10th anniversary of closing) if a seller is no longer employed on the contractual payment date and will be recorded as compensation expense. The following represents the summary of the excess purchase price over the fair value of net assets acquired and fair value of non-controlling interest (dollars in thousands):
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Purchase price | $ | 1,216,944 | |
| Less: Estimated fair value of net assets acquired (see table below) | 152,027 | |
| Plus: Estimated fair value of non-controlling interest (1) | 32,416 | |
| Excess purchase price over estimated fair value of net assets acquired | $ | 1,097,333 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Represents fair value of legacy non-controlling interest of Turner & Townsend81
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Measurement period adjustments, prepaid expenses and other current assets | 2,000 | SEC-NUM |
[Table of Contents](#ic0c31f79a13347b4b84027caf6ad2450_7)KDG Acquisition On January 3, 2022, we, through our wholly-owned subsidiary, Motion Industries, Inc., acquired all of the equity interests in KDG for a purchase price of approximately $1.3 billion in cash. KDG, which is headquartered in Bloomfield, Connecticut, is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the United States, providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to MRO and OEM customers. KDG has approximately 1,700 employees with approximately 220 locations across the United States and Puerto Rico. As of January 3, 2022, KDG had estimated annual revenues of approximately $1 billion.The net cash consideration transferred of approximately $1.3 billion is net of the estimated cash acquired of approximately $30 million. The KDG acquisition was financed using a combination of borrowings under the existing unsecured revolving credit facility, proceeds of $200 million from the selling of additional receivables under our amended A/R Sales Agreement and $109 million of cash. The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition date as well as adjustments made to the acquisition accounting during the nine months ended September 30, 2022 (referred to as the "measurement period adjustments"). The measurement period adjustments primarily resulted from revisions to the valuation of certain tangible and intangible assets. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets. We are in the process of analyzing the estimated values of all assets acquired and liabilities assumed as of the acquisition date, including, among other things, obtaining valuations of certain tangible and intangible assets, as well as the fair value of certain contracts and the determination of certain tax balances. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations, tax accounting and leases.
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| | | | | | | | | | | | | | | |
| | | As of January 3, 2022 |
| (in thousands) | | Initial Balance | Measurement Period Adjustments | As Adjusted |
| Trade accounts receivable | | $ | 156,000 | | $ | — | | $ | 156,000 | |
| Merchandise inventories | | 166,000 | | (1,000) | | 165,000 | |
| Prepaid expenses and other current assets | | 39,000 | | (2,000) | | 37,000 | |
| Property, plant and equipment | | 26,000 | | (2,000) | | 24,000 | |
| Operating lease assets | | 49,000 | | (5,000) | | 44,000 | |
| Other assets | | 1,000 | | — | | 1,000 | |
| Other intangible assets | | 574,000 | | (6,000) | | 568,000 | |
| Goodwill | | 592,000 | | 4,000 | | 596,000 | |
| Total assets acquired | | 1,603,000 | | (12,000) | | 1,591,000 | |
| Trade accounts payable | | 85,000 | | — | | 85,000 | |
| Other current liabilities | | 32,000 | | — | | 32,000 | |
| Operating lease liabilities | | 17,000 | | (1,000) | | 16,000 | |
| Deferred tax liabilities | | 121,000 | | (10,000) | | 111,000 | |
| Other long-term liabilities | | 39,000 | | (4,000) | | 35,000 | |
| Total liabilities assumed | | 294,000 | | (15,000) | | 279,000 | |
| Net assets acquired | | $ | 1,309,000 | | $ | 3,000 | | $ | 1,312,000 | |
The other intangible assets acquired included $527 million of customer relationship intangibles and a $41 million favorable trade name licensing agreement, with amortization lives of 17 and 1.5 years, respectively. The other intangible assets have a total weighted amortization life of 16 years.The goodwill was assigned to the Industrial segment and is attributable primarily to expected synergies and the assembled workforce. Approximately $261 million of the estimated goodwill recognized as part of the KDG acquisition is expected to be tax deductible. For the nine months ended September 30, 2022, approximately $5 million of inventory amortization step-up cost related to this acquisition was included in cost of goods sold. Further, $49 million of transaction and other one-time 13
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Property, Plant and Equipment, Useful Life | 38 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
application as filed. Also in October 2019 a second motion for rehearing was filed, and Entergy Texas filed a response in opposition to the motion. The second motion for rehearing was overruled by operation of law. In December 2019, Texas Industrial Energy Consumers filed an appeal to the PUCT order in district court alleging that the PUCT erred in declining to apply a load growth adjustment.
In August 2019, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended TCRF rider was designed to collect approximately $19.4 million annually from Entergy Texas’s retail customers based on its capital invested in transmission between January 1, 2018 and June 30, 2019, which is $16.7 million in incremental annual revenue above the $2.7 million approved in the prior pending TCRF proceeding. In January 2020 the PUCT issued an order approving an unopposed settlement providing for recovery of the requested revenue requirement. Entergy Texas implemented the amended rider beginning with bills covering usage on and after January 23, 2020.
In October 2020, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The amended rider was designed to collect from Entergy Texas’s retail customers approximately $51 million annually, or $31.6 million in incremental annual revenues beyond Entergy Texas’s then-effective TCRF rider based on its capital invested in transmission between July 1, 2019 and August 31, 2020. In March 2021 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2021 and resolving all issues in the proceeding. In March 2021 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting. In June 2021 the PUCT issued an order approving the settlement.
In October 2021, Entergy Texas filed with the PUCT a request to amend its TCRF rider. The proposed rider is designed to collect from Entergy Texas’s retail customers approximately $66.1 million annually, or $15.1 million in incremental annual revenues beyond Energy Texas’s currently effective TCRF rider based on its capital invested in transmission between September 1, 2020 and July 31, 2021 and changes in approved transmission charges. In January 2022 the PUCT referred the proceeding to the State Office of Administrative Hearings. In February 2022 the parties filed an unopposed settlement recommending that Entergy Texas be allowed to collect its full requested TCRF revenue requirement with interim rates effective March 2022. In February 2022 the ALJ granted the motion for interim rates, admitted evidence, and remanded the case to the PUCT for consideration of a final order at a future open meeting.
Generation Cost Recovery Rider
In October 2020, Entergy Texas filed an application to establish a generation cost recovery rider with an initial annual revenue requirement of approximately $91 million to begin recovering a return of and on its generation capital investment in the Montgomery County Power Station through August 31, 2020. In December 2020, Entergy Texas filed an unopposed settlement supporting a generation cost recovery rider with an annual revenue requirement of approximately $86 million. The settlement revenue requirement was based on a depreciation rate intended to fully depreciate Montgomery County Power Station over 38 years and the removal of certain costs from Entergy Texas’s request. Under the settlement, Entergy Texas retained the right to propose a different depreciation rate and seek recovery of a majority of the costs removed from its request in its next base rate proceeding. On January 14, 2021, the PUCT approved the generation cost recovery rider settlement rates on an interim basis and abated the proceeding. In March 2021, Entergy Texas filed to update its generation cost recovery rider to include investment in Montgomery County Power Station after August 31, 2020. In April 2021 the ALJ issued an order unabating the proceeding and in May 2021 the ALJ issued an order finding Entergy Texas’s application and notice of the application to be sufficient. In May 2021, Entergy Texas filed an amendment to the application to reflect the PUCT’s approval of the sale of a 7.56% partial interest in the Montgomery County Power Station to East Texas Electric Cooperative, Inc., which closed in June 2021. In June 2021 the PUCT referred the proceeding to the State Office of Administrative Hearings. In July 2021 the ALJ with the State Office of Administrative Hearings adopted a procedural schedule setting a hearing on the merits for September 2021. In July 2021 the parties filed a motion to abate the procedural schedule noting they had reached an agreement in principle 88
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Participants' maximum contribution per year | 15.0 | SEC-NUM |
The following table shows a summary of PSU activity during the years ended December 31, 2021, 2020 and 2019:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| PSU compensation expense | $ | 31.8 | | | $ | 26.5 | | | $ | 23.2 | |
| Income tax benefit | (3.3) | | | (2.6) | | | (2.7) | |
| PSU compensation expense, net of tax | $ | 28.5 | | | $ | 23.9 | | | $ | 20.5 | |
As of December 31, 2021, there was $21.6 million of unrecognized compensation cost related to outstanding PSUs. That cost is expected to be recognized over a weighted-average period of 0.68 years. The fair value of PSUs with market conditions was estimated on the date of grant using a Monte Carlo simulation model, which utilizes multiple variables that determine the probability of satisfying the market condition stipulated in the award. Expected volatilities for awards granted during the years ended December 31, 2021, 2020 and 2019 were based on the historical prices of the Company’s common stock and peer group. The expected term for grants issued during the years ended December 31, 2021, 2020 and 2019 was assumed to equal the average of the vesting period of the PSUs. The risk-free rate was based on the U.S. Treasury yield curve in effect at the time of grant.
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| | | | | | | | | | | | | | | | | | |
| | For awards granted during theyears ended December 31, |
| | 2021 | | 2020 | | 2019 |
| Expected volatility | 34.14 | % | | 27.23 | % | | 20.92 | % |
| Expected term (years) | 2.79 | | 2.79 | | 2.80 |
| Risk free interest rate | 0.29 | % | | 0.41 | % | | 2.40 | % |
Employee Stock Purchase PlanUnder the Employee Stock Purchase Plan (the “ESPP”), the Company is authorized to issue up to 5,000,000 new shares of common stock to employees who are participants in the ESPP. The ESPP allows eligible employees to contribute, through payroll deductions, portions of their after-tax compensation in each offering period toward the purchase of shares of the Company’s common stock. There are two offering periods during the year (January 1 through June 30 and July 1 through December 31) and shares of common stock are purchased at the end of each offering period at 90% of the lower of the closing price of the common stock on the first or last day of the offering period. Participants must be employed on the last trading day of the offering period in order to purchase shares of common stock under the ESPP. The maximum number of shares of common stock that can be purchased is 5,000 per employee. Participants’ contributions are limited to a maximum contribution of $7.5 thousand per offering period, or $15.0 thousand per year.The ESPP is offered to individuals who are scheduled to work a certain number of hours per week, have been continuously employed for at least six months by the start of the offering period, are not temporary employees (employed less than 12 months) and have not been on a leave of absence for more than 90 days immediately preceding the offering period. In January 2022, the Company issued 46,460 shares of common stock at a discounted price of $140.27 for the offering period of July 1, 2021 through December 31, 2021. In January 2021, the Company issued 59,753 shares of common stock at a discounted price of $90.96 for the offering period of July 1, 2020 through December 31, 2020. In July 2021, the Company issued 53,802 shares of common stock to employees at a discounted price of $118.90 for the offering period of January 1, 2021 through June 30, 2021. In July 2020, the Company issued 50,521 shares of common stock to employees at a discounted price of $92.96 for the offering period of January 1, 2020 through June 30, 2020. The compensation expense recorded related to the ESPP was $2.2 million, $2.0 million and $1.3 million for the years ended December 31, 2021, 2020 and 2019, respectively. The related income tax benefit for disqualified disposition was $0.1 million for the years ended December 31, 2021 and 2020. There was no income tax benefit for disqualified disposition for the year ended December 31, 2019. The fair value of each award under the ESPP was estimated at the beginning of each offering period using the Black-Scholes option-pricing model and assumptions in the table below. Expected volatilities are based on implied volatilities from traded options on the Company’s common stock and the historical volatility of the Company’s common stock. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the current annualized dividend and common stock price as of the grant date.F-65
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Future compensation expense & contingent consideration (up to) | 468 | SEC-NUM |
(d)Interest Rate RiskWe hold interest rate swaps designated as fair value hedges related to fixed-rate senior notes that are due in fiscal 2024 through 2025. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on LIBOR plus a fixed number of basis points. The effect of such swaps is to convert the fixed interest rates of the senior fixed-rate notes to floating interest rates based on LIBOR. The gains and losses related to changes in the fair value of the interest rate swaps are included in interest expense and substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to the changes in market interest rates. (e)Equity Price Risk We hold marketable equity securities in our portfolio that are subject to price risk. To diversify our overall portfolio, we also hold equity derivatives that are not designated as accounting hedges. The change in the fair value of each of these investment types are included in other income (loss), net. We are also exposed to variability in compensation charges related to certain deferred compensation obligations to employees. Although not designated as accounting hedges, we utilize derivatives such as total return swaps to economically hedge this exposure and offset the related compensation expense.
14.Commitments and Contingencies (a)Purchase Commitments with Contract Manufacturers and Suppliers We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate component supply, we enter into agreements with contract manufacturers and suppliers that allow them to procure inventory based upon criteria as defined by us or establish the parameters defining our requirements. A significant portion of our reported purchase commitments arising from these agreements consists of firm, noncancelable, and unconditional commitments. Certain of these inventory purchase commitments with contract manufacturers and suppliers relate to arrangements to secure supply and pricing for certain product components for multi-year periods. In certain instances, these agreements allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. The following table summarizes our inventory purchase commitments with contract manufacturers and suppliers (in millions):
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| Commitments by Period | July 30,2022 | | July 31,2021 |
| Less than 1 year | $ | 9,954 | | | $ | 6,903 | |
| 1 to 3 years | 2,240 | | | 1,806 | |
| 3 to 5 years | 770 | | | 1,545 | |
| Total | $ | 12,964 | | | $ | 10,254 | |
We record a liability for firm, noncancelable, and unconditional purchase commitments for quantities in excess of our future demand forecasts consistent with the valuation of our excess and obsolete inventory. As of July 30, 2022 and July 31, 2021, the liability for these purchase commitments was $313 million and $151 million, respectively, and was included in other current liabilities.(b)Other CommitmentsIn connection with our acquisitions, we have agreed to pay certain additional amounts contingent upon the achievement of certain agreed-upon technology, development, product, or other milestones or upon the continued employment with Cisco of certain employees of the acquired entities. The following table summarizes the compensation expense related to acquisitions (in millions):
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | July 30, 2022 | | July 31, 2021 | | July 25, 2020 |
| Compensation expense related to acquisitions | $ | 271 | | | $ | 262 | | | $ | 214 | |
As of July 30, 2022, we estimated that future cash compensation expense of up to $468 million may be required to be recognized pursuant to the applicable business combination agreements. We also have certain funding commitments, primarily related to our privately held investments, some of which are based on the achievement of certain agreed-upon milestones or are required to be funded on demand. The funding commitments were $0.4 billion and $0.2 billion as of July 30, 2022 and July 31, 2021, respectively.89
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Operating loss carryforwards, decrease | 45.9 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
The components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the consolidated statements of operations as well as items recognized in other comprehensive earnings. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 26, 2021 and December 27, 2020 are:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| (In millions) | 2021 | | 2020 |
| Deferred tax assets: | | | |
| Accounts receivable | $ | 30.8 | | | 32.7 | |
| Inventories | 14.1 | | | 14.0 | |
| Loss and credit carryforwards | 175.7 | | | 221.6 | |
| Operating leases | 17.8 | | | 23.1 | |
| Operating expenses | 23.5 | | | 32.9 | |
| Pension | 16.3 | | | 16.6 | |
| Other compensation | 37.3 | | | 33.7 | |
| Postretirement benefits | 8.5 | | | 7.9 | |
| Interest rate hedge | 4.7 | | | 5.0 | |
| Tax sharing agreement | 1.5 | | | 2.2 | |
| Deferred revenue | 4.0 | | | 8.3 | |
| Other | 13.5 | | | 12.0 | |
| Gross deferred tax assets | 347.7 | | | 410.0 | |
| Deferred tax liabilities: | | | |
| Depreciation and amortization of long-lived assets | 144.5 | | | 181.2 | |
| Equity method investment | 6.7 | | | 21.3 | |
| Operating leases | 15.1 | | | 20.1 | |
| Foreign exchange | 13.7 | | | 7.3 | |
| Prepaid expenses | 3.5 | | | 3.6 | |
| Other | 8.8 | | | 19.5 | |
| Gross deferred tax liabilities | 192.3 | | | 253.0 | |
| Valuation allowance | (171.2) | | | (174.2) | |
| Net deferred income taxes | $ | (15.8) | | | (17.2) | |
Certain reclassifications have been made to prior year presentation to conform to current year presentation.The most significant amount of the loss and credit carryforwards relate to tax attributes of the acquired eOne entities that historically operated at losses in certain jurisdictions. At December 26, 2021, the Company has loss and credit carryforwards of $175.7 million, which is a decrease of $45.9 million from $221.6 million at December 27, 2020. Loss and credit carryforwards as of December 26, 2021 relate primarily to the U.S. and Canada. The Canadian loss carryforwards expire at various dates from 2031 to 2041. Some U.S. federal and state loss and credit carryforwards expire at various dates throughout 2022 while others have an indefinite carryforward period. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is generally established. To the extent that a valuation allowance was established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the change in the valuation allowance is recognized in the consolidated statements of income.The Company has a valuation allowance for certain net deferred tax assets at December 26, 2021 of $171.2 million, which is a decrease of $3.0 million from $174.2 million at December 27, 2020. The valuation allowance pertains to certain U.S. state and international loss and credit carryforwards, some of which have no expiration and 106
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Proceeds from issuance of senior notes | 600.0 | SEC-NUM |
[Table of Contents](#i65e99520d6ea4cc1b4dc1d2c34003e98_7)Allegion plcCondensed and Consolidated Statements of Cash Flows(Unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine months ended |
| | September 30, |
| In millions | 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net earnings | $ | 322.9 | | | $ | 370.6 | |
| Adjustments to arrive at net cash provided by operating activities: | | | |
| Depreciation and amortization | 69.6 | | | 62.0 | |
| | | | |
| Loss on divestitures | 7.1 | | | — | |
| Changes in assets and liabilities and other non-cash items | (132.5) | | | (76.2) | |
| Net cash provided by operating activities | 267.1 | | | 356.4 | |
| Cash flows from investing activities: | | | |
| Capital expenditures | (41.5) | | | (28.7) | |
| Acquisition of and equity investments in businesses, net of cash acquired | (923.1) | | | (6.5) | |
| Proceeds from sale of equity method investment | — | | | 7.6 | |
| Other investing activities, net | (1.3) | | | 12.7 | |
| Net cash used in investing activities | (965.9) | | | (14.9) | |
| Cash flows from financing activities: | | | |
| Debt repayments, net | (9.4) | | | (0.1) | |
| Proceeds from revolving facility | 340.0 | | | — | |
| Repayments of revolving facility | (141.0) | | | — | |
| Proceeds from issuance of senior notes | 600.0 | | | — | |
| | | | |
| | | | |
| Net proceeds from (repayments of) debt | 789.6 | | | (0.1) | |
| Debt financing costs | (10.2) | | | — | |
| | | | |
| Dividends paid to ordinary shareholders | (107.9) | | | (96.9) | |
| | | | |
| | | | |
| | | | |
| Repurchase of ordinary shares | (61.0) | | | (212.7) | |
| Other financing activities, net | (4.4) | | | 0.4 | |
| Net cash provided by (used in) financing activities | 606.1 | | | (309.3) | |
| Effect of exchange rate changes on cash and cash equivalents | (23.0) | | | (8.7) | |
| Net (decrease) increase in cash and cash equivalents | (115.7) | | | 23.5 | |
| Cash and cash equivalents - beginning of period | 397.9 | | | 480.4 | |
| Cash and cash equivalents - end of period | $ | 282.2 | | | $ | 503.9 | |
See accompanying notes to condensed and consolidated financial statements.
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Derivative Liability, Fair Value, Offset Against Collateral, Net of Not Subject to Master Netting Arrangement, Policy Election | 47 | SEC-NUM |
[Table of Contents](#i0302cc7c03c44d0c8270f104de834cdb_7)CF INDUSTRIES HOLDINGS, INC.
The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of March 31, 2022 and December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Amounts presented in consolidatedbalance sheets(1) | | Gross amounts not offset in consolidated balance sheets | | |
| | | Financialinstruments | | Cash collateral received (pledged) | | Netamount |
| | (in millions) |
| March 31, 2022 | | | | | | | |
| Total derivative assets | $ | 3 | | | $ | — | | | $ | — | | | $ | 3 | |
| Total derivative liabilities | — | | | — | | | — | | | — | |
| Net derivative assets | $ | 3 | | | $ | — | | | $ | — | | | $ | 3 | |
| December 31, 2021 | | | | | | | |
| Total derivative assets | $ | 16 | | | $ | — | | | $ | — | | | $ | 16 | |
| Total derivative liabilities | (47) | | | — | | | — | | | (47) | |
| Net derivative liabilities | $ | (31) | | | $ | — | | | $ | — | | | $ | (31) | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented are the same.
We do not believe the contractually allowed netting, close-out netting or setoff of amounts owed to, or due from, the counterparties to our ISDA agreements would have a material effect on our financial position.
14. Noncontrolling InterestWe have a strategic venture with CHS under which CHS owns an equity interest in CFN, a subsidiary of CF Holdings, which represents approximately 11% of the membership interests of CFN. We own the remaining membership interests. Under the terms of CFN’s limited liability company agreement, each member’s interest will reflect, over time, the impact of the profitability of CFN, any member contributions made to CFN and withdrawals and distributions received from CFN. For financial reporting purposes, the assets, liabilities and earnings of the strategic venture are consolidated into our financial statements. CHS’ interest in the strategic venture is recorded in noncontrolling interest in our consolidated financial statements.A reconciliation of the beginning and ending balances of noncontrolling interest and distributions payable to noncontrolling interest in our consolidated balance sheets is provided below.
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | |
| | 2022 | | 2021 |
| | | | |
| | (in millions) |
| Noncontrolling interest: | | | |
| Balance as of January 1 | $ | 2,830 | | | $ | 2,681 | |
| | | | |
| Earnings attributable to noncontrolling interest | 168 | | | 24 | |
| Declaration of distributions payable | (247) | | | (64) | |
| | | | |
| | | | |
| Balance as of March 31 | $ | 2,751 | | | $ | 2,641 | |
| Distributions payable to noncontrolling interest: | | | |
| Balance as of January 1 | $ | — | | | $ | — | |
| Declaration of distributions payable | 247 | | | 64 | |
| Distributions to noncontrolling interest | (247) | | | (64) | |
| | | | |
| Balance as of March 31 | $ | — | | | $ | — | |
18
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Net income (loss) attributable to redeemable noncontrolling interest | 2 | SEC-NUM |
[Table](#i433d81903e814837b268e57261b357cb_7) [of Contents](#i433d81903e814837b268e57261b357cb_7) EXPEDIA GROUP, INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(In millions, except share and per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Common stock | | Class Bcommon stock | | Additionalpaid-incapital | | Treasury stock - Common and Class B | | Retainedearnings(deficit) | | Accumulatedothercomprehensiveincome (loss) | | Non-redeemablenon-controllinginterest | | Total |
| | | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | |
| Balance as of December 31, 2018 | | 231,492,986 | | | $ | — | | | 12,799,999 | | | $ | — | | | $ | 9,549 | | | 97,158,586 | | | $ | (5,742) | | | $ | 517 | | | $ | (220) | | | $ | 1,547 | | | $ | 5,651 | |
| Net income (excludes $2 of net loss attributable to redeemable non-controlling interest) | | | | | | | | | | | | | | | | 565 | | | | | 9 | | | 574 | |
| Other comprehensive income (loss), net of taxes | | | | | | | | | | | | | | | | | | 3 | | | (8) | | | (5) | |
| Payment of dividends to common stockholders (declared at $1.32 per share) | | | | | | | | | | | | | | | | (195) | | | | | | | (195) | |
| Proceeds from exercise of equity instruments and employee stock purchase plans | | 4,453,610 | | | — | | | | | | | 301 | | | | | | | | | | | | | 301 | |
| Withholding taxes for stock options | | | | | | | | | | (2) | | | | | | | | | | | | | (2) | |
| Liberty Expedia Holdings transaction | | 20,745,181 | | | — | | | | | | | 2,883 | | | 23,876,671 | | | (3,212) | | | | | | | | | (329) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Treasury stock activity related to vesting of equity instruments | | | | | | | | | | | | 295,185 | | | (36) | | | | | | | | | (36) | |
| Common stock repurchases | | | | | | | | | | | | 5,562,083 | | | (683) | | | | | | | | | (683) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Adjustment to the fair value of redeemable non-controlling interests | | | | | | | | | | | | | | | | (14) | | | | | | | (14) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Other changes in ownership of non-controlling interests | | | | | | | | | | 1 | | | | | | | | | | | 21 | | | 22 | |
| Impact of adoption of new accounting guidance | | | | | | | | | | | | | | | | 6 | | | | | | | 6 | |
| Stock-based compensation expense | | | | | | | | | | 246 | | | | | | | | | | | | | 246 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance as of December 31, 2019 | | 256,691,777 | | | $ | — | | | 12,799,999 | | | $ | — | | | $ | 12,978 | | | 126,892,525 | | | $ | (9,673) | | | $ | 879 | | | $ | (217) | | | $ | 1,569 | | | $ | 5,536 | |
| Net loss | | | | | | | | | | | | | | | | (2,612) | | | | | (116) | | | (2,728) | |
| Other comprehensive income (loss), net of taxes | | | | | | | | | | | | | | | | | | 39 | | | 28 | | | 67 | |
| Payment of dividends to common stockholders (declared at $0.34 per share) | | | | | | | | | | | | | | | | (48) | | | | | | | (48) | |
| Payment of preferred dividends (declared at $62.47 per share) | | | | | | | | | | (75) | | | | | | | | | | | | | (75) | |
| Proceeds from exercise of equity instruments and employee stock purchase plans | | 4,872,135 | | | — | | | | | | | 319 | | | | | | | | | | | | | 319 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Common stock warrants, net of issuance costs | | | | | | | | | | 110 | | | | | | | | | | | | | 110 | |
| Treasury stock activity related to vesting of equity instruments | | | | | | | | | | | | 489,263 | | | (54) | | | | | | | | | (54) | |
| Common stock repurchases | | | | | | | | | | | | 3,364,119 | | | (370) | | | | | | | | | (370) | |
| Adjustment to the fair value of redeemable non-controlling interests | | | | | | | | | | 4 | | | | | | | | | | | | | 4 | |
| Other changes in ownership of non-controlling interests | | | | | | | | | | 4 | | | | | | | | | | | 13 | | | 17 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Stock-based compensation expense | | | | | | | | | | 225 | | | | | | | | | | | | | 225 | |
| Other | | | | | | | | | | 1 | | | 20,630 | | | | | | | | | | | 1 | |
F- 7
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Increase (Decrease) in ARO Due to Early Retirement | 800 | SEC-NUM |
[Table of Contents](#i59ca7ab3cc784e42904d434b0008a7a9_10)Notes to Consolidated Financial Statements(Dollars in millions, unless otherwise noted)
Note 10 — Asset Retirement Obligationswithout any remaining ARC, the corresponding change is recorded as a decrease in Operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income.The following table provides a rollforward of the nuclear decommissioning AROs reflected in the Consolidated Balance Sheets from December 31, 2019 to December 31, 2021:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Nuclear Decommissioning AROs |
| Balance as of December 31, 2019 | $ | 10,504 | |
| Net increase due to changes in, and timing of, estimated future cash flows | 1,022 | |
| Accretion expense | 489 | |
| Costs incurred related to decommissioning plants | (93) | |
| Balance as of December 31, 2020(a) | 11,922 | |
| Net increase due to changes in, and timing of, estimated future cash flows | 324 | |
| Accretion expense | 503 | |
| Costs incurred related to decommissioning plants | (73) | |
| Balance as of December 31, 2021(a) | $ | 12,676 | |
| | |
\_\_\_\_\_\_\_\_\_\_(a)Includes $72 million and $80 million as the current portion of the ARO as of December 31, 2021 and 2020, respectively, which is included in Other current liabilities in the Consolidated Balance Sheets.The net $324 million increase in the ARO during 2021 for changes in the amounts and timing of estimated decommissioning cash flows was driven by multiple adjustments throughout the year. These adjustments primarily include:•An increase of approximately $550 million for updated cost escalation rates, primarily for labor and energy, and a decrease in discount rates.•An increase of approximately $90 million due to revisions to assumed retirement dates for several nuclear plants. •A net decrease of approximately $170 million was driven by updates to Byron and Dresden reflecting changes in assumed retirement dates and assumed methods of decommissioning as a result of the reversal of the decision to early retire the plants. See Note 7 — Early Plant Retirements for additional information.•A net decrease of approximately $150 million due to lower estimated decommissioning costs resulting from the completion of updated cost studies for seven nuclear plants.The 2021 ARO updates resulted in a decrease of $51 million in Operating and maintenance expense for the year ended December 31, 2021 in the Consolidated Statement of Operations and Comprehensive Income. The net $1,022 million increase in the ARO during 2020 for changes in the amounts and timing of estimated decommissioning cash flows was driven by multiple adjustments throughout the year. These adjustments primarily include:•A net increase of approximately $800 million was driven by updates to Byron and Dresden reflecting changes in assumed retirement dates and assumed methods of decommissioning as a result of the announcement to early retire these plants in 2021. Refer to Note 7 — Early Plant Retirements for additional information.•An increase of approximately $360 million resulting from the change in the assumed DOE spent fuel acceptance date for disposal from 2030 to 2035. •A decrease of approximately $220 million due to lower estimated decommissioning costs resulting from the completion of updated cost studies primarily for two nuclear plants.The 2020 ARO updates resulted in an increase of $60 million in Operating and maintenance expense for the year ended December 31, 2020 in the Consolidated Statement of Operations and Comprehensive Income. 112
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Debt instrument, increase (decrease) | 956 | SEC-NUM |
Approximately $469 million of the Company's total variable-rate notes payable are effectively fixed via interest rate swaps at December 31, 2021, bringing the weighted-average interest rate for the full debt portfolio to 3.3%.
During 2021, the Company's total debt decreased $956 million, the result of payments of $1.3 billion, including $923 million in prepayments. Payments were offset by issuances of $363 million, including $311 million of unsecured loans from the PSP and $54 million in proceeds from issuance of debt.
CARES Act Loan
In 2020, the Company finalized an agreement with the Treasury to obtain up to $1.9 billion via a secured term loan facility. In 2020, the Company drew $135 million under the agreement, which was used for general corporate purposes and certain operating expenses in accordance with the terms and conditions of the loan agreement and the applicable provisions of the CARES Act. The full balance was repaid in the second quarter of 2021. In accordance with the related agreement, the facility terminated at the time of repayment.
Debt Maturity
At December 31, 2021, long-term debt principal payments for the next five years and thereafter are as follows (in millions):
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Total |
| 2022 | $ | 371 | |
| 2023 | 334 | |
| 2024 | 240 | |
| 2025 | 261 | |
| 2026 | 176 | |
| Thereafter | 1,177 | |
| Total principal payments | $ | 2,559 | |
Bank Lines of Credit Alaska has three credit facilities totaling $486 million as of December 31, 2021. One of the credit facilities for $150 million expires in March 2025 and is secured by certain accounts receivable, spare engines, spare parts and ground service equipment. A second credit facility for $250 million expires in June 2024 and is secured by aircraft. Both facilities have variable interest rates based on LIBOR plus a specified margin. A third credit facility for $86 million expires in June 2022 and is secured by aircraft.
Alaska has secured letters of credit against the third facility, but has no plans to borrow using either of the two facilities. All credit facilities have a requirement to maintain a minimum unrestricted cash and marketable securities balance of $500 million. Alaska was in compliance with this covenant at December 31, 2021.
NOTE 7. LEASES
The Company leases property and equipment through operating leases and categorizes these leases into five asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, corporate real estate and other equipment. All capitalized lease assets have been recorded on the consolidated balance sheet as of December 31, 2021 as Operating lease assets, with the corresponding liabilities recorded as Operating lease liabilities. Operating rent expense is recognized on a straight-line basis over the term of the lease.
The Company has elected the practical expedient under ASC 842 - Leases, allowing a policy election to exclude from recognition short-term lease assets and lease liabilities for leases with an initial term of twelve months or less. Such expense was not material for the twelve months ended December 31, 2021, 2020, and 2019.
70
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Vested and exercisable (in dollars per share) | 9.70 | SEC-NUM |
[Table of Contents](#ie5b53d08516744208c4d15ed88453ce2_7)of 9,140,912 shares to the shares available for issuance under the 2014 Plan, as adjusted to give effect to the Stock Split. In fiscal 2020, in connection with our acquisition of Awake Security, we assumed the stock options outstanding under the Awake Security 2014 Equity Incentive Plan and registered an additional 461,352 shares to be available for future issuance, as adjusted to give effect to the Stock Split. As of December 31, 2021, there remained approximately 88.0 million shares available for issuance under the 2014 Plan. In February, 2022, our board of directors authorized an increase of 9,230,434 shares to shares available for future issuance under the 2014 Plan effective January 1, 2022.2014 Employee Stock Purchase PlanIn April 2014, the board of directors and stockholders approved the 2014 Employee Stock Purchase Plan (the “ESPP”). The ESPP became effective on the first day that our common stock was publicly traded. The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1% of our shares outstanding immediately preceding December 31, but not to exceed 10,000,000 shares, unless the board of directors, in its discretion, determines to make a smaller increase. Effective January 1, 2021, our board of directors authorized an increase of 3,046,968 shares as adjusted to give effect to the Stock Split to shares available for issuance under the ESPP. As of December 31, 2021, there remained 18.0 million shares available for issuance under the ESPP. In February, 2022, our board of directors authorized an increase of 3,076,811 shares to shares available for issuance under the ESPP effective January 1, 2022.Under our ESPP, eligible employees are permitted to acquire shares of our common stock at 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date. Each offering period lasts approximately two years starting on the first trading date after February 15 and August 15 of each year. Participants may purchase shares of common stock through payroll deductions up to 10% of their eligible compensation, subject to Internal Revenue Service mandated purchase limits. During the year ended December 31, 2021, we issued 458,284 shares at an average purchase price of $46.50 under our ESPP, as adjusted to give effect to the Stock Split. Stock Option ActivitiesThe following table summarizes the option activities and related information, as adjusted to give effect to the Stock Split (in thousands, except years and per share amounts):
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| | | Number of Shares UnderlyingOutstanding Options | | Weighted- Average Exercise Price per Share | | Weighted- Average Remaining Contractual Term (In Years) | | Aggregate Intrinsic Value |
| Balance—December 31, 2020 | | 13,719 | | | $ | 11.29 | | | 3.6 | | $ | 841,659 | |
| Options granted | | — | | | — | | | | | |
| Options exercised | | (4,941) | | | 9.30 | | | | | |
| Options canceled | | (93) | | | 9.55 | | | | | |
| Balance—December 31, 2021 | | 8,685 | | | $ | 12.45 | | | 2.8 | | $ | 1,140,369 | |
| Vested and exercisable—December 31, 2021 | | 6,650 | | | $ | 9.70 | | | 2.4 | | $ | 891,466 | |
We did not grant any stock options in the year ended December 31, 2021. The weighted-average grant-date fair value of options granted during the years ended December 31, 2020 and 2019 was $46.24 and $26.86 per share, respectively, as adjusted to give effect to the Stock Split. The aggregate intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $410.9 million, $245.9 million and $323.1 million, respectively. The total fair value of options vested for the years ended December 31, 2021, 2020 and 2019 was approximately $25.3 million, $20.0 million and $23.0 million, respectively.94
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Income tax payable | 14 | SEC-NUM |
[Table of Contents](#i31241139a24240ee889881d54ce4b5f1_7)Diamondback Energy, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(Unaudited)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Six Months Ended June 30, |
| | 2022 | | 2021 |
| | (In millions) |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | 2,264 | | | $ | 551 | |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
| Provision for (benefit from) deferred income taxes | 273 | | | 155 | |
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| | | | |
| | | | |
| Depreciation, depletion, amortization and accretion | 643 | | | 614 | |
| | | | |
| (Gain) loss on extinguishment of debt | 58 | | | 61 | |
| | | | |
| (Gain) loss on derivative instruments, net | 653 | | | 661 | |
| Cash received (paid) on settlement of derivative instruments | (720) | | | (484) | |
| (Income) loss from equity investment | (37) | | | (2) | |
| | | | |
| Equity-based compensation expense | 28 | | | 23 | |
| | | | |
| (Gain) loss on sale of equity method investments | — | | | (23) | |
| | | | |
| Other | 36 | | | 15 | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (380) | | | (172) | |
| | | | |
| Income tax receivable | 1 | | | 99 | |
| | | | |
| Prepaid expenses and other | 15 | | | 18 | |
| Accounts payable and accrued liabilities | (21) | | | (26) | |
| | | | |
| | | | |
| Income tax payable | (14) | | | — | |
| Revenues and royalties payable | 163 | | | 100 | |
| | | | |
| Other | (3) | | | (12) | |
| Net cash provided by (used in) operating activities | 2,959 | | | 1,578 | |
| Cash flows from investing activities: | | | |
| Drilling, completions and infrastructure additions to oil and natural gas properties | (863) | | | (645) | |
| | | | |
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| Additions to midstream assets | (42) | | | (17) | |
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| Property acquisitions | (381) | | | (421) | |
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| Proceeds from sale of assets | 72 | | | 100 | |
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| Funds held in escrow | 12 | | | 51 | |
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| Other | (30) | | | 34 | |
| Net cash provided by (used in) investing activities | (1,232) | | | (898) | |
| Cash flows from financing activities: | | | |
| Proceeds from borrowings under credit facilities | 1,579 | | | 661 | |
| Repayments under credit facilities | (1,563) | | | (780) | |
| Proceeds from senior notes | 750 | | | 2,200 | |
| Repayment of senior notes | (1,865) | | | (2,107) | |
| Proceeds from (repayments to) joint venture | (17) | | | (10) | |
| Premium on extinguishment of debt | (49) | | | (166) | |
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| Repurchased shares under buyback program | (310) | | | — | |
| Repurchased units under buyback program | (71) | | | (36) | |
| | | | |
| Dividends to stockholders | (648) | | | (140) | |
| | | | |
| Distributions to non-controlling interest | (110) | | | (41) | |
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| Financing portion of net cash received (paid) for derivative instruments | — | | | 59 | |
| Other | (36) | | | (32) | |
| Net cash provided by (used in) financing activities | (2,340) | | | (392) | |
| Net increase (decrease) in cash and cash equivalents | (613) | | | 288 | |
| Cash, cash equivalents and restricted cash at beginning of period | 672 | | | 108 | |
| Cash, cash equivalents and restricted cash at end of period(1) | $ | 59 | | | $ | 396 | |
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(1) See [Note 2—Summary of Significant Accounting Policies](#i31241139a24240ee889881d54ce4b5f1_43).
See accompanying notes to condensed consolidated financial statements.6
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Proceeds from the sales of strategic investments | 91.2 | SEC-NUM |
[Table of Contents](#ie9658fba2baf4e3799b1175f69eaed46_7)BIOGEN INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW(unaudited, in millions)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2022 | | 2021 |
| Cash flow from operating activities: | | | |
| Net income | $ | 218.5 | | | $ | 404.6 | |
| Adjustments to reconcile net income to net cash flow from operating activities: | | | |
| Depreciation and amortization | 143.1 | | | 102.6 | |
| Impairment of intangible assets | — | | | 44.3 | |
| Excess and obsolescence charges related to inventory | 281.5 | | | 11.9 | |
| | | | |
| Share-based compensation | 67.6 | | | 70.0 | |
| Contingent consideration | (7.1) | | | (33.8) | |
| Deferred income taxes | 1.0 | | | (15.0) | |
| (Gain) loss on strategic investments | 191.1 | | | 437.6 | |
| (Gain) loss on equity method investments | 3.3 | | | 18.2 | |
| Other | 43.3 | | | 59.8 | |
| Changes in operating assets and liabilities, net: | | | |
| Accounts receivable | (87.5) | | | 37.2 | |
| Due from anti-CD20 therapeutic programs | 22.9 | | | 43.8 | |
| Inventory | (142.6) | | | (112.5) | |
| Accrued expense and other current liabilities | (461.6) | | | (283.6) | |
| Income tax assets and liabilities | 101.9 | | | 64.8 | |
| Other changes in operating assets and liabilities, net | (213.6) | | | (80.9) | |
| Net cash flow provided by (used in) operating activities | 161.8 | | | 769.0 | |
| Cash flow from investing activities: | | | |
| Purchases of property, plant and equipment | (57.9) | | | (92.6) | |
| Proceeds from sales and maturities of marketable securities | 543.6 | | | 819.2 | |
| Purchases of marketable securities | (1,133.5) | | | (913.3) | |
| Proceeds from divestiture of Hillerød, Denmark manufacturing operations | — | | | 28.1 | |
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| Proceeds from the sales of strategic investments | — | | | 91.2 | |
| Other | (0.2) | | | 2.7 | |
| Net cash flow provided by (used in) investing activities | (648.0) | | | (64.7) | |
| Cash flow from financing activities: | | | |
| Purchases of treasury stock | — | | | (600.0) | |
| Payments related to issuance of stock for share-based compensation arrangements, net | (20.8) | | | (27.1) | |
| Repayment of borrowings and premiums paid on debt exchange | — | | | (169.3) | |
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| Net (distribution) contribution to noncontrolling interest | 0.2 | | | — | |
| Other | 4.1 | | | 11.4 | |
| Net cash flow provided by (used in) financing activities | (16.5) | | | (785.0) | |
| Net increase (decrease) in cash and cash equivalents | (502.7) | | | (80.7) | |
| Effect of exchange rate changes on cash and cash equivalents | (9.4) | | | (33.0) | |
| Cash and cash equivalents, beginning of the period | 2,261.4 | | | 1,331.2 | |
| Cash and cash equivalents, end of the period | $ | 1,749.3 | | | $ | 1,217.5 | |
See accompanying notes to these unaudited condensed consolidated financial statements.8
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Number of wholesale distributors (more than) | 1,100 | SEC-NUM |
[Table of Contents](#i90c0b6fc77a94e699123e3f505f83787_7)2. Revenue Recognition (continued)Disaggregation of Net Sales The Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks and water treatment products. Both segments primarily manufacture and market in their respective regions of the world.As each segment manufactures and markets products in its respective region of the world, the Company has determined that geography is the primary factor in reporting its sales. The Company further disaggregates its North America segment sales by major product line as each of North America’s major product lines is sold through distinct distribution channels and these product lines may be impacted differently by certain economic factors. Within the Rest of World segment, particularly in China and India, the Company’s major customers purchase across the Company’s product lines, utilizing the same distribution channels regardless of product type. In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment.The North America segment's major product lines are defined as the following:Water heaters The Company’s water heaters are open water heating systems that heat potable water. Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses. The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 1,100 independent wholesale plumbing distributors. The Company also sells residential water heaters and related parts through retail and maintenance, repair and operations (MRO) channels. A significant portion of the Company’s water heater sales in the North America segment is derived from the replacement of existing products.Boilers The Company’s boilers are closed loop water heating systems used primarily for space heating or hydronic heating. The Company’s boilers are primarily used in applications in commercial settings for hospitals, schools, hotels and other large commercial buildings while residential boilers are used in homes, apartments and condominiums. The Company’s boiler distribution channel is comprised primarily of manufacturer representative firms, with the remainder of its boilers distributed through wholesale channels. The Company’s boiler sales in the North America segment are derived from a combination of replacement of existing products and new construction.Water treatment products The Company’s water treatment products range from point-of-entry water softeners, solutions for problem well water, and whole-home water filtration products to on-the-go filtration bottles and point-of-use carbon and reverse osmosis products. Typical applications for the Company’s water treatment products include residences, restaurants, hotels and offices. The Company sells water treatment products through its retail and wholesale distribution channels, similar to water heater products and related parts. The Company’s water treatment products are also sold through independent water quality dealers as well as directly to consumers including through internet sales channels. A portion of the Company’s sales of water treatment products in the North America segment is comprised of replacement filters.The following table disaggregates the Company’s net sales by segment. As described above, the Company’s North America segment sales are further disaggregated by major product line. In addition, the Company’s Rest of World segment sales are disaggregated by China and all other Rest of World:
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| (dollars in millions) | Three Months EndedJune 30, | | Six Months EndedJune 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| North America | | | | | | | |
| Water heaters and related parts | $ | 613.9 | | | $ | 498.1 | | | $ | 1,229.7 | | | $ | 955.8 | |
| Boilers and related parts | 70.4 | | | 55.5 | | | 127.9 | | | 102.0 | |
| Water treatment products | 59.8 | | | 50.0 | | | 116.6 | | | 98.7 | |
| Total North America | 744.1 | | | 603.6 | | | 1,474.2 | | | 1,156.5 | |
| Rest of World | | | | | | | |
| China | $ | 201.5 | | | $ | 238.8 | | | $ | 429.8 | | | $ | 438.0 | |
| All other Rest of World | 28.4 | | | 24.4 | | | 56.1 | | | 47.5 | |
| Total Rest of World | 229.9 | | | 263.2 | | | 485.9 | | | 485.5 | |
| Inter-segment sales | (8.1) | | | (7.0) | | | (16.5) | | | (13.2) | |
| Total Net Sales | $ | 965.9 | | | $ | 859.8 | | | $ | 1,943.6 | | | $ | 1,628.8 | |
8
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Finance Lease, Liability, to be Paid, Year Four | 2 | SEC-NUM |
Supplemental balance sheet information related to leases was as follows:
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| | | | | | | | | | | | |
| | December 31, |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 767 | | | $ | 299 | |
| | | | |
| Current operating lease obligations(2) | 109 | | | 41 | |
| Operating lease liabilities | 670 | | | 265 | |
| Total operating lease liabilities | $ | 779 | | | $ | 306 | |
| Financing Leases | | | |
| Financing lease right-of-use assets(1) | $ | 21 | | | $ | 8 | |
| | | | |
| Current financing lease obligations(2) | 5 | | | 3 | |
| Financing lease liabilities(3) | 15 | | | 4 | |
| Total financing lease liabilities | $ | 20 | | | $ | 7 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Presented in Other assets in the Consolidated Balance Sheets.(2)Presented in Other current liabilities in the Consolidated Balance Sheets.(3)Presented in Other liabilities in the Consolidated Balance Sheets.Weighted average remaining lease term and discount rate were as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 |
| Weighted average remaining lease term in years | | | |
| Operating leases | 11.1 | | 10.5 |
| Finance leases | 4.3 | | 2.9 |
| Weighted average discount rate | | | |
| Operating leases | 2.73 | % | | 3.82 | % |
| Finance leases | 1.85 | % | | 1.81 | % |
Maturities of lease liabilities as of December 31, 2021 were as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| (DOLLARS IN MILLIONS) | Operating Leases | | Financing Leases | | Total |
| 2022 | $ | 127 | | | $ | 7 | | | $ | 134 | |
| 2023 | 97 | | | 5 | | | 102 | |
| 2024 | 82 | | | 3 | | | 85 | |
| 2025 | 78 | | | 2 | | | 80 | |
| 2026 | 73 | | | 2 | | | 75 | |
| Thereafter | 459 | | | 2 | | | 461 | |
| Total undiscounted liabilities | 916 | | | 21 | | | 937 | |
| Less: Imputed interest | (137) | | | (1) | | | (138) | |
| Total lease liabilities | $ | 779 | | | $ | 20 | | | $ | 799 | |
Right-of-use assets and lease liabilities acquired from N&B were remeasured at the present value of the future minimum lease payments over the remaining lease term utilizing an updated incremental borrowing rate of the Company as if the acquired leases were new leases as of the Closing Date. Right-of-use assets were further adjusted for any off-market terms of the lease. The remaining lease term is based on the remaining term at the Closing Date plus any renewal or extension options that the Company is reasonably certain will be exercised. Additionally, the Company has elected short-term lease treatment for those acquired lease contracts which, at the Closing Date, have a remaining lease term of 12 months or less. For the leases acquired through the Transactions, the Company will retain the previous lease classification. This resulted in an increase in both right-of-use assets and operating lease liabilities of approximately $525 million and $523 million, respectively, as of the Closing Date.
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Payments of deferred and contingent acquisition consideration | 4.1 | SEC-NUM |
[Table of Contents](#ifd0dff1f28084ac0b92d7f0a49d14a91_7)INGERSOLL RAND INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited; in millions)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Nine Month Period Ended September 30, |
| | 2022 | | 2021 |
| Cash Flows From Operating Activities From Continuing Operations: | | | |
| Net income | $ | 389.8 | | | $ | 271.3 | |
| Income (loss) from discontinued operations, net of tax | 0.6 | | | (88.1) | |
| Income from continuing operations | 389.2 | | | 359.4 | |
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations: | | | |
| Amortization of intangible assets | 263.6 | | | 244.8 | |
| Depreciation | 64.4 | | | 65.5 | |
| | | | |
| Non-cash restructuring charges | 6.0 | | | — | |
| Stock-based compensation expense | 62.3 | | | 65.0 | |
| Income (loss) on equity method investments | 2.5 | | | 2.9 | |
| Foreign currency transaction gains, net | (12.3) | | | (13.6) | |
| | | | |
| Non-cash adjustments to carrying value of LIFO inventories | 33.0 | | | — | |
| Other non-cash adjustments | 3.1 | | | 8.6 | |
| Changes in assets and liabilities: | | | |
| Receivables | (160.1) | | | (43.8) | |
| Inventories | (260.2) | | | (126.6) | |
| Accounts payable | 76.4 | | | 83.7 | |
| Accrued liabilities | 90.2 | | | (129.2) | |
| Other assets and liabilities, net | (47.5) | | | (135.8) | |
| Net cash provided by operating activities from continuing operations | 510.6 | | | 380.9 | |
| Cash Flows From Investing Activities From Continuing Operations: | | | |
| Capital expenditures | (61.1) | | | (41.2) | |
| Net cash paid in business combinations | (62.5) | | | (809.3) | |
| Disposals of property, plant and equipment | — | | | 9.5 | |
| Other investing | 4.1 | | | — | |
| Net cash used in investing activities from continuing operations | (119.5) | | | (841.0) | |
| Cash Flows From Financing Activities From Continuing Operations: | | | |
| Principal payments on long-term debt | (647.1) | | | (425.7) | |
| | | | |
| Purchases of treasury stock | (257.8) | | | (736.5) | |
| Cash dividends on common shares | (24.3) | | | — | |
| Proceeds from stock option exercises | 14.7 | | | 20.0 | |
| Payments of interest rate cap premiums | (13.4) | | | — | |
| Payments of deferred and contingent acquisition consideration | (4.1) | | | — | |
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| Other financing | (2.8) | | | — | |
| Net cash used in financing activities from continuing operations | (934.8) | | | (1,142.2) | |
| Cash Flows From Discontinued Operations: | | | |
| Net cash used in operating activities | (5.0) | | | (0.6) | |
| Net cash provided by investing activities | 4.4 | | | 1,902.5 | |
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| Net cash provided by (used in) discontinued operations | (0.6) | | | 1,901.9 | |
| Effect of exchange rate changes on cash and cash equivalents | (105.8) | | | (17.5) | |
| Net increase (decrease) in cash and cash equivalents | (650.1) | | | 282.1 | |
| Cash and cash equivalents, beginning of period | 2,109.6 | | | 1,750.9 | |
| Cash and cash equivalents, end of period | $ | 1,459.5 | | | $ | 2,033.0 | |
| Supplemental Cash Flow Information | | | |
| Cash paid for income taxes | $ | 117.1 | | | $ | 381.4 | |
| Cash paid for interest | 64.2 | | | 62.5 | |
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The accompanying notes are an integral part of these condensed consolidated financial statements.11
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Number of days prior written notice to redeem investments | 90 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)The fair values of our pension plan assets as of December 31, 2021, by asset category were as follows ($ in millions):
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| | Quoted Prices inActive Market(Level 1) | | Significant OtherObservable Inputs(Level 2) | | SignificantUnobservableInputs(Level 3) | | Total |
| Cash and equivalents | $ | 3.7 | | | $ | — | | | $ | — | | | $ | 3.7 | |
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| | | | | | | | |
| Mutual funds | — | | | 32.6 | | | — | | | 32.6 | |
| Insurance contracts | — | | | 31.7 | | | — | | | 31.7 | |
| Total | $ | 3.7 | | | $ | 64.3 | | | $ | — | | | $ | 68.0 | |
| Investments measured at NAV(a): | | | | | | | |
| Mutual funds | | | | | | | 125.6 | |
| Real estate funds | | | | | | | 18.7 | |
| Other private investments | | | | | | | 42.7 | |
| Total assets at fair value | | | | | | | $ | 255.0 | |
| | | | | | | | |
| (a) The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets. |
The fair values of our pension plan assets as of December 31, 2020, by asset category were as follows ($ in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Quoted Prices inActive Market(Level 1) | | Significant OtherObservable Inputs(Level 2) | | SignificantUnobservableInputs(Level 3) | | Total |
| Cash and equivalents | $ | 5.4 | | | $ | — | | | $ | — | | | $ | 5.4 | |
| Mutual funds | — | | | 30.8 | | | — | | | 30.8 | |
| Insurance contracts | — | | | 27.8 | | | — | | | 27.8 | |
| Total | $ | 5.4 | | | $ | 58.6 | | | $ | — | | | $ | 64.0 | |
| Investments measured at NAV(a): | | | | | | | |
| Mutual funds | | | | | | | 155.1 | |
| Real estate funds | | | | | | | 15.2 | |
| Other private investments | | | | | | | 19.4 | |
| Total assets at fair value | | | | | | | $ | 253.7 | |
| | | | | | | | |
| (a) The fair value amounts presented in the table above are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets. |
Certain mutual funds are valued at the quoted closing price reported on the active market on which the individual securities are traded. Common stock, corporate bonds, and mutual funds that are not traded on an active market are valued at quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market.Certain mutual funds and other private investments are valued using NAV based on the information provided by the asset fund managers, which reflects the plan’s share of the fair value of the net assets of the investment. Depending on the nature of the assets, the underlying investments are valued using a combination of either discounted cash flows, earnings and market multiples, third party appraisals, or through reference to the quoted market prices of the underlying investments held by the venture, partnership, or private entity where available. In addition, some of these investments have limits on their redemption to monthly, quarterly, semiannually, or annually and may require up to 90 days prior written notice. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company.The methods described above may produce a fair value estimate that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe the valuation methods are appropriate and consistent with the methods used by other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.Expected Contributions82
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Unrecognized compensation cost related to nonvested stock-based compensation arrangements under stock-based component of LTIP costs, weighted average remaining period (in years) | 1.4 | SEC-NUM |
DAVITA INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)(unaudited)(dollars and shares in thousands, except per share data)
equity interest or which are wholly-owned by third parties of approximately $12,425.In addition, on May 25, 2022, the Company entered into an agreement with Medtronic, Inc. and one of its subsidiaries (collectively, Medtronic) to form a new, independent kidney care-focused medical device company (NewCo). The transaction is expected to close in 2023, subject to customary closing conditions and regulatory approvals. At close, the Company will make a cash payment to Medtronic of approximately $75,000, subject to certain customary adjustments prior to the closing, and will contribute certain other non-cash assets to NewCo valued at approximately $25,000. Additionally, at close, the Company and Medtronic each will contribute approximately $200,000 in cash to launch NewCo. The Company also agreed to pay Medtronic additional consideration of up to $300,000 if certain regulatory and commercial milestones are achieved between 2024 and 2028.8. Shareholders' equityStock-based compensationDuring the six months ended June 30, 2022, the Company granted 993 restricted and performance stock units with an aggregate grant-date fair value of $110,414 and a weighted-average expected life of approximately 3.5 years and 130 stock-settled stock appreciation rights with an aggregate grant-date fair value of $4,573 and a weighted-average expected life of approximately 4.5 years.As of June 30, 2022, the Company had $191,666 in total estimated but unrecognized stock-based compensation expense under the Company's equity compensation and employee stock purchase plans. The Company expects to recognize this expense over a weighted average remaining period of 1.4 years.Share repurchasesThe following table summarizes the Company's common stock repurchases during the three and six months ended June 30, 2022 and 2021:
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2022 | | 2021 | | | 2022 | | 2021 | |
| Open market repurchases: | | | | | | | | | |
| Shares repurchased | 3,869 | | | 2,070 | | | | 5,973 | | | 5,019 | | |
| Amount paid | $ | 369,740 | | | $ | 240,897 | | | | $ | 603,058 | | | $ | 563,230 | | |
| Average paid per share | $ | 95.56 | | | $ | 116.38 | | | | $ | 100.96 | | | $ | 112.21 | | |
The Company repurchased 901 shares of its common stock for $74,761 at an average cost of $82.94 per share subsequent to June 30, 2022 through July 29, 2022. The Company is authorized to make purchases from time to time in the open market or in privately negotiated transactions, including without limitation, through accelerated share repurchase transactions, derivative transactions, tender offers, Rule 10b5-1 plans or any combination of the foregoing, depending upon market conditions and other considerations.As of July 29, 2022, the Company had a total of $1,706,120 available under the current authorization for additional share repurchases. Although this share repurchase authorization does not have an expiration date, the Company remains subject to share repurchase limitations including under the terms of its current senior secured credit facilities.15
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Business acquisitions, net of cash and cash equivalents acquired | 419,501 | SEC-NUM |
THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine Months Ended |
| | October 2, 2022 | | October 3, 2021 |
| Operating Activities | | | |
| Net income including noncontrolling interest | $ | 1,248,521 | | | $ | 1,143,028 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 279,082 | | | 231,953 | |
| Stock-based compensation expense | 50,640 | | | 51,009 | |
| Deferred income taxes | (9,751) | | | 762 | |
| | | | |
| | | | |
| Write-down of equity investments | 70,754 | | | 28,734 | |
| | | | |
| Other | 92,632 | | | 77,548 | |
| Changes in assets and liabilities, net of business acquisitions and divestitures: | | | |
| Accounts receivable—trade, net | (259,064) | | | (222,864) | |
| Inventories | (201,425) | | | (38,864) | |
| Prepaid expenses and other current assets | (40,565) | | | 11,908 | |
| Accounts payable and accrued liabilities | 248,230 | | | 76,446 | |
| Accrued income taxes | 124,965 | | | 92,236 | |
| Contributions to pension and other benefit plans | (16,639) | | | (38,576) | |
| Other assets and liabilities | (27,186) | | | (9,603) | |
| Net cash provided by operating activities | 1,560,194 | | | 1,403,717 | |
| Investing Activities | | | |
| Capital additions (including software) | (359,993) | | | (347,450) | |
| | | | |
| | | | |
| Equity investments in tax credit qualifying partnerships | (159,713) | | | (75,917) | |
| Business acquisitions, net of cash and cash equivalents acquired | — | | | (419,501) | |
| Other investing activities | 9,730 | | | 3,129 | |
| | | | |
| Net cash used in investing activities | (509,976) | | | (839,739) | |
| Financing Activities | | | |
| Net (decrease) increase in short-term debt | (145,552) | | | 339,981 | |
| | | | |
| Repayment of long-term debt and finance leases | (3,321) | | | (438,029) | |
| | | | |
| | | | |
| Cash dividends paid | (567,989) | | | (505,194) | |
| Repurchase of common stock | (355,271) | | | (457,946) | |
| Proceeds from exercised stock options | 30,824 | | | 39,499 | |
| Taxes withheld and paid on employee stock awards | (34,722) | | | (16,137) | |
| | | | |
| Net cash used in financing activities | (1,076,031) | | | (1,037,826) | |
| Effect of exchange rate changes on cash and cash equivalents | 24,288 | | | (6,057) | |
| Decrease in cash and cash equivalents, including cash classified as held for sale | (1,525) | | | (479,905) | |
| Less: Increase in cash and cash equivalents classified as held for sale | — | | | 11,434 | |
| Net decrease in cash and cash equivalents | (1,525) | | | (468,471) | |
| Cash and cash equivalents, beginning of period | 329,266 | | | 1,143,987 | |
| Cash and cash equivalents, end of period | $ | 327,741 | | | $ | 675,516 | |
| Supplemental Disclosure | | | |
| Interest paid | $ | 90,787 | | | $ | 92,397 | |
| Income taxes paid | 190,724 | | | 199,735 | |
See Notes to Unaudited Consolidated Financial Statements.
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| [Table of Contents](#i0bc28196a24d4084af1a4cbdf6bdf4bd_7) | The Hershey Company | Q3 2022 Form 10-Q | Page 5 | hsy-20221002_g2.jpg |
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Less imputed interest | 282 | SEC-NUM |
[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSThe total future minimum lease payments, over the remaining lease term, relating to the Company’s operating and finance leases for each of the next five fiscal years and thereafter is as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| (In millions) | | Operating Leases | | Finance Leases |
| Fiscal 2023 | | $ | 414 | | | $ | 13 | |
| Fiscal 2024 | | 377 | | | 7 | |
| Fiscal 2025 | | 308 | | | 2 | |
| Fiscal 2026 | | 260 | | | 1 | |
| Fiscal 2027 | | 215 | | | — | |
| Thereafter | | 941 | | | — | |
| Total future minimum lease payments | | 2,515 | | | 23 | |
| Less imputed interest | | (282) | | | — | |
| Total | | $ | 2,233 | | | $ | 23 | |
Operating lease and finance lease liabilities included in the consolidated balance sheet are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | June 30 |
| | | 2022 | | 2021 |
| (In millions) | | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases |
| Total current liabilities | | $ | 365 | | | 13 | | | $ | 379 | | | $ | 18 | |
| Total noncurrent liabilities | | 1,868 | | | 10 | | | 2,151 | | | 27 | |
| Total | | $ | 2,233 | | | $ | 23 | | | $ | 2,530 | | | $ | 45 | |
The ROU assets and lease liabilities related to finance leases are included in Other assets and in Current debt and Long-term debt, respectively, in the accompanying consolidated balance sheets as of June 30, 2022 and 2021. During fiscal 2021 and fiscal 2020, as a result of the continued challenging retail environment due to the COVID-19 pandemic, certain of the Company’s freestanding stores experienced lower net sales and lower expectations of future cash flows. These changes were an indicator that the carrying amounts may not be recoverable. Accordingly, the Company performed a recoverability test by comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying value. For those freestanding stores that failed step one of this test, the Company then compared the assets carrying values to their estimated fair values. Specifically, for the related ROU assets, the fair value was based on discounting market rent using a real estate discount rate. As a result, the Company recognized $71 million and $215 million of long-lived asset impairments, included in Impairments of other intangible and long-lived assets, in the accompanying consolidated statements of earnings for the year ended June 30, 2021 and 2020, respectively. The fiscal 2021 impairments related to other assets (i.e. rights associated with commercial operating leases) of $27 million, operating lease right-of-use assets of $25 million and the related property, plant and equipment in certain freestanding stores of $19 million. The fiscal 2020 impairments related to operating lease ROU assets of $131 million, as well as the related property, plant and equipment and other long-lived assets in certain freestanding stores of $84 million, combined.
F-33
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Goodwill, Purchase Accounting Adjustments | 4 | SEC-NUM |
Completed AcquisitionsAcquisitions completed during the year ended December 31, 2021, for which the initial accounting was not finalized as of March 31, 2022, included myNEXUS, Inc. (“myNEXUS”), a comprehensive home-based nursing management company for payors, and MMM Holdings, LLC (“MMM”), including its Medicare Advantage plan, Medicaid plan and other affiliated companies. As of March 31, 2022, the purchase price of each transaction was allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $1,577 has been allocated to finite-lived intangible assets, $20 to indefinite-lived intangible assets, and $2,525 to goodwill. The majority of goodwill is not deductible for income tax purposes. Adjustments to goodwill arising from contractual purchase price adjustments and subsequent adjustments made to the assets acquired or liabilities assumed during the quarter ended March 31, 2022 were $4.4. Business Optimization InitiativesProvided below is a summary of the activity, by reportable segment, related to the liability for employee termination costs previously incurred in connection with our enterprise-wide business optimization initiatives introduced in 2020.
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| | Commercial & Specialty Business | | Government Business | | IngenioRx | | Other | | Total |
| 2020 Business Optimization Initiatives | | | | | | | | | |
| Employee termination costs: | | | | | | | | | |
| Liability for employee termination costs at January 1, 2022 | $ | 61 | | | $ | 57 | | | $ | 1 | | | $ | 3 | | | $ | 122 | |
| | | | | | | | | | |
| Payments | (5) | | | (5) | | | — | | | — | | | (10) | |
| Liability for employee termination costs at March 31, 2022 | $ | 56 | | | $ | 52 | | | $ | 1 | | | $ | 3 | | | $ | 112 | |
5. Investments Fixed Maturity SecuritiesWe evaluate our available-for-sale fixed maturity securities for declines based on qualitative and quantitative factors. We have established an allowance for credit loss and recorded credit loss expense as a reflection of our expected impairment losses. We continue to review our investment portfolios under our impairment review policy. Given the inherent uncertainty of changes in market conditions and the significant judgments involved, there is a continuing risk that declines in fair value may occur and additional material impairment losses on investments may be recorded in future periods.Although not material to our consolidated results of operations, during the three months ended March 31, 2022, we recorded a combination of credit losses, losses on sale of fixed maturity securities and impairments related to our exposure resulting from investments in Russia and Ukraine. These items are reflected in the tables presented below. At March 31, 2022, our remaining holdings of Russia and Ukraine fixed maturity securities were not material.
-11-
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Weighted average remaining contractual term, vested and expected to vest | 6 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)Stock OptionsThe following summarizes the assumptions used in the Black-Scholes model to value stock options granted under the Stock Plan during the years ended December 31:
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| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| Risk-free interest rate | 0.8% - 1.3% | | 0.3% - 1.5% | | 1.4% - 2.6% |
| Volatility (a) | 27.2 | % | | 21.1 | % | | 19.9 | % |
| Dividend yield (b) | 0.4 | % | | 0.4 | % | | 0.4 | % |
| Expected years until exercise | 5.5 - 8.0 | | 5.5 - 8.0 | | 5.5 - 8.0 |
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| (a) Expected volatility is based on a weighted average blend of the company’s historical stock price volatility from July 2, 2016 (the date of separation from Danaher) through the stock option grant date and the average historical stock price volatility of a group of peer companies for the expected term of the options. |
| (b) The dividend yield is calculated by dividing our annual dividend, based on the most recent quarterly dividend rate, by Fortive’s closing stock price on the grant date. |
The following summarizes option activity under the Stock Plan (in millions, except price per share and numbers of years):
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| | Options (a) | | WeightedAverageExercisePrice | | Weighted AverageRemainingContractual Term(years) | | AggregateIntrinsicValue |
| Outstanding as of January 1, 2019 (a) | 11.9 | | | $ | 36.22 | | | | | |
| Granted | 2.7 | | | 57.28 | | | | | |
| Exercised | (1.4) | | | 28.14 | | | | | |
| Canceled/forfeited | (0.9) | | | 55.01 | | | | | |
| Outstanding as of December 31, 2019 (a) | 12.3 | | | 40.50 | | | | | |
| Granted | 2.3 | | | 63.09 | | | | | |
| Exercised | (1.9) | | | 26.32 | | | | | |
| Canceled/forfeited | (0.7) | | | 61.39 | | | | | |
| Adjustment due to Vontier Separation (b) | (1.4) | | | 44.94 | | | | | |
| Outstanding as of December 31, 2020 | 10.6 | | | 50.07 | | | | | |
| Granted | 2.0 | | | 69.07 | | | | | |
| Exercised | (1.5) | | | 36.40 | | | | | |
| Canceled/forfeited | (0.7) | | | 64.28 | | | | | |
| Outstanding as of December 31, 2021 | 10.4 | | | 54.81 | | | 6 | | $ | 224.3 | |
| Vested and expected to vest as of December 31, 2021 (c) | 10.3 | | | 54.62 | | | 6 | | $ | 222.9 | |
| Vested as of December 31, 2021 | 4.8 | | | 42.78 | | | 4 | | $ | 160.9 | |
| | | | | | | | |
| (a) The outstanding options as of December 31, 2019 have been adjusted by a factor of 1.20, as noted above, due to the Separation. (b) The “Adjustment due to Vontier Separation” reflects the cancellation of outstanding options held by Vontier employees as of October 8, 2020, which were replaced with Vontier options issued by Vontier as part of the Separation.(c) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options. |
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between the closing stock price of Fortive common stock on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2021. The amount of aggregate intrinsic value will change based on the price of Fortive’s common stock. 97
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Lessee, Operating and Finance Lease, Liability, to be Paid, Year Three | 85 | SEC-NUM |
Supplemental balance sheet information related to leases was as follows:
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| | December 31, |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 767 | | | $ | 299 | |
| | | | |
| Current operating lease obligations(2) | 109 | | | 41 | |
| Operating lease liabilities | 670 | | | 265 | |
| Total operating lease liabilities | $ | 779 | | | $ | 306 | |
| Financing Leases | | | |
| Financing lease right-of-use assets(1) | $ | 21 | | | $ | 8 | |
| | | | |
| Current financing lease obligations(2) | 5 | | | 3 | |
| Financing lease liabilities(3) | 15 | | | 4 | |
| Total financing lease liabilities | $ | 20 | | | $ | 7 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Presented in Other assets in the Consolidated Balance Sheets.(2)Presented in Other current liabilities in the Consolidated Balance Sheets.(3)Presented in Other liabilities in the Consolidated Balance Sheets.Weighted average remaining lease term and discount rate were as follows:
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| | | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 |
| Weighted average remaining lease term in years | | | |
| Operating leases | 11.1 | | 10.5 |
| Finance leases | 4.3 | | 2.9 |
| Weighted average discount rate | | | |
| Operating leases | 2.73 | % | | 3.82 | % |
| Finance leases | 1.85 | % | | 1.81 | % |
Maturities of lease liabilities as of December 31, 2021 were as follows:
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| (DOLLARS IN MILLIONS) | Operating Leases | | Financing Leases | | Total |
| 2022 | $ | 127 | | | $ | 7 | | | $ | 134 | |
| 2023 | 97 | | | 5 | | | 102 | |
| 2024 | 82 | | | 3 | | | 85 | |
| 2025 | 78 | | | 2 | | | 80 | |
| 2026 | 73 | | | 2 | | | 75 | |
| Thereafter | 459 | | | 2 | | | 461 | |
| Total undiscounted liabilities | 916 | | | 21 | | | 937 | |
| Less: Imputed interest | (137) | | | (1) | | | (138) | |
| Total lease liabilities | $ | 779 | | | $ | 20 | | | $ | 799 | |
Right-of-use assets and lease liabilities acquired from N&B were remeasured at the present value of the future minimum lease payments over the remaining lease term utilizing an updated incremental borrowing rate of the Company as if the acquired leases were new leases as of the Closing Date. Right-of-use assets were further adjusted for any off-market terms of the lease. The remaining lease term is based on the remaining term at the Closing Date plus any renewal or extension options that the Company is reasonably certain will be exercised. Additionally, the Company has elected short-term lease treatment for those acquired lease contracts which, at the Closing Date, have a remaining lease term of 12 months or less. For the leases acquired through the Transactions, the Company will retain the previous lease classification. This resulted in an increase in both right-of-use assets and operating lease liabilities of approximately $525 million and $523 million, respectively, as of the Closing Date.
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Forfeited/canceled (in dollars per share) | 13 | SEC-NUM |
[Table of Contents](#ica158fb683c247fdb170955b492f9216_7)HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)Stock-based compensation expense as presented in the table above is recorded within the following cost and expense lines in the Consolidated Statement of Earnings.
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| | For the fiscal years ended October 31, |
| | 2021 | | 2020 | | 2019 |
| | In millions |
| Cost of sales | $ | 40 | | | $ | 37 | | | $ | 37 | |
| Research and development | 124 | | | 81 | | | 70 | |
| Selling, general and administrative | 208 | | | 156 | | | 161 | |
| Transformation costs | — | | | — | | | 2 | |
| Acquisition, disposition and other related charges | 10 | | | 4 | | | — | |
| Stock-based compensation expense | $ | 382 | | | $ | 278 | | | $ | 270 | |
Employee Stock Purchase PlanEffective November 1, 2015, the Company adopted the Hewlett Packard Enterprise Company 2015 Employee Stock Purchase Plan ("ESPP"). The total number of shares of Company's common stock authorized under the ESPP was 80 million. The ESPP allows eligible employees to contribute up to 10% of their eligible compensation to purchase Hewlett Packard Enterprise's common stock. The ESPP provides for a discount not to exceed 15% and an offering period up to 24 months. The Company currently offers 6-month offering periods during which employees have the ability to purchase shares at 95% of the closing market price on the purchase date. No stock-based compensation expense was recorded in connection with those purchases, as the criteria of a non-compensatory plan were met.Restricted Stock UnitsRestricted stock units have forfeitable dividend equivalent rights equal to the dividend paid on common stock. Restricted stock units do not have the voting rights of common stock, and the shares underlying restricted stock units are not considered issued and outstanding upon grant. The fair value of the restricted stock units is the closing price of the Company's common stock on the grant date of the award. The Company expenses the fair value of restricted stock units ratably over the period during which the restrictions lapse. The following table summarizes restricted stock unit activity for the year ended October 31, 2021:
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| | | | | | | | | | | | |
| | Shares | | Weighted-Average Grant Date Fair Value Per Share |
| | In thousands | | |
| Outstanding at beginning of year | 42,325 | | | $ | 13 | |
| Granted and replacement awards for acquisition | 28,403 | | | $ | 13 | |
| | | | |
| Vested | (20,605) | | | $ | 14 | |
| Forfeited/canceled | (4,374) | | | $ | 13 | |
| Outstanding at end of year | 45,749 | | | $ | 13 | |
The total grant date fair value of restricted stock awards vested for Company employees in fiscal 2021, 2020 and 2019 was $271 million, $254 million and $182 million, respectively. As of October 31, 2021, there was $259 million of unrecognized pre-tax stock-based compensation expense related to unvested restricted stock units, which the Company expects to recognize over the remaining weighted-average vesting period of 1.3 years.Performance Restricted Units The Company issues performance stock units ("PSU") that vest on the satisfaction of service and performance conditions. The fair value of the PSUs is the closing price of the Company's common stock on the grant date of the award. The Company also issues performance-adjusted restricted stock units ("PARSU") that vest only on the satisfaction of service, performance and market conditions. The Company estimates the fair value of PARSUs subject to performance-contingent vesting conditions using the Monte Carlo simulation model. The expenses associated with these performance restricted units were not material for any of the periods presented.94
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Products warranty period | 12 | SEC-NUM |
[Table of Contents](#ie3b4dd133255408488aec6011c49b801_10)APPLIED MATERIALS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)Applied products are generally sold with a warranty for a 12-month period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales.GuaranteesIn the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of October 31, 2021, the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $500 million. Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of October 31, 2021, Applied has provided parent guarantees to banks for approximately $144 million to cover these arrangements.Legal MattersFrom time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings, regulatory investigations or inquires, and claims, both asserted and unasserted, that arise in the ordinary course of business. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material effect on its consolidated financial condition or results of operations.
Note 18 Industry Segment OperationsApplied’s three reportable segments are: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. As defined under the accounting literature, Applied’s chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Segment information is presented based upon Applied’s management organization structure as of October 31, 2021 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s reportable segments.The Semiconductor Systems reportable segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation.The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, certain remanufactured earlier generation equipment and factory automation software for semiconductor, display and other products.The Display and Adjacent Markets segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), equipment upgrades and other display technologies for TVs, monitors, laptops, personal computers, smart phones, and other consumer-oriented devices.Each operating segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker. The chief operating decision-maker does not evaluate operating segments using total asset information. Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. 102
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Prepayment of the Company's share of the estimated taxes resulting from the anticipated divestitures by Disney of certain assets | 700 | SEC-NUM |
FOX CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSPursuant to the 21CF Disney Merger Agreement, immediately prior to the Distribution, the Company paid to 21CF a dividend in the amount of $8.5 billion (the "Dividend"). The final determination of the taxes in respect of the Separation and the Distribution for which the Company is responsible pursuant to the 21CF Disney Merger Agreement and a prepayment of the estimated taxes in respect of divestitures (collectively, the "Transaction Tax") was $6.5 billion. Following the Distribution, on March 20, 2019 the Company received a cash payment in the amount of $2.0 billion from Disney, which had the net effect of reducing the Dividend the Company paid to 21CF. The Transaction Tax included a prepayment of the Company's share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets, principally the FOX Sports Regional Sports Networks ("RSNs"), which were sold by Disney during calendar year 2019 ("Divestiture Tax"). This prepayment was in the amount of approximately $700 million. During the first quarter of fiscal 2021, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $462 million from Disney as reimbursement of the Company's prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information under the heading "Other, net"). The balance of the prepaid Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the results of the Company.As a result of the Separation and the Distribution, which was a taxable transaction for which the estimated tax liability of $5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values. This will result in estimated annual tax deductions of approximately $1.5 billion, principally over the next several years related to the amortization of the additional tax basis. This amortization is estimated to reduce the Company's annual cash tax liability by approximately $370 million per year at the current combined federal and state applicable tax rate of approximately 25%. Such estimates are subject to revisions, which could be material, based upon the occurrence of future events.The consolidated financial statements are referred to as the "Financial Statements" herein. The consolidated statements of operations are referred to as the "Statements of Operations" herein. The consolidated statements of comprehensive income are referred to as the "Statements of Comprehensive Income" herein. The consolidated balance sheets are referred to as the "Balance Sheets" herein. The consolidated statements of cash flows are referred to as the "Statements of Cash Flows" herein. The consolidated statements of equity are referred to as the "Statements of Equity" herein.NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of consolidationThe Financial Statements include the accounts of all majority-owned and controlled subsidiaries. In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810-10, "Consolidation" ("ASC 810-10") and whether the Company is the primary beneficiary. Consolidation is required if both of these criteria are met. All significant intercompany accounts and transactions within the Company's consolidated businesses have been eliminated in consolidation.Any change in the Company's ownership interest in a consolidated subsidiary, where a controlling financial interest is retained, is accounted for as an equity transaction. When the Company ceases to have a controlling financial interest in a consolidated subsidiary, the Company will recognize a gain or loss in net income upon deconsolidation.The Company's fiscal year ends on June 30 ("fiscal") of each year.Reclassifications and adjustmentsCertain fiscal 2021 and 2020 amounts have been reclassified to conform to the fiscal 2022 presentation.Use of estimatesThe preparation of the Company's Financial Statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the 69
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Return of investment capital | 1 | SEC-NUM |
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| FINANCIAL STATEMENTS | |
PIEDMONT NATURAL GAS COMPANY, INC.Condensed Consolidated Statements of Cash Flows(Unaudited)
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| | Nine Months Ended |
| | September 30, |
| (in millions) | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
| Net income | $ | 180 | | | $ | 175 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 168 | | | 152 | |
| Equity component of AFUDC | (7) | | | (19) | |
| | | | |
| Impairment of assets and other charges | 1 | | | 10 | |
| Deferred income taxes | 13 | | | 10 | |
| Equity in earnings from unconsolidated affiliates | (5) | | | (7) | |
| | | | |
| Contributions to qualified pension plans | (2) | | | — | |
| | | | |
| Provision for rate refunds | (3) | | | (3) | |
| (Increase) decrease in | | | |
| | | | |
| Receivables | 198 | | | 151 | |
| Receivables from affiliated companies | 1 | | | (1) | |
| Inventory | (26) | | | — | |
| Other current assets | (91) | | | 7 | |
| Increase (decrease) in | | | |
| Accounts payable | 24 | | | (55) | |
| Accounts payable to affiliated companies | (5) | | | (48) | |
| Taxes accrued | (18) | | | 17 | |
| Other current liabilities | 23 | | | (32) | |
| Other assets | (8) | | | 3 | |
| Other liabilities | (3) | | | 2 | |
| Net cash provided by operating activities | 440 | | | 362 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
| Capital expenditures | (598) | | | (628) | |
| Contributions to equity method investments | (8) | | | (9) | |
| Return of investment capital | — | | | 1 | |
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| Other | (17) | | | (23) | |
| Net cash used in investing activities | (623) | | | (659) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
| Proceeds from the issuance of long-term debt | 394 | | | 347 | |
| Payments for the redemption of long-term debt | — | | | (160) | |
| Notes payable to affiliated companies | (210) | | | (215) | |
| | | | |
| | | | |
| Capital contributions from parent | — | | | 325 | |
| | | | |
| Other | (1) | | | — | |
| Net cash provided by financing activities | 183 | | | 297 | |
| Net increase in cash and cash equivalents | — | | | — | |
| Cash and cash equivalents at beginning of period | — | | | — | |
| Cash and cash equivalents at end of period | $ | — | | | $ | — | |
| Supplemental Disclosures: | | | |
| | | | |
| | | | |
| Significant non-cash transactions: | | | |
| Accrued capital expenditures | $ | 163 | | | $ | 115 | |
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See Notes to Condensed Consolidated Financial Statements41
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Authorized grants under the plan (in shares) | 25 | SEC-NUM |
NOTE 3 - STOCK COMPENSATION
The Company maintains the 2016 Omnibus Incentive Plan (the “Plan”) under which it may grant non-qualified stock options (“NQSOs”), incentive stock options, restricted stock, RSUs and stock appreciation rights, collectively referred to as “Awards.” Awards are granted at exercise prices that are equal to the closing stock price on the date of grant. The Company authorized grants under the Plan of 25 million shares of common stock, plus any unexercised portion of canceled or terminated stock options granted under the legacy DENTSPLY International Inc. 2010 and 2002 Equity Incentive Plans, as amended, and under the legacy Sirona Dental Systems, Inc. 2015 and 2006 Equity Incentive Plans, as amended. Each restricted stock and RSU issued is counted as a reduction of 3.09 shares of common stock available to be issued under the Plan. No key employee may be granted awards in excess of 1 million shares of common stock in any calendar year. The number of shares available for grant under the 2016 Plan at December 31, 2021 is 20 million.
The amounts of stock compensation expense recorded in the Company's Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 were as follows:
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| | | Year Ended December 31, |
| (in millions) | | 2021 | | 2020 | | 2019 |
| | | | | | | |
| Cost of products sold | | $ | 3 | | | $ | 1 | | | $ | 2 | |
| Selling, general, and administrative expense | | 44 | | | 44 | | | 61 | |
| Research and development expense | | 2 | | | 1 | | | 2 | |
| Total stock based compensation expense | | $ | 49 | | | $ | 46 | | | $ | 65 | |
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| Related deferred income tax benefit | | $ | 6 | | | $ | 5 | | | $ | 8 | |
The Company uses the Black-Scholes option-pricing model to estimate the fair value of each option awarded. The average assumptions used to determine compensation cost for the Company’s NQSOs issued were as follows:
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| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| | | | | | | |
| Weighted average fair value per share | | $ | 15.90 | | | $ | 10.03 | | | $ | 12.20 | |
| Expected dividend yield | | 0.68 | % | | 0.84 | % | | 0.71 | % |
| Risk-free interest rate | | 0.79 | % | | 0.77 | % | | 2.36 | % |
| Expected volatility | | 31.5 | % | | 24.0 | % | | 22.6 | % |
| Expected life (years) | | 5.08 | | 5.49 | | 6.00 |
The total intrinsic value of options exercised for the years ended December 31, 2021, 2020 and 2019 was $16 million, $3 million and $37 million, respectively.
The total fair value of shares vested for the years ended December 31, 2021, 2020 and 2019 was $76 million, $54 million and $44 million, respectively.
The NQSO transactions for the year ended December 31, 2021 were as follows:
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| | | Outstanding | | Exercisable |
| (in millions, except per share amounts) | | Shares | | WeightedAverageExercisePrice | | AggregateIntrinsicValue | | Shares | | WeightedAverageExercisePrice | | AggregateIntrinsicValue |
| | | | | | | | | | | | | |
| December 31, 2020 | | 4.0 | | | $ | 50.01 | | | $ | 17 | | | 2.7 | | | $ | 50.28 | | | $ | 12 | |
| Granted | | 0.5 | | | 58.85 | | | | | | | | | |
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| Exercised | | (1.1) | | | 46.81 | | | | | | | | | |
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| Forfeited | | (0.2) | | | 53.03 | | | | | | | | | |
| December 31, 2021 | | 3.2 | | | $ | 52.44 | | | $ | 15 | | | 2.2 | | | $ | 52.05 | | | $ | 11 | |
73
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Embedded Derivative, Estimate of Embedded Derivative Liability | 40 | SEC-NUM |
relevant legal requirements. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio. Assets invested in fixed income securities and pooled fixed-income portfolios are managed actively to pursue opportunities presented by changes in interest rates, credit ratings, or maturity premiums.
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| | Other Post-Retirement Benefits |
| Assumed Healthcare Cost Trend Rates at the Balance Sheet Date | 2022 | | 2021 |
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| Healthcare cost trend rate – initial (%) | | | |
| Pre-65 | n/a | | n/a |
| Post-65 | 4.6 | % | | 7.3 | % |
| Healthcare cost trend rate – ultimate (%) | | | |
| Pre-65 | n/a | | n/a |
| Post-65 | 4.1 | % | | 4.4 | % |
| Year in which ultimate rates are reached | | | |
| Pre-65 | n/a | | n/a |
| Post-65 | 2040 | | | 2035 | |
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13. EQUITY, REDEEMABLE PREFERRED STOCK, AND ACCUMULATED OTHER COMPREHENSIVE LOSS Description of Capital StockThe Company is authorized to issue 1.00 billion shares of its Common Stock and 100 million shares of preferred stock, par value $0.01 per share. In accordance with the Company’s amended and restated certificate of incorporation, each share of Common Stock has one vote, and the Common Stock votes together as a single class. Public Offerings of Common StockOn June 15, 2020, the Company completed a public offering of its Common Stock (the “June 2020 Equity Offering”), in which the Company sold 8 million shares of Common Stock at a price of $70.72 per share, net of underwriting discounts and commissions. The Company obtained total net proceeds from the June 2020 Equity Offering of $548 million after the payment of associated offering expenses. The net proceeds of the June 2020 Equity Offering were used to repay $200 million of prophylactic borrowings from the third quarter of fiscal 2020 under Operating Company's Revolving Credit Facility, with the remainder available for general corporate purposes. On July 10, 2020, the underwriter for the June 2020 Equity Offering exercised its over-allotment option on 1 million additional shares, resulting in net proceeds of $82 million from the June 2020 Equity Offering, which was recorded in the fiscal year ended June 30, 2021.On February 6, 2020, the Company completed a public offering of its Common Stock (the “February 2020 Equity Offering”), in which the Company sold 8 million shares of Common Stock at a price of $58.58 per share, net of underwriting discounts and commissions. The Company obtained total net proceeds from the February 2020 Equity Offering of $494 million. The net proceeds of the February 2020 Equity Offering were used to repay $100 million of borrowings earlier in the quarter under Operating Company's Revolving Credit Facility and the consideration for the MaSTherCell acquisition due at its closing, with the remainder available for general corporate purposes.Redeemable Preferred StockIn May 2019, the Company designated 1 million shares of its preferred stock, par value $0.01, as its “Series A Convertible Preferred Stock” (the “Series A Preferred Stock”), pursuant to a certificate of designation of preferences, rights, and limitations and issued and sold 650,000 shares of the Series A Preferred Stock for an aggregate price of $650 million, to affiliates of Leonard Green & Partners, L.P., each share having an stated value of $1,000.Proceeds from the offering of the Series A Preferred Stock, net of stock issuance costs, were $646 million, of which $40 million was allocated to the dividend-adjustment feature at its issuance and separately accounted for as a derivative liability. Each change in the fair value of derivative liability during a fiscal quarter was recorded as a non-operating expense in the consolidated statement of operations. 105
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SARs, weighted average remaining contractual term, exercisable | 4.31 | SEC-NUM |
[Table of Contents](#i769337f517694ce29a72abc52f207787_10)
Notes to Consolidated Financial Statements — (Continued)Becton, Dickinson and Company
A summary of SARs outstanding as of September 30, 2021 and changes during the year then ended is as follows:
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| | SARs (inthousands) | | WeightedAverageExercise Price | | WeightedAverageRemainingContractual Term(Years) | | AggregateIntrinsicValue(Millionsof dollars) |
| Balance at October 1 | 6,337 | | | $ | 167.17 | | | | | |
| Granted | 1,097 | | | 227.83 | | | | | |
| Exercised | (842) | | | 128.13 | | | | | |
| Forfeited, canceled or expired | (297) | | | 237.47 | | | | | |
| Balance at September 30 | 6,295 | | | $ | 179.64 | | | 5.51 | | $ | 424 | |
| Vested and expected to vest at September 30 | 6,113 | | | $ | 177.94 | | | 5.42 | | $ | 421 | |
| Exercisable at September 30 | 4,471 | | | $ | 156.28 | | | 4.31 | | $ | 403 | |
A summary of SARs exercised during 2021, 2020 and 2019 is as follows:
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| (Millions of dollars) | 2021 | | 2020 | | 2019 |
| Total intrinsic value of SARs exercised | $ | 102 | | | $ | 212 | | | $ | 260 | |
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| Total fair value of SARs vested | $ | 39 | | | $ | 46 | | | $ | 66 | |
Performance-Based and Time-Vested Restricted Stock UnitsPerformance-based restricted stock units cliff vest three years after the date of grant. These units are tied to the Company’s performance against pre-established targets over a performance period of three years. The performance measures for fiscal years 2021 and 2020 were average annual currency-neutral revenue growth and average annual return on invested capital, with the combined factor subject to adjustment based on the Company's relative total shareholder return (measures the Company’s stock performance during the performance period against that of peer companies). For fiscal year 2019, the performance measures were relative total shareholder return and average annual return on invested capital. Under the Company’s long-term incentive program, the actual payout under these awards may vary from zero to 200% of an employee’s target payout, based on the Company’s actual performance over the performance period of three years. In fiscal years 2021 and 2020, the Company also issued additional performance-based time-vested units to certain key executives, which cliff vest three years after the date of grant and are tied to the Company’s performance against average annual growth in the Company’s Adjusted EPS over a performance period of three years. No shares will be issuable if the performance targets have not been met. The fair value is based on the market price of the Company’s stock on the date of grant. Compensation cost initially recognized assumes that the target payout level will be achieved and is adjusted for subsequent changes in the expected outcome of performance-related conditions. For units for which the performance conditions are modified after the date of grant, any incremental increase in the fair value of the modified units, over the original units, is recorded as compensation expense on the date of the modification for vested units, or over the remaining performance period for units not yet vested.Time-vested restricted stock unit awards vest on a graded basis over a period of three years, except for certain key executives of the Company, including the executive officers, for which such units generally vest one year following the employee’s retirement. The related share-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all time-vested restricted stock units is based on the market value of the Company’s stock on the date of grant.79
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Revenue, Remaining Performance Obligation, Amount | 635.9 | SEC-NUM |
[Table of Contents](#i7b123d2c40e141848818780e535fa94e_7)Notes to Consolidated Financial Statements – (continued) (Amounts in Millions, Except Per Share Amounts) (Unaudited)to advance consideration received from customers under the terms of our contracts primarily related to reimbursements of third-party expenses, whether we act as principal or agent, and to a lesser extent, periodic retainer fees, both of which are generally recognized shortly after billing. The majority of our contracts are for periods of one year or less with the exception of our data management contracts. For those contracts with a term of more than one year, we had approximately $635.9 of unsatisfied performance obligations as of September 30, 2022, which will be recognized as services are performed over the remaining contractual terms through 2027.
Note 3: Debt and Credit ArrangementsLong-Term DebtA summary of the carrying amounts of our long-term debt is listed below.
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| | EffectiveInterest Rate | | September 30,2022 | | December 31,2021 |
| |
| 4.200% Senior Notes due 2024 (less unamortized discount and issuance costs of $0.1 and $0.3, respectively) | 4.240% | | $ | 249.6 | | | $ | 249.4 | |
| 4.650% Senior Notes due 2028 (less unamortized discount and issuance costs of $1.1 and $2.7, respectively) | 4.780% | | 496.2 | | | 495.8 | |
| 4.750% Senior Notes due 2030 (less unamortized discount and issuance costs of $3.0 and $4.6, respectively) | 4.920% | | 642.4 | | | 641.7 | |
| 2.400% Senior Notes due 2031 (less unamortized discount and issuance costs of $0.7 and $3.9, respectively) | 2.512% | | 495.4 | | | 495.0 | |
| 3.375% Senior Notes due 2041 (less unamortized discount and issuance costs of $1.0 and $5.3, respectively) | 3.448% | | 493.7 | | | 493.4 | |
| 5.400% Senior Notes due 2048 (less unamortized discount and issuance costs of $2.6 and $4.9, respectively) | 5.480% | | 492.5 | | | 492.3 | |
| Other notes payable and capitalized leases | | | 33.3 | | | 41.7 | |
| Total long-term debt | | | 2,903.1 | | | 2,909.3 | |
| Less: current portion | | | 0.6 | | | 0.7 | |
| Long-term debt, excluding current portion | | | $ | 2,902.5 | | | $ | 2,908.6 | |
As of September 30, 2022 and December 31, 2021, the estimated fair value of the Company's long-term debt was $2,485.7 and $3,337.4, respectively. Refer to Note 12 for details.Credit AgreementWe maintain a committed corporate credit facility, originally dated as of July 18, 2008, which has been amended and restated from time to time (the "Credit Agreement"). We use our Credit Agreement to increase our financial flexibility, to provide letters of credit primarily to support obligations of our subsidiaries and to support our commercial paper program. On November 1, 2021, we amended and restated the Credit Agreement. As amended, among other things, the maturity date of the Credit Agreement was extended to November 1, 2026 and the cost structure of the Credit Agreement was changed. The Credit Agreement continues to include a required leverage ratio of not more than 3.50 to 1.00, among other customary covenants, including limitations on our liens and the liens of our consolidated subsidiaries and limitations on the incurrence of subsidiary debt. At the election of the Company, the leverage ratio may be changed to not more than 4.00 to 1.00 for four consecutive quarters, beginning with the fiscal quarter in which there is an occurrence of one or more acquisitions with an aggregate purchase price of at least $200.0. 12
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Number of participants covering under multi employer pension plan | 212 | SEC-NUM |
Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation or the market value of assets are amortized over the average remaining service period of active participants.
Costs of defined contribution plans were $12.8 million, $12.5 million and $12.4 million for 2021, 2020 and 2019, respectively.
The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 212 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.0 million, $1.1 million, and $1.1 million for 2021, 2020 and 2019, respectively.
For measurement purposes, a 5.45% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2021. The rate was assumed to decrease gradually each year to a rate of 4.45% for 2040, and remain at that level thereafter. Plan Assets
The Company’s pension plan weighted average asset allocations at December 31, 2021 and 2020, by asset category, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | U.S. Plans | | Non-U.S. Plans |
| | 2021 | | 2020 | | 2021 | | 2020 |
| Equity securities | 4 | % | | 7 | % | | 18 | % | | 17 | % |
| Fixed income securities | 33 | % | | 65 | % | | 22 | % | | 24 | % |
| Cash/Commingled Funds/Other (1) | 63 | % | | 28 | % | | 60 | % | | 59 | % |
| Total | 100 | % | | 100 | % | | 100 | % | | 100 | % |
The basis used to measure the defined benefit plans’ assets at fair value at December 31, 2021 and 2020 is summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Basis of Fair Value Measurement |
| | OutstandingBalances | | Level 1 | | Level 2 | | Level 3 |
| As of December 31, 2021 | (In millions) |
| Equity | | | | | | | |
| U.S. Large Cap | $ | 0.3 | | | $ | 0.3 | | | $ | — | | | $ | — | |
| U.S. Small / Mid Cap | 4.6 | | | — | | | 4.6 | | | — | |
| International | 4.2 | | | 1.0 | | | 3.2 | | | — | |
| Fixed Income | | | | | | | |
| U.S. Intermediate | 1.9 | | | — | | | 1.9 | | | — | |
| U.S. Long Term | 5.4 | | | — | | | 5.4 | | | — | |
| U.S. High Yield | 0.7 | | | — | | | 0.7 | | | — | |
| International | 7.5 | | | 0.3 | | | 7.2 | | | — | |
| Other Commingled Funds(1) | 23.7 | | | — | | | — | | | 23.7 | |
| Cash and Equivalents | 12.1 | | | 11.0 | | | 1.1 | | | — | |
| Other | 2.7 | | | — | | | 2.7 | | | — | |
| | $ | 63.1 | | | $ | 12.6 | | | $ | 26.8 | | | $ | 23.7 | |
(1)Other commingled funds represent pooled institutional investments in non-U.S. plans.
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Total contractual obligations, Payments Due in Fiscal 2026 | 374 | SEC-NUM |
[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 16 – COMMITMENTS AND CONTINGENCIES
Contractual ObligationsThe following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Payments Due in Fiscal | | |
| (In millions) | | Total | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter |
| Debt service (1) | | $ | 8,151 | | | $ | 429 | | | $ | 170 | | | $ | 665 | | | $ | 161 | | | $ | 661 | | | $ | 6,065 | |
| Unconditional purchase obligations (2) | | 4,742 | | | 2,852 | | | 705 | | | 637 | | | 132 | | | 133 | | | 283 | |
| Gross unrecognized tax benefits and interest – current (3) | | 2 | | | 2 | | | — | | — | | — | | — | | — |
| Transition Tax payable(4) | | 215 | | | 27 | | | 42 | | | 65 | | | 81 | | | — | | | — | |
| Total contractual obligations(5) | | $ | 13,110 | | | $ | 3,310 | | | $ | 917 | | | $ | 1,367 | | | $ | 374 | | | $ | 794 | | | $ | 6,348 | |
| | | | | | | | | | | | | | | |
(1)Includes long-term and current debt and the related projected interest costs. Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2023, 2024, 2025, 2026, 2027 and thereafter are projected to be $174 million, $170 million, $165 million, $161 million, $161 million and $1,765 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2022.(2)Unconditional purchase obligations primarily include: royalty payments pursuant to license agreements, inventory commitments, information technology contract commitments, capital expenditure commitments, advertising commitments and third-party distribution commitments. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2022, without consideration for potential renewal periods.(3)Refer to Note 9 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2022, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $73 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.(4)The Transition Tax may be paid over an eight-year period and this amount represents the remaining liability as of June 30, 2022.(5)Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases.
Legal Proceedings
The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, tax and privacy. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements.
F-63
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Accounts receivable, net | 78.2 | SEC-NUM |
ALLEGION PLCNOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Continued)(Unaudited)
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| In millions | |
| Accounts receivable, net | $ | 78.2 | |
| Inventories | 50.3 | |
| Other current assets | 0.3 | |
| Property, plant and equipment | 15.2 | |
| Goodwill | 616.0 | |
| Intangible assets | 222.5 | |
| Other noncurrent assets | 13.7 | |
| Accounts payable | (22.4) | |
| Accrued expenses and other current liabilities | (43.1) | |
| Other noncurrent liabilities | (7.6) | |
| Total net assets acquired and liabilities assumed | $ | 923.1 | |
The valuation of assets acquired and liabilities assumed has not yet been finalized as of September 30, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired tangible and intangible assets, goodwill and income tax assets and liabilities, among other items. The completion of the valuation will occur no later than one year from the acquisition date. Intangible assets recognized as of the acquisition date were comprised of the following:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| In millions | | Value (in millions) | | Useful life (in years) |
| Completed technologies/patents | | $ | 6.2 | | | 5 |
| Customer relationships | | 137.4 | | | 23 |
| Trade names (finite-lived) | | 56.8 | | | 5 |
| Backlog revenue | | 22.1 | | | 2 |
Goodwill results from several factors, including Allegion-specific synergies that were excluded from the cash flow projections used in the valuation of intangible assets and intangible assets that do not qualify for separate recognition, such as an assembled workforce. Goodwill resulting from this acquisition is expected to be deductible for tax purposes.The following unaudited pro forma financial information for the three and nine months ended September 30, 2022 and 2021, reflects the consolidated results of operations of the Company as if this acquisition had taken place on January 1, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| In millions | 2022 | | 2021 | | 2022 | | 2021 |
| Net revenues | $ | 913.7 | | | $ | 802.7 | | | $ | 2,587.5 | | | $ | 2,407.6 | |
| Net earnings attributable to Allegion plc | 135.5 | | | 140.7 | | | 340.1 | | | 330.2 | |
The unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of results of operations that would have occurred had the pro forma events taken place on the date indicated or the future consolidated results of operations of the combined company. The unaudited pro forma financial information has been calculated after applying the Company's accounting policies and adjusting the historical financial results to reflect additional items directly attributable to the acquisition that would have been incurred assuming the acquisition had occurred on January 1, 2021. Adjustments to historical financial information for the three and nine months ended September 30 include:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended | | Nine months ended |
| In millions | 2022 | | 2021 | | 2022 | | 2021 |
| Intangible asset amortization expense, net of tax | $ | 1.7 | | | $ | (5.0) | | | $ | (10.1) | | | $ | (18.3) | |
| Interest expense, net of tax | 1.6 | | | (6.2) | | | (10.7) | | | (21.4) | |
| Acquisition and integration costs, net of tax | 13.5 | | | — | | | 19.4 | | | (19.4) | |
| Inventory fair value step-up amortization, net of tax | 4.1 | | | — | | | 4.1 | | | (4.1) | |
The following financial information reflects the Net revenues and Loss before income taxes generated by the Access Technologies business since the acquisition date included within the Company's Condensed and Consolidated Statements of Comprehensive Income:5
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Modification partial termination of commercial arrangement, noncash financing activity, amount | 576 | SEC-NUM |
[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)assessed, would require a charge to future earnings. Management believes the positions the Company has taken in its U.S. tax returns are in accordance with the relevant tax laws. Tax authorities in Denmark have issued tax assessments related to interest accrued by certain of the Company’s subsidiaries for the years 2004 through 2015. During the first quarter of 2021, the Company received a notice from the Danish tax authorities that included a significant reduction in the interest amounts imposed on the original tax assessments. Taking into account the revised interest amounts, the assessments total approximately DKK 2.1 billion including interest accrued to date (approximately $317 million based on the exchange rate as of December 31, 2021). The Company’s appeal of the tax assessments with the Danish National Tax Tribunal has been put on hold awaiting the final outcome of other preceding withholding tax cases that have been brought before the Danish High Court. Management believes the positions the Company has taken in Denmark are in accordance with the relevant tax laws and is vigorously defending its positions. The Company intends on pursuing this matter through the Danish High Court should the appeal to the Danish National Tax Tribunal be unsuccessful. While the ultimate resolution of this matter is uncertain and could take many years, as a result of the payments the Company has previously made related to these assessments in order to mitigate further interest accruals, the Company does not expect the resolution of this matter will have a future material adverse impact to the Company’s financial statements, including its cash flow and effective tax rate.Management estimates that it is reasonably possible that the amount of unrecognized tax benefits related to continuing operations may be reduced by approximately $58 million within 12 months as a result of resolution of worldwide tax matters, payments of tax audit settlements and/or statute of limitations expirations. Future resolution of uncertain tax positions related to discontinued operations may result in additional charges or credits to earnings from discontinued operations in the Consolidated Statements of Earnings (refer to Note 3).The Company operates in various non-U.S. jurisdictions where income tax incentives and rulings have been granted for specific periods of time. In Switzerland, the Company has various tax rulings and tax holiday arrangements which reduce the overall effective tax rate of the Company. The tax holidays expire between 2022 and 2027. In Singapore, the Company operates under various tax incentive agreements that provide for reduced tax rates. Subject to the Company satisfying certain requirements, the agreements expire in 2022. As of December 31, 2021, the Company had satisfied the conditions enumerated in these agreements. Included in the accompanying Consolidated Financial Statements are tax benefits of $59 million, $43 million and $71 million (or $0.08, $0.06 and $0.10 per diluted common share) for 2021, 2020 and 2019, respectively, from these rulings and tax holidays.
NOTE 8. OTHER OPERATING EXPENSESEffective July 24, 2021, the Company’s indirect, wholly-owned subsidiary, Beckman Coulter, Inc. (“Beckman”), entered into a series of related agreements with Quidel Corporation and a subsidiary thereof (“Quidel”) to resolve litigation that Beckman initiated against Quidel and to modify and partially terminate the related prior commercial arrangement. Pursuant to the related agreements, the dispute regarding Beckman’s ability to compete in B-type Naturietic Peptide (“BNP”) test related activities has been settled, allowing Beckman to research, develop, manufacture and distribute BNP type tests. Beckman’s commitment to supply certain BNP test kits to Quidel has also been terminated. Beckman also obtained the right to distribute and sell the BNP assay currently sold by Quidel. As consideration under the agreements, Beckman will pay Quidel predominantly fixed payments of approximately $75 million per year through 2029 (subject to proration in 2021). The Company engaged a third-party valuation specialist to assist in determining the value of the elements of the transaction. The present value of the payments to Quidel is estimated to be $581 million, of which $547 million was recorded as a pretax contract settlement expense primarily due to the unfavorable nature of the prior arrangement (consisting of a cash charge of $5 million and a noncash charge of $542 million) in the third quarter of 2021 related to the modification and partial termination of the prior commercial arrangement and resolution of the associated litigation. The Company also capitalized $34 million in intangible assets, comprised of proprietary technology, customer relationships and the use of a trade name acquired in the settlement, which represent a noncash investing activity. Due to the extended payment terms of the arrangement, the arrangement represents a noncash financing activity of $576 million. Over the period of the arrangement, the cash payments related to servicing the obligation due to Quidel will be recorded as cash outflows from financing activities and the payments related to the imputed interest on the obligation due to Quidel will be recorded as cash outflows from operating activities in the Consolidated Statements of Cash Flows.
86
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Increase (decrease) in income tax expense/benefit, amount | 110 | SEC-NUM |
[Table of Contents](#i6f5a02f7aeae4b00b01c55901eb4a1a5_4)9. Income TaxesThe following table presents the calculation of the Company's effective income tax rate (dollars in millions):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | | | For the Three Months Ended March 31, |
| | | | | | 2022 | | 2021 |
| Income before income taxes | | | | | $ | 1,618 | | | $ | 2,079 | |
| Income tax expense | | | | | $ | 376 | | | $ | 486 | |
| Effective income tax rate | | | | | 23.3 | % | | 23.4 | % |
| | | | | | | | |
Income tax expense decreased $110 million for the three months ended March 31, 2022, as compared to the same period in 2021 due to a decrease in pretax income. The effective tax rate was relatively flat for the three months ended March 31, 2022 as compared to the same period in 2021.The Company is subject to examination by the Internal Revenue Service ("IRS") and tax authorities in various state, local and foreign tax jurisdictions. The IRS is examining the Company's 2018 federal income tax filings. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. At this time, the potential change in unrecognized tax benefits is expected to be immaterial over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations.10. Earnings Per Share The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | | | For the Three Months Ended March 31, |
| | | | | | 2022 | | 2021 |
| Numerator | | | | | | | |
| Net income | | | | | $ | 1,242 | | | $ | 1,593 | |
| Preferred stock dividends | | | | | (31) | | | (39) | |
| Net income available to common stockholders | | | | | 1,211 | | | 1,554 | |
| Income allocated to participating securities | | | | | (6) | | | (8) | |
| Net income allocated to common stockholders | | | | | $ | 1,205 | | | $ | 1,546 | |
| Denominator | | | | | | | |
| Weighted-average shares of common stock outstanding | | | | | 285 | | | 307 | |
| | | | | | | | |
| Weighted-average shares of common stock outstanding and common stock equivalents | | | | | 285 | | | 307 | |
| | | | | | | | |
| Basic earnings per common share | | | | | $ | 4.23 | | | $ | 5.04 | |
| Diluted earnings per common share | | | | | $ | 4.22 | | | $ | 5.04 | |
| | | | | | | | |
Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three months ended March 31, 2022 and 2021.21
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Annual facility fee | 2,188,000 | SEC-NUM |
[Table of](#ia143979d54ef4089bc700f871e6b0e92_7) [Contents](#ia143979d54ef4089bc700f871e6b0e92_7)At June 30, 2022, the Company had a $1,750,000,000 revolving variable rate unsecured credit facility with a syndicate of banks (the “Credit Facility”) which matures in February 2024. The Credit Facility bears interest at varying levels based on (i) the London Interbank Offered Rate (“LIBOR”) applicable to the period of borrowing for a particular draw of funds from the facility (e.g., one month to maturity, three months to maturity, etc.) and (ii) the rating levels for our unsecured notes. The current stated pricing for drawn borrowings is LIBOR plus 0.775% per annum (2.56% at June 30, 2022), assuming a one month borrowing rate. The annual facility fee for the Credit Facility remained at 0.125%, resulting in a fee of $2,188,000 annually based on the $1,750,000,000 facility size and based on the Company's current credit rating.
The Company had no borrowings outstanding under the Credit Facility and had $6,914,000 and $11,969,000 outstanding in letters of credit that reduced the borrowing capacity as of June 30, 2022 and December 31, 2021, respectively. In addition, the Company had $42,181,000 and $39,581,000 outstanding in additional letters of credit unrelated to the Credit Facility as of June 30, 2022 and December 31, 2021, respectively.
In March 2022, the Company established an unsecured commercial paper note program (the “Commercial Paper Program”). Under the terms of the Commercial Paper Program, the Company may issue, from time to time, unsecured commercial paper notes with varying maturities of less than one year. Amounts available under the Commercial Paper Program may be issued, repaid and re-issued from time to time, with the maximum aggregate face or principal amount outstanding at any one time not to exceed $500,000,000. The Commercial Paper Program is backstopped by the Company's commitment to maintain available borrowing capacity under the Credit Facility in an amount equal to actual borrowings under the Commercial Paper Program. The Company had no amounts outstanding under the Commercial Paper Program as of June 30, 2022.
In the aggregate, secured notes payable mature at various dates from March 2027 through July 2066, and are secured by certain apartment communities (with a net carrying value of $1,240,598,000, excluding communities classified as held for sale, as of June 30, 2022).
The weighted average interest rate of the Company's fixed rate secured notes payable (conventional and tax-exempt) was 3.7% at both June 30, 2022 and December 31, 2021. The weighted average interest rate of the Company's variable rate secured notes payable (conventional and tax-exempt), including the effect of certain financing related fees, was 2.5% and 1.7% at June 30, 2022 and December 31, 2021, respectively.
In addition to the Commercial Paper Program, scheduled payments and maturities of secured notes payable and unsecured notes outstanding at June 30, 2022 were as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | | Secured notes principal payments | | Secured notes maturities | | Unsecured notes and Term Loan maturities | | Stated interest rate of unsecured notes and Term Loan |
| 2022 | | $ | 1,837 | | | $ | — | | | $ | — | | | — | |
| 2023 | | 8,999 | | | — | | | 350,000 | | | 4.200 | % |
| | | | | | | 250,000 | | | 2.850 | % |
| 2024 | | 9,837 | | | — | | | 300,000 | | | 3.500 | % |
| | | | | | | 150,000 | | | LIBOR + 0.85% |
| 2025 | | 10,478 | | | — | | | 525,000 | | | 3.450 | % |
| | | | | | | 300,000 | | | 3.500 | % |
| 2026 | | 11,420 | | | — | | | 475,000 | | | 2.950 | % |
| | | | | | | 300,000 | | | 2.900 | % |
| 2027 | | 13,765 | | | 236,100 | | | 400,000 | | | 3.350 | % |
| 2028 | | 18,512 | | | — | | | 450,000 | | | 3.200 | % |
| | | | | | | 400,000 | | | 1.900 | % |
| 2029 | | 9,462 | | | 66,250 | | | 450,000 | | | 3.300 | % |
| 2030 | | 10,014 | | | — | | | 700,000 | | | 2.300 | % |
| 2031 | | 10,669 | | | — | | | 600,000 | | | 2.450 | % |
| Thereafter | | 111,537 | | | 245,123 | | | 700,000 | | | 2.050 | % |
| | | | | | | 350,000 | | | 3.900 | % |
| | | | | | | 300,000 | | | 4.150 | % |
| | | | | | | 300,000 | | | 4.350 | % |
| | | $ | 216,530 | | | $ | 547,473 | | | $ | 7,300,000 | | | |
The Company was in compliance at June 30, 2022 with customary covenants under the Credit Facility and the Commercial Paper Program, the Term Loan and the Company's fixed rate unsecured notes.11
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Risk-free interest rate, upper limit | 2.44 | SEC-NUM |
[Table of Contents](#i988dd6b5140d4a1b8c6b4c50f020743f_10)appreciation rights, other stock-based awards, and cash-based awards at the discretion of the Management Development and Compensation Committee of the Board of Directors (the "Committee") that administers the ICP. Additionally, restricted stock, which may be deferred into RSU’s, may be awarded under a Restricted Stock and Deferred Compensation Plan for Non-Employee Directors.
PERFORMANCE SHARE PLAN
Under the Performance Share Plan ("PSP"), contingent awards of International Paper common stock are granted by the Committee. The PSP awards are earned over a three-year period. PSP awards are earned based on the achievement of defined performance of Return on Invested Capital ("ROIC") measured against our internal benchmark and ranking of Total Shareholder Return ("TSR") compared to the TSR peer group of companies. The 2019-2021, 2020-2022 and 2021-2023 Awards are weighted 50% ROIC and 50% TSR for all participants. The ROIC component of the PSP awards is valued at the closing stock price on the day prior to the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of the PSP awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free rate, expected dividends, and the expected volatility for the Company and its competitors. The expected term is estimated based on the vesting period of the awards, the risk-free rate is based on the yield on U.S. Treasury securities matching the vesting period, and the volatility is based on the Company’s historical volatility over the expected term. PSP grants are made in performance-based restricted stock units.
The following table sets forth the assumptions used to determine compensation cost for the market condition component of the PSP plan:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Twelve Months Ended December 31, 2021 |
| Expected volatility | 24.36% - 36.92% |
| Risk-free interest rate | 0.17% - 2.44% |
The following summarizes PSP activity for the three years ended December 31, 2021:
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| | Share/Units | WeightedAverageGrant DateFair Value |
| Outstanding at December 31, 2018 | 5,766,477 | | $38.79 | |
| Granted | 2,353,613 | | 43.49 | |
| Shares issued | (2,367,135) | | 36.79 | |
| Forfeited | (238,227) | | 50.64 | |
| Outstanding at December 31, 2019 | 5,514,728 | | 41.14 | |
| Granted | 2,171,385 | | 49.15 | |
| Shares issued | (1,221,950) | | 51.70 | |
| Forfeited | (844,138) | | 51.70 | |
| Outstanding at December 31, 2020 | 5,620,025 | | 40.36 | |
| Granted | 2,316,295 | | 45.24 | |
| Shares issued | (994,052) | | 63.54 | |
| Forfeited | (1,016,126) | | 57.55 | |
| Outstanding at December 31, 2021 | 5,926,142 | | $35.43 | |
RESTRICTED STOCK AWARD PROGRAMS
The service-based Restricted Stock Award program ("RSA"), designed for recruitment, retention and special recognition purposes, provides for awards of restricted stock to key employees.
The following summarizes the activity of the RSA program for the three years ended December 31, 2021:
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| | Shares | WeightedAverageGrant DateFair Value |
| Outstanding at December 31, 2018 | 132,111 | | $50.17 | |
| Granted | 87,910 | | 43.70 | |
| Shares issued | (52,021) | | 48.90 | |
| Forfeited | (7,300) | | 45.10 | |
| Outstanding at December 31, 2019 | 160,700 | | 47.27 | |
| Granted | 82,228 | | 40.12 | |
| Shares issued | (83,053) | | 44.25 | |
| Forfeited | (33,800) | | 46.43 | |
| Outstanding at December 31, 2020 | 126,075 | | 44.83 | |
| Granted | 85,098 | | 50.90 | |
| Shares issued | (85,768) | | 45.59 | |
| Forfeited | (21,636) | | 45.52 | |
| Outstanding at December 31, 2021 | 103,769 | | $49.03 | |
At December 31, 2021, 2020 and 2019 a total of 7.7 million, 8.5 million and 9.8 million shares, respectively, were available for grant under the ICP.
88
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Preferred stock, shares authorized (in shares) | 0.3 | SEC-NUM |
Automatic Data Processing, Inc. and SubsidiariesConsolidated Balance Sheets(In millions, except per share amounts)(Unaudited)
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | September 30, | | June 30, |
| | | 2022 | | 2022 |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 1,207.7 | | | $ | 1,436.3 | |
| | | | | |
| Accounts receivable, net of allowance for doubtful accounts of $52.5 and $56.8, respectively | | 2,939.2 | | | 3,170.6 | |
| Other current assets | | 884.0 | | | 628.8 | |
| | | | | |
| | | | | |
| Total current assets before funds held for clients | | 5,030.9 | | | 5,235.7 | |
| Funds held for clients | | 32,937.9 | | | 49,569.2 | |
| Total current assets | | 37,968.8 | | | 54,804.9 | |
| | | | | |
| Long-term receivables, net of allowance for doubtful accounts of $0.1 and $0.1, respectively | | 8.2 | | | 9.1 | |
| Property, plant and equipment, net | | 645.1 | | | 652.6 | |
| Operating lease right-of-use asset | | 419.0 | | | 450.9 | |
| Deferred contract costs | | 2,546.5 | | | 2,579.7 | |
| Other assets | | 1,135.0 | | | 937.4 | |
| Goodwill | | 2,273.4 | | | 2,300.5 | |
| Intangible assets, net | | 1,368.7 | | | 1,333.1 | |
| Total assets | | $ | 46,364.7 | | | $ | 63,068.2 | |
| Liabilities and Stockholders' Equity | | | | |
| Current liabilities: | | | | |
| Accounts payable | | $ | 82.7 | | | $ | 110.2 | |
| Accrued expenses and other current liabilities | | 2,165.1 | | | 2,107.8 | |
| Accrued payroll and payroll-related expenses | | 501.2 | | | 862.6 | |
| Dividends payable | | 428.8 | | | 429.6 | |
| Short-term deferred revenues | | 172.3 | | | 188.2 | |
| Obligations under reverse repurchase agreements (A) | | 167.6 | | | 136.4 | |
| | | | | |
| | | | | |
| | | | | |
| Income taxes payable | | 176.8 | | | 38.4 | |
| | | | | |
| Total current liabilities before client funds obligations | | 3,694.5 | | | 3,873.2 | |
| Client funds obligations | | 35,471.7 | | | 51,285.5 | |
| Total current liabilities | | 39,166.2 | | | 55,158.7 | |
| Long-term debt | | 2,987.6 | | | 2,987.1 | |
| Operating lease liabilities | | 348.5 | | | 370.9 | |
| Other liabilities | | 902.1 | | | 924.2 | |
| Deferred income taxes | | 66.0 | | | 67.0 | |
| Long-term deferred revenues | | 317.8 | | | 335.0 | |
| Total liabilities | | 43,788.2 | | | 59,842.9 | |
| | | | | |
| Commitments and contingencies (Note 13) | | | | |
| | | | | |
| Stockholders' equity: | | | | |
| Preferred stock, $1.00 par value: authorized, 0.3 shares; issued, none | | — | | | — | |
| Common stock, $0.10 par value: authorized, 1,000.0 shares; issued, 638.7 shares at September 30, 2022 and June 30, 2022; outstanding, 415.2 and 416.1 shares at September 30, 2022 and June 30, 2022, respectively | | 63.9 | | | 63.9 | |
| Capital in excess of par value | | 1,893.1 | | | 1,794.2 | |
| Retained earnings | | 21,039.0 | | | 20,696.3 | |
| Treasury stock - at cost: 223.6 and 222.7 shares at September 30, 2022 and June 30, 2022, respectively | | (17,695.4) | | | (17,335.4) | |
| Accumulated other comprehensive (loss)/ income | | (2,724.1) | | | (1,993.7) | |
| Total stockholders’ equity | | 2,576.5 | | | 3,225.3 | |
| Total liabilities and stockholders’ equity | | $ | 46,364.7 | | | $ | 63,068.2 | |
(A) As of September 30, 2022, $167.0 million of long-term marketable securities and $0.6 million of cash and cash equivalents have been pledged as collateral under the Company's reverse repurchase agreements. As of June 30, 2022, $14.3 million of short-term marketable securities and $122.1 million of long-term marketable securities have been pledged as collateral under the Company's reverse repurchase agreements (see Note 9).
See notes to the Consolidated Financial Statements.5
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RSUs forfeited/canceled (in shares) | 664 | SEC-NUM |
[Table of Contents](#ie5b53d08516744208c4d15ed88453ce2_7)Restricted Stock Unit (RSU) ActivitiesThe following table summarizes the RSU activities and related information, as adjusted to give effect to the Stock Split (in thousands, except per share amounts):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Number of Shares | | Weighted- Average Grant Date Fair Value Per Share |
| Unvested balance—December 31, 2020 | | 7,263 | | | $ | 53.92 | |
| RSUs granted (1) | | 3,487 | | | 93.18 | |
| RSUs vested | | (2,265) | | | 53.15 | |
| RSUs forfeited/canceled | | (664) | | | 61.74 | |
| Unvested balance—December 31, 2021 | | 7,821 | | | $ | 70.98 | |
(1) Included in this amount are 268,000 performance-based RSUs (“PRSUs”, as adjusted to give effect to the Stock Split) to our CEO and other executive officers that include both service and performance-based conditions. These PRSUs will vest over three to four years, and the ultimate number of shares eligible to vest will vary between 0% and 200% of the amount granted based on the achievement of certain performance metrics over the performance period and each holder’s continued employment with Arista. As of December 31, 2021 we expect the achievement level of such awards to be at the higher end of the performance range.The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2021, 2020 and 2019 was $93.18, $54.11 and $60.53 per share, respectively, as adjusted to give effect to the Stock Split. The total fair value of RSUs vested for the years ended December 31, 2021, 2020 and 2019 was approximately $120.4 million, $85.4 million, and $65.7 million, respectively.Stock-Based Compensation Expense The following table summarizes the stock-based compensation expense related to our equity awards (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Cost of revenue | | $ | 7,444 | | | $ | 6,272 | | | $ | 4,637 | |
| Research and development | | 99,770 | | | 79,913 | | | 53,068 | |
| Sales and marketing | | 46,521 | | | 34,944 | | | 29,168 | |
| General and administrative | | 33,140 | | | 15,913 | | | 14,407 | |
| Total stock-based compensation | | $ | 186,875 | | | $ | 137,042 | | | $ | 101,280 | |
Determination of Fair ValueWe record stock-based compensation awards based on fair value as of the grant date. We value RSUs at the market close price of our common stock on the grant date. For option awards and ESPP offerings, we use the Black-Scholes option pricing model to determine fair value. We recognize such costs as compensation expense generally on a straight-line basis over the requisite service period of the award. 95
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SARs, weighted average exercise price, vested and expected to vest (USD per share) | 177.94 | SEC-NUM |
[Table of Contents](#i769337f517694ce29a72abc52f207787_10)
Notes to Consolidated Financial Statements — (Continued)Becton, Dickinson and Company
A summary of SARs outstanding as of September 30, 2021 and changes during the year then ended is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | SARs (inthousands) | | WeightedAverageExercise Price | | WeightedAverageRemainingContractual Term(Years) | | AggregateIntrinsicValue(Millionsof dollars) |
| Balance at October 1 | 6,337 | | | $ | 167.17 | | | | | |
| Granted | 1,097 | | | 227.83 | | | | | |
| Exercised | (842) | | | 128.13 | | | | | |
| Forfeited, canceled or expired | (297) | | | 237.47 | | | | | |
| Balance at September 30 | 6,295 | | | $ | 179.64 | | | 5.51 | | $ | 424 | |
| Vested and expected to vest at September 30 | 6,113 | | | $ | 177.94 | | | 5.42 | | $ | 421 | |
| Exercisable at September 30 | 4,471 | | | $ | 156.28 | | | 4.31 | | $ | 403 | |
A summary of SARs exercised during 2021, 2020 and 2019 is as follows:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| (Millions of dollars) | 2021 | | 2020 | | 2019 |
| Total intrinsic value of SARs exercised | $ | 102 | | | $ | 212 | | | $ | 260 | |
| | | | | | |
| Total fair value of SARs vested | $ | 39 | | | $ | 46 | | | $ | 66 | |
Performance-Based and Time-Vested Restricted Stock UnitsPerformance-based restricted stock units cliff vest three years after the date of grant. These units are tied to the Company’s performance against pre-established targets over a performance period of three years. The performance measures for fiscal years 2021 and 2020 were average annual currency-neutral revenue growth and average annual return on invested capital, with the combined factor subject to adjustment based on the Company's relative total shareholder return (measures the Company’s stock performance during the performance period against that of peer companies). For fiscal year 2019, the performance measures were relative total shareholder return and average annual return on invested capital. Under the Company’s long-term incentive program, the actual payout under these awards may vary from zero to 200% of an employee’s target payout, based on the Company’s actual performance over the performance period of three years. In fiscal years 2021 and 2020, the Company also issued additional performance-based time-vested units to certain key executives, which cliff vest three years after the date of grant and are tied to the Company’s performance against average annual growth in the Company’s Adjusted EPS over a performance period of three years. No shares will be issuable if the performance targets have not been met. The fair value is based on the market price of the Company’s stock on the date of grant. Compensation cost initially recognized assumes that the target payout level will be achieved and is adjusted for subsequent changes in the expected outcome of performance-related conditions. For units for which the performance conditions are modified after the date of grant, any incremental increase in the fair value of the modified units, over the original units, is recorded as compensation expense on the date of the modification for vested units, or over the remaining performance period for units not yet vested.Time-vested restricted stock unit awards vest on a graded basis over a period of three years, except for certain key executives of the Company, including the executive officers, for which such units generally vest one year following the employee’s retirement. The related share-based compensation expense is recorded over the requisite service period, which is the vesting period or is based on retirement eligibility. The fair value of all time-vested restricted stock units is based on the market value of the Company’s stock on the date of grant.79
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Other contractual commitments, Total | 974 | SEC-NUM |
[Table of Contents](#i02bedaa3ef9a402693e3fc0f0d740b61_7)
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Quarter Ended | | Three Fiscal Quarters Ended |
| | | July 31,2022 | | August 1,2021 | | July 31,2022 | | August 1,2021 |
| | | | | | | | | |
| | | (In millions) |
| Net revenue: | | | | | | | | |
| Semiconductor solutions | | $ | 6,624 | | | $ | 5,021 | | | $ | 18,726 | | | $ | 14,749 | |
| Infrastructure software | | 1,840 | | | 1,757 | | | 5,547 | | | 5,294 | |
| Total net revenue | | $ | 8,464 | | | $ | 6,778 | | | $ | 24,273 | | | $ | 20,043 | |
| | | | | | | | | |
| Operating income: | | | | | | | | |
| Semiconductor solutions | | $ | 3,916 | | | $ | 2,720 | | | $ | 10,891 | | | $ | 7,828 | |
| Infrastructure software | | 1,283 | | | 1,226 | | | 3,903 | | | 3,700 | |
| Unallocated expenses | | (1,462) | | | (1,820) | | | (4,555) | | | (5,590) | |
| Total operating income | | $ | 3,737 | | | $ | 2,126 | | | $ | 10,239 | | | $ | 5,938 | |
11. Commitments and ContingenciesCommitmentsThe following table summarizes contractual obligations and commitments as of July 31, 2022 that materially changed from the end of fiscal year 2021:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| Fiscal Year: | | Purchase Commitments | | Other Contractual Commitments |
| | | | | |
| | | (In millions) |
| 2022 (remainder) | | $ | 42 | | | $ | 554 | |
| 2023 | | 178 | | | 185 | |
| 2024 | | 159 | | | 148 | |
| 2025 | | 79 | | | 36 | |
| 2026 | | 9 | | | 50 | |
| Thereafter | | 7 | | | 1 | |
| Total | | $ | 474 | | | $ | 974 | |
Purchase Commitments. Represent unconditional purchase obligations that are enforceable and legally binding on us and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions, and the approximate timing of the transaction. These commitments include agreements to purchase inventory and other goods or services. Purchase obligations exclude agreements that are cancelable without penalty and unconditional purchase obligations with a remaining term of one year or less.Other Contractual Commitments. Represent amounts payable pursuant to agreements related to IT, human resources, and other service agreements.Due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits at July 31, 2022, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities. Therefore, $3,307 million of unrecognized tax benefits and accrued interest and penalties as of July 31, 2022 have been excluded from the table above.21
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Preferred shares authorized (in shares) | 20,000,000 | SEC-NUM |
14.STOCK AND STOCK-BASED INCENTIVE PLANS(A)Preferred Stock Under the terms of our Articles of Incorporation, the board of directors (“board”) may determine the rights, preferences and terms of our authorized but unissued shares of preferred stock. We have authorized 20,000,000 shares of preferred stock, $20 par value. No shares of preferred stock are currently outstanding.
(B) Share Repurchase ProgramAs of February 28, 2022, a total of $2 billion of board authorizations for repurchases of our common stock was outstanding, with no expiration date, of which $774.5 million remained available for repurchase. In April 2022, our board increased our share repurchase authorization by $2 billion.
Common Stock Repurchases
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Years Ended February 28 or 29 |
| | 2022 | | 2021 | | 2020 |
| Number of shares repurchased (in thousands) | 4,475.2 | | | 2,379.8 | | | 6,971.1 | |
| Average cost per share | $ | 125.49 | | | $ | 90.87 | | | $ | 80.56 | |
| Available for repurchase, as of end of year (in millions) | $ | 774.5 | | | $ | 1,336.1 | | | $ | 1,552.3 | |
(C)Stock Incentive PlansWe maintain long-term incentive plans for management, certain employees and the nonemployee members of our board. The plans allow for the granting of equity-based compensation awards, including nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock- and cash-settled restricted stock units, stock grants or a combination of awards. To date, we have not awarded any incentive stock options. As of February 28, 2022, a total of 60,850,000 shares of our common stock had been authorized to be issued under the long-term incentive plans. The number of unissued common shares reserved for future grants under the long-term incentive plans was 6,700,484 as of that date. The majority of associates who receive share-based compensation awards primarily receive cash-settled restricted stock units. Senior management and other key associates receive awards of nonqualified stock options, stock-settled restricted stock units and/or restricted stock awards. Nonemployee directors receive awards of nonqualified stock options, stock grants, stock-settled restricted stock units and/or restricted stock awards. Excluding stock grants and stock-settled deferred stock units, all share-based compensation awards, including any associated dividend rights, are subject to forfeiture.
Nonqualified Stock Options. Nonqualified stock options are awards that allow the recipient to purchase shares of our common stock at a fixed price. Stock options are granted at an exercise price equal to the fair market value of our common stock on the grant date. The stock options generally vest annually in equal amounts over four years. These options expire seven years after the date of the grant.
Cash-Settled Restricted Stock Units. Also referred to as restricted stock units, or RSUs, these are awards that entitle the holder to a cash payment equal to the fair market value of a share of our common stock for each unit granted. For grants prior to fiscal 2021, conversion generally occurs at the end of a three-year vesting period. For RSUs granted during or after fiscal 2021, conversion generally occurs annually in equal amounts over three years. However, the cash payment per RSU will not be greater than 200% or less than 75% of the fair market value of a share of our common stock on the grant date. The initial grant date fair values are based on the volume-weighted average prices or closing prices of our common stock on the grant dates. RSUs are liability-classified awards and do not have voting rights. Stock-Settled Market Stock Units. Also referred to as market stock units, or MSUs, these are restricted stock unit awards with market conditions granted to eligible key associates that are converted into between zero and two shares of common stock for each unit granted. Conversion generally occurs at the end of a three-year vesting period. The conversion ratio is calculated by dividing the average closing price of our stock during the final 40 trading days of the three-year vesting period by our stock price on the grant date, with the resulting quotient capped at two. This quotient is then multiplied by the number of MSUs granted to yield the number of shares awarded. The grant date fair values are determined using a Monte-Carlo simulation and are based on the expected market price of our common stock on the vesting date and the expected number of converted common shares. MSUs do not have voting rights.
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Equity method investment, ownership percentage (as a percent) | 5 | SEC-NUM |
[Table of Contents](#i8e6404ebd98d416daa7f88f48159b601_7)EDWARDS LIFESCIENCES CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company sells separately priced service contracts, which range from 12 to 36 months, to owners of its hemodynamic monitors. The Company invoices the customer the total amount of consideration at the inception of the contract and recognizes revenue ratably over the term of the contract. As of December 31, 2021 and 2020, $10.2 million and $6.3 million, respectively, of deferred revenue associated with outstanding service contracts was recorded in “Accrued and Other Liabilities” and "Other Long-term Liabilities." During 2021, the Company recognized as revenue $7.3 million that was included in the balance of deferred revenue as of December 31, 2020, and during 2020, the Company recognized as revenue $6.3 million that was included in the balance of deferred revenue as of December 31, 2019.
A limited number of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the transaction price is allocated to each performance obligation based on its relative standalone selling price charged to other customers.
The Company applies the optional exemption of not disclosing the amount of the transaction price allocated to unsatisfied performance obligations for contracts with an original expected duration of one year or less.
Shipping and Handling Costs
Shipping costs, which are costs incurred to physically move product from the Company's premises or third party distribution centers, including storage, to the customer's premises, are included in "Selling, General, and Administrative Expenses." Handling costs, which are costs incurred to store at the Company's premises, move, and prepare products for shipment, are included in "Cost of Sales." For the years ended December 31, 2021, 2020, and 2019, shipping costs of $85.3 million, $74.0 million, and $71.5 million, respectively, were included in "Selling, General, and Administrative Expenses."
Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. These investments are valued at cost, which approximates fair value.
Investments
The Company invests its excess cash in debt securities, including time deposits, commercial paper, United States government and agency securities, asset-backed securities, corporate debt securities, and municipal debt securities. Investments with maturities of one year or less are classified as short-term, and investments with maturities greater than one year are classified as long-term. Investments that the Company has the ability and intent to hold until maturity are classified as held-to-maturity and carried at amortized cost. Investments in debt securities that are classified as available-for-sale are carried at fair value with unrealized gains and losses included in "Accumulated Other Comprehensive Loss." The Company determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such designation at each balance sheet date.
The Company also has long-term equity investments in companies that are in various stages of development. These investments are reported at fair value or under the equity method of accounting, as appropriate. Equity investments that do not have readily determinable fair values are recorded at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The Company accounts for investments in limited partnerships and limited liability corporations, whereby the Company owns a minimum of 5% of the investee's outstanding voting stock, under the equity method of accounting. These investments are recorded at the amount of the Company's investment and adjusted each period for the Company's share of the investee's income or loss, and dividends paid.
Realized gains and losses on investments that are sold are determined using the specific identification method, or the first-in, first-out method, depending on the investment type, and recorded to "Other Income, net." Income relating to investments in debt securities is recorded to "Interest Income."
Equity investments without readily determinable fair value are considered impaired when there is an indication that the fair value of the Company's interest is less than the carrying amount. Equity method investments are considered impaired when 50
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Due after ten years, Estimated Fair Value | 5,904 | SEC-NUM |
Residential mortgage-backed securities: An allowance for credit loss was established on certain residential mortgage-backed securities. Notification of maturity and coupon default, as well as a significant and sustained decline in fair value, were factors to indicate a credit loss. Unrealized losses on our other residential mortgage-backed securities were largely due to market conditions and rising interest rates; however, qualitative factors did not indicate a credit loss. We do not intend to sell these investments and it is likely we will not be required to sell these investments prior to maturity or recovery of amortized cost.As for the remaining securities shown in the table above, unrealized losses on these securities have not been recognized into income because we do not intend to sell these investments and it is likely that we will not be required to sell these investments prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. We have evaluated these securities for any change in credit rating and have determined that no allowance is necessary. The fair value is expected to recover as the securities approach maturity.The table below presents a roll-forward by major security type of the allowance for credit losses on fixed maturity securities available-for-sale held at period end for the three months March 31, 2022 and 2021:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2022 | | |
| | Foreign government securities | | Corporate securities | | Residential mortgage-backed securities | | Total | | | | | | |
| Allowance for credit losses: | | | | | | | | | | | | | |
| Beginning balance | $ | — | | | $ | 4 | | | $ | 2 | | | $ | 6 | | | | | | | |
| Additions for securities for which no previous expected credit losses were recognized | 3 | | | 4 | | | — | | | 7 | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Total allowance for credit losses, ending balance | $ | 3 | | | $ | 8 | | | $ | 2 | | | $ | 13 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2021 | | |
| | Corporate securities | | Residential mortgage-backed securities | | Total | | | | | | |
| Allowance for credit losses: | | | | | | | | | | | |
| Beginning balance | $ | 7 | | | $ | — | | | $ | 7 | | | | | | | |
| Additions for securities for which no previous expected credit losses were recognized | 1 | | | — | | | 1 | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| (Decreases) increases to the allowance for credit losses on securities | (2) | | | 2 | | | — | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total allowance for credit losses, ending balance | $ | 6 | | | $ | 2 | | | $ | 8 | | | | | | | |
The amortized cost and fair value of fixed maturity securities at March 31, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations.
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | AmortizedCost | | EstimatedFair Value |
| Due in one year or less | $ | 1,257 | | | $ | 1,254 | |
| Due after one year through five years | 6,686 | | | 6,569 | |
| Due after five years through ten years | 9,225 | | | 8,905 | |
| Due after ten years | 6,071 | | | 5,904 | |
| Mortgage-backed securities | 4,344 | | | 4,183 | |
| Total fixed maturity securities | $ | 27,583 | | | $ | 26,815 | |
-14-
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Workers' Compensation Discount, Prior Year Amount | 1,655 | SEC-NUM |
Environmental and Asbestos — To date, known environmental and asbestos claims have not had a material impact on the Company’s operations, because its subsidiaries generally did not insure large industrial companies that are subject to significant environmental or asbestos exposures prior to 1986 when an absolute exclusion was incorporated into standard policy language.The Company’s net reserves for losses and loss expenses relating to asbestos and environmental claims on policies written before adoption of the absolute exclusion was $20 million at December 31, 2021 and $19 million at December 31, 2020. The estimation of these liabilities is subject to significantly greater than normal variation and uncertainty because it is difficult to make an actuarial estimate of these liabilities due to the absence of a generally accepted actuarial methodology for these exposures and the potential effect of significant unresolved legal matters, including coverage issues, as well as the cost of litigating the legal issues. Additionally, the determination of ultimate damages and the final allocation of such damages to financially responsible parties are highly uncertain.Discounting — The Company discounts its liabilities for certain workers’ compensation reserves. The amount of workers’ compensation reserves that were discounted was $1,387 million and $1,655 million at December 31, 2021 and 2020, respectively. The aggregate net discount for those reserves, after reflecting the effects of ceded reinsurance, was $452 million and $483 million at December 31, 2021 and 2020, respectively. At December 31, 2021, discount rates by year ranged from 0.7% to 6.5%, with a weighted average discount rate of 3.4%.Substantially all discounted workers’ compensation reserves (97% of total discounted reserves at December 31, 2021) are excess workers’ compensation reserves. In order to properly match loss expenses with income earned on investment securities supporting the liabilities, reserves for excess workers’ compensation business are discounted using risk-free discount rates determined by reference to the U.S. Treasury yield curve. These rates are determined annually based on the weighted average rate for the period. Once established, no adjustments are made to the discount rate for that period, and any increases or decreases in loss reserves in subsequent years are discounted at the same rate, without regard to when any such adjustments are recognized. The expected loss and loss expense payout patterns subject to discounting are derived from the Company’s loss payout experience. The Company also discounts reserves for certain other long-duration workers’ compensation reserves (representing approximately 3% of total discounted reserves at December 31, 2021), including reserves for quota share reinsurance and reserves related to losses regarding occupational lung disease. These reserves are discounted at statutory rates prescribed or permitted by the Department of Insurance of the State of Delaware.
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Penalties expense | 17 | SEC-NUM |
NOTE 22 - COMMITMENTS AND CONTINGENCIES
Contingencies
On January 25, 2018, Futuredontics, Inc., a former wholly-owned subsidiary of the Company, received service of a purported class action lawsuit brought by Henry Olivares and other similarly situated individuals in the Superior Court of the State of California for the County of Los Angeles. In January 2019, an amended complaint was filed adding another named plaintiff, Rachael Clarke, and various claims. The plaintiff class alleges several violations of the California wage and hours laws, including, but not limited to, failure to provide rest and meal breaks and the failure to pay overtime. The parties have engaged in written and other discovery. On February 5, 2019, Plaintiff Calethia Holt (represented by the same counsel as Mr. Olivares and Ms. Clarke) filed a separate representative action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. On April 5, 2019, Plaintiff Kendra Cato filed a similar action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. The Company has agreed to resolve all three actions (Olivares, Holt, and Cato). The court in Cato approved the settlement in that case, the settlement payment has been made, and the court dismissed the lawsuit. The parties to Olivares and Holt are in the process of seeking court approval of that settlement. The expected settlement amount, which is immaterial to the financial statements, has been recorded as an accrued liability within the Company's consolidated balance sheet as of December 31, 2021.
On June 7, 2018, and August 9, 2018, two putative class action suits were filed, and later consolidated, in the Supreme Court of the State of New York, County of New York claiming that the Company and certain individual defendants, violated U.S. securities laws (the "State Court Action") by making material misrepresentations and omitting required information in the December 4, 2015 registration statement filed with the SEC in connection with the 2016 merger of Sirona Dental Systems Inc. ("Sirona") with DENTSPLY International Inc. (the "Merger"). The amended complaint alleges that the defendants failed to disclose, among other things, that a distributor had purchased excessive inventory of legacy Sirona products and that three distributors of the Company's products had been engaging in anticompetitive conduct. The plaintiffs seek to recover damages on behalf of a class of former Sirona shareholders who exchanged their shares for shares of the Company's stock in the Merger. On September 26, 2019, the Court granted the Company's motion to dismiss all claims and a judgment dismissing the case was subsequently entered. On February 4, 2020, the Court denied plaintiffs' post-judgment motion to vacate or modify the judgment and to grant them leave to amend their complaint. The plaintiffs appealed the dismissal and the denial of the post-judgment motion to the Supreme Court of the State of New York, Appellate Division, First Department, and the Company cross-appealed select rulings in the Court's decision dismissing the action. The plaintiffs' appeals and the Company's cross-appeal were consolidated and argued on January 12, 2021. On February 2, 2021, the Appellate Division issued its decision upholding the dismissal of the State Court Action with prejudice on statute of limitations grounds. The Plaintiffs did not appeal the Appellate Division decision.
On December 19, 2018, a related putative class action was filed in the U.S. District Court for the Eastern District of New York against the Company and certain individual defendants (the "Federal Class Action"). The plaintiff makes similar allegations and asserts the same claims as those asserted in the State Court Action. In addition, the plaintiff alleges that the defendants violated U.S. securities laws by making false and misleading statements in quarterly and annual reports and other public statements between February 20, 2014, and August 7, 2018. The plaintiff asserts claims on behalf of a putative class consisting of (a) all purchasers of the Company's stock during the period February 20, 2014 through August 7, 2018 and (b) former shareholders of Sirona who exchanged their shares of Sirona stock for shares of the Company's stock in the Merger. The Company moved to dismiss the amended complaint on August 15, 2019. The plaintiff filed its second amended complaint on January 22, 2021, and the Company filed a motion to dismiss the second amended complaint on March 8, 2021. Briefing on the motion to dismiss was fully submitted on May 21, 2021, and that motion is currently pending before the Court.
The Company intends to defend itself vigorously in these actions.
As a result of an audit by the IRS for fiscal years 2012 through 2013, on February 11, 2019, the IRS issued to the Company a “30-day letter” and a Revenue Agent’s Report (“RAR”), relating to the Company’s worthless stock deduction in 2013 in the amount of $546 million. The RAR disallows the deduction and, after adjusting the Company’s net operating loss carryforward, asserts that the Company is entitled to a refund of $5 million for 2012, has no tax liability for 2013, and owes a deficiency of $17 million in tax for 2014, excluding interest. In accordance with ASC 740, the Company recorded the tax benefit associated with the worthless stock deduction in the Company’s 2012 financial statements. In March 2019, the Company submitted a formal protest disputing on multiple grounds the proposed taxes. The Company and its advisors discussed its position with the IRS Appeals Office Team on October 28, 2020 and, on November 13, 2020, submitted a supplemental response to questions raised by the Appeals Team. The Company’s position continues to be reviewed by the IRS Appeals Office team. The Company 119
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Payments of stock issuance costs | 43 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock, could potentially discourage attempts by third parties to obtain control of the Company through certain types of takeover practices.We declared and paid cash dividends per common share during the periods presented as follows:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Dividend Per Common Share | | Amount($ in millions) |
| 2021: | | | |
| First quarter | $ | 0.07 | | | $ | 23.7 | |
| Second quarter | 0.07 | | | 23.7 | |
| Third quarter | 0.07 | | | 25.2 | |
| Fourth quarter | 0.07 | | | 25.1 | |
| Total | $ | 0.28 | | | $ | 97.7 | |
| | | | |
| 2020: | | | |
| First quarter | $ | 0.07 | | | $ | 23.5 | |
| Second quarter | 0.07 | | | 23.6 | |
| Third quarter | 0.07 | | | 23.6 | |
| Fourth quarter | 0.07 | | | 23.7 | |
| Total | $ | 0.28 | | | $ | 94.4 | |
| | | | |
| The sum of the components of total dividends paid may not equal the total amount due to rounding. |
Aggregate cash payments for the dividends paid to shareholders are recorded as dividends to shareholders in our Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows.Subsequent EventsOn January 25, 2022 we declared a regular quarterly cash dividend of $0.07 per share payable on March 25, 2022 to common stockholders of record on February 25, 2022.On February 17, 2022, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 20 million shares of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the repurchase program, and the timing and amount of repurchases under the program are determined by the Company's management based on market conditions and other factors. The repurchase program may be suspended or discontinued at any time by the Board of Directors.Mandatory Convertible Preferred StockOn June 29, 2018, we issued 1,380,000 shares of 5.0% Mandatory Convertible Preferred Stock, Series A (“MCPS”) with a par value of $0.01 per share and liquidation preference of $1,000 per share, which included the exercise of an over-allotment option in full to purchase 180,000 shares. We received net $1.34 billion in proceeds from the issuance of the MCPS, excluding $43 million of issuance costs. We used the net proceeds from the issuance of MCPS to fund our acquisition activities and for general corporate purposes, including repayment of debt, working capital, and capital expenditures.On July 1, 2021, all outstanding shares of our 5.0% Mandatory Convertible Preferred Stock (“MCPS”) converted at a rate of 14.0978 common shares per share of preferred stock into an aggregate of approximately 19.4 million shares (net of fractional shares) of the Company’s common stock, pursuant to the terms of the Certificate of Designation governing the Series A Preferred Stock. Fortive issued cash in lieu of fractional shares of common stock in the conversion. These payments were recorded as a reduction to additional paid-in capital. The final dividend of $12.50 per share, or $17.2 million in the aggregate, was paid on July 1, 2021. The impact of the MCPS calculated under the if-converted method was anti-dilutive for the periods in 2021 prior to conversion.
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Restricted cash included in Other assets | 496 | SEC-NUM |
[Table of Contents](#i1f1d4643819f4c4aa82d0bc4fb2f7f45_7)GENERAL MOTORS COMPANY AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total shown in the condensed consolidated statement of cash flows:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | June 30, 2022 |
| Cash and cash equivalents | $ | 16,710 | |
| Restricted cash included in Other current assets | 2,509 | |
| Restricted cash included in Other assets | 496 | |
| Total | $ | 19,715 | |
Note 5. GM Financial Receivables and Transactions
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2022 | | December 31, 2021 |
| | Retail | | Commercial(a) | | Total | | Retail | | Commercial(a) | | Total |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| GM Financial receivables, net of fees | $ | 61,208 | | | $ | 7,526 | | | $ | 68,733 | | | $ | 58,093 | | | $ | 6,609 | | | $ | 64,702 | |
| Less: allowance for loan losses | (1,987) | | | (40) | | | (2,027) | | | (1,839) | | | (47) | | | (1,886) | |
| GM Financial receivables, net | $ | 59,220 | | | $ | 7,486 | | | $ | 66,706 | | | $ | 56,254 | | | $ | 6,562 | | | $ | 62,816 | |
| | | | | | | | | | | | |
| Fair value of GM Financial receivables utilizing Level 2 inputs | | | | | $ | 7,486 | | | | | | | $ | 6,562 | |
| Fair value of GM Financial receivables utilizing Level 3 inputs | | | | | $ | 58,528 | | | | | | | $ | 57,613 | |
\_\_\_\_\_\_\_\_\_\_(a)Net of dealer cash management balances of $1.3 billion and $1.0 billion at June 30, 2022 and December 31, 2021. Under the cash management program, subject to certain conditions, a dealer may choose to reduce the amount of interest on its floorplan line by making principal payments to GM Financial in advance.
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
| Allowance for loan losses at beginning of period | $ | 1,928 | | | $ | 1,835 | | | $ | 1,886 | | | $ | 1,978 | |
| | | | | | | | |
| Provision for loan losses | 198 | | | 59 | | | 320 | | | 33 | |
| Charge-offs | (247) | | | (204) | | | (521) | | | (457) | |
| Recoveries | 161 | | | 146 | | | 339 | | | 296 | |
| Effect of foreign currency | (14) | | | 14 | | | 4 | | | — | |
| Allowance for loan losses at end of period | $ | 2,027 | | | $ | 1,850 | | | $ | 2,027 | | | $ | 1,850 | |
Retail Finance Receivables GM Financial's retail finance receivable portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. The following tables are consolidated summaries of the retail finance receivables by FICO score or its equivalent, determined at origination, for each vintage of the retail finance receivables portfolio at June 30, 2022 and December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year of Origination | | June 30, 2022 |
| | 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | | Total | | Percent |
| Prime – FICO score 680 and greater | $ | 12,052 | | | $ | 16,089 | | | $ | 9,915 | | | $ | 3,048 | | | $ | 1,574 | | | $ | 464 | | | $ | 43,141 | | | 70.5 | % |
| Near-prime – FICO score 620 to 679 | 1,704 | | | 3,183 | | | 1,883 | | | 932 | | | 459 | | | 204 | | | 8,366 | | | 13.7 | % |
| Sub-prime – FICO score less than 620 | 1,826 | | | 3,323 | | | 1,986 | | | 1,356 | | | 699 | | | 512 | | | 9,701 | | | 15.8 | % |
| Retail finance receivables, net of fees | $ | 15,582 | | | $ | 22,595 | | | $ | 13,784 | | | $ | 5,337 | | | $ | 2,732 | | | $ | 1,179 | | | $ | 61,208 | | | 100.0 | % |
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Preferred stock, par value (in dollars per share) | 0.01 | SEC-NUM |
[Table of Contents](#i3b067f3fb23d442cae02253229e3471d_7)AKAMAI TECHNOLOGIES, INC.CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| (in thousands, except share data) | December 31, 2021 | | December 31, 2020 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 536,725 | | | $ | 352,917 | |
| Marketable securities | 541,470 | | | 745,156 | |
| Accounts receivable, net of reserves of $1,397 and $1,822 at December 31, 2021 and 2020, respectively | 675,926 | | | 660,052 | |
| Prepaid expenses and other current assets | 166,313 | | | 171,406 | |
| Total current assets | 1,920,434 | | | 1,929,531 | |
| Marketable securities | 1,088,048 | | | 1,398,802 | |
| Property and equipment, net | 1,534,329 | | | 1,478,272 | |
| Operating lease right-of-use assets | 815,754 | | | 793,945 | |
| Acquired intangible assets, net | 313,225 | | | 234,724 | |
| Goodwill | 2,156,254 | | | 1,674,371 | |
| Deferred income tax assets | 168,342 | | | 106,918 | |
| Other assets | 142,287 | | | 147,567 | |
| Total assets | $ | 8,138,673 | | | $ | 7,764,130 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 109,928 | | | $ | 118,546 | |
| Accrued expenses | 411,590 | | | 380,468 | |
| Deferred revenue | 86,517 | | | 76,600 | |
| | | | |
| Operating lease liabilities | 175,683 | | | 154,801 | |
| Other current liabilities | 6,623 | | | 27,755 | |
| Total current liabilities | 790,341 | | | 758,170 | |
| Deferred revenue | 25,342 | | | 5,262 | |
| Deferred income tax liabilities | 40,974 | | | 37,458 | |
| Convertible senior notes | 1,976,167 | | | 1,906,707 | |
| Operating lease liabilities | 707,087 | | | 715,404 | |
| Other liabilities | 68,748 | | | 89,833 | |
| Total liabilities | 3,608,659 | | | 3,512,834 | |
| Commitments and contingencies (Note 13) | | | |
| Stockholders’ equity: | | | |
| Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding | — | | | — | |
| Common stock, $0.01 par value; 700,000,000 shares authorized; 160,512,111 and 162,709,720 shares issued and outstanding at December 31, 2021 and 2020, respectively | 1,605 | | | 1,627 | |
| Additional paid-in capital | 3,340,822 | | | 3,664,820 | |
| Accumulated other comprehensive loss | (69,105) | | | (20,201) | |
| Retained earnings | 1,256,692 | | | 605,050 | |
| Total stockholders’ equity | 4,530,014 | | | 4,251,296 | |
| Total liabilities and stockholders’ equity | $ | 8,138,673 | | | $ | 7,764,130 | |
The accompanying notes are an integral part of the consolidated financial statements.
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Options exercised (in shares) | 869,855 | SEC-NUM |
[Table of Contents](#i1d117440a79147f69db4408bc4f22334_10)Part IV
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| --- | --- | --- |
| | | |
| |
IRON MOUNTAIN INCORPORATEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)DECEMBER 31, 2021(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)A summary of stock option activity for the year ended December 31, 2021 is as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | OPTIONS | | WEIGHTEDAVERAGEEXERCISE PRICE | | WEIGHTED AVERAGEREMAININGCONTRACTUALTERM (YEARS) | | AGGREGATEINTRINSICVALUE |
| Outstanding at December 31, 2020 | 4,732,519 | | | $ | 35.83 | | | | | |
| Granted | 429,618 | | | 34.73 | | | | | |
| Exercised | (869,855) | | | 34.26 | | | | | |
| Forfeited | (16,304) | | | 35.37 | | | | | |
| Expired | (51,905) | | | 34.27 | | | | | |
| Outstanding at December 31, 2021 | 4,224,073 | | | $ | 36.06 | | | 5.75 | | $ | 68,747 | |
| Options exercisable at December 31, 2021 | 3,168,908 | | | $ | 36.60 | | | 4.90 | | $ | 49,850 | |
| Options expected to vest | 1,054,641 | | | $ | 34.42 | | | 8.34 | | $ | 18,888 | |
RESTRICTED STOCK UNITSOur RSUs generally have a vesting period of three years from the date of grant. However, RSUs granted to our non-employee directors vest immediately upon grant. All RSUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will generally be paid to holders of RSUs in cash upon the vesting date of the associated RSU and will be forfeited if the RSU does not vest. The fair value of RSUs is the excess of the market price of our common stock at the date of grant over the holder's purchase price (which is typically zero). The fair value of RSUs vested during the years ended December 31, 2021, 2020 and 2019, are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | YEAR ENDED DECEMBER 31, |
| | 2021 | | 2020 | | 2019 |
| Fair value of RSUs vested | $ | 29,332 | | | $ | 26,492 | | | $ | 21,191 | |
A summary of RSU activity for the year ended December 31, 2021 is as follows:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | RSUs | | WEIGHTED-AVERAGEGRANT-DATE FAIR VALUE |
| Non-vested at December 31, 2020 | 1,294,006 | | | $ | 33.02 | |
| Granted | 1,178,170 | | | 34.98 | |
| Vested | (862,377) | | | 34.01 | |
| Forfeited | (206,166) | | | 32.65 | |
| Non-vested at December 31, 2021 | 1,403,633 | | | $ | 34.11 | |
PERFORMANCE UNITSThe PUs we issue vest based on our performance against predefined operational and share based targets. For awards granted in 2019 and thereafter, the vesting is subject to a minimum level of return on invested capital (“ROIC”) in the third year of the performance period, and thereafter the number of PUs earned is based on (i) the revenue performance for each year averaged at the end of the three-year performance period, (ii) the revenue exit rate of new products in the last quarter of the three-year performance period and (iii) a relative TSR target. With respect to the PUs granted in 2019 and thereafter, the number of PUs earned may range from 0% to approximately 238% of the initial award.
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| | IRON MOUNTAIN 2021 FORM 10-K | 92 |
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Cash purchase price | 317 | SEC-NUM |
[Table of Contents](#i82eec5aa49a24290a07e4a9f99c1e608_7) unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service in a series. The amounts disclosed above as remaining performance obligations consist primarily of fixed or monthly minimum processing fees and maintenance fees under contracts with an original expected duration of greater than one year.Contract CostsThe Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with customers that are expected to be recovered. These costs consist of sales commissions incurred only if a contract is obtained, and customer conversion or implementation related costs. Capitalized sales commissions and conversion or implementation costs were as follows at December 31:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | | | |
| (In millions) | | 2021 | | 2020 |
| Capitalized sales commissions | | $ | 437 | | | $ | 402 | |
| Capitalized conversion or implementation costs | | 374 | | | 290 | |
| | | | | |
Capitalized contract costs are amortized based on the transfer of goods or services to which the asset relates. The amortization period also considers expected customer lives and whether the asset relates to goods or services transferred under a specific anticipated contract. The amortization of capitalized sales commissions is included in selling, general and administrative expenses and amortization of capitalized conversion or implementation costs within cost of processing and services. These costs totaled $148 million, $124 million and $105 million during the years ended December 31, 2021, 2020 and 2019, respectively. Impairment losses recognized during the years ended December 31, 2021, 2020 and 2019 related to capitalized contract costs were not significant.4. Acquisitions and DispositionsAcquisitions were accounted for as business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). Purchase price was allocated to the respective assets acquired and liabilities assumed based on the estimated fair values at the date of acquisitions. Acquisition of BentoBoxOn November 22, 2021, the Company acquired BentoBox CMS, Inc (“BentoBox”), a digital marketing and commerce platform that helps restaurants connect with their guests, for approximately $317 million, net of $24 million of acquired cash. BentoBox is included within the Acceptance segment, and further expands the Company’s Clover® dining solutions and commerce and business management capabilities. The preliminary allocation of purchase price resulted in the recognition of identifiable intangible assets, consisting primarily of acquired software and technology, of approximately $136 million with useful lives anticipated to be in the range of five to ten years, and goodwill of approximately $204 million. The allocation of the purchase price is preliminary and is subject to further adjustment, pending additional analysis and final completion of valuations. Goodwill, not expected to be deductible for tax purposes, is primarily attributed to the anticipated value created by the enhanced strength of the Company’s omnichannel platform to drive increased operational efficiencies for restaurants, enabling operators to deliver seamless and distinct hospitality experiences for their diners. The results of operations for BentoBox are included in the consolidated results of the Company from the date of acquisition. Pro forma information for this acquisition is not provided because it did not have a material effect on the Company’s consolidated results of operations.Acquisition of Pineapple PaymentsOn May 4, 2021, the Company acquired Pineapple Payments Holdings, LLC (“Pineapple Payments”), an independent sales organization that provides payment processing, proprietary technology, and payment acceptance solutions for merchants, for $207 million, net of $6 million of acquired cash, and including earn-out provisions estimated at a fair value of $30 million (see Note 10). Pineapple Payments is included within the Acceptance segment, and expands the reach of the Company’s payment solutions through its technology- and relationship-led distribution channels. The allocation of purchase price was finalized in the fourth quarter of 2021 and resulted in the recognition of identifiable intangible assets of $127 million, goodwill of $79 million and other net assets of $7 million. Goodwill, of which $59 million is deductible for tax purposes, is primarily attributed to the anticipated value created by the accelerated delivery of new and innovative capabilities to merchant clients. 63
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Foreign earnings reinvested indefinitely | 2.0 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties, is as follows ($ in millions):
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| Unrecognized tax benefits, beginning of year | $ | 200.1 | | | $ | 214.9 | | | $ | 133.4 | |
| Additions based on tax positions related to the current year | 7.9 | | | 10.4 | | | 17.8 | |
| Additions for tax positions of prior years | 3.4 | | | 16.1 | | | 79.7 | |
| Reductions for tax positions of prior years | (1.4) | | | (26.5) | | | (13.0) | |
| Lapse of statute of limitations | (15.6) | | | (6.1) | | | (2.3) | |
| Settlements | (0.2) | | | (0.5) | | | (0.3) | |
| Effect of foreign currency translation | (1.2) | | | 1.7 | | | (0.4) | |
| Separation related adjustments (a) | — | | | (9.9) | | | — | |
| Unrecognized tax benefits, end of year | $ | 193.0 | | | $ | 200.1 | | | $ | 214.9 | |
| | | | | | |
| (a) Unrecognized tax benefit reserves decreased in 2020 by $10 million upon separation from Vontier in accordance with the Agreements. |
| | | | | | |
| |
Repatriation and Unremitted EarningsThe TCJA eliminated the U.S. tax cost for qualified repatriation beginning in 2018 but foreign cumulative earnings remain subject to foreign remittance taxes. As of December 31, 2021, we recorded estimated incremental foreign remittance taxes of $1 million on the planned 2022 repatriation of $542 million of previously unremitted earnings from 2021 and prior periods.The TCJA imposed a final U.S. tax on cumulative earnings from our foreign operations that we have previously made an assertion regarding the amount of such earnings intended for indefinite reinvestment. As of December 31, 2021, the earnings we plan to reinvest indefinitely outside of the United States for which foreign deferred taxes have not been provided was estimated at $2.0 billion. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.NOTE 15. RESTRUCTURING AND OTHER RELATED CHARGES Restructuring and other related charges for the years ended December 31 were as follows ($ in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| Employee severance related | $ | 12.8 | | | $ | 21.1 | | | $ | 46.9 | |
| Facility exit and other related | 5.9 | | | 5.7 | | | 3.5 | |
| | | | | | |
| Total restructuring and other related charges | $ | 18.7 | | | $ | 26.8 | | | $ | 50.4 | |
Substantially all restructuring activities initiated in 2021 were completed by December 31, 2021. We expect substantially all cash payments associated with remaining termination benefits recorded in 2021 will be paid in 2022, and all planned restructuring activities related to the 2020 and 2019 plans have been completed.The nature of our restructuring and related activities initiated in 2021, 2020 and 2019 were broadly consistent throughout our segments and focused on improvements in operational efficiency through targeted workforce reductions and facility consolidations and closures. We incurred these costs to position ourselves to provide superior products and services to our customers in a cost-efficient manner, while taking into consideration broad economic uncertainties, including those created by the COVID-19 pandemic.92
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Shares redeemed through the split-off of Envista Holdings Corporation | 3,452 | SEC-NUM |
[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)DANAHER CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS($ in millions)
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31 |
| | 2021 | | 2020 | | 2019 |
| Cash flows from operating activities: | | | | | |
| Net earnings | $ | 6,433 | | | $ | 3,646 | | | $ | 3,008 | |
| Less: earnings from discontinued operations, net of income taxes | (86) | | | — | | | (576) | |
| Net earnings from continuing operations | 6,347 | | | 3,646 | | | 2,432 | |
| Noncash items: | | | | | |
| Depreciation | 718 | | | 637 | | | 564 | |
| Amortization of intangible assets | 1,450 | | | 1,138 | | | 625 | |
| Amortization of acquisition-related inventory fair value step-up | 59 | | | 457 | | | — | |
| Stock-based compensation expense | 218 | | | 187 | | | 159 | |
| Contract settlement expense | 542 | | | — | | | — | |
| | | | | | |
| Pretax loss on early extinguishment of borrowings | 96 | | | 26 | | | 7 | |
| Pretax gain on sale of product lines and investment (gains) losses | (414) | | | (455) | | | — | |
| Change in deferred income taxes | (229) | | | 518 | | | (415) | |
| Change in trade accounts receivable, net | (611) | | | (264) | | | (157) | |
| Change in inventories | (502) | | | (123) | | | (22) | |
| Change in trade accounts payable | 549 | | | 227 | | | 18 | |
| Change in prepaid expenses and other assets | (4) | | | 102 | | | 48 | |
| Change in accrued expenses and other liabilities | 139 | | | 119 | | | 398 | |
| Total operating cash provided by continuing operations | 8,358 | | | 6,215 | | | 3,657 | |
| Total operating cash (used in) provided by discontinued operations | — | | | (7) | | | 295 | |
| Net cash provided by operating activities | 8,358 | | | 6,208 | | | 3,952 | |
| Cash flows from investing activities: | | | | | |
| Cash paid for acquisitions | (10,961) | | | (20,971) | | | (331) | |
| Payments for additions to property, plant and equipment | (1,294) | | | (791) | | | (636) | |
| Proceeds from sales of property, plant and equipment | 13 | | | 2 | | | 13 | |
| Payments for purchases of investments | (934) | | | (342) | | | (241) | |
| Proceeds from sales of investments | 126 | | | 13 | | | — | |
| Proceeds from sale of product lines | 26 | | | 826 | | | — | |
| All other investing activities | 37 | | | 24 | | | 29 | |
| Total cash used in investing activities from continuing operations | (12,987) | | | (21,239) | | | (1,166) | |
| Total investing cash used in discontinued operations | — | | | — | | | (72) | |
| Net cash used in investing activities | (12,987) | | | (21,239) | | | (1,238) | |
| Cash flows from financing activities: | | | | | |
| Proceeds from the issuance of common stock in connection with stock-based compensation | 86 | | | 153 | | | 130 | |
| Proceeds from the public offering of common stock, net of issuance costs | — | | | 1,729 | | | 1,443 | |
| Proceeds from the public offering of preferred stock, net of issuance costs | — | | | 1,668 | | | 1,600 | |
| Net proceeds from the sale of Envista Holdings Corporation common stock, net of issuance costs | — | | | — | | | 643 | |
| Payment of dividends | (742) | | | (615) | | | (527) | |
| | | | | | |
| Net proceeds from (repayments of) borrowings (maturities of 90 days or less) | 2,265 | | | (4,637) | | | 2,802 | |
| Proceeds from borrowings (maturities longer than 90 days) | 984 | | | 8,670 | | | 12,113 | |
| Repayments of borrowings (maturities longer than 90 days) | (1,186) | | | (5,933) | | | (1,565) | |
| Make-whole premiums to redeem borrowings prior to maturity | (96) | | | (26) | | | (7) | |
| All other financing activities | (16) | | | (3) | | | (43) | |
| Total financing cash provided by continuing operations | 1,295 | | | 1,006 | | | 16,589 | |
| Cash distributions to Envista Holdings Corporation, net | — | | | — | | | (224) | |
| Net cash provided by financing activities | 1,295 | | | 1,006 | | | 16,365 | |
| Effect of exchange rate changes on cash and equivalents | (115) | | | 148 | | | 45 | |
| Net change in cash and equivalents | (3,449) | | | (13,877) | | | 19,124 | |
| Beginning balance of cash and equivalents | 6,035 | | | 19,912 | | | 788 | |
| Ending balance of cash and equivalents | $ | 2,586 | | | $ | 6,035 | | | $ | 19,912 | |
| | | | | | |
| Supplemental disclosure: | | | | | |
| Shares redeemed through the split-off of Envista Holdings Corporation (22.9 million shares held as Treasury shares) | $ | — | | | $ | — | | | $ | 3,452 | |
See the accompanying Notes to the Consolidated Financial Statements.66
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Undistributed Foreign Earnings, Deferred Taxes Not Provided | 16.7 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 7. INCOME TAXES (Continued)
Components of Income Taxes
Components of income taxes excluding cumulative effects of changes in accounting principles, other comprehensive income, and equity in net results of affiliated companies accounted for after-tax for the years ended December 31 were as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2019 | | 2020 | | 2021 |
| Income/(Loss) before income taxes (in millions) | | | | | |
| U.S. | $ | 2,656 | | | $ | (231) | | | $ | 10,043 | |
| Non-U.S. | (3,296) | | | (885) | | | 7,737 | |
| Total | $ | (640) | | | $ | (1,116) | | | $ | 17,780 | |
| Provision for/(Benefit from) income taxes (in millions) | | | | | |
| Current | | | | | |
| Federal | $ | (101) | | | $ | (23) | | | $ | 102 | |
| Non-U.S. | 738 | | | 554 | | | 598 | |
| State and local | 33 | | | (45) | | | 26 | |
| Total current | 670 | | | 486 | | | 726 | |
| Deferred | | | | | |
| Federal | (1,190) | | | (523) | | | 2,290 | |
| Non-U.S. | (70) | | | 168 | | | (3,254) | |
| State and local | (134) | | | 29 | | | 108 | |
| Total deferred | (1,394) | | | (326) | | | (856) | |
| Total | $ | (724) | | | $ | 160 | | | $ | (130) | |
| Reconciliation of effective tax rate | | | | | |
| U.S. statutory rate | 21.0 | % | | 21.0 | % | | 21.0 | % |
| Non-U.S. tax rates under U.S. rates | 46.9 | | | (2.6) | | | 1.3 | |
| State and local income taxes | 12.4 | | | 8.9 | | | 0.5 | |
| General business credits | 67.0 | | | 35.1 | | | (2.3) | |
| Dispositions and restructurings (a) | 45.5 | | | (0.4) | | | (18.8) | |
| U.S. tax on non-U.S. earnings | (49.2) | | | 27.0 | | | 2.4 | |
| Prior year settlements and claims | (5.0) | | | 8.3 | | | (0.3) | |
| Tax incentives | 20.7 | | | (6.0) | | | (0.6) | |
| Enacted change in tax laws | (12.5) | | | 1.5 | | | 1.1 | |
| Valuation allowances | (18.7) | | | (108.8) | | | (4.7) | |
| Other | (15.0) | | | 1.7 | | | (0.3) | |
| Effective rate | 113.1 | % | | (14.3) | % | | (0.7) | % |
\_\_\_\_\_\_\_\_\_\_(a)Includes a benefit of $2.9 billion to recognize deferred tax assets resulting from changes in our global tax structure in 2021.
On December 22, 2017, the Tax Cuts and Jobs Act (H.R. 1) was signed into law. This act includes, among other items, a permanent reduction to the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, and requires immediate taxation of accumulated, unremitted non-U.S. earnings. For the year ended December 31, 2019, our tax provision includes additional expense of $95 million related to the impact of the act and subsequently issued Treasury regulations on our global operations.
During 2020, based on all available evidence, we established U.S. valuation allowances of $1.3 billion, primarily against tax credits as it was deemed more likely than not that these deferred tax assets would not be realized. In assessing the realizability of deferred tax assets, we consider the trade-offs between cash preservation and cash outlays to preserve tax credits. In 2021, we reversed $918 million of the previously established U.S. valuation allowances. The reversal primarily reflects a change in our intent to pursue planning actions involving cash outlays to preserve tax credits.
At December 31, 2021, $16.7 billion of non-U.S. earnings are considered indefinitely reinvested in operations outside the United States, for which deferred taxes have not been provided. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested basis differences is not practicable.126
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Cash, Cash Equivalents, and Short-term Investments | 16.2 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)The Boeing Company and SubsidiariesNotes to the Consolidated Financial StatementsYears ended December 31, 2021, 2020 and 2019 (Dollars in millions, except otherwise stated)Note 1 – Summary of Significant Accounting PoliciesPrinciples of Consolidation and Basis of PresentationThe Consolidated Financial Statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing,” the “Company,” “we,” “us” or “our”). These statements include the accounts of all majority-owned subsidiaries and variable interest entities that are required to be consolidated. All significant intercompany accounts and transactions have been eliminated. As described in Note 22, we operate in four reportable segments: Commercial Airplanes (BCA), Defense, Space & Security (BDS), Global Services (BGS) and Boeing Capital (BCC).Liquidity MattersThe global outbreak of COVID-19, 787 production issues and associated rework, and the residual impacts of the 737 MAX grounding continue to have significant adverse impacts on our business and are expected to continue to negatively impact revenue, earnings and operating cash flow in future quarters. The COVID-19 pandemic has caused an unprecedented shock to demand for air travel, creating a tremendous challenge for our customers, our business and the entire commercial aerospace manufacturing and services sector. We continue to expect commercial air travel to return to 2019 levels in 2023 to 2024. We expect it will take a few years beyond that for the industry to return to long-term trend growth. There is significant uncertainty with respect to when commercial air traffic levels will recover, and whether, and at what point capacity will return to and/or exceed pre-COVID-19 levels.
During 2021, net cash used by operating activities was $3.4 billion. Our operating cash flows continue to be impacted by lower commercial airplane deliveries and concessions paid to 737 MAX customers. We expect negative operating cash flows until commercial deliveries ramp up. In 2021, we issued $9.8 billion of fixed rate senior notes that mature between 2023 and 2026. We used the net proceeds of these note issuances to repay the $13.8 billion outstanding under our two-year delayed draw term loan credit agreement. In 2021, we also repaid $1.5 billion of term notes. As a result, our cash and short-term investment balance was $16.2 billion and our debt balance was $58.1 billion at December 31, 2021. In addition, we have term notes of $1.2 billion maturing in 2022.As of December 31, 2021, our unused borrowing capacity on revolving credit agreements is $14.7 billion. We anticipate that these revolving credit lines will remain undrawn and primarily serve as backup liquidity to support our general corporate borrowing needs. Our borrowing capacity includes a $3.1 billion 364-day revolving credit facility, which is set to expire in October 2022. See Note 15.In 2021, our short-term and long-term credit ratings by the major credit rating agencies remained unchanged from 2020. There is risk for further downgrades.At December 31, 2021 and 2020, trade payables included $2.3 billion and $3.8 billion payable to suppliers who have elected to participate in supply chain financing programs. While access to supply chain financing has been reduced due to our current credit ratings and debt levels, we do not believe that these or future changes in the availability of supply chain financing will have a significant impact on our liquidity.In addition to our debt issuances, we have taken a number of actions to improve liquidity. During 2020, our Board of Directors terminated its prior authorization to repurchase shares of the Company’s outstanding common stock and suspended the declaration and/or payment of dividends until further 64
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Number of days in which payment is required | 25 | SEC-NUM |
[Table of Contents](#ib44c212f2b9b4d609af803980a71c2da_7)EQT CORPORATION AND SUBSIDIARIESNotes to the Condensed Consolidated Financial Statements (Unaudited)
Supplemental Cash Flow Information. The following table summarizes net cash paid for interest and income taxes and non-cash activity included in the Statements of Condensed Consolidated Cash Flows.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine Months Ended September 30, |
| | 2022 | | 2021 |
| | | | |
| | (Thousands) |
| Cash paid during the period for: | | | |
| Interest, net of amount capitalized | $ | 208,239 | | | $ | 220,430 | |
| Income taxes, net | 10,529 | | | 22,263 | |
| | | | |
| Non-cash activity during the period for: | | | |
| Increase in asset retirement costs and obligations | $ | 14,102 | | | $ | 2,709 | |
| Capitalization of non-cash equity share-based compensation | 3,923 | | | 3,728 | |
| Increase in right-of-use assets and lease liabilities, net | 1,651 | | | 1,091 | |
| Issuance of common stock for Convertible Notes settlements (Note 6) | 48 | | | — | |
| Equity issued as consideration for acquisition (Note 9) | — | | | 1,925,405 | |
2. Revenue from Contracts with Customers
Under the Company's natural gas, natural gas liquids (NGLs) and oil sales contracts, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. These contracts typically require payment within 25 days of the end of the calendar month in which the commodity is delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company's efforts to satisfy the performance obligations. Other contracts, such as fixed price contracts or contracts with a fixed differential to New York Mercantile Exchange (NYMEX) or index prices, contain fixed consideration. The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price.
Based on management's judgment, the performance obligations for the sale of natural gas, NGLs and oil are satisfied at a point in time because the customer obtains control and legal title of the asset when the natural gas, NGLs or oil is delivered to the designated sales point.
The sales of natural gas, NGLs and oil presented in the Statements of Condensed Consolidated Operations represent the Company's share of revenues net of royalties and exclude revenue interests owned by others. When selling natural gas, NGLs and oil on behalf of royalty or working interest owners, the Company acts as an agent and, thus, reports the revenue on a net basis.
For contracts with customers where the Company's performance obligations had been satisfied and an unconditional right to consideration existed as of the balance sheet date, the Company recorded amounts due from contracts with customers of $1,486.8 million and $1,093.9 million in accounts receivable in the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively.
11
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Finite-Lived Intangible Assets, Amortization Expense, Year Three | 129 | SEC-NUM |
Amortization expense was $123 million, $93 million, and $89 million for the fiscal years ended June 30, 2022, 2021, and 2020, respectively. Future amortization expense for the next five fiscal years is estimated to be:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter | | Total |
| Amortization | $ | 132 | | | $ | 131 | | | $ | 129 | | | $ | 121 | | | $ | 105 | | | $ | 442 | | | $ | 1,060 | |
6. RESTRUCTURING COSTSFrom time to time, the Company has implemented plans to restructure certain operations, both domestically and internationally. The restructuring plans focused on various aspects of operations, including closing and consolidating certain manufacturing operations, rationalizing headcount and aligning operations in a strategic and more cost-efficient structure. In addition, the Company may incur restructuring charges in the future in cases where a material change in the scope of operation with its business occurs. Employee-related costs consist primarily of severance costs and also include outplacement services provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. Facility exit and other costs consist of accelerated depreciation, equipment relocation costs, and costs associated with planned facility closures to streamline Company operations.
During the fiscal year ended June 30, 2022, no material restructuring plan was adopted.
During the fiscal year ended June 30, 2021, the Company adopted a plan to reduce costs and optimize its infrastructure in Europe by closing its Clinical Supply Services facility in Bolton, U.K. In connection with this restructuring plan, the Company reduced its headcount by approximately 170 employees and incurred cumulative charges of $10 million, primarily associated with employee severance benefits. For the fiscal year ended June 30, 2022, restructuring charges associated with the Bolton facility closure were $3 million. Restructuring costs for the fiscal years ended June 30, 2022, 2021, and 2020 were recorded in Other Operating Expense in the Consolidated Statement of Operations.The following table summarizes the costs recorded within restructuring costs:
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| | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended June 30, |
| (Dollars in millions) | 2022 | | 2021 | | 2020 |
| Restructuring costs: | | | | | |
| Employee-related reorganization | $ | 9 | | | $ | 8 | | | $ | 6 | |
| Facility exit and other costs | 1 | | | 2 | | | — | |
| Total restructuring costs | $ | 10 | | | $ | 10 | | | $ | 6 | |
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Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 692 | SEC-NUM |
[Table of Contents](#i43c0112b46aa4245817525f4da15c00d_7)NOTE 4 – Business CombinationOn February 14, 2022, the Company completed the acquisition of all issued and outstanding shares of Xilinx (the Merger), a leading provider of adaptive computing solutions, for a total purchase consideration of $48.8 billion ($46.4 billion, net of cash acquired of $2.4 billion). The acquisition of Xilinx expands the Company’s product portfolio to include adaptable hardware platforms that enable hardware acceleration and rapid innovation across a variety of technologies. With the acquisition of Xilinx, the Company now offers FPGAs, adaptive SoC products, and ACAP products. The purchase consideration consisted of $48.5 billion of fair value of 429 million shares of the Company’s common stock issued to Xilinx stockholders and $275 million of fair value of replacement equity awards attributable to services rendered pre-combination. As the transaction closed prior to the opening of markets on February 14, 2022, the fair value of the common stock issued to Xilinx stockholders was based on the closing price of the Company’s common stock on February 11, 2022 of $113.18 per share.The financial results of Xilinx are included in the Company’s consolidated financial statements from the date of acquisition, February 14, 2022, through March 26, 2022, and are reported under the Xilinx segment.The purchase consideration was preliminarily allocated as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | (In millions) |
| Cash and cash equivalents | $ | 2,366 | |
| Short-term investments | 1,582 | |
| Accounts receivable | 299 | |
| Inventories | 539 | |
| Prepaid expenses and other current assets | 61 | |
| Property and equipment | 692 | |
| Operating lease right-of-use assets | 61 | |
| Acquisition-related intangibles | 27,308 | |
| Deferred tax assets | 11 | |
| Other non-current assets | 418 | |
| Total Assets | 33,337 | |
| Accounts payable | 116 | |
| Accrued liabilities | 633 | |
| Other current liabilities | 191 | |
| Long-term debt | 1,474 | |
| Long-term operating lease liabilities | 45 | |
| Deferred tax liabilities | 4,346 | |
| Other long-term liabilities | 533 | |
| Total Liabilities | 7,338 | |
| Fair value of net assets acquired | 25,999 | |
| Goodwill | 22,794 | |
| Total purchase consideration | $ | 48,793 | |
The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The fair values are subject to adjustment for up to one year after the close of the transaction as additional information is obtained. The primary items pending are related to income tax matters. Any adjustments to the preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.Goodwill was primarily attributed to increased synergies expected to be achieved from the integration of Xilinx. None of the goodwill is expected to be deductible for income tax purposes. Goodwill is not amortized to earnings, but instead will be reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill arising from the Xilinx acquisition was allocated to the Xilinx segment. 12
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Adjustment to treasury rate | 20 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Long-Term DebtWe maintain credit facilities with third-party lenders, which we use for a variety of purposes. On March 4, 2019, CBRE Services, Inc. (CBRE Services) entered into an incremental assumption agreement with respect to its credit agreement, dated October 31, 2017 (such agreement, as amended by a December 20, 2018 incremental term loan assumption agreement and such March 4, 2019 incremental assumption agreement, collectively, the 2019 Credit Agreement), which (i) extended the maturity of the U.S. dollar tranche A term loans under such credit agreement, (ii) extended the termination date of the revolving credit commitments available under such credit agreement and (iii) made certain changes to the interest rates and fees applicable to such tranche A term loans and revolving credit commitments under such credit agreement. The proceeds from a new tranche A term loan facility under the 2019 Credit Agreement was used to repay the $300.0 million of tranche A term loans outstanding under the credit agreement in effect prior to the entry into the 2019 incremental assumption agreement. On July 9, 2021, CBRE Services entered into an additional incremental assumption agreement with respect to the 2019 Credit Agreement for purposes of increasing the revolving credit commitments available under the 2019 Credit Agreement by an aggregate principal amount of $350.0 million (the 2019 Credit Agreement, as amended by the July 9, 2021 incremental assumption agreement is collectively referred to in this Annual Report as the 2021 Credit Agreement). On December 10, 2021, CBRE Services and certain of the other borrowers entered into an amendment of the 2021 Credit Agreement which (i) changed the interest rate applicable to revolving borrowings denominated in Sterling from a LIBOR-based rate to a rate based on the Sterling Overnight Index Average (SONIA) and (ii) changed the interest rate applicable to revolving borrowings denominated in Euros from a LIBOR-based rate to a rate based on EURIBOR. The revised interest rates described above went into effect as of January 1, 2022.The 2021 Credit Agreement is a senior unsecured credit facility that is guaranteed by us. On May 21, 2021, we entered into a definitive agreement whereby our subsidiary guarantors were released as guarantors from the 2021 Credit Agreement. As of December 31, 2021, the 2021 Credit Agreement provided for the following: (1) a $3.15 billion revolving credit facility, which includes the capacity to obtain letters of credit and swingline loans and terminates on March 4, 2024; (2) a $300.0 million tranche A term loan facility maturing on March 4, 2024, requiring quarterly principal payments unless our leverage ratio (as defined in the 2021 Credit Agreement) is less than or equal to 2.50x on the last day of the fiscal quarter immediately preceding any such payment date and (3) a €400.0 million term loan facility due and payable in full at maturity on December 20, 2023. Borrowings under the euro term loan facility under the 2021 Credit Agreement bear interest at a minimum rate of 0.75% plus EURIBOR and revolving borrowings bear interest, based at our option, on either (1) the applicable fixed rate plus 0.68% to 1.075% or (2) the daily rate plus 0.0% to 0.075% in each case as determined by reference to our Credit Rating (as defined in the 2021 Credit Agreement). As of December 31, 2021, we had $454.5 million of euro term loan borrowings outstanding under the 2021 Credit Agreement (at an interest rate of 0.75% plus EURIBOR), net of unamortized debt issuance costs, included in the accompanying consolidated balance sheet. Borrowings under the tranche A term loan facility under the 2021 Credit Agreement bore interest, based at our option, on either (1) the applicable fixed rate plus 0.750% to 1.25% or (2) the daily rate plus 0.0% to 0.25%, in each case as determined by reference to our Credit Rating (as defined in the 2021 Credit Agreement). On November 23, 2021, we repaid our $300.0 million tranche A term loan facility under the 2021 Credit Agreement. On March 18, 2021, CBRE Services issued $500.0 million in aggregate principal amount of 2.500% senior notes due April 1, 2031 at a price equal to 98.451% of their face value (the 2.500% senior notes). The 2.500% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. Interest accrues at a rate of 2.500% per year and is payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2021. The 2.500% senior notes are redeemable at our option, in whole or in part, on or after January 1, 2031 at a redemption price of 100% of the principal amount on that date, plus accrued and unpaid interest, if any, to, but excluding the date of redemption. At any time prior to January 1, 2031, we may redeem all or a portion of the notes at a redemption price equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present value at the date of redemption of the remaining scheduled payments of principal and interest thereon to January 1, 2031, assuming the notes matured on January 1, 2031, discounted to the date of redemption on a semi-annual basis at an adjusted rate equal to the treasury rate plus 20 basis points, minus accrued and unpaid interest to, but excluding, the date of redemption, plus, in either case, accrued and unpaid interest, if any, to, but not including, the redemption date. The amount of the 2.500% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheet was $488.1 million at December 31, 2021.94
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Subsets and Splits