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Pro forma net income | 71 | SEC-NUM |
[Table of Contents](#i1852a2ea91e948d98ea7c44fc3e188ea_7)from the results reflected in the following pro forma information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors.
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| (In millions, except per share amounts) | | Six Months Ended June 30, 2021 |
| Pro forma revenue | | $ | 1,802 | | | |
| Pro forma net income | | 71 | | | |
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| Pro forma basic earnings per share | | $ | 0.09 | | | |
| Pro forma diluted earnings per share | | $ | 0.09 | | | |
3. Properties and Equipment, NetProperties and equipment, net are comprised of the following:
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| (In millions) | | June 30,2022 | | December 31,2021 |
| Proved oil and gas properties | | $ | 16,102 | | | $ | 15,340 | |
| Unproved oil and gas properties | | 5,292 | | | 5,316 | |
| Gathering and pipeline systems | | 423 | | | 395 | |
| Land, buildings and other equipment | | 144 | | | 140 | |
| Finance lease right-of-use asset | | 24 | | | 20 | |
| | | 21,985 | | | 21,211 | |
| Accumulated depreciation, depletion and amortization | | (4,578) | | | (3,836) | |
| | | $ | 17,407 | | | $ | 17,375 | |
Capitalized Exploratory Well CostsAs of June 30, 2022, the Company did not have any projects with exploratory well costs capitalized for a period of greater than one year after drilling.4. Debt and Credit AgreementsThe Company’s debt and credit agreements consisted of the following:
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| (In millions) | | June 30,2022 | | December 31,2021 |
| 6.51% weighted-average private placement senior notes (1) | | $ | 37 | | | $ | 37 | |
| 5.58% weighted-average private placement senior notes (2) | | 87 | | | 87 | |
| 3.65% weighted-average private placement senior notes | | 825 | | | 825 | |
| 4.375% senior notes due June 1, 2024 | | 750 | | | 750 | |
| 3.90% senior notes due May 15, 2027 | | 750 | | | 750 | |
| 4.375% senior notes due March 15, 2029 | | 500 | | | 500 | |
| Revolving credit facility | | — | | | — | |
| Net premium (discount) | | 164 | | | 185 | |
| Unamortized debt issuance costs | | (8) | | | (9) | |
| | | $ | 3,105 | | | $ | 3,125 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) Includes $37 million of current portion of long-term debt at June 30, 2022.(2) Includes $87 million of current portion of long-term debt at June 30, 2022.At June 30, 2022, the Company was in compliance with all financial and other covenants for both its revolving credit facility and senior notes. 8
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Goodwill impairment analysis, discount rate | 19 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music") for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million, during 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment. On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements. There were no underlying business conditions that provided an indication of the existence of impairment. During the fourth quarter of 2021 the Company performed a quantitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that, other than the Music goodwill impairment loss noted above, there was no other impairment to any of its reporting units. Accordingly, no goodwill impairment was recorded as a result of the quantitative test for the year ended December 26, 2021.During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to its reporting units, including eOne, and determined that it was not necessary to perform a quantitative assessment for the goodwill of the Company's reporting units. During the fourth quarter of 2019, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business. These modifications included organizational actions and related personnel changes, the extension of launch dates for games currently in or planned for development and the addition of partners for the development of future games releases. The modifications resulted in changes to the long-term projections for the Backflip business. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. Discounted cash flows serve as the primary basis for the Income Approach. The Company utilized forecasted cash flows for the Backflip reporting unit that included assumptions including but not limited to: expected revenues to be realized based on planned future mobile game releases, expected EBITDA margins derived in part based on expected future royalty costs, advertising and marketing costs, development costs, overhead costs, and expected future tax rates. The cash flows beyond the forecast period were estimated using a terminal value growth rate of 3%. To calculate the fair value of the future cash flows under the Income Approach, a discount rate of 19% was utilized, representing the reporting unit’s estimated weighted-average cost of capital. Based on the results of the impairment test, the Company determined that the carrying value of the Backflip reporting unit exceeded its estimated fair value. Based on this assessment, the Company recorded an impairment charge of $86.3 million in the fourth quarter of 2019, in the Company’s Wizards of the Coast & Digital Gaming segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip in 2019, the Company concluded there was no other impairment of goodwill during 2019. Other Intangible Assets, NetThe following table represents a summary of the Company’s other intangible assets, net at December 26, 2021 and December 27, 2020:
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| (In millions) | 2021 | | 2020 |
| Acquired product rights | $ | 2,101.7 | | | 2,374.7 | |
| Licensed rights of entertainment properties | 45.0 | | | 45.0 | |
| Accumulated amortization | (1,050.4) | | | (964.6) | |
| Amortizable intangible assets | 1,096.3 | | | 1,455.1 | |
| Product rights with indefinite lives | 75.7 | | | 75.7 | |
| Total other intangibles assets, net | $ | 1,172.0 | | | 1,530.8 | |
Certain intangible assets relating to rights obtained in the Company’s acquisition of Milton Bradley in 1984 and Tonka in 1991 are not amortized. These rights were determined to have indefinite lives and are included as product rights with indefinite lives in the table above. The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the 95
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Common stock, par value (in dollars per share) | 0.01 | SEC-NUM |
[Table of Contents](#i7c08528f82aa4260b71dd1d8bcc2d1c3_7)
PART I—FINANCIAL INFORMATIONItem 1. Financial Statements
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| CDW CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(dollars in millions, except per share amounts) |
| | September 30, 2022 | | December 31, 2021 |
| Assets | (unaudited) | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 384.6 | | | $ | 258.1 | |
| Accounts receivable, net of allowance for credit losses of $24.0 and $20.4, respectively | 4,549.4 | | | 4,499.4 | |
| Merchandise inventory | 914.5 | | | 927.6 | |
| Miscellaneous receivables | 486.4 | | | 435.5 | |
| Prepaid expenses and other | 560.3 | | | 357.5 | |
| Total current assets | 6,895.2 | | | 6,478.1 | |
| Operating lease right-of-use assets | 153.8 | | | 155.6 | |
| Property and equipment, net | 188.0 | | | 195.8 | |
| Goodwill | 4,327.5 | | | 4,382.9 | |
| Other intangible assets, net | 1,525.5 | | | 1,628.1 | |
| Other assets | 385.6 | | | 358.9 | |
| Total Assets | $ | 13,475.6 | | | $ | 13,199.4 | |
| Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable-trade | $ | 3,251.1 | | | $ | 3,114.2 | |
| Accounts payable-inventory financing | 478.7 | | | 448.3 | |
| Current maturities of long-term debt | 57.8 | | | 102.7 | |
| Contract liabilities | 437.7 | | | 402.9 | |
| Accrued expenses and other current liabilities: | | | |
| Compensation | 359.1 | | | 361.7 | |
| Advertising | 169.8 | | | 145.5 | |
| Sales and income taxes | 58.0 | | | 65.9 | |
| Other | 546.6 | | | 454.8 | |
| Total current liabilities | 5,358.8 | | | 5,096.0 | |
| Long-term liabilities: | | | |
| Debt | 6,100.0 | | | 6,755.8 | |
| Deferred income taxes | 208.3 | | | 222.3 | |
| Operating lease liabilities | 180.0 | | | 184.2 | |
| Other liabilities | 302.5 | | | 235.4 | |
| Total long-term liabilities | 6,790.8 | | | 7,397.7 | |
| Commitments and contingencies | | | |
| Stockholders’ equity: | | | |
| Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods | — | | | — | |
| Common stock, $0.01 par value, 1,000.0 shares authorized; 135.3 and 134.8 shares outstanding, respectively | 1.4 | | | 1.3 | |
| Paid-in capital | 3,481.5 | | | 3,369.5 | |
| Accumulated deficit | (1,969.3) | | | (2,570.7) | |
| Accumulated other comprehensive loss | (187.6) | | | (94.4) | |
| Total stockholders’ equity | 1,326.0 | | | 705.7 | |
| Total Liabilities and Stockholders’ Equity | $ | 13,475.6 | | | $ | 13,199.4 | |
The accompanying notes are an integral part of the Consolidated Financial Statements.3
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Operating Lease Liabilities | 935 | SEC-NUM |
As of March 31, 2022 and December 31, 2021, the weighted average remaining lease term of our operating leases was 7 years for each period. The lease liabilities reflect a weighted average discount rate of 2.68% at March 31, 2022 and 2.69% at December 31, 2021.Future lease payments for noncancellable operating leases with initial or remaining terms of one year or more are as follows:
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| 2022 (excluding the three months ended March 31, 2022) | $ | 157 | |
| 2023 | 194 | |
| 2024 | 165 | |
| 2025 | 127 | |
| 2026 | 90 | |
| Thereafter | 307 | |
| Total future minimum payments | 1,040 | |
| Less imputed interest | (105) | |
| Total lease liabilities | $ | 935 | |
As of March 31, 2022, we have additional operating leases for building spaces that have not yet commenced, and some building spaces are being constructed by the lessors and their agents. These leases have terms of up to 10 years and are expected to commence on various dates during 2022 when the construction is complete and we take possession of the buildings. The undiscounted lease payments for these leases, which are not included in the tables above, aggregate to $41.-36-
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Employee stock purchase plan, maximum employee subscription rate percent | 15 | 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)EMPLOYEE STOCK PURCHASE PLANWe offer an ESPP in which participation is available to substantially all United States and Canadian employees who meet certain service eligibility requirements. The ESPP provides for the purchase of our common stock by eligible employees through successive offering periods. We have historically had two six-month offering periods per year, the first of which generally runs from June 1 through November 30 and the second of which generally runs from December 1 through May 31. During each offering period, participating employees accumulate after-tax payroll contributions, up to a maximum of 15% of their compensation, to pay the purchase price at the end of the offering. Participating employees may withdraw from an offering before the purchase date and obtain a refund of the amounts withheld as payroll deductions. At the end of the offering period, outstanding options under the ESPP are exercised, and each employee’s accumulated contributions are used to purchase our common stock. The price for shares purchased under the ESPP is 95% of the fair market price at the end of the offering period, without a look-back feature. As a result, we do not recognize compensation expense for the ESPP shares purchased. In May 2021, our stockholders approved an amendment to the ESPP to increase the number of shares of Common Stock authorized for issuance thereunder by 1,000,000 from 1,000,000 to 2,000,000. For the years ended December 31, 2021, 2020 and 2019, there were 112,297, 159,853 and 129,505 shares, respectively, purchased under the ESPP. As of December 31, 2021, we have 1,103,990 shares available under the ESPP.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_As of December 31, 2021, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $42,559 and is expected to be recognized over a weighted-average period of 1.9 years.We issue shares of our common stock for the exercises of stock options, and the vesting of RSUs, PUs and shares of our common stock under our ESPP from unissued reserved shares.T. ACQUISITION AND INTEGRATION COSTSAcquisition and integration costs represent operating expenditures directly associated with the closing and integration activities of our business acquisitions that have closed, or are highly probable of closing, and include (i) advisory, legal and professional fees to complete business acquisitions and (ii) costs to integrate acquired businesses into our existing operations, including move, severance, facility upgrade and system integration costs (collectively, "Acquisition and Integration Costs"). Acquisition and Integration Costs do not include costs associated with the formation of joint ventures or costs associated with the acquisition of customer relationships. Acquisition and integration costs for the year ended December 31, 2021, 2020 and 2019 were $12,764, $0 and $13,293, respectively. U. OTHER (INCOME) EXPENSE, NETConsolidated other (income) expense, net for the years ended December 31, 2021, 2020 and 2019 consists of the following:
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| | YEAR ENDED DECEMBER 31, |
| | 2021 | | 2020 | | 2019 |
| Foreign currency transaction (gains) losses, net(1) | $ | (15,753) | | | $ | 29,830 | | | $ | 24,852 | |
| Debt extinguishment expense | — | | | 68,300 | | | — | |
| Other, net(2) | (177,051) | | | 45,415 | | | 9,046 | |
| Other (Income) Expense, Net | $ | (192,804) | | | $ | 143,545 | | | $ | 33,898 | |
(1)The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, includes gains or losses primarily related to (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined in Note 7), (ii) our previously outstanding 3% Euro Senior Notes due 2025 ("Euro Notes"), (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested and (iv) amounts that are paid or received on the net settlement amount from forward contracts (as more fully discussed in Note 6).(2)Other, net for the year ended December 31, 2021 consists primarily of (a) a gain of approximately $179,000 associated with our IPM Divestment and (b) a gain of approximately $20,300 associated with the loss of control and related deconsolidation, as of May 18, 2021, of one of our wholly owned Netherlands subsidiaries, for which we had value-added tax liability exposure that was recorded in 2019, partially offset by (c) losses on our equity method investments. Other, net for the year ended December 31, 2020 consists primarily of (a) changes in the estimated value of our mandatorily redeemable noncontrolling interests and (b) losses on our equity method investments.
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| | IRON MOUNTAIN 2021 FORM 10-K | 94 |
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Aggregate Intrinsic Value, Options outstanding as of January 1, 2022 | 422,830 | SEC-NUM |
[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)Stock-Based CompensationStock-based compensation expense and the related income tax benefit recognized in connection with stock options, restricted stock and the ESPP during fiscal 2021, 2020 and 2019 were as follows:
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| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Stock options | $ | 9,051 | | | $ | 8,062 | | | $ | 6,806 | |
| Restricted stock | 181,946 | | | 173,193 | | | 164,078 | |
| ESPP | 19,093 | | | 16,013 | | | 10,663 | |
| Total stock-based compensation expense | $ | 210,090 | | | $ | 197,268 | | | $ | 181,547 | |
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| Income tax benefit | $ | 33,958 | | | $ | 31,857 | | | $ | 30,118 | |
Stock-based compensation expense is reflected in Cadence’s consolidated income statements during fiscal 2021, 2020 and 2019 as follows:
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| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Cost of product and maintenance | $ | 4,161 | | | $ | 2,922 | | | $ | 2,759 | |
| Cost of services | 3,375 | | | 3,720 | | | 3,510 | |
| Marketing and sales | 43,264 | | | 42,096 | | | 39,088 | |
| Research and development | 131,247 | | | 124,999 | | | 114,656 | |
| General and administrative | 28,043 | | | 23,531 | | | 21,534 | |
| Total stock-based compensation expense | $ | 210,090 | | | $ | 197,268 | | | $ | 181,547 | |
Stock OptionsThe exercise price of each stock option granted under Cadence’s employee equity incentive plans is equal to or greater than the closing price of Cadence’s common stock on the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average grant date fair value of options granted and the weighted average assumptions used in the model for fiscal 2021, 2020 and 2019 were as follows:
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| | 2021 | | 2020 | | 2019 |
| Dividend yield | None | | None | | None |
| Expected volatility | 31.7 | % | | 25.1 | % | | 24.4 | % |
| Risk-free interest rate | 1.02 | % | | 1.36 | % | | 2.47 | % |
| Expected term (in years) | 4.8 | | 4.8 | | 4.8 |
| Weighted average fair value of options granted | $ | 46.10 | | | $ | 19.38 | | | $ | 14.58 | |
A summary of the changes in stock options outstanding under Cadence’s equity incentive plans during fiscal 2021 is presented below:
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| | | | Weighted Average | | Weighted AverageRemainingContractualTerms | | AggregateIntrinsic |
| | Shares | | Exercise Price | | (Years) | | Value |
| | (In thousands) | | | | | | (In thousands) |
| Options outstanding as of January 2, 2021 | 3,934 | | | $ | 36.72 | | | | | |
| Granted | 612 | | | 159.25 | | | | | |
| Exercised | (1,066) | | | 22.37 | | | | | |
| Forfeited | (61) | | | 61.38 | | | | | |
| Options outstanding as of January 1, 2022 | 3,419 | | | $ | 62.69 | | | 3.5 | | $ | 422,830 | |
| Options vested as of January 1, 2022 | 2,425 | | | $ | 39.16 | | | 2.7 | | $ | 356,981 | |
71
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Number of healthcare facilities used to secure debt (in facilities) | 18 | SEC-NUM |
[Table of Contents](#ifa3dff468a15495db7b57c65ada0de74_7)During the three months ended March 31, 2022, the Company did not repurchase or redeem any senior unsecured notes. The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the year ended December 31, 2021 (dollars in thousands):
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| Payoff Date | | Amount | | Coupon Rate | | Maturity Year |
| May 19, 2021(1) | | $ | 251,806 | | | 3.40 | % | | 2025 |
| May 19, 2021(1) | | 298,194 | | | 4.00 | % | | 2025 |
| February 26, 2021(2) | | 188,000 | | | 4.25 | % | | 2023 |
| February 26, 2021(2) | | 149,000 | | | 4.20 | % | | 2024 |
| February 26, 2021(2) | | 331,000 | | | 3.88 | % | | 2024 |
| January 28, 2021(2) | | 112,000 | | | 4.25 | % | | 2023 |
| January 28, 2021(2) | | 201,000 | | | 4.20 | % | | 2024 |
| January 28, 2021(2) | | 469,000 | | | 3.88 | % | | 2024 |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Upon repurchasing a portion of the 3.40% and 4.00% senior unsecured notes due 2025, the Company recognized a $61 million loss on debt extinguishment during the year ended December 31, 2021.(2)Upon completing the repurchases and redemptions of all outstanding 4.25%, 4.20%, and 3.88% senior unsecured notes due 2023 and 2024, the Company recognized a $164 million loss on debt extinguishment during the three months ended March 31, 2021.During the three months ended March 31, 2022, the Company did not issue any senior unsecured notes.In 2021, the Company completed two green bond offerings. The net proceeds from both green bonds are or will be allocated to eligible green projects, and the Company may choose to allocate or re-allocate net proceeds from such offerings to one more other eligible green projects. The following table summarizes these senior unsecured note issuances for the year ended December 31, 2021 (dollars in thousands):
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| Issue Date | | Amount | | Coupon Rate | | Maturity Year |
| November 24, 2021 | | $ | 500,000 | | | 2.13 | % | | 2028 |
| July 12, 2021 | | 450,000 | | | 1.35 | % | | 2027 |
Mortgage DebtAt March 31, 2022 and December 31, 2021, the Company had $349 million and $350 million, respectively, in aggregate principal of mortgage debt outstanding, which was secured by 18 healthcare facilities, with an aggregate carrying value of $803 million and $811 million, respectively. Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.During each of the three months ended March 31, 2022 and March 31, 2021, the Company made aggregate principal repayments of mortgage debt of $1 million (excluding mortgage debt on assets held for sale and discontinued operations). In April 2021, in conjunction with the acquisition of the MOB Portfolio, the Company originated $142 million of secured mortgage debt (see Note 3) that matures in May 2026. In April 2022, the Company terminated its existing interest rate cap agreements associated with this variable rate mortgage debt and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026 (see Note 17). 19
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Options exercisable at end of period (in dollars per share) | 70.99 | SEC-NUM |
Below is a summary of option information for the year 2021:
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| (Dollars in millions, except exercise price. Shares in thousands) | | Shares | | Weighted-average exercise price | | Aggregateintrinsicvalue | | Weighted-averageremaining contractuallife |
| Outstanding option shares at January 1, 2021 | | 3,601 | | | $ | 72.55 | | | | | |
| Granted | | 464 | | | 96.32 | | | | | |
| Exercised | | (415) | | | 50.51 | | | | | |
| Forfeited or expired | | (98) | | | 62.00 | | | | | |
| Outstanding option shares at December 31, 2021 | | 3,552 | | | 78.52 | | | $ | 126 | | | 5.97 years |
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| Options exercisable at end of period | | 2,599 | | | $ | 70.99 | | | $ | 112 | | | 5.07 years |
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Cash received from the exercise of options was $13 million, $7 million and $11 million for the years ended December 31, 2021, 2020 and 2019, respectively. We acquired 77,947, 50,751 and 103,237 shares totaling $8 million, $5 million and $9 million, respectively, from associates in consideration for option exercises during 2021, 2020 and 2019. The weighted-average remaining contractual life for options expected to vest as of December 31, 2021, was 8.41 years.
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Under all active shareholder approved plans, a total of 17.3 million shares were authorized to be granted. At December 31, 2021, 5.9 million shares remained available for future issuance under the plans. During 2021, we granted 17,018 shares of common stock to our directors for 2020 board service fees. Restricted Stock UnitsService-based restricted stock units granted to associates are valued at fair value of the shares on the date of grant less the present value of the dividends that holders of restricted stock units do not receive on the shares underlying the restricted stock units during the vesting period. Service-based restricted stock units generally cliff vest three years after the date of grant. We also grant restricted stock units which vest on a three year ratable vesting schedule. Service-based restricted stock units vested during the year had an intrinsic value of $26 million, $30 million and $25 million for the years ended December 31, 2021, 2020 and 2019, respectively. We have performance-based awards that vest on the first day of March after a three-calendar-year performance period. These awards vest according to the level of three-year total shareholder return achieved compared with a peer group over a three-year performance period with payouts ranging from 0% to 200% for awards granted in 2021, 2020 and 2019. Three-year total shareholder return is calculated by using annualized total return of a stock to an investor due to capital gain appreciation plus reinvestment of all dividends.
For the three-year performance period ended December 31, 2021, our total shareholder return exceeded six of our nine peers. We expect payout of these shares at the target level to occur in March of 2022. During 2021, we issued 113,648 shares of performance-based restricted stock units at the maximum-level performance hurdle for the three-year performance period ended December 31, 2020, as our total shareholder return exceeded eight of nine peers in our 2018 peer group. We issued 56,722 shares of performance-based restricted stock units during 2020 at the target-level performance hurdle for the three-year performance period ended December 31, 2019, as our total shareholder return exceeded five of nine peers in our 2017 peer group. Performance-based awards vested during the year had an intrinsic value of $11 million, $5 million and $2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
These performance-based awards are valued using a Monte-Carlo valuation on the date of grant, which uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the volatility of each peer and the pairwise correlations of each peer being modeled. Compensation cost is recognized regardless of whether the market-based performance objective has been satisfied. We make assumptions to develop the Monte-Carlo model as follows: •Correlation coefficients are based upon the stock price data used to calculate the historical volatilities. The correlation coefficients are used to model the way the price of each entity's stock tends to move in relation to each other.Cincinnati Financial Corporation - 2021 10-K - Page 170
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Proceeds from issuance of long-term debt | 7 | SEC-NUM |
[Table of Contents](#ib0ff9808fe764fdea19589324372f96b_7)Abbott Laboratories and SubsidiariesCondensed Consolidated Statement of Cash Flows(Unaudited)(dollars in millions)
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| | Nine Months Ended September 30 |
| | 2022 | | 2021 |
| Cash Flow From (Used in) Operating Activities: | | | |
| Net earnings | $ | 5,900 | | | $ | 5,082 | |
| Adjustments to reconcile net earnings to net cash from operating activities — | | | |
| Depreciation | 943 | | | 1,122 | |
| Amortization of intangible assets | 1,517 | | | 1,533 | |
| Share-based compensation | 570 | | | 534 | |
| Trade receivables | (409) | | | (194) | |
| Inventories | (1,224) | | | (471) | |
| Other, net | (42) | | | (140) | |
| Net Cash From Operating Activities | 7,255 | | | 7,466 | |
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| Cash Flow From (Used in) Investing Activities: | | | |
| Acquisitions of property and equipment | (1,167) | | | (1,271) | |
| Acquisitions of businesses and technologies, net of cash acquired | — | | | (187) | |
| Proceeds from business dispositions | 48 | | | 134 | |
| Sales (purchases) of other investment securities, net | (3) | | | (27) | |
| Other | 14 | | | 14 | |
| Net Cash From (Used in) Investing Activities | (1,108) | | | (1,337) | |
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| Cash Flow From (Used in) Financing Activities: | | | |
| Net borrowings (repayments) of short-term debt and other | 37 | | | (7) | |
| Proceeds from issuance of long-term debt | 7 | | | — | |
| Repayments of long-term debt | (753) | | | (45) | |
| Purchases of common shares | (3,110) | | | (1,325) | |
| Proceeds from stock options exercised | 126 | | | 173 | |
| Dividends paid | (2,486) | | | (2,404) | |
| Net Cash From (Used in) Financing Activities | (6,179) | | | (3,608) | |
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| Effect of exchange rate changes on cash and cash equivalents | (173) | | | (57) | |
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| Net Increase (Decrease) in Cash and Cash Equivalents | (205) | | | 2,464 | |
| Cash and Cash Equivalents, Beginning of Year | 9,799 | | | 6,838 | |
| Cash and Cash Equivalents, End of Period | $ | 9,594 | | | $ | 9,302 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.8
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Formula rate plan revenue increase including demand side management costs | 48.2 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
necessary. In the fourth quarter 2018, Entergy Mississippi recorded a provision of $9.3 million that reflected the estimate of the difference between the 2018 expected earned rate of return on rate base and an established performance-adjusted benchmark rate of return under the formula rate plan performance-adjusted bandwidth mechanism. In the first quarter 2019, Entergy Mississippi recorded a $0.8 million increase in the provision to reflect the amount shown in the look-back filing. In June 2019, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the 2019 test year filing showed that a $32.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.93% return on rate base, within the formula rate plan bandwidth. Additionally, pursuant to the joint stipulation, Entergy Mississippi’s 2018 look-back filing reflected an earned return on rate base of 7.81% in calendar year 2018 which is above the look-back benchmark return on rate base of 7.13%, resulting in an $11 million decrease in formula rate plan revenues on an interim basis through May 2020. In the second quarter 2019, Entergy Mississippi recorded an additional $0.9 million increase in the provision to reflect the $11 million shown in the look-back filing. In June 2019 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July 2019.
2020 Formula Rate Plan Filing
In March 2020, Entergy Mississippi submitted its formula rate plan 2020 test year filing and 2019 look-back filing showing Entergy Mississippi’s earned return for the historical 2019 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2020 calendar year to be below the formula rate plan bandwidth. The 2020 test year filing shows a $24.6 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51% return on rate base, within the formula rate plan bandwidth. The 2019 look-back filing compares actual 2019 results to the approved benchmark return on rate base and reflects the need for a $7.3 million interim increase in formula rate plan revenues. In accordance with the MPSC-approved revisions to the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2019 retail revenues, effective with the April 2020 billing cycle, subject to refund. In June 2020, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the 2020 test year filing showed that a $23.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51% return on rate base, within the formula rate plan bandwidth. Pursuant to the joint stipulation, Entergy Mississippi’s 2019 look-back filing reflected an earned return on rate base of 6.75% in calendar year 2019, which is within the look-back bandwidth. As a result, there is no change in formula rate plan revenues in the 2019 look-back filing. In June 2020 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July 2020. In the June 2020 order the MPSC directed Entergy Mississippi to submit revisions to its formula rate plan to realign recovery of costs from its energy efficiency cost recovery rider to its formula rate plan. In November 2020 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan providing for the realignment of energy efficiency costs to its formula rate plan, the deferral of energy efficiency expenditures into a regulatory asset, and the elimination of its energy efficiency cost recovery rider effective with the January 2022 billing cycle.
2021 Formula Rate Plan Filing
In March 2021, Entergy Mississippi submitted its formula rate plan 2021 test year filing and 2020 look-back filing showing Entergy Mississippi’s earned return for the historical 2020 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2021 calendar year to be below the formula rate plan bandwidth. The 2021 test year filing shows a $95.4 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.69% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, is capped at 4% of retail revenues, which equates to a revenue change of $44.3 million. The 2021 evaluation report also includes $3.9 million in demand side management costs for which the MPSC approved realignment of recovery from the energy efficiency rider to the formula rate plan. These costs are not subject to the 4% cap and result in a total change in formula rate plan revenues of $48.2 million. The 2020 look-back filing compares actual 2020 results to the approved benchmark return on rate base and reflects the need for a $16.8 million interim increase in formula rate 82
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Public Utilities, Approved Rate Increase (Decrease), Amount | 49 | SEC-NUM |
May 2022, SWEPCo filed a petition for review with the Texas District Court seeking a judicial review of the several errors challenged in the PUCT’s final order.
2020 Louisiana Base Rate Case
In December 2020, SWEPCo filed a request with the LPSC for a $134 million annual increase in Louisiana base rates based upon a proposed 10.35% ROE. SWEPCo subsequently revised the requested annual increase to $114 million to reflect removing hurricane storm restoration costs from the base case filing. The hurricane costs have been requested in a separate storm filing. See “2021 Louisiana Storm Cost Filing” below for more information. The base case filing would extend the formula rate plan for five years and includes modifications to the formula rate plan to allow for forward-looking transmission costs, reflects the impact of net operating losses associated with the acceleration of certain tax benefits and incorporates future federal corporate income tax changes. The proposed net annual increase requests a $32 million annual depreciation increase to recover Louisiana’s share of the Dolet Hills Power Station, Pirkey Power Plant and Welsh Plant, all of which are expected to be retired early.
In July 2021, the LPSC staff filed testimony supporting a $6 million annual increase in base rates based upon a ROE of 9.1% while other intervenors recommended a ROE ranging from 9.35% to 9.8%. The primary differences between SWEPCo’s requested annual increase in base rates and the LPSC staff’s recommendation include: (a) a reduction in depreciation expense, (b) recovery of Dolet Hills Power Station and Pirkey Power Plant in a separate rider mechanism, (c) the rejection of SWEPCo’s proposed adjustment to include a stand-alone net operating loss carryforward deferred tax asset in rate base and (d) a reduction in the proposed ROE.
In September 2021, SWEPCo filed rebuttal testimony supporting a revised requested annual increase in base rates of $95 million. The primary differences in the rebuttal testimony from the previous revised request of $114 million are modifications to the proposed recovery of the Dolet Hills Power Station and revisions to various proposed amortizations. LPSC staff and intervenor responses to SWEPCo’s rebuttal testimony were filed in October 2021. The procedural schedule for the case is on hold due to ongoing settlement discussions.
If any of these costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.
2021 Arkansas Base Rate Case
In July 2021, SWEPCo filed a request with the APSC for an $85 million annual increase in Arkansas base rates based upon a proposed 10.35% ROE with a capital structure of 48.7% debt and 51.3% common equity. The proposed annual increase includes: (a) a $41 million revenue requirement for the North Central Wind Facilities, (b) a $14 million annual depreciation increase primarily due to recovery of the Dolet Hills Power Station through 2026 and Pirkey Plant and Welsh Plant, Units 1 and 3 through 2037 and (c) a $6 million increase due to SPP costs. In January 2022, SWEPCo filed testimony revising the requested annual increase in Arkansas base rates to $81 million. SWEPCo requested that rates become effective in June 2022.
In May 2022, the APSC issued a final order approving an annual revenue increase of $49 million based upon a 9.5% ROE. The order also includes: (a) a capital structure of 55% debt and 45% common equity, (b) approval to recover the Dolet Hills Power Station as a regulatory asset over five years without a return on this investment resulting in an immaterial disallowance in the second quarter of 2022, (c) the denial of accelerated depreciation for the Pirkey Plant and Welsh Plant, Units 1 and 3 and (d) approval of a rider to recover SPP costs and revenues. The final order also denied the inclusion of the stand-alone NOLC in SWEPCo’s deferred tax assets, but included approval of the deferral of the forgone revenue requirement associated with the NOLC and excess NOLC, with recovery of the deferral contingent upon receipt of a supportive private letter ruling from the IRS. Rates were implemented with the first billing cycle of July 2022. In June 2022, SWEPCo filed a motion for rehearing with the APSC challenging the capital structure that was approved. In July 2022, the APSC denied the motion for rehearing.
165
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Other contractual commitments, Due in 2025 | 36 | SEC-NUM |
[Table of Contents](#i02bedaa3ef9a402693e3fc0f0d740b61_7)
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| | | Fiscal Quarter Ended | | Three Fiscal Quarters Ended |
| | | July 31,2022 | | August 1,2021 | | July 31,2022 | | August 1,2021 |
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| | | (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 | |
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| 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:
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| Fiscal Year: | | Purchase Commitments | | Other Contractual Commitments |
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| | | (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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Unrecognized Tax Benefits, Decrease Resulting from Current Period Tax Positions | 1 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)remeasurement of pension and other postretirement benefit obligations. For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.As of December 31, 2021 and 2020, the Company has recorded valuation allowances of $2,423 and $3,094 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss and tax credit carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.During 2021, the Company decreased the valuation allowance by $671. This reflects a tax benefit of $1,206 included in OCI primarily due to the net actuarial gains that resulted from the annual remeasurement of pension assets and liabilities. This was partially offset by tax expense of $512 recorded in continuing operations and an increase of $23 related to the associated federal benefit of state impacts.Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI.The Tax Cuts and Jobs Act (TCJA) one-time repatriation tax and Global Intangible Low Tax Income liabilities effectively taxed the undistributed earnings previously deferred from U.S. income taxes. We have not provided for deferred income taxes on the undistributed earnings from certain non-U.S. subsidiaries because such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any deferred income taxes would not be significant.As of December 31, 2021 and 2020, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant. The amounts of interest included in the Consolidated Statements of Operations were not significant for the years ended December 31, 2021, 2020 and 2019.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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| | 2021 | | 2020 | | 2019 |
| Unrecognized tax benefits – January 1 | $966 | | | $1,476 | | | $2,412 | |
| Gross increases – tax positions in prior periods | 64 | | | 44 | | | 100 | |
| Gross decreases – tax positions in prior periods | (245) | | | (581) | | | (1,418) | |
| Gross increases – current period tax positions | 73 | | | 136 | | | 344 | |
| Gross decreases – current period tax positions | | | | | (1) | |
| Settlements | | | (109) | | | 39 | |
| Statute Lapse | | | | | |
| Unrecognized tax benefits – December 31 | $858 | | | $966 | | | $1,476 | |
As of December 31, 2021, 2020 and 2019, the total amount of unrecognized tax benefits include $790, $734 and $1,287, respectively, that would affect the effective tax rate, if recognized. As of December 31, 2021, these amounts are primarily associated with the amount of research tax credits claimed and various other matters.83
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Proceeds from issuance of long-term debt | 3,992 | SEC-NUM |
[Table of Contents](#i7f92822ddf844c24912627bf68509b56_7)
COSTCO WHOLESALE CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in millions)
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| | 52 Weeks Ended |
| | August 28,2022 | | August 29,2021 | | August 30,2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| Net income including noncontrolling interests | $ | 5,915 | | | $ | 5,079 | | | $ | 4,059 | |
| Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 1,900 | | | 1,781 | | | 1,645 | |
| Non-cash lease expense | 377 | | | 286 | | | 194 | |
| Stock-based compensation | 724 | | | 665 | | | 619 | |
| Other non-cash operating activities, net | 76 | | | 85 | | | 42 | |
| Deferred income taxes | (37) | | | 59 | | | 104 | |
| Changes in operating assets and liabilities: | | | | | |
| Merchandise inventories | (4,003) | | | (1,892) | | | (791) | |
| Accounts payable | 1,891 | | | 1,838 | | | 2,261 | |
| Other operating assets and liabilities, net | 549 | | | 1,057 | | | 728 | |
| Net cash provided by operating activities | 7,392 | | | 8,958 | | | 8,861 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
| Purchases of short-term investments | (1,121) | | | (1,331) | | | (1,626) | |
| Maturities and sales of short-term investments | 1,145 | | | 1,446 | | | 1,678 | |
| Additions to property and equipment | (3,891) | | | (3,588) | | | (2,810) | |
| Acquisitions | — | | | — | | | (1,163) | |
| Other investing activities, net | (48) | | | (62) | | | 30 | |
| Net cash used in investing activities | (3,915) | | | (3,535) | | | (3,891) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
| Proceeds from issuance of long-term debt | — | | | — | | | 3,992 | |
| Repayments of long-term debt | (800) | | | (94) | | | (3,200) | |
| Tax withholdings on stock-based awards | (363) | | | (312) | | | (330) | |
| Repurchases of common stock | (439) | | | (496) | | | (196) | |
| Cash dividend payments | (1,498) | | | (5,748) | | | (1,479) | |
| Dividend to noncontrolling interest | (208) | | | — | | | — | |
| Acquisition of noncontrolling interest | (842) | | | — | | | — | |
| Other financing activities, net | (133) | | | 162 | | | 66 | |
| Net cash used in financing activities | (4,283) | | | (6,488) | | | (1,147) | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (249) | | | 46 | | | 70 | |
| Net change in cash and cash equivalents | (1,055) | | | (1,019) | | | 3,893 | |
| CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 11,258 | | | 12,277 | | | 8,384 | |
| CASH AND CASH EQUIVALENTS END OF YEAR | $ | 10,203 | | | $ | 11,258 | | | $ | 12,277 | |
| | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | |
| Cash paid during the year for: | | | | | |
| Interest | $ | 145 | | | $ | 149 | | | $ | 124 | |
| Income taxes, net | $ | 1,940 | | | $ | 1,527 | | | $ | 1,052 | |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: | | | | | |
| Capital expenditures included in liabilities | $ | 156 | | | $ | 184 | | | $ | 204 | |
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The accompanying notes are an integral part of these consolidated financial statements.
40
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Noncontrolling interest, decrease from deconsolidation | 692 | SEC-NUM |
[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)NOTE 3. DISCONTINUED OPERATIONS Fortive Corporation SeparationOn July 2, 2016, the Company completed the separation of its former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Fortive Corporation (“Fortive”), the entity the Company incorporated to hold such businesses. For the year ended December 31, 2021, the Company recorded an income tax benefit of $86 million related to the release of previously provided reserves associated with uncertain tax positions on certain of the Company’s tax returns which were jointly filed with Fortive entities. These reserves were released due to the expiration of statutes of limitations for those returns. This income tax benefit is included in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings. Envista Holdings Corporation DispositionOn September 20, 2019, Envista Holdings Corporation (“Envista”), completed an initial public offering (“IPO”) of 30.8 million shares of its common stock, which represented 19.4% of Envista’s outstanding shares at the time of the offering, at a public offering price of $22.00 per share. Envista realized net proceeds of $643 million from the IPO, after deducting underwriting discounts and deal expenses.In connection with the completion of the IPO, through a series of equity and other transactions, the Company transferred its dental businesses to Envista (the “Separation”). In exchange, Envista transferred consideration of approximately $2.0 billion to the Company, which consists primarily of the net proceeds from the IPO and approximately $1.3 billion of proceeds from Envista’s term debt financing. The excess of the net book value of the business transferred to Envista over the net proceeds from the IPO was $60 million and was recorded as a reduction to additional paid-in capital in the accompanying Consolidated Balance Sheet. On December 18, 2019, Danaher completed the disposition of the remaining 80.6% ownership of Envista common stock through a split-off exchange offer, which resulted in Danaher’s repurchase of 22.9 million shares of the Company’s common stock in exchange for the remaining shares of Envista held by Danaher (the “Split-Off”). The IPO, Separation and Split-Off are collectively referred to as the “Envista Disposition”. As a result, the Company recognized a gain on the disposition of $451 million in the fourth quarter of 2019. At the time of the disposition, the Company reclassified $109 million of foreign currency translation adjustment losses related to Envista from accumulated other comprehensive income (loss) to the Company’s results of discontinued operations as a component of the net gain on the Envista Disposition. As a result of the IPO, Danaher recorded an increase to noncontrolling interest of $689 million in 2019 for the sale of the Envista common stock and subsequent earnings and other comprehensive income (loss) attributable to the noncontrolling interest. At the time of the Envista Disposition, Danaher decreased noncontrolling interests by $692 million to record the deconsolidation of Envista and the elimination of the noncontrolling interest.The accounting requirements for reporting Envista as a discontinued operation were met when the Split-Off was completed. Accordingly, the Consolidated Financial Statements for all periods presented reflect this business as a discontinued operation. The Company allocated a portion of the consolidated interest expense to discontinued operations based on the ratio of the discontinued business’ net assets to the Company’s consolidated net assets. Envista had revenues of approximately $2.6 billion in 2019 prior to the exchange offer. As a result of the Envista Disposition, the Company incurred $69 million in IPO and Separation-related costs during the year ended December 31, 2019, which are reflected in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings. These costs primarily relate to professional fees associated with preparation of regulatory filings and activities within finance, tax, legal and information technology functions as well as certain investment banking fees and tax costs.Danaher used a portion of the consideration received from Envista to redeem $875 million in aggregate principal amount of outstanding indebtedness in the fourth quarter of 2019 (consisting of the Company’s 2.4% senior unsecured notes due 2020 and 5.0% senior unsecured notes due 2020). The Company incurred make-whole premiums in connection with the redemption of $7 million ($5 million after-tax). The Company used the balance of the consideration it received from Envista to redeem commercial paper borrowings as they matured. In connection with the Envista IPO and Separation, Danaher and Envista entered into various agreements to effect the disposition and provide a framework for their relationship after the Envista Separation, including a separation agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property matters agreement and DANAHER BUSINESS SYSTEM (“DBS”) license agreement. These agreements provide for the allocation between Danaher and Envista of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-76
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Payment of deferred financing costs | 421 | SEC-NUM |
[Table of](#ia143979d54ef4089bc700f871e6b0e92_7) [Contents](#ia143979d54ef4089bc700f871e6b0e92_7)AVALONBAY COMMUNITIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)(Dollars in thousands)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the six months ended |
| | 6/30/2022 | | 6/30/2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 400,642 | | | $ | 590,211 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation expense | 401,088 | | | 367,769 | |
| Amortization of deferred financing costs | 3,950 | | | 3,675 | |
| Amortization of debt discount | 1,387 | | | 1,320 | |
| Gain on extinguishment of debt, net | — | | | (122) | |
| Amortization of stock-based compensation | 17,681 | | | 13,185 | |
| Equity in (income) loss of, and return on, unconsolidated entities and noncontrolling interests, net of eliminations | (1) | | | 2,989 | |
| Real estate casualty loss | — | | | 831 | |
| Abandonment of development pursuits | 738 | | | 685 | |
| Unrealized gain on terminated cash flow hedges | — | | | (2,654) | |
| Cash flow hedge losses reclassified to earnings | 2,026 | | | 4,733 | |
| Gain on sale of real estate assets | (149,284) | | | (412,060) | |
| Gain on sale of for-sale condominiums | (1,469) | | | (706) | |
| Decrease in resident security deposits, prepaid expenses and other assets | (31,336) | | | (16,329) | |
| (Decrease) increase in accrued expenses, other liabilities and accrued interest payable | (5,374) | | | 15,102 | |
| Net cash provided by operating activities | 640,048 | | | 568,629 | |
| | | | |
| Cash flows from investing activities: | | | |
| Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (414,107) | | | (325,692) | |
| Acquisition of real estate assets, including partnership interest | (165,117) | | | (118,572) | |
| Capital expenditures - existing real estate assets | (64,356) | | | (57,157) | |
| Capital expenditures - non-real estate assets | (5,665) | | | (2,584) | |
| Decrease in payables for construction | (5,024) | | | (27,294) | |
| Proceeds from sale of real estate, net of selling costs | 230,660 | | | 575,431 | |
| Proceeds from the sale of for-sale condominiums, net of selling costs | 75,182 | | | 48,655 | |
| Note receivable lending | (6,055) | | | (113) | |
| Note receivable payments | 4,021 | | | 1,556 | |
| Distributions from unconsolidated entities | 2,000 | | | 22,331 | |
| Investments in unconsolidated entities | (8,047) | | | (27,356) | |
| Net cash (used in) provided by investing activities | (356,508) | | | 89,205 | |
| | | | |
| Cash flows from financing activities: | | | |
| Issuance of common stock, net | 2,010 | | | 2,372 | |
| Dividends paid | (445,226) | | | (444,572) | |
| Repayments of mortgage notes payable, including prepayment penalties | (6,427) | | | (34,734) | |
| Repayment of unsecured notes | (100,000) | | | — | |
| Payment of deferred financing costs | (421) | | | — | |
| Receipt for termination of forward interest rate swaps | — | | | 6,962 | |
| Payment to noncontrolling interest | (29) | | | (33) | |
| Payments related to tax withholding for share-based compensation | (16,379) | | | (13,228) | |
| Distributions to DownREIT partnership unitholders | (24) | | | (24) | |
| Distributions to joint venture and profit-sharing partners | (181) | | | (164) | |
| Preferred interest obligation redemption and dividends | (460) | | | (840) | |
| Net cash used in financing activities | (567,137) | | | (484,261) | |
| | | | |
| Net (decrease) increase in cash, cash equivalents and cash in escrow | (283,597) | | | 173,573 | |
| | | | |
| Cash, cash equivalents and cash in escrow, beginning of period | 543,788 | | | 313,532 | |
| Cash, cash equivalents and cash in escrow, end of period | $ | 260,191 | | | $ | 487,105 | |
| | | | |
| Cash paid during the period for interest, net of amount capitalized | $ | 106,443 | | | $ | 101,703 | |
See accompanying notes to Condensed Consolidated Financial Statements.3
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Future commitment to fund | 0.9 | SEC-NUM |
The following table summarizes the capitalized costs related to data center agreements as of June 30, 2022:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Amended IT Services Agreement | | Amended EU IT Services Agreement | | Total |
| | | (in millions) |
| Capitalized costs, beginning balance | | $ | 62.8 | | | $ | 9.0 | | | $ | 71.8 | |
| Capitalized costs incurred | | 0.3 | | | — | | | 0.3 | |
| Impact of foreign currency exchange | | — | | | (1.4) | | | (1.4) | |
| Total capitalized costs, ending balance | | 63.0 | | | 7.6 | | | 70.7 | |
| Total accumulated amortization | | (46.6) | | | (5.4) | | | (52.0) | |
| Net Deferred Kyndryl Costs | | $ | 16.4 | | | $ | 2.3 | | | $ | 18.7 | |
Cloud Services Resale AgreementOn December 31, 2021, the Company and Presidio Networked Solutions LLC (“Presidio”), a reseller of services of Amazon Web Services, Inc. and its affiliates (collectively, “AWS”), entered into an Order Form and AWS Private Pricing Addendum, dated December 31, 2021 (the “Order Form”), to the Cloud Services Resale Agreement, dated December 15, 2017, as amended (together with the Order Form, the “AWS Cloud Agreement”), whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation, management and support of the Company’s cloud global distributed platforms and products. The AWS Cloud Agreement expires on December 31, 2026. Fixed minimums remaining under the AWS Cloud Agreement at June 30, 2022 are $226.8 million in the aggregate through December 31, 2026.InvestmentsThe Company has an equity method investment that is a variable interest in a variable interest entity. The Company is not the primary beneficiary and therefore does not consolidate the investee. The Company’s potential maximum loss exposure related to its unconsolidated investment in this variable interest entity totaled $42.7 million as of June 30, 2022, which represents the carrying value of the Company's investment. In addition, as of June 30, 2022, the Company also has a future commitment to fund $0.9 million to one of the Company’s other investees. Contractual ObligationsThe Company has obligations under the Amended IT Services Agreement, the Amended EU IT Services Agreement, the Private Cloud Agreement, the AWS Cloud Agreement, software license agreements including hosted software arrangements, and software and hardware maintenance and support agreements. The following table summarizes the total expenses related to these agreements:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| | | 2022 | | 2021 | | 2020 |
| | | (in millions) |
| Data center expenses | | $ | 248.0 | | | $ | 204.3 | | | $ | 128.9 | |
| Software license agreements | | 81.9 | | | 63.6 | | | 46.9 | |
| Software/hardware maintenance agreements | | 77.3 | | | 77.5 | | | 72.1 | |
| Total expenses | | $ | 407.1 | | | $ | 345.4 | | | $ | 247.9 | |
91
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Liabilities | 1,147 | SEC-NUM |
The following table summarizes the final acquisition accounting for these combined acquisitions (in thousands):
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Trade and other receivables | | $ | 4,975 | |
| Prepaid expenses and other current assets | | 145 | |
| Property, plant and equipment | | 3,178 | |
| Other long term assets | | 1,049 | |
| Goodwill | | 28,038 | |
| Intangibles | | 42,144 | |
| Liabilities | | (1,147) | |
| Other noncurrent liabilities | | (782) | |
| | | |
| Aggregate purchase price | | $ | 77,600 | |
The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Useful Lives (in Years) | | Value |
| Trade Name and Trademarks | | 5 - Indefinite | | $ | 2,161 | |
| Licensed Software and Technology | | 10 | | 4,400 | |
| Proprietary Technology | | 5 | | 8,400 | |
| Supplier Network | | 10 | | 783 | |
| Customer Relationships | | 9 - 16 | | 26,400 | |
| | | | | |
| | | | | |
| | | | | $ | 42,144 | |
8. Goodwill and Other Intangible AssetsA summary of changes in the Company’s goodwill by reportable segment is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2020 | | Acquisitions | | | | Acquisition AccountingAdjustments | | ForeignCurrency | | December 31, 2021 |
| Segment | | | | | | | | | | | | |
| North America | | $ | 3,400,772 | | | $ | 420,529 | | | | | $ | 398 | | | $ | (7,441) | | | $ | 3,814,258 | |
| Brazil | | 585,861 | | | — | | | | | — | | | (39,713) | | | 546,148 | |
| International | | 732,548 | | | 3,286 | | | | | (1,294) | | | (15,968) | | | 718,572 | |
| | | $ | 4,719,181 | | | $ | 423,815 | | | | | $ | (896) | | | $ | (63,122) | | | $ | 5,078,978 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2019 | | Acquisitions | | | | Acquisition Accounting Adjustments | | ForeignCurrency | | December 31, 2020 |
| Segment | | | | | | | | | | | | |
| North America | | $ | 3,369,173 | | | $ | 24,984 | | | | | $ | (1,908) | | | $ | 8,523 | | | $ | 3,400,772 | |
| Brazil | | 756,975 | | | — | | | | | — | | | (171,114) | | | 585,861 | |
| International | | 706,899 | | | 3,950 | | | | | — | | | 21,699 | | | 732,548 | |
| | | $ | 4,833,047 | | | $ | 28,934 | | | | | $ | (1,908) | | | $ | (140,892) | | | $ | 4,719,181 | |
At December 31, 2021 and 2020, approximately $923.3 million and $793.8 million of the Company’s goodwill is deductible for tax purposes, respectively. Acquisition accounting adjustments recorded in 2021 and 2020 are a result of the Company completing its acquisition accounting and working capital adjustments for certain prior year acquisitions. 76
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Number of shares redeemed (in shares) | 600,000 | SEC-NUM |
THE CHARLES SCHWAB CORPORATIONNotes to Consolidated Financial Statements(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
19. Stockholders’ Equity
Except in connection with the 2020 acquisition of TD Ameritrade as described below, CSC did not issue shares of common stock through external offerings during the years ended December 31, 2021, 2020 or 2019.
On October 6, 2020, the Company completed its acquisition of TD Ameritrade. In conjunction with the acquisition, the Company issued shares of CSC common stock and a new, nonvoting class of CSC common stock. Immediately prior to the acquisition, on October 6, 2020, the Company amended its certificate of incorporation to create the nonvoting class of common stock with 300 million shares authorized for issuance and to increase the number of authorized shares of capital stock by the same amount. Each share of nonvoting common stock has identical rights to common stock, including liquidation and dividend rights, except that holders of nonvoting common stock have no voting rights other than over matters that significantly and adversely affect the rights or preferences of the nonvoting common stock, or as required by applicable law. Holders of nonvoting common stock are restricted from transferring shares except for permitted inside or outside transfers, as defined in the certificate of incorporation. Shares of nonvoting stock transferred in a permitted outside transfer are automatically converted to shares of common stock.
Pursuant to the Merger Agreement, CSC issued approximately 177 million shares of common stock and approximately 77 million shares of nonvoting common stock to TD Bank and its affiliates on October 6, 2020. Those shares of common stock and nonvoting common stock were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act. Following this issuance, TD Bank exchanged an aggregate of approximately 2 million shares of CSC common stock for an equal number of shares of CSC nonvoting common stock and held approximately 79 million shares of nonvoting common stock as of December 31, 2021. TD Bank and its affiliates are not permitted to own more than 9.9% of CSC common stock. This limit is interpreted in accordance with the applicable rules of the Federal Reserve and includes shares of CSC common stock deemed to be beneficially owned directly or indirectly by TD Bank and its affiliates.
On June 1, 2021, the Company redeemed all of the 600,000 outstanding shares of its 6.00% non-cumulative perpetual preferred stock, Series C, and the corresponding 24,000,000 depositary shares, each representing a 1/40th interest in a share of the Series C Preferred Stock. The depositary shares were redeemed at a redemption price of $25 per depositary share for a total of $600 million.
On March 30, 2021, the Company issued and sold 24,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.450% fixed-rate non-cumulative perpetual preferred stock, Series J, $.01 par value, with a liquidation preference of $1,000 per share (equivalent of $25 per Depositary Share). The net proceeds of the offering were $584 million, after deducting the underwriting discount and offering expenses.
On March 18, 2021, the Company issued and sold 2,250,000 depositary shares, each representing a 1/100th ownership interest in a share of 4.000% fixed-rate reset non-cumulative perpetual preferred stock, Series I, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were $2.2 billion, after deducting the underwriting discount and offering expenses.
On December 11, 2020, the Company issued and sold 2,500,000 depositary shares, each representing a 1/100th ownership interest in a share of 4.000% fixed-rate reset non-cumulative perpetual preferred stock, Series H, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were approximately $2.47 billion, after deducting the underwriting discount and offering expenses.
On April 30, 2020, the Company issued and sold 2,500,000 depositary shares, each representing a 1/100th ownership interest in a share of 5.375% fixed-rate reset non-cumulative perpetual preferred stock, Series G, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were approximately $2.47 billion, after deducting the underwriting discount and offering expenses.
On January 30, 2019, CSC publicly announced that its Board of Directors authorized a share repurchase program to repurchase up to $4.0 billion of common stock. The share repurchase authorization does not have an expiration date. There were no repurchases of CSC’s common stock under this authorization during the years ended December 31, 2021 and 2020. During 2019, CSC repurchased 55 million shares of its common stock under this authorization for $2.2 billion.
- 105 -
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Senior Notes, Fair Value | 3.91 | SEC-NUM |
[Table of Contents](#i11f673a761214399ab28a3a12dfa4686_7)
ADOBE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)The fair value of our financial assets and liabilities at December 3, 2021 was determined using the following inputs:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| (in millions) | Fair Value Measurements at Reporting Date Using |
| | | | Quoted Pricesin ActiveMarkets forIdentical Assets | | SignificantOtherObservableInputs | | SignificantUnobservableInputs |
| | Total | | (Level 1) | | (Level 2) | | (Level 3) |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Corporate debt securities | $ | 5 | | | $ | — | | | $ | 5 | | | $ | — | |
| Money market funds | 2,914 | | | 2,914 | | | — | | | — | |
| | | | | | | | |
| Time deposits | 175 | | | 175 | | | — | | | — | |
| | | | | | | | |
| Short-term investments: | | | | | | | |
| Asset-backed securities | 124 | | | — | | | 124 | | | — | |
| Corporate debt securities | 1,425 | | | — | | | 1,425 | | | — | |
| | | | | | | | |
| | | | | | | | |
| Municipal securities | 28 | | | — | | | 28 | | | — | |
| | | | | | | | |
| U.S. Treasury securities | 377 | | | — | | | 377 | | | — | |
| Prepaid expenses and other current assets: | | | | | | | |
| Foreign currency derivatives | 98 | | | — | | | 98 | | | — | |
| Other assets: | | | | | | | |
| Deferred compensation plan assets | 151 | | | 151 | | | — | | | — | |
| | | | | | | | |
| Total assets | $ | 5,297 | | | $ | 3,240 | | | $ | 2,057 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | |
| Accrued expenses: | | | | | | | |
| | | | | | | | |
| Foreign currency derivatives | $ | 8 | | | $ | — | | | $ | 8 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
[See Note 4 for further information regarding the fair value of our financial instruments.](#i11f673a761214399ab28a3a12dfa4686_43) Our fixed income available-for-sale debt securities consist of high quality, investment grade securities from diverse issuers with a weighted average credit rating of AA-. We value these securities based on pricing from independent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Inputs include quoted prices in active markets for identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value, including benchmark yields, issuer spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. We therefore classify all of our fixed income available-for-sale securities as Level 2. We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded. The fair values of our money market funds, time deposits and deferred compensation plan assets, which consist of money market and other mutual funds, are based on quoted prices in active markets at the measurement date.Our over-the-counter foreign currency derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date.Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisThe fair value of our senior notes was $3.91 billion as of September 2, 2022, based on observable market prices in less active markets and categorized as Level 2. [See Note 14 for further details regarding our debt.](#i11f673a761214399ab28a3a12dfa4686_82)17
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Proceeds from issuance of debt | 54 | SEC-NUM |
[Table of Contents](#i329aa562213e420593df15cade55885b_7) NOTE 5: BORROWINGS AND LINES OF CREDIT Long-term debt consisted of the following:
| | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | |
| (In millions) | | | | September 30,2022 | | December 31,2021 |
| | | | | | | |
| | | | | | | |
| 2.242% Notes due February 15, 2025 | | | | $ | 1,200 | | | $ | 2,000 | |
| 2.493% Notes due February 15, 2027 | | | | 900 | | | 1,250 | |
| 2.722% Notes due February 15, 2030 | | | | 2,000 | | | 2,000 | |
| 2.700% Notes due February 15, 2031 | | | | 750 | | | 750 | |
| 3.377% Notes due April 5, 2040 | | | | 1,500 | | | 1,500 | |
| 3.577% Notes due April 5, 2050 | | | | 2,000 | | | 2,000 | |
| | | | | | | |
| | | | | | | |
| Total long-term Notes | | | | 8,350 | | | 9,500 | |
| Japanese Term Loan Facility | | | | 372 | | | — | |
| Other debt (including project financing obligations and finance leases) | | | | 228 | | | 267 | |
| Discounts and debt issuance costs | | | | (61) | | | (71) | |
| Total debt | | | | 8,889 | | | 9,696 | |
| Less: current portion of long-term debt | | | | 219 | | | 183 | |
| Long-term debt, net of current portion | | | | $ | 8,670 | | | $ | 9,513 | |
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Japanese Term Loan FacilityOn July 15, 2022, the Company entered into a five-year, JPY 54 billion (approximately $400 million) senior unsecured term loan facility with MUFG Bank Ltd., as administrative agent and lender, and certain other lenders (the "Japanese Term Loan Facility"). Borrowings under the Japanese Term Loan Facility bear interest at a rate equal to the Tokyo Term Risk Free Rate plus 0.75%. In addition, the Japanese Term Loan Facility is subject to customary covenants including a covenant to maintain a maximum consolidated leverage ratio. On July 25, 2022, the Company borrowed JPY 54 billion under the Japanese Term Loan Facility and used the proceeds to fund a portion of the TCC acquisition and to pay related fees and expenses.
Revolving Credit FacilityOn February 10, 2020, the Company entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures on April 3, 2025 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and cash requirements of the Company. A commitment fee of 0.125% is charged on unused commitments. Borrowings under the Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling and bear interest at a variable interest rate plus a ratings-based margin, which was 125 basis points as of September 30, 2022. As of September 30, 2022, there were no borrowings outstanding under the Revolving Credit Facility.
Commercial Paper ProgramThe Company has a $2.0 billion unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes, including the funding of working capital and potential acquisitions. As of September 30, 2022, there were no borrowings outstanding under the commercial paper program.
Project Financing ArrangementsThe Company is involved in long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued $27 million and $108 million of debt during the nine months ended September 30, 2022 and 2021, respectively. Long-term debt repayments associated with these financing arrangements during the nine months ended September 30, 2022 and 2021 were $70 million and $170 million, respectively.
Debt CovenantsThe Revolving Credit Facility, the indenture for the long-term Notes and the Japanese Term Loan Facility contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of September 30, 2022, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.
12
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Proceeds from issuance of securitized debt | 1,242 | SEC-NUM |
[Table of Contents](#i6f5a02f7aeae4b00b01c55901eb4a1a5_4)DISCOVER FINANCIAL SERVICESCondensed Consolidated Statements of Cash Flows (unaudited)(dollars in millions)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2022 | | 2021 |
| Cash flows provided by operating activities | | | |
| Net income | $ | 1,242 | | | $ | 1,593 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Provision for credit losses | 154 | | | (365) | |
| Deferred income taxes | (10) | | | 232 | |
| Depreciation and amortization | 139 | | | 119 | |
| Amortization of deferred revenues | (76) | | | (74) | |
| Net unrealized and realized losses on investments and other assets | 173 | | | 10 | |
| Other, net | 20 | | | 23 | |
| Changes in assets and liabilities: | | | |
| Increase in other assets | (127) | | | (150) | |
| Increase in accrued expenses and other liabilities | 219 | | | 120 | |
| Net cash provided by operating activities | 1,734 | | | 1,508 | |
| | | | |
| Cash flows provided by investing activities | | | |
| Maturities of other short-term investments | — | | | 2,200 | |
| | | | |
| Maturities of available-for-sale investment securities | 769 | | | 404 | |
| | | | |
| Maturities of held-to-maturity investment securities | 12 | | | 20 | |
| Purchases of held-to-maturity investment securities | (14) | | | (16) | |
| Net change in principal on loans originated for investment | (103) | | | 3,642 | |
| | | | |
| Proceeds from the sale of other investments | 71 | | | — | |
| Purchases of other investments | (23) | | | (21) | |
| | | | |
| Purchases of premises and equipment | (51) | | | (41) | |
| Net cash provided by investing activities | 661 | | | 6,188 | |
| | | | |
| Cash flows used for by financing activities | | | |
| Net change in short-term borrowings | (1,750) | | | — | |
| Net change in deposits | 82 | | | (165) | |
| Proceeds from issuance of securitized debt | 1,242 | | | — | |
| Maturities and repayment of securitized debt | (2,556) | | | (7) | |
| | | | |
| Maturities and repayment of other long-term borrowings | — | | | (163) | |
| Proceeds from issuance of common stock | 2 | | | 2 | |
| Purchases of treasury stock | (944) | | | (119) | |
| | | | |
| Dividends paid on common and preferred stock | (160) | | | (159) | |
| Net cash used for financing activities | (4,084) | | | (611) | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (1,689) | | | 7,085 | |
| Cash, cash equivalents and restricted cash, at the beginning of the period | 11,332 | | | 13,589 | |
| Cash, cash equivalents and restricted cash, at the end of the period | $ | 9,643 | | | $ | 20,674 | |
| | | | |
| Reconciliation of cash, cash equivalents and restricted cash | | | |
| Cash and cash equivalents | $ | 9,625 | | | $ | 20,348 | |
| Restricted cash | 18 | | | 326 | |
| Cash, cash equivalents and restricted cash, at the end of the period | $ | 9,643 | | | $ | 20,674 | |
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See Notes to the Condensed Consolidated Financial Statements.5
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Percent of outstanding amount owned for decision making | 25 | SEC-NUM |
[Table of Contents](#i1c7c95a3a35c4e5dafc8b646de4a8ff7_7)
On May 17, 2021, the Company provided notice of its election to redeem early, on June 16, 2021, the $350.0 million aggregate principal amount outstanding of its 4.20% Senior Notes at a redemption price of $350.0 million plus a make-whole redemption premium of $6.7 million using proceeds from the Company’s 2.625% Senior Notes. In addition, the Company recognized the remaining $1.3 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.20% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.20% Senior Notes as well as $0.4 million of deferred taxes for a total loss on early debt redemption of $8.6 million which was recorded within Other expense - net in the Consolidated Statements of Income.
Issuance of 3.00% Senior Notes in 2020
On April 29, 2020, the Company completed a public offering of $500.0 million in aggregate principal amount of 3.00% Senior Notes due May 2030 (the “3.00% Senior Notes”). The net proceeds from the offering were approximately $494.4 million, after deducting the issuance discount of $0.9 million, the underwriting commission of $3.3 million and offering expenses of $1.4 million. The net proceeds were used to redeem and repay the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes due December 15, 2020 (the “4.50% Senior Notes”) and the related accrued interest and a make-whole redemption premium, with the remaining balance used for general corporate purposes. The 3.00% Senior Notes bear interest at a rate of 3.00% per annum, which is payable semi-annually in arrears on May 1 and November 1 of each year. The 3.00% Senior Notes mature on May 1, 2030.
The Company may redeem all or a portion of the 3.00% Senior Notes at any time prior to maturity at the redemption prices set forth in the Indenture governing the 3.00% Senior Notes. The Indenture and 3.00% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all of the Company’s assets. The terms of the 3.00% Senior Notes also require the Company to make an offer to repurchase the 3.00% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any. The Indenture also provides for customary events of default, which include nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% of the then outstanding 3.00% Senior Notes may declare the principal amount of all of the 3.00% Senior Notes to be due and payable immediately.
On April 27, 2020, the Company provided notice of its election to redeem early, on May 27, 2020, the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes at a redemption price of $300.0 million plus a make-whole redemption premium of $6.8 million and accrued and unpaid interest of $6.1 million using proceeds from the Company’s 3.00% Senior Notes. In addition, the Company recognized the remaining $1.4 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.50% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.50% Senior Notes for a total loss on early debt redemption of $8.4 million which was recorded within Other expense - net in the Consolidated Statements of Income.
Revolving Credit Facility
On May 31, 2019, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, with other agents party thereto. The Credit Agreement consists of a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $800 million with a final maturity date of May 31, 2024. The maturity date may be extended under certain conditions for an additional one-year term. Up to $75 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $50 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis. The Credit Agreement replaced the Company’s prior five-year $700 million credit agreement, dated as of June 23, 2015, which was due to expire in June 2020.
Proceeds of the Revolving Facility are available for use by the Borrowers for acquisitions, working capital and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not exceed $400 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement.
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Number of Manufacturing Facilities | 127 | SEC-NUM |
[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7)
APTIV PLCNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. GENERALGeneral and basis of presentation—“Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC (formerly known as Delphi Automotive PLC), a public limited company formed under the laws of Jersey on May 19, 2011, which completed an initial public offering on November 22, 2011, and its consolidated subsidiaries. On December 4, 2017, following the spin-off of Delphi Technologies, the Company changed its name to Aptiv PLC and its NYSE symbol to “APTV.”The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).Nature of operations—Aptiv is a leading global technology and mobility architecture company primarily serving the automotive sector. We deliver end-to-end mobility solutions enabling our customers' transition to more electrified, software-defined vehicles. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets. Aptiv is one of the largest vehicle technology suppliers and our customers include the 25 largest automotive original equipment manufacturers (“OEMs”) in the world. Aptiv operates 127 major manufacturing facilities and 12 major technical centers utilizing a regional service model that enables the Company to efficiently and effectively serve its global customers from best cost countries. Aptiv has a presence in 46 countries and has approximately 18,900 scientists, engineers and technicians focused on developing market relevant product solutions for its customers.
2. SIGNIFICANT ACCOUNTING POLICIESConsolidation—The consolidated financial statements include the accounts of Aptiv and the subsidiaries in which Aptiv holds a controlling financial or management interest and variable interest entities of which Aptiv has determined that it is the primary beneficiary. Aptiv’s share of the earnings or losses of non-controlled affiliates, over which Aptiv exercises significant influence (generally a 20% to 50% ownership interest), is included in the consolidated operating results using the equity method of accounting. When Aptiv does not have the ability to exercise significant influence (generally when ownership interest is less than 20%), investments in non-consolidated affiliates without readily determinable fair value are measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer, while investments in publicly traded equity securities are measured at fair value based on quoted prices for identical assets on active market exchanges as of each reporting date. The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis. If the Company determines that such a decline has occurred, an impairment loss is recorded, which is measured as the difference between carrying value and estimated fair value. Estimated fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.Intercompany transactions and balances between consolidated Aptiv businesses have been eliminated.During the years ended December 31, 2021, 2020 and 2019, Aptiv received dividends of $6 million, $9 million and $9 million, respectively, from its equity method investments. The dividends were recognized as a reduction to the investment and represented a return on investment included in cash flows from operating activities.Aptiv's equity investments without readily determinable fair value totaled $30 million and $113 million as of December 31, 2021 and 2020, respectively, and are classified within other long-term assets in the consolidated balance sheets. Aptiv's investments in publicly traded equity securities totaled $66 million as of December 31, 2021 and are classified within other long-term assets in the consolidated balance sheet. There were no publicly traded equity securities held as of December 31, 2020. Refer to Note 5. Investments in Affiliates for further information regarding Aptiv's equity investments.Use of estimates—Preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect amounts reported therein. Generally, matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, asset impairments, useful lives of intangible and fixed assets, deferred tax asset valuation allowances, income taxes, pension benefit plan assumptions, accruals related to litigation, warranty costs, environmental remediation costs, contingent consideration arrangements, worker’s compensation accruals and healthcare accruals. Due to the inherent uncertainty involved in making estimates, including the duration and severity of the impacts of the COVID-19 pandemic and the ongoing global supply chain disruptions, actual results reported in future periods may be based upon amounts that differ from those estimates.Revenue recognition—Revenue is measured based on consideration specified in a contract with a customer. Customer contracts generally are represented by a combination of a current purchase order and a current production schedule issued by the customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. From time to time, Aptiv enters into pricing agreements with its customers that provide for 70
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Acquisition of intangible assets | 10,000 | SEC-NUM |
IDEXX LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) (Unaudited)
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| | For the Nine Months EndedSeptember 30, |
| | 2022 | | 2021 |
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| Cash Flows from Operating Activities: | | | |
| Net income | $ | 506,882 | | | $ | 582,073 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 83,180 | | | 76,901 | |
| Impairment charges | 2,346 | | | 5,148 | |
| Provision for credit losses | 5,112 | | | 1,719 | |
| Deferred income taxes | (36,890) | | | 4,049 | |
| Share-based compensation expense | 36,491 | | | 28,042 | |
| Other | 2,032 | | | 2,402 | |
| Changes in assets and liabilities: | | | |
| Accounts receivable | (35,061) | | | (49,050) | |
| Inventories | (99,621) | | | (46,891) | |
| Other assets and liabilities | (87,566) | | | (51,961) | |
| Accounts payable | (3,930) | | | 637 | |
| Deferred revenue | (3,419) | | | (7,487) | |
| Net cash provided by operating activities | 369,556 | | | 545,582 | |
| Cash Flows from Investing Activities: | | | |
| Purchases of property and equipment | (99,609) | | | (87,761) | |
| Acquisition of intangible assets | (10,000) | | | — | |
| Equity investment | (25,000) | | | — | |
| Acquisitions of a business, net of cash acquired | (11,512) | | | (161,166) | |
| Net cash used by investing activities | (146,121) | | | (248,927) | |
| Cash Flows from Financing Activities: | | | |
| Borrowings under revolving credit facility, net | 559,500 | | | — | |
| Payment of senior debt | (75,000) | | | (50,000) | |
| Payments of acquisition-related contingent consideration and holdbacks | (5,730) | | | (1,500) | |
| Repurchases of common stock, net | (745,691) | | | (502,021) | |
| Proceeds from exercises of stock options and employee stock purchase plans | 23,257 | | | 37,428 | |
| Shares withheld for statutory tax withholding payments on restricted stock | (10,552) | | | (15,501) | |
| Net cash used by financing activities | (254,216) | | | (531,594) | |
| Net effect of changes in exchange rates on cash | (14,497) | | | (3,786) | |
| Net decrease in cash and cash equivalents | (45,278) | | | (238,725) | |
| Cash and cash equivalents at beginning of period | 144,454 | | | 383,928 | |
| Cash and cash equivalents at end of period | $ | 99,176 | | | $ | 145,203 | |
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| Supplemental Cash Flow Information: | | | |
| Cash paid for income taxes | $ | 179,720 | | | $ | 96,103 | |
| Unpaid property and equipment, reflected in accounts payable and accrued liabilities | $ | 19,661 | | | $ | 14,734 | |
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| The accompanying notes are an integral part of these condensed consolidated financial statements. |
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Loss to AOCI | 3 | SEC-NUM |
[Table of Contents](#iedef37dc53354d4baa10c50c5095e29f_25)The DB SERP note receivable – related party is Consumers’ portion of a demand note payable issued by CMS Energy to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.6: Retirement BenefitsCMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.In March 2022, CMS Energy and Consumers determined it was probable that 2022 lump-sum payments to participants under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once it is probable such settlements will meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of March 31, 2022 and June 30, 2022. For the six months ended June 30, 2022, CMS Energy, including Consumers, recognized a settlement loss of $8 million; of this amount, $8 million was deferred as a regulatory asset. Consumers recognized a settlement loss of $8 million, all of which was deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years.As a result of the remeasurements, the non-current asset for DB Pension Plan A increased by $113 million from December 31, 2021 at CMS Energy, with an offsetting decrease in the associated regulatory asset of $110 million and a $3 million gain to accumulated other comprehensive loss. At Consumers, the non‑current asset increased by $110 million and the associated regulatory asset decreased by $110 million.75
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Credit facility borrowing capacity | 1.5 | SEC-NUM |
5. DEBT Debt outstanding at September 30, 2022 and December 31, 2021 was as follows:
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| | | September 30, 2022 | | December 31, 2021 |
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| Commercial paper | | $ | 162.4 | | | $ | 321.9 | |
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| Notes, 3.3%, due December 2022 | | 500.0 | | | 500.0 | |
| Notes, 3.95%, due June 2023 | | 400.0 | | | 400.0 | |
| Notes, 2.6%, due December 2024 | | 750.0 | | | 750.0 | |
| Notes, 2.6%, due December 2025 | | 400.0 | | | 400.0 | |
| Notes, 3.25%, due June 2026 | | 275.0 | | | 275.0 | |
| Term loan, due August 2026 | | 700.0 | | | 700.0 | |
| Notes, 5.10%, due December 2027 | | 750.0 | | | — | |
| Debentures, 6.9%, due July 2028 | | 125.0 | | | 125.0 | |
| Notes, 3.1%, due May 2030 | | 600.0 | | | 600.0 | |
| Notes, 2.35%, due September 2031 | | 1,000.0 | | | 1,000.0 | |
| Notes, 7.0%, due July 2037 | | 250.0 | | | 250.0 | |
| Other | | 0.5 | | | 3.2 | |
| Total debt | | 5,912.9 | | | 5,325.1 | |
| Less short-term debt and current maturities | | (1,062.9) | | | (824.8) | |
| Less unamortized discounts and debt issuance costs | | (30.8) | | | (30.2) | |
| Total long-term debt, net | | $ | 4,819.2 | | | $ | 4,470.1 | |
5.1% Senior Notes. In September 2022, we issued $750.0 million aggregate principal amount of 5.1% five-year Senior Notes due 2027 (the "2027 Notes") in an underwritten public offering. Interest on the 2027 Notes accrues at a rate of 5.1% per year and is payable semi-annually in arrears on June 15 and December 15 of each year. The net proceeds of the sale of the 2027 Notes were ultimately used to repay, in October 2022, our then-outstanding $500.0 million 3.30% Senior Notes due December 2022. The remaining proceeds were used for general corporate purposes, including the repayment of borrowings under our commercial paper program. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2027 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
2.35% Senior Notes. In August 2021, we issued $1.0 billion aggregate principal amount of 2.35% ten-year Senior Notes due 2031 (the “2031 Notes”) in an underwritten public offering. Interest on the 2031 Notes accrues at a rate of 2.35% per year and is payable semi-annually in arrears on March 15 and September 15 of each year. The net proceeds of the sale of the 2031 Notes were used to repay our then-outstanding $300.0 million 3.6% Senior Notes due 2021 and $300.0 million Floating Rate Notes due 2021. The remaining proceeds were used for general corporate purposes, including the repayment of borrowings under our commercial paper program and the funding of acquisitions, including our acquisition of Appriss Insights in the fourth quarter of 2021. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2031 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
Senior Credit Facilities. In August 2021, we refinanced our existing unsecured revolving credit facility of $1.1 billion set to expire September 2023, and entered into a new $1.5 billion five-year unsecured revolving credit facility (the “Revolver”) and a new $700.0 million delayed draw term loan (“Term Loan”), collectively known as the “Senior Credit Facilities,” both of which mature in August 2026. Borrowings under the Senior Credit Facilities may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions and for other general corporate purposes. The Revolver includes an option to request a maximum of three one-year extensions of the maturity date, any time after the first anniversary of the closing date of the Revolver. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the Revolver. As of September 30, 2022, there were $162.4 million of outstanding commercial paper notes, $0.4 million of letters of credit outstanding, no outstanding borrowings under the Revolver and $700.0 million outstanding under the Term Loan. Availability under the Revolver was $1,337.2 million at September 30, 2022. 18
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Shares of common stock settled to put and redemption options (in shares) | 105 | SEC-NUM |
AT&T INC.SEPTEMBER 30, 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ContinuedDollars in millions except per share amounts
Convertible Instruments As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, “Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (ASU 2020-06). ASU 2020-06 requires that instruments which may be settled in cash or stock are presumed settled in stock in calculating diluted earnings per share. While our intent is to settle the Series A Cumulative Perpetual Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period.
The following table presents the impact of the adoption of ASU 2020-06 on our diluted earnings per share from continuing operations:
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| | | | Historical Accounting Method | | Effect of Adoption of ASU 2020-061 | | Under ASU 2020-06 |
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| Diluted earnings per share from continuing operations: | | | | | | | | | |
| Three months ended September 30, 2022 | | | | | $ | 0.82 | | | $ | (0.03) | | | $ | 0.79 | |
| Three months ended September 30, 2021 | | | | | $ | 0.64 | | | $ | (0.01) | | | $ | 0.63 | |
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| Nine months ended September 30, 2022 | | | | | $ | 2.08 | | | $ | (0.05) | | | $ | 2.03 | |
| Nine months ended September 30, 2021 | | | | | $ | 2.40 | | | $ | (0.03) | | | $ | 2.37 | |
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| 1See Note 2 for a discussion of the numerator and denominator adjustments. |
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Government Assistance The Financial Accounting Standards Board (FASB) issued ASU No, 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (ASU 2021-10), which requires annual disclosures, beginning with the 2022 Annual Report on Form 10-K, in the notes to the financial statements, about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other guidance. The annual disclosures include terms and conditions, accounting treatment and impacted financial statement lines reflecting the impact of the transactions. ASU 2021-10 will be effective for annual reporting periods beginning after December 15, 2021, which we plan to adopt under prospective application for all in scope government transactions in the financial statements as of our adoption date or thereafter.
Supplier Finance Obligations In September 2022, the FASB issued ASU No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (ASU 2022-04), which establishes interim and annual reporting disclosure requirements about a company’s supplier finance programs for its purchase of goods and services. Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs. ASU 2022-04 will be effective for interim and annual periods beginning after December 15, 2022, with retrospective application, except for the annual rollforward requirement, which becomes effective for annual periods beginning after December 15, 2023, with prospective application. The standard allows early adoption of all requirements. In the year of adoption, the disclosure of payment and other key terms under the programs and outstanding balances under the obligations will also apply to interim reporting dates. We are in the process of evaluating the impact of our adoption of ASU 2022-04.
Subsequent Event
Mobility II Preferred Interests On October 24, 2022, approximately 105 million Mobility preferred interests of the 319 million outstanding were put to AT&T by a third-party investor. We paid approximately $2,600 cash to redeem the Mobility preferred interest, funded with commercial paper borrowings. As of October 31, 2022, we have approximately 213 million Mobility preferred interests outstanding, which have a redemption value of approximately $5,300 and pay cash distributions of $373 per annum, subject to declaration. Under the terms of the Mobility preferred interests, holders can put no more than 107 million interests in any 12-month period. As a result, future puts can be exercised in the fourth quarter of 2023, at the earliest.
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Total lease payments | 483 | SEC-NUM |
[Table of Contents](#i40ca88ef65884b508d3f9e19d0380e84_7)NOTE 17 - LEASESThe lease cost for operating leases were as follows:
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| | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | Six Months Ended June 30, | |
| In millions | 2022 | 2021 | 2022 | 2021 | | |
| Operating lease costs | $ | 28 | | $ | 26 | | $ | 55 | | $ | 53 | | | |
Operating cash flows from operating leases were $56 million and $52 million for the six months ended June 30, 2022 and 2021, respectively.
New operating lease assets and liabilities entered into during the six months ended June 30, 2022 and 2021 were $59 million and $23 million, respectively. Supplemental balance sheet information related to leases was as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| In millions | June 30, 2022 | December 31, 2021 |
| Operating Leases | | |
| Operating lease right-of-use assets 1 | $ | 430 | | $ | 422 | |
| Current operating lease liabilities 2 | 90 | | 92 | |
| Noncurrent operating lease liabilities 3 | 343 | | 337 | |
| Total operating lease liabilities | $ | 433 | | $ | 429 | |
1.Included in "Deferred charges and other assets" in the Condensed Consolidated Balance Sheet.2.Included in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheet.3.Included in "Other noncurrent obligations" in the Condensed Consolidated Balance Sheet.
Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Lease Term and Discount Rate for Operating Leases | June 30, 2022 | December 31, 2021 |
| Weighted-average remaining lease term (years) | 8.32 | 8.50 |
| Weighted average discount rate | 2.14 | % | 2.01 | % |
Maturities of lease liabilities were as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Maturity of Lease Liabilities at June 30, 2022 | Operating Leases |
| In millions |
| Remainder of 2022 | $ | 55 | |
| 2023 | 90 | |
| 2024 | 76 | |
| 2025 | 54 | |
| 2026 | 40 | |
| 2027 and thereafter | 168 | |
| Total lease payments | $ | 483 | |
| Less: Interest | 50 | |
| Present value of lease liabilities | $ | 433 | |
The Company has leases in which it is the lessor, with the largest being a result of the N&B transaction. In connection with the N&B Transaction, DuPont entered into leasing agreements with IFF, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories to IFF. These leases are classified as operating leases and lessor income and related expenses are not significant to the Company's Condensed Consolidated Balance Sheet or interim Consolidated Statement of Operations. Lease agreements where the Company is the lessor have final expirations through 2036.
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Current and other assets | 3,540 | SEC-NUM |
CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)Final Purchase Price AllocationThe fair values are based on management’s analysis including work performed by third party valuation specialists, which were finalized over the one-year measurement period. The following table summarizes the allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed of Former Caesars, with the excess recorded as goodwill as of December 31, 2021:
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| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| (In millions) | Fair Value | | |
| Current and other assets | $ | 3,540 | | | |
| Property and equipment | 13,096 | | | |
| | | | |
| Goodwill | 9,064 | | | |
| Intangible assets (a) | 3,394 | | | |
| Other noncurrent assets | 710 | | | |
| Total assets | $ | 29,804 | | | |
| | | | |
| Current liabilities | $ | 1,771 | | | |
| Financing obligation | 8,149 | | | |
| Long-term debt | 6,591 | | | |
| Noncurrent liabilities | 2,400 | | | |
| Total liabilities | 18,911 | | | |
| Noncontrolling interests | 18 | | | |
| Net assets acquired | $ | 10,875 | | | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Intangible assets consist of gaming rights valued at $396 million, trade names valued at $2.1 billion, the Caesars Rewards programs valued at $523 million and customer relationships valued at $425 million.The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation methodologies under both a market and income approach used for the identifiable net assets acquired in the Former Caesars acquisition make use of Level 3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market pricing for comparable assets.Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the Former Caesars acquisition date. Assets and liabilities held for sale are recorded at fair value, less costs to sell, based on the agreements reached as of the acquisition date, or an income approach.Certain financial assets acquired were determined to have experienced more than insignificant deterioration of credit quality since origination. A reconciliation of the difference between the purchase price of financial assets, including acquired markers, and the face value of the assets is as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Purchase price of financial assets | $ | 95 | |
| Allowance for credit losses at the acquisition date based on the acquirer’s assessment | 89 | |
| Discount attributable to other factors | 2 | |
| Face value of financial assets | $ | 186 | |
The fair value of land was determined using the sales comparable approach. The market data is then adjusted for any significant differences, to the extent known, between the identified comparable sites and the site being valued. The value of building and site improvements was estimated via the income approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and/or economic obsolescence. Non-amortizing intangible assets acquired primarily include trademarks, Caesars Rewards and gaming rights. The fair value for these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach. Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty program, the Company would have to make a stream of payments to a brand or franchise owner in [Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)79
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Operating loss carryforwards, not subject to expiration, net of tax | 544 | SEC-NUM |
FirstEnergy's effective tax rate on continuing operations for 2021 and 2020 was 20.5% and 11.2%, respectively. The increase in effective tax rate was primarily due to:
•The non-deductibility of the DPA monetary penalty;•The absence of a $52 million benefit for reduction in valuation allowances in 2020 from the recognition of deferred gains on prior intercompany generation asset transfers triggered by the FES Debtors’ emergence from bankruptcy and deconsolidation from FirstEnergy’s consolidated federal income tax group;•Lower amortization of investment tax credits due to the absence of a $10 million benefit from accelerated amortization of certain investment credits in 2020;•The absence of a $40 million benefit related to reversals of certain tax regulatory liabilities resulting from the transfer of TMI-2 in 2020;•Additional tax expense of $9 million as a result of the West Virginia legislation that changed income tax apportionment rules discussed above;•Partially offset by a net $81 million increase in uncertain tax position benefits primarily related to reserves on the worthless stock deduction, nondeductible interest under Section 163(j), and certain federal tax credits, discussed below; and •A $34 million benefit in federal tax credits claimed on FirstEnergy’s federal income tax return in 2021.Accumulated deferred income taxes as of December 31, 2021 and 2020, are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | As of December 31, |
| | | 2021 | | 2020 |
| | | (In millions) |
| | | | | |
| Property basis differences | | $ | 5,670 | | | $ | 5,396 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Pension and OPEB | | (570) | | | (769) | |
| | | | | |
| | | | | |
| | | | | |
| AROs | | (21) | | | (28) | |
| Regulatory asset/liability | | 322 | | | 440 | |
| | | | | |
| Deferred compensation | | (155) | | | (165) | |
| | | | | |
| | | | | |
| | | | | |
| Loss carryforwards and tax credits | | (2,040) | | | (1,995) | |
| Valuation reserve | | 484 | | | 496 | |
| | | | | |
| | | | | |
| All other | | (253) | | | (280) | |
| Net deferred income tax liability | | $ | 3,437 | | | $ | 3,095 | |
FirstEnergy has recorded as deferred income tax assets the effect of Federal NOLs and tax credits that will more likely than not be realized through future operations and through the reversal of existing temporary differences. As of December 31, 2021, FirstEnergy's loss carryforwards primarily consisted of $6.9 billion ($1.5 billion, net of tax) of Federal NOL carryforwards that will begin to expire in 2031.
The table below summarizes pre-tax NOL carryforwards and their respective anticipated expirations for state and local income tax purposes of approximately $11.9 billion ($544 million, net of tax) for FirstEnergy, of which approximately $2.7 billion ($136 million, net of tax) is expected to be utilized based on current estimates and assumptions. The ultimate utilization of these NOLs may be impacted by statutory limitations on the use of NOLs imposed by state and local tax jurisdictions, changes in statutory tax rates, and changes in business which, among other things, impact both future profitability and the manner in which future taxable income is apportioned to various state and local tax jurisdictions.
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| | | | | | | | | | | | | | | |
| Expiration Period | | State | | Local |
| | | (In millions) |
| 2022-2026 | | $ | 2,603 | | | $ | 3,783 | |
| 2027-2031 | | 1,390 | | | — | |
| 2032-2036 | | 992 | | | — | |
| 2037-2041 | | 959 | | | — | |
| Indefinite | | 2,157 | | | — | |
| | | $ | 8,101 | | | $ | 3,783 | |
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Cash and Cash Equivalents | 18.2 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
(22) eOne Music SaleOn April 25, 2021, the Company entered into a definitive agreement to sell eOne Music for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. On June 29, 2021, the Company completed the sale of eOne Music for net proceeds of $397.0 million, including the sales price of $385.0 million and $12.0 million of closing adjustments related to working capital and net debt calculations. The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $0.9 million. The Company acquired eOne Music through its acquisition of eOne in December 2019. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million within Loss on Disposal of Business on the Consolidated Statements of Operations for the year ended December 26, 2021. The Company also recorded pre-tax cash transaction expenses of $9.5 million within Selling, Distribution and Administration expenses on the Consolidated Statements of Operations during the second quarter of 2021. The impairment charge was recorded within the Entertainment segment and the transaction costs were recorded within the Corporate and Other segment. The operations of eOne Music did not meet the criteria to be presented as discontinued operations in accordance with Accounting Standards Update No. 2014-08 (ASU 2014-08) Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity and eOne Music did not represent an individually significant component of the Company’s business. Income from operations before income taxes, attributable to eOne Music, was recorded to the Company's Consolidated Statements of Operations, within the Entertainment segment through the sale transaction closing date. Assets of $473.5 million and liabilities of $77.3 million, attributable to eOne Music, were de-consolidated as of the closing date and, as of December 26, 2021, there are no remaining carrying amounts in the Company's Consolidated Balance Sheets.The following table presents the carrying amounts of the major classes of eOne Music assets and liabilities sold on June 29, 2021 and reflects final working capital adjustments.
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (In millions) | December 26,2021 |
| Cash and Cash Equivalents | $ | 18.2 | |
| Goodwill and Other Intangible Assets | 410.3 | |
| Prepaid Expenses | 31.0 | |
| Other Assets | 14.0 | |
| Total Assets | 473.5 | |
| | |
| Accrued Liabilities | 24.4 |
| Deferred Taxes | 36.9 |
| Other Liabilities | 16.0 |
| Total Liabilities | $ | 77.3 | |
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Maximum annual contributions per employee | 75 | SEC-NUM |
[Table of Contents](#ic5e280ddd1ef46fe9ace2a18e7a582b7_7)
14. Net Income Per Share
Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted average number of shares of common stock outstanding during the period and potentially dilutive common shares, including the effect of restricted stock units, performance share awards, and stock options using the treasury stock method. The following table sets forth the computation of the numerators and denominators used in the basic and diluted net income per share amounts:
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| | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended January 31, |
| | 2022 | | 2021 | | 2020 |
| Numerator: | | | | | |
| Net income | $ | 497.0 | | | $ | 1,208.2 | | | $ | 214.5 | |
| Denominator: | | | | | |
| Weighted average shares for basic net income per share | 219.7 | | | 219.4 | | | 219.7 | |
| Effect of dilutive securities | 2.3 | | | 2.7 | | | 2.8 | |
| Weighted average shares for dilutive net income per share | 222.0 | | | 222.1 | | | 222.5 | |
| Basic net income per share | $ | 2.26 | | | $ | 5.51 | | | $ | 0.98 | |
| Diluted net income per share | $ | 2.24 | | | $ | 5.44 | | | $ | 0.96 | |
The computation of diluted net income per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average market value of Autodesk’s stock during the fiscal year. The effect of 0.2 million and 0.1 million potentially anti-dilutive shares were excluded from the computation of diluted net income per share for the fiscal years ended January 31, 2022 and 2021, respectively. There were no potentially anti-dilutive shares excluded from the computation of diluted net income per share for the fiscal year ended January 31, 2020.
15. Retirement Benefit Plans
Pretax Savings Plan
Autodesk has a 401(k) plan that covers nearly all U.S. employees. Eligible employees may contribute up to 75% of their pretax salary, subject to limitations mandated by the Internal Revenue Service. Autodesk makes voluntary cash contributions and matches a portion of employee contributions in cash. Autodesk’s contributions were $24.3 million in fiscal 2022, $21.6 million in fiscal 2021, and $21.4 million in fiscal 2020. Autodesk does not allow participants to invest in Autodesk common stock through the 401(k) plan.
Defined Benefit Pension Plans
Autodesk provides certain defined benefit pension plans to employees located in countries outside of the United States, primarily the United Kingdom, Switzerland, and Japan. The Company deposits funds for specific plans, consistent with the requirements of local law, with insurance companies or third-party trustees, or into government-managed accounts, and accrues for the unfunded portion of the obligation, where material.
The projected benefit obligation was $106.7 million and $110.0 million as of January 31, 2022, and January 31, 2021, respectively. The accumulated benefit obligation was $99.5 million and $105.2 million as of January 31, 2022, and January 31, 2021, respectively. The related fair value of plan assets was $112.5 million and $107.2 million as of January 31, 2022, and January 31, 2021, respectively. Our defined pension plan assets are measured at fair value and consist primarily of insurance contracts categorized as level 2 in the fair value hierarchy and an investment fund valued using net asset value. The insurance contracts represent the immediate cash surrender value of assets managed by qualified insurance companies. The assets held in the investment fund are invested in a diversified growth fund actively managed by a third party.
Autodesk recognized an aggregate pension liability for the funded status of $9.3 million and $12.1 million in “Long-term other liabilities” on the Consolidated Balance Sheet as of January 31, 2022, and January 31, 2021, respectively. Our total net periodic pension plan cost was $2.6 million, $2.8 million and $3.7 million for fiscal years 2022, 2021, and 2020, respectively.
Our expected funding for the plans during fiscal 2023 is approximately $4.8 million.
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Foreign remittance taxes provided on repatriation of foreign earnings | 1 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties, is as follows ($ in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | 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. |
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| |
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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Estimated percentage of total rate increase, step two | 25 | SEC-NUM |
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| FINANCIAL STATEMENTS | REGULATORY MATTERS |
Midwest Propane CavernsDuke Energy Ohio used propane stored in caverns to meet peak demand during winter for several decades. Once the Central Corridor Project was complete and placed in service, the propane peaking facilities were no longer necessary and were retired. On October 7, 2021, Duke Energy Ohio requested deferral treatment of the property, plant and equipment as well as costs related to propane inventory and decommissioning costs. On January 6, 2022, the Staff issued a report recommending deferral authority for costs related to propane inventory and decommissioning costs, but not for the net book value of the remaining plant assets. As a result of the Staff's report, Duke Energy Ohio recorded a $19 million charge to Impairment of assets and other charges on the Condensed Consolidated Statements of Operations and Comprehensive Income in the fourth quarter of 2021. A Stipulation and Recommendation was filed jointly by Duke Energy Ohio and the Staff on April 27, 2022, recommending, among other things, approval of deferral treatment of a portion of the net book value of the property, plant and equipment prior to the 2021 impairment at the time of the next natural gas base rate case, excluding operations and maintenance savings, decommissioning costs not to exceed $7 million and costs related to propane inventory. The Stipulation and Recommendation states that Duke Energy Ohio will seek recovery of the deferral through its next natural gas base rate case proceeding with a proposed amortization period of at least 10 years and include an independent engineering study analyzing the necessity and prudency of the incremental investments made at the facilities since March 31, 2012. Duke Energy Ohio will not seek a return on the deferred amounts. An evidentiary hearing was held on September 8, 2022. On October 5, 2022, the PUCO issued an order approving the Stipulation and Recommendation as filed. As a result of the order, Duke Energy Ohio recorded a reversal of $12 million to Impairment of assets and other charges on the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months and nine months ended September 30, 2022.Duke Energy Indiana2019 Indiana Rate CaseOn July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued an order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction was due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% was due to the approved ROE of 9.7% versus the requested ROE of 10.4% and approximately 20% was related to miscellaneous earnings neutral adjustments. Step one rates were estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates estimated to be the remaining 25% of the total rate increase were approved on July 28, 2021, and implemented in August 2021.Several groups appealed the IURC order to the Indiana Court of Appeals. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court on June 28, 2021. The Indiana Supreme Court issued its opinion on March 10, 2022, finding that the IURC erred in allowing Duke Energy Indiana to recover coal ash costs incurred before the IURC’s rate case order in June 2020. The Indiana Supreme Court found that allowing Duke Energy Indiana to recover coal ash costs incurred between rate cases that exceeded the amount built into base rates violated the prohibition against retroactive ratemaking. The IURC’s order has been remanded to the IURC for additional proceedings consistent with the Indiana Supreme Court’s opinion. As a result of the court's opinion, Duke Energy Indiana recognized pretax charges of approximately $211 million to Impairment of assets and other charges and $46 million to Operating revenues in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022, which the court denied on May 26, 2022. Duke Energy Indiana filed its testimony in the remand proceeding on August 18, 2022. An evidentiary hearing is scheduled to begin January 20, 2023. Duke Energy Indiana cannot predict the outcome of this matter.2020 Indiana Coal Ash Recovery CaseIn Duke Energy Indiana’s 2019 rate case, the IURC also opened a subdocket for post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The OUCC filed a notice of appeal to the Indiana Court of Appeals on December 3, 2021. The OUCC's opening brief was filed on October 12, 2022. Duke Energy Indiana cannot predict the outcome of this matter.TDSIC 2.0On November 23, 2021, Duke Energy Indiana filed for approval of the Transmission, Distribution, Storage Improvement Charge 2.0 investment plan for 2023-2028 (TDSIC 2.0). On June 15, 2022, the IURC approved, without modification, TDSIC 2.0, which includes approximately $2 billion in transmission and distribution investments selected to improve reliability to our customers, harden and improve resiliency of the grid, enable expansion of renewable and distributed energy projects and encourage economic development. In addition, the IURC set up a subdocket to consider the targeted economic development project, which the IURC approved on March 2, 2022. On July 15, 2022, the OUCC filed a notice of appeal to the Indiana Court of Appeals in Duke Energy Indiana’s TDSIC 2.0 proceeding. An appellant brief was filed on October 28, 2022. Duke Energy Indiana cannot predict the outcome of this matter.52
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Property, plant and equipment | 35.9 | SEC-NUM |
THE COOPER COMPANIES, INC. AND SUBSIDIARIESNotes to Consolidated Condensed Financial Statements(Unaudited)
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (In millions) | |
| Current assets: | |
| Cash and cash equivalents | $ | 58.6 | |
| Trade accounts receivable, net | 23.3 | |
| Inventories | 4.0 | |
| Prepaid expense and other current assets | 29.9 | |
| Total current assets | 115.8 | |
| Property, plant and equipment | 35.9 | |
| Operating lease right-of-use assets | 21.4 | |
| Goodwill | 1,230.4 | |
| Customer relationships | 671.9 | |
| Trademarks | 54.9 | |
| Deferred tax assets | 15.7 | |
| Other assets | 0.8 | |
| Total assets acquired | $ | 2,146.8 | |
| | |
| Current liabilities: | |
| Accounts payable | $ | 12.6 | |
| Employee compensation and benefits | 12.3 | |
| Operating lease liabilities | 2.5 | |
| Deferred revenue | 68.4 | |
| Other current liabilities | 15.1 | |
| Total current liabilities | 110.9 | |
| Deferred tax liabilities | 140.3 | |
| Operating lease liabilities | 18.8 | |
| Deferred revenue | 212.5 | |
| Other liabilities | 1.2 | |
| Total liabilities assumed | $ | 483.7 | |
| | |
| Total purchase price | $ | 1,663.1 | |
The purchase accounting is incomplete and subject to change during the measurement period, which may result in material changes to the purchase price allocation. The Company is in the process of finalizing information primarily related to the valuation of intangible assets and property, plant and equipment, the measurement of deferred revenue, the associated deferred tax adjustments and the corresponding impact on goodwill. The Company recorded a measurement period adjustment of $62.2 million to goodwill in the second quarter of fiscal 2022 ended April 30, 2022.
Deferred revenue was recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers, as a result of the adoption of ASU 2021-08. See Note 1. General for additional information.
The Company currently estimates that customer relationships will be amortized over 13 years and trademarks will be amortized over 14 years. Goodwill is primarily attributable to assembled workforce and expected synergies to be achieved. The goodwill recognized is not deductible for tax purposes.
The transaction costs associated with the acquisition consisted primarily of legal, regulatory and financial advisory fees, which were expensed as incurred as selling, general and administrative expense.
Generate's revenue and net income for the period from the acquisition date to April 30, 2022, were $104.8 million and $4.2 million, respectively. The following unaudited pro forma information summarizes the combined results of operations of the Company and Generate as if the acquisition had been completed at the beginning of the Company’s fiscal 2021:
11
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Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months | 115,770 | SEC-NUM |
INVITATION HOMES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollar amounts in thousands)
The table below summarizes our interest rate swap instruments as of December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Agreement Date | | ForwardEffective Date | | MaturityDate | | StrikeRate | | Index | | NotionalAmount |
| April 19, 2018 | | January 31, 2019 | | January 31, 2025 | | 2.86% | | One month LIBOR | | $ | 400,000 | |
| February 15, 2019 | | March 15, 2019 | | March 15, 2022 | | 2.23% | | One month LIBOR | | 800,000 | |
| April 19, 2018 | | March 15, 2019 | | November 30, 2024 | | 2.85% | | One month LIBOR | | 400,000 | |
| April 19, 2018 | | March 15, 2019 | | February 28, 2025 | | 2.86% | | One month LIBOR | | 400,000 | |
| May 8, 2018 | | March 9, 2020 | | June 9, 2025 | | 2.99% | | One month LIBOR | | 325,000 | |
| May 8, 2018 | | June 9, 2020 | | June 9, 2025 | | 2.99% | | One month LIBOR | | 595,000 | |
| June 28, 2018 | | August 7, 2020 | | July 9, 2025 | | 2.90% | | One month LIBOR | | 1,100,000 | |
| December 9, 2019 | | July 15, 2021 | | November 30, 2024 | | 2.90% | | One month LIBOR | | 400,000 | |
| November 7, 2018 | | March 15, 2022 | | July 31, 2025 | | 3.14% | | One month LIBOR | | 400,000 | |
| November 7, 2018 | | March 15, 2022 | | July 31, 2025 | | 3.16% | | One month LIBOR | | 400,000 | |
During the years ended December 31, 2021 and 2020, we terminated interest rate swaps and paid the counterparties $20,798 and $15,249, respectively, in connection with these terminations. During the year ended December 31, 2019, we modified the start date of an interest rate swap and paid the counterparty $8,239 in connection with the modification.During the years ended December 31, 2021, 2020, and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $115,770 will be reclassified to earnings as an increase in interest expense.During the year ended December 31, 2020, we accelerated the reclassification of certain amounts in other comprehensive income to earnings as a result of a portion of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts represented a loss of $3,111 and were recorded as interest expense in the accompanying consolidated statement of operations for the year ended December 31, 2020. We did not accelerate the reclassification of any amounts in other comprehensive income to earnings during the years ended December 31, 2021 and 2019.Non-Designated HedgesConcurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.75% to 7.56%.F-32
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Lessee, Operating Lease, Liability, Payments, Due Year Two | 35 | SEC-NUM |
[Table of Contents](#i43d04c9d26874e33802bdf64c458414a_7)The future minimum payments for leases presented in the consolidated balance sheet at December 31, 2021, follow:
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| | | | |
| 2022 | $ | 46 | | | |
| 2023 | 35 | | | |
| 2024 | 73 | | | |
| 2025 | 27 | | | |
| 2026 | 24 | | | |
| Thereafter | 194 | | | |
| Total payments | 399 | | | |
| Less amount representing interest | (80) | | | |
| Present value of net minimum lease payments | 319 | | | |
| Less current portion | (38) | | | |
| Long-term portion | $ | 281 | | | |
Contractual Obligations. At December 31, 2021, based on applicable prices on that date, FCX has unconditional purchase obligations (including take-or-pay contracts with terms less than one year) of $4.3 billion, primarily comprising the procurement of copper concentrate ($3.1 billion), transportation services ($0.4 billion) and electricity ($0.3 billion). Some of FCX’s unconditional purchase obligations are settled based on the prevailing market rate for the service or commodity purchased. In some cases, the amount of the actual obligation may change over time because of market conditions. Obligations for copper concentrate provide for deliveries of specified volumes to Atlantic Copper at market-based prices. Transportation obligations are primarily for South America contracted ocean freight. Electricity obligations are primarily for long-term power purchase agreements in North America and contractual minimum demand at the South America mines.
FCX’s unconditional purchase obligations by year total $1.6 billion in 2022, $1.5 billion in 2023, $0.5 billion in 2024, $0.2 billion in 2025, $0.2 billion in 2026 and $0.3 billion thereafter. During the three-year period ended December 31, 2021, FCX fulfilled its minimum contractual purchase obligations.
IUPK - Indonesia. On December 21, 2018, FCX completed the transaction with the Indonesia government regarding PT-FI’s long-term mining rights and share ownership. Concurrent with the closing of the transaction, the Indonesia government granted PT-FI an IUPK to replace its former COW, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041, subject to PT-FI completing the development of additional smelting capacity in Indonesia by the end of 2023 (an extension of which has been requested due to COVID-19 mitigation measures subject to the approval of the Indonesia government, refer to Note 12), and fulfilling its defined fiscal obligations to the Indonesia government. The IUPK, and related documentation, contains legal and fiscal terms and is legally enforceable through 2041, assuming the additional extension is received. In addition, FCX, as a foreign investor, has rights to resolve investment disputes with the Indonesia government through international arbitration.
The key fiscal terms set forth in the IUPK include a 25 percent corporate income tax rate, a 10 percent profits tax on net income, and royalty rates of 4 percent for copper, 3.75 percent for gold and 3.25 percent for silver. PT-FI’s royalties totaled $319 million in 2021, $160 million in 2020 and $106 million in 2019.
Dividend distributions from PT-FI to FCX totaled $1.0 billion in 2021 and are subject to a 10 percent withholding tax. There were no dividend distributions from PT-FI to FCX in 2020 or 2019.
The IUPK requires PT-FI to pay export duties of 5 percent, declining to 2.5 percent when smelter development progress exceeds 30 percent and eliminated when development progress for additional smelting capacity in Indonesia exceeds 50 percent. PT-FI had previously agreed to and has been paying export duties since July 2014 (refer to Note 12 for further discussion of disputed export duties). PT-FI’s export duties charged against revenues totaled $218 million in 2021, $92 million in 2020 and $66 million in 2019 (excluding $155 million associated with the historical export duty matter discussed in Note 12).
The IUPK also requires PT-FI to pay surface water taxes of $15 million annually, which began in 2019 and are recognized in production and delivery costs.
157
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Net proceeds from issuance of notes | 982 | SEC-NUM |
[Table](#i433d81903e814837b268e57261b357cb_7) [of Contents](#i433d81903e814837b268e57261b357cb_7)is equal to an initial conversion price of approximately $255.02 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding November 15, 2025, holders may convert their Convertible Notes at their option only under the following circumstances:• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price then in effect on each applicable trading day;• during the five business day period immediately after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the business day immediately prior to the redemption date, but only with respect to the Convertible Notes called for redemption (or deemed called for redemption); or• upon the occurrence of specified corporate events.Irrespective of the foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Additionally, upon the occurrence of a corporate event that constitutes a “make-whole fundamental change” per the indenture, or if we call the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion rate in certain circumstances as described in the indenture. Upon conversion, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.We may not redeem the Convertible Notes prior to February 20, 2024. On or after February 20, 2024 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, we may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, except as otherwise described in the indenture.The net carrying amount of the Convertible Notes as of December 31, 2021 was $986 million, which reflects the $1 billion in principal less unamortized debt issuance costs of $14 million. Interest expense related to the amortization of the debt issuance costs for the Convertible Notes was $3 million during the year ended December 31, 2021. March 2021 Senior Note Issuance. On March 3, 2021, we privately placed $1 billion of senior unsecured notes that are due in March 2031 that bear interest at 2.95%. In May 2021, we completed an offer to exchange these notes for registered notes having substantially the same financial terms and covenants as the original notes (the unregistered and registered notes collectively, the “2.95% Notes”). The 2.95% Notes were issued at a price of 99.081% of the aggregate principal amount. Interest is payable semi-annually in arrears in March and September of each year, beginning September 15, 2021, and the interest rate is subject to adjustment based on certain ratings events. We may redeem some or all of the 2.95% Notes at any time prior to December 15, 2030 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some or all of the 2.95% Notes on or after December 15, 2030 at par plus accrued and unpaid interest, if any. The net proceeds from the issuance of the 2.95% Notes was approximately $982 million after deducting the discount and debt issuance costs. Previous Senior Note Issuances. In prior years, we issued the following senior notes, which are still outstanding as of December 31, 2021:•Euro 650 million of registered senior unsecured notes that are due in June 2022 that bear interest at 2.5% (the “2.5% Notes”). The 2.5% Notes were issued at 99.525% of par resulting in a discount, which is being amortized over their life. Interest is payable annually in arrears in June of each year. We may redeem the 2.5% Notes at our option, at whole or in part, at any time or from time to time. If we elect to redeem the 2.5% Notes prior to March 3, 2022, we may redeem them at a specified “make-whole” premium. If we elect to redeem the 2.5% Notes on or after March 3, 2022, we may redeem them at a redemption price of 100% of the principal plus accrued and unpaid interest. Subject to certain limited exceptions, all payments of interest and principal for the 2.5% Notes will be made in Euros.F- 27
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Long-term debt maturing during year two | 505 | SEC-NUM |
(10) SHORT-TERM BORROWINGS AND LINES OF CREDIT
Short-term borrowings and current maturities of long-term debt are as follows:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | 2020 | | | 2021 | |
| Current maturities of long-term debt | | $ | 322 | | | 538 | |
| Commercial paper | | 838 | | | 334 | |
| Total | | $ | 1,160 | | | 872 | |
| | | | | |
| Interest rate for weighted-average short-term borrowings at year end | | 0.1% | | 0.1% |
In May 2018, the Company entered into a $3.5 billion five-year revolving backup credit facility with various banks, which replaced the April 2014 $3.5 billion facility. The credit facility is maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings under this or previous facilities. The credit facility contains no financial covenants and is not subject to termination based on a change of credit rating or material adverse changes. The facility is unsecured and may be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facility are immaterial.
(11) LONG-TERM DEBTThe details of long-term debt follow:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 2020 | | | 2021 | |
| 4.25% notes due November 2020 | $ | 300 | | | — | |
| 2.625% notes due December 2021 | 500 | | | 500 | |
| 2.625% notes due February 2023 | 500 | | | 500 | |
| 0.375% euro notes due May 2024 | 586 | | | 579 | |
| 3.15% notes due June 2025 | 500 | | | 500 | |
| 1.25% euro notes due October 2025 | 586 | | | 579 | |
| 0.875% notes due October 2026 | 750 | | | 750 | |
| 1.8% notes due October 2027 | 500 | | | 500 | |
| 2.0% euro notes due October 2029 | 586 | | | 579 | |
| 1.95% notes due October 2030 | 500 | | | 500 | |
| 6.0% notes due August 2032 | 250 | | | 250 | |
| 6.125% notes due April 2039 | 250 | | | 250 | |
| 5.25% notes due November 2039 | 300 | | | 300 | |
| 2.75% notes due October 2050 | 500 | | | 500 | |
| Other | 40 | | | 44 | |
| Long-term debt | 6,648 | | | 6,331 | |
| Less: Current maturities | 322 | | | 538 | |
| Total, net | $ | 6,326 | | | 5,793 | |
Long-term debt maturing during each of the four years after 2022 is $505, $592, $497 and $577, respectively. Total interest paid on long-term debt was approximately $156, $163 and $195 in 2021, 2020 and 2019, respectively. During the year, the Company repaid $300 of 4.25% notes that matured in November 2020. In 2020, the Company repaid $500 of 4.875% notes that matured in October 2019. In April 2020, the Company issued $500 of 1.8% notes due October 2027, $500 of 1.95% notes due October 2030 and $500 of 2.75% notes due October 2050. In September 2020, the Company issued $750 of 0.875% notes due October 2026.The Company maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts or share purchase units without a predetermined limit. Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale.45
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Cash paid for business combination | 157,301 | SEC-NUM |
Extra Space Storage Inc.Condensed Consolidated Statements of Cash Flows(amounts in thousands)(unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Six Months Ended June 30, |
| | 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 465,551 | | | $ | 394,080 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 136,973 | | | 118,169 | |
| Amortization of deferred financing costs | 3,933 | | | 4,869 | |
| | | | |
| Non-cash lease expense | 939 | | | 945 | |
| Compensation expense related to stock-based awards | 9,787 | | | 8,635 | |
| Accrual of interest income added to principal of debt securities and notes receivable | (19,235) | | | (17,312) | |
| | | | |
| Gain on real estate transactions | (14,249) | | | (63,883) | |
| Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest | — | | | (6,251) | |
| Distributions from unconsolidated real estate ventures in excess of earnings | 6,204 | | | 3,026 | |
| Changes in operating assets and liabilities: | | | |
| | | | |
| Other assets | 15,789 | | | 5,519 | |
| Accounts payable and accrued expenses | 28,646 | | | 19,063 | |
| Other liabilities | 6,049 | | | (3,172) | |
| Net cash provided by operating activities | 640,387 | | | 463,688 | |
| Cash flows from investing activities: | | | |
| Acquisition of real estate assets | (438,287) | | | (375,209) | |
| Cash paid for business combination | (157,301) | | | — | |
| Development and redevelopment of real estate assets | (29,256) | | | (25,782) | |
| Proceeds from sale of real estate assets and investments in real estate ventures | 39,367 | | | 194,205 | |
| Investment in unconsolidated real estate entities | (76,339) | | | (7,174) | |
| | | | |
| Return of investment in unconsolidated real estate ventures | 342 | | | 31,534 | |
| Issuance and purchase of notes receivable | (204,930) | | | (68,523) | |
| Principal payments received from notes receivable | 223,773 | | | 20,426 | |
| Proceeds from sale of notes receivable | 82,115 | | | 87,298 | |
| Purchase of equipment and fixtures | (9,512) | | | (2,077) | |
| Net cash used in investing activities | (570,028) | | | (145,302) | |
| Cash flows from financing activities: | | | |
| Proceeds from the sale of common stock, net of offering costs | — | | | 273,509 | |
| Proceeds from notes payable and revolving lines of credit | 1,948,657 | | | 2,372,000 | |
| Principal payments on notes payable and revolving lines of credit | (1,915,531) | | | (3,193,025) | |
| Proceeds from issuance of public bonds, net | 400,000 | | | 446,396 | |
| Deferred financing costs | (6,713) | | | (5,403) | |
| | | | |
| Net proceeds from exercise of stock options | — | | | 4,254 | |
| Repurchase of common stock | (63,008) | | | — | |
| Redemption of Operating Partnership units held by noncontrolling interests | (3,504) | | | (472) | |
| Redemption of Preferred B Units for cash | (4,500) | | | — | |
| Proceeds from principal payments on note receivable collateralized by OP Units | — | | | 411 | |
| | | | |
| Dividends paid on common stock | (403,551) | | | (266,317) | |
| Distributions to noncontrolling interests | (28,237) | | | (17,999) | |
| Net cash used in financing activities | (76,387) | | | (386,646) | |
| Net decrease in cash, cash equivalents, and restricted cash | (6,028) | | | (68,260) | |
| Cash, cash equivalents, and restricted cash, beginning of the period | 76,194 | | | 128,009 | |
| Cash, cash equivalents, and restricted cash, end of the period | $ | 70,166 | | | $ | 59,749 | |
| | | | |
| | | | |
| | | | |
11
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Likelihood of no resolution period | 12 | SEC-NUM |
[Table of Contents](#ica158fb683c247fdb170955b492f9216_7)HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)Uncertain Tax PositionsA reconciliation of unrecognized tax benefits is as follows:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | As of October 31, |
| | 2021 | | 2020 | | 2019 |
| | In millions |
| Balance at beginning of year | $ | 2,159 | | | $ | 2,269 | | | $ | 8,826 | |
| Increases: | | | | | |
| For current year's tax positions | 24 | | | 27 | | | 43 | |
| For prior years' tax positions | 64 | | | 40 | | | 37 | |
| Decreases: | | | | | |
| For prior years' tax positions | (31) | | | (71) | | | (17) | |
| Statute of limitations expiration | (44) | | | (17) | | | (38) | |
| Settlements with taxing authorities | (15) | | | (53) | | | (7) | |
| Settlements related to joint and several positions of former Parent | (26) | | | (36) | | | (6,575) | |
| Balance at end of year | $ | 2,131 | | | $ | 2,159 | | | $ | 2,269 | |
Up to $688 million, $731 million and $772 million of Hewlett Packard Enterprise's unrecognized tax benefits at October 31, 2021, 2020 and 2019, respectively, would affect the Company's effective tax rate if realized. Hewlett Packard Enterprise recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in (Provision) benefit for taxes in the Consolidated Statements of Earnings. The Company recognized $17 million of interest expense, $10 million of interest income, and $13 million of interest income in fiscal 2021, 2020, and 2019, respectively. As of October 31, 2021 and 2020, the Company had accrued $136 million and $119 million, respectively, for interest and penalties in the Consolidated Balance Sheets.Hewlett Packard Enterprise is subject to income tax in the U.S. and approximately 90 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.With the resolution of the 2013 through 2015 U.S. Internal Revenue Service ("IRS") tax audits of its former parent in fiscal 2019, Hewlett Packard Enterprise is no longer subject to U.S. federal tax audits for years prior to 2016. With respect to major state and foreign tax jurisdictions, HPE is no longer subject to tax authority examinations for years prior to 2005. Hewlett Packard Enterprise is joint and severally liable for certain pre-Separation state tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by state tax authorities.Hewlett Packard Enterprise engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. Hewlett Packard Enterprise does not expect complete resolution of any IRS audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions, joint and several tax liabilities and other matters. Accordingly, Hewlett Packard Enterprise believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $69 million within the next 12 months.Hewlett Packard Enterprise believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the (Provision) benefit for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.Hewlett Packard Enterprise has not provided for U.S. federal and state income and foreign withholding taxes on $8.9 billion of undistributed earnings and basis differences from non-U.S. operations as of October 31, 2021 because the Company intends to reinvest such earnings indefinitely outside of the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings and basis differences is not practicable. The Company will remit non-indefinitely 97
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Income from discontinued operations, net of tax | 4 | SEC-NUM |
3 | The AES CorporationCondensed Consolidated Statements of Operations(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | |
| | (in millions, except share and per share amounts) |
| Revenue: | | | | | | | |
| Regulated | $ | 976 | | | $ | 768 | | | $ | 2,613 | | | $ | 2,147 | |
| Non-Regulated | 2,651 | | | 2,268 | | | 6,944 | | | 6,224 | |
| Total revenue | 3,627 | | | 3,036 | | | 9,557 | | | 8,371 | |
| Cost of Sales: | | | | | | | |
| Regulated | (896) | | | (644) | | | (2,335) | | | (1,806) | |
| Non-Regulated | (1,839) | | | (1,632) | | | (5,237) | | | (4,413) | |
| Total cost of sales | (2,735) | | | (2,276) | | | (7,572) | | | (6,219) | |
| Operating margin | 892 | | | 760 | | | 1,985 | | | 2,152 | |
| General and administrative expenses | (51) | | | (39) | | | (149) | | | (130) | |
| Interest expense | (276) | | | (242) | | | (813) | | | (669) | |
| Interest income | 100 | | | 71 | | | 270 | | | 212 | |
| Loss on extinguishment of debt | (1) | | | (22) | | | (8) | | | (41) | |
| Other expense | (10) | | | (12) | | | (51) | | | (32) | |
| Other income | 4 | | | 48 | | | 80 | | | 274 | |
| Gain on disposal and sale of business interests | 1 | | | 22 | | | — | | | 81 | |
| | | | | | | | |
| Asset impairment expense | (50) | | | (29) | | | (533) | | | (1,374) | |
| Foreign currency transaction gains (losses) | 8 | | | 29 | | | (60) | | | (8) | |
| | | | | | | | |
| INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 617 | | | 586 | | | 721 | | | 465 | |
| Income tax expense | (145) | | | (126) | | | (186) | | | (75) | |
| Net equity in earnings (losses) of affiliates | (26) | | | 25 | | | (54) | | | (15) | |
| INCOME FROM CONTINUING OPERATIONS | 446 | | | 485 | | | 481 | | | 375 | |
| | | | | | | | |
| Gain from disposal of discontinued businesses | — | | | — | | | — | | | 4 | |
| NET INCOME | 446 | | | 485 | | | 481 | | | 379 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries | (25) | | | (142) | | | (124) | | | (156) | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 223 | |
| AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | | | | | | | |
| Income from continuing operations, net of tax | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 219 | |
| Income from discontinued operations, net of tax | — | | | — | | | — | | | 4 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 223 | |
| BASIC EARNINGS PER SHARE: | | | | | | | |
| Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.63 | | | $ | 0.52 | | | $ | 0.53 | | | $ | 0.32 | |
| Income from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | | | — | | | — | | | 0.01 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.63 | | | $ | 0.52 | | | $ | 0.53 | | | $ | 0.33 | |
| DILUTED EARNINGS PER SHARE: | | | | | | | |
| Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.59 | | | $ | 0.48 | | | $ | 0.50 | | | $ | 0.31 | |
| Income from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | | | — | | | — | | | 0.01 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.59 | | | $ | 0.48 | | | $ | 0.50 | | | $ | 0.32 | |
| DILUTED SHARES OUTSTANDING | 711 | | | 711 | | | 711 | | | 701 | |
See Notes to Condensed Consolidated Financial Statements.
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Repayments of short-term obligations | 6,225 | SEC-NUM |
[Table of Contents](#ie64973d8440d48dda3b140796cb1bc77_7)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)Note 3. Information Relating to the Consolidated Statement of Cash Flows
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine Months EndedSeptember 30 |
| | 2022 | | 2021 |
| | (Millions of dollars) |
| Distributions more (less) than income from equity affiliates includes the following: | | |
| Distributions from equity affiliates | $ | 2,194 | | | $ | 1,838 | |
| (Income) loss from equity affiliates | (6,962) | | | (4,000) | |
| Distributions more (less) than income from equity affiliates | $ | (4,768) | | | $ | (2,162) | |
| Net decrease (increase) in operating working capital was composed of the following: |
| Decrease (increase) in accounts and notes receivable | $ | (4,428) | | | $ | (5,692) | |
| Decrease (increase) in inventories | (2,170) | | | (353) | |
| Decrease (increase) in prepaid expenses and other current assets | (479) | | | (94) | |
| Increase (decrease) in accounts payable and accrued liabilities | 5,282 | | | 3,842 | |
| Increase (decrease) in income and other taxes payable | 2,967 | | | 838 | |
| Net decrease (increase) in operating working capital | $ | 1,172 | | | $ | (1,459) | |
| Net cash provided by operating activities includes the following cash payments: |
| Interest on debt (net of capitalized interest) | $ | 320 | | | $ | 427 | |
| Income taxes | 6,750 | | | 2,943 | |
| Proceeds and deposits related to asset sales and returns of investment consisted of the following gross amounts: | | | |
| Proceeds and deposits related to asset sales | $ | 1,406 | | | $ | 563 | |
| Returns of investment from equity affiliates | 1,079 | | | 23 | |
| Proceeds and deposits related to asset sales and returns of investment | $ | 2,485 | | | $ | 586 | |
| |
| | | | |
| | | | |
| | | | |
| Net sales (purchases) of marketable securities consisted of the following gross amounts: |
| Marketable securities purchased | $ | (9) | | | $ | (3) | |
| Marketable securities sold | 91 | | | 2 | |
| Net sales (purchases) of marketable securities | $ | 82 | | | $ | (1) | |
| Net repayment (borrowing) of loans by equity affiliates consisted of the following gross amounts: | | | |
| Borrowing of loans by equity affiliates | $ | (27) | | | $ | — | |
| Repayment of loans by equity affiliates | 65 | | | 389 | |
| Net repayment (borrowing) of loans by equity affiliates | $ | 38 | | | $ | 389 | |
| Net borrowings (repayments) of short-term obligations consisted of the following gross and net amounts: | | | |
| Proceeds from issuances of short-term obligations | $ | — | | | $ | 4,449 | |
| Repayments of short-term obligations | — | | | (6,225) | |
| Net borrowings (repayments) of short-term obligations with three months or less maturity | 278 | | | (1,851) | |
| Net borrowings (repayments) of short-term obligations | $ | 278 | | | $ | (3,627) | |
| Net sales (purchases) of treasury shares consists of the following gross and net amounts: | | | |
| Shares issued for share-based compensation plans | $ | 5,505 | | | $ | 388 | |
| Shares purchased under share repurchase and deferred compensation plans | (7,505) | | | (633) | |
| Net sales (purchases) of treasury shares | $ | (2,000) | | | $ | (245) | |
| Net contributions from (distributions to) noncontrolling interests consisted of the following gross amounts: | | | |
| Distributions to noncontrolling interests | $ | (107) | | | $ | (51) | |
| Contributions from noncontrolling interests | 4 | | | 17 | |
| Net contributions from (distributions to) noncontrolling interests | $ | (103) | | | $ | (34) | |
The Consolidated Statement of Cash Flows excludes changes to the Consolidated Balance Sheet that did not affect cash.9
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Bridge Facility, Maximum Borrowing Capacity | 11.0 | SEC-NUM |
[Table of Contents](#id353055757fb42afb305a023bc295188_7)and other postretirement benefits, asset retirement obligations, environmental liabilities and loss contingencies, among others. Actual results could differ from those estimates.2. Recent Accounting PronouncementsThere are no recent Accounting Standard Updates issued by the Financial Accounting Standards Board which are expected to materially impact the Company's financial position, operating results or financial disclosures.3. Acquisitions, Dispositions and Plant ClosuresAcquisitionsIn December 2021, the Company acquired the Santoprene™ thermoplastic vulcanizates ("TPV") elastomers business of Exxon Mobil Corporation ("Santoprene") for a purchase price of $1.15 billion in an all-cash transaction. The Company acquired the Santoprene™, Dytron™ and Geolast™ trademarks and product portfolios, customer and supplier contracts and agreements, both production facilities producing TPV, the TPV intellectual property portfolio with associated technical and R&D assets and employees of the TPV elastomer business. The acquisition of Santoprene substantially strengthens our existing elastomers portfolio, allowing the Company to bring a wider range of functionalized solutions into targeted growth areas including future mobility, medical and sustainability. The acquisition was accounted for as a business combination and the acquired operations are included in the Engineered Materials segment. The Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The purchase price allocation was based upon preliminary information and is subject to change if additional information about the facts and circumstances that existed at the acquisition date becomes available. The Company is in the ongoing process of conducting a valuation of the assets acquired and liabilities assumed related to the acquisition, including personal and real property, lease obligations, deferred taxes and intangible assets. The final fair value of the net assets acquired may result in adjustments to these assets and liabilities, including goodwill. During the measurement period, there were no adjustments that materially impacted the Company's goodwill initially recorded.On February 17, 2022, the Company signed a definitive agreement to acquire a majority of the Mobility & Materials business of DuPont de Nemours, Inc. (the "M&M Acquisition") for a purchase price of $11.0 billion, subject to certain adjustments, in an all-cash transaction. The Company will acquire a global production network of 29 facilities, including compounding and polymerization, customer and supplier contracts and agreements, an intellectual property portfolio including approximately 850 patents with associated technical and R&D assets, and expects to acquire approximately 5,000 employees across the manufacturing, technical, and commercial organizations. The acquired operations will be included in the Engineered Materials segment. The Company expects the acquisition to close around the end of 2022, subject to regulatory approvals and customary closing conditions.In connection with the planned M&M Acquisition, also on February 17, 2022, the Company entered into a bridge facility commitment letter with Bank of America, N.A. ("Bank of America") pursuant to which Bank of America has committed to provide, subject to the terms and conditions set forth therein, a 364-day $11.0 billion senior unsecured bridge term loan facility (the "Bridge Facility"). Subsequently, commitments in respect of the Bridge Facility were syndicated to additional financial institutions as contemplated thereby.On March 18, 2022, Celanese, Celanese U.S. and certain subsidiaries entered into a term loan credit agreement (the "Term Loan Credit Agreement"), pursuant to which lenders have committed to provide a tranche of delayed-draw term loans due 364 days from issuance in an amount equal to $500 million and a tranche of delayed-draw term loans due 5 years from issuance in an amount equal to $1.0 billion (the "Term Loan Facility"), which reduced the commitments under the Bridge Facility by a corresponding amount. The Term Loan Facility, subject to the terms and conditions set forth in the Term Loan Credit Agreement, together with the Acquisition Notes (as defined and described below), additional debt financing and the Bridge Facility, will be available to finance the M&M Acquisition, and to pay fees and expenses related thereto. The Term Loan Credit Agreement is guaranteed by Celanese and domestic subsidiaries representing substantially all of the Company's U.S. assets and business operations (the "Subsidiary Guarantors").Amounts outstanding under the 364-day tranche of the Term Loan Credit Agreement will accrue interest at a rate equal to Secured Overnight Financing Rate with an interest period of one or three months ("Term SOFR") plus a margin of 1.00% to 2.00% per annum, or the base rate plus a margin of 0.00% to 1.00%, in each case, based on the Company's senior unsecured debt rating. Amounts outstanding under the 5-year tranche of the Term Loan Credit Agreement will accrue interest at a rate equal to Term SOFR plus a margin of 1.125% to 2.125% per annum, or the base rate plus a margin of 0.125% to 1.125%, in each case, based on the Company's senior unsecured debt rating.10
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Increase in number of shares reserved for issuance (in shares) | 1 | SEC-NUM |
[Table](#i433d81903e814837b268e57261b357cb_7) [of Contents](#i433d81903e814837b268e57261b357cb_7)
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Risk-free interest rate | 0.82 | % |
| Expected volatility | 42.64 | % |
| Expected life (in years) | 5.13 |
| Dividend yield | — | % |
| Weighted-average estimated fair value of options granted during the year | $ | 60.39 | |
There were no options granted during 2020 and options granted in 2019 were immaterial.In 2021, 2020 and 2019, we recognized total stock-based compensation expense of $418 million, $205 million and $241 million. The total income tax benefit related to stock-based compensation expense was $157 million, $44 million and $55 million for 2021, 2020 and 2019. We capitalized $68 million, $36 million and $30 million of stock-based compensation expense associated with the cost of developing internal-use software in 2021, 2020 and 2019.Cash received from stock-based award exercises for the years ended December 31, 2021 and 2020 was $476 million and $301 million. Total current income tax benefits during the years ended December 31, 2021 and 2020 associated with the exercise of stock-based awards held by our employees were $28 million and $1 million.As of December 31, 2021, there was approximately $881 million of unrecognized stock-based compensation expense related to unvested stock-based awards, which is expected to be recognized in expense over a weighted-average period of 2.92 years.Employee Stock Purchase PlanWe have an Employee Stock Purchase Plan (“ESPP”), which allows shares of our common stock to be purchased by eligible employees at three-month intervals at 85% of the fair market value of the stock on the last day of each three-month period. Eligible employees were allowed to contribute up to 15% of their base compensation. During 2021, 2020 and 2019, approximately 194,000, 212,000, and 171,000 shares were purchased under this plan for an average price of $135.38, $84.89 and $99.41 per share. During 2021, our Board of Directors approved an increase in the number of shares reserved for issuance under the ESPP of 1 million shares. As of December 31, 2021, we have reserved approximately 1.2 million shares of our common stock for issuance under the ESPP.NOTE 10 — Income Taxes The following table summarizes our U.S. and foreign income (loss) before income taxes:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| | (In millions) |
| U.S. | $ | (274) | | | $ | (2,354) | | | $ | 172 | |
| Foreign | 236 | | | (797) | | | 603 | |
| Total | $ | (38) | | | $ | (3,151) | | | $ | 775 | |
F- 31
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Estimated amortization expense, Year 2 | 236 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)As of December 31, 2021 and 2020, we had indefinite-lived intangible assets with carrying amounts of $197 relating to trade names. During 2019, we recorded an impairment of $293 within Cost of Sales, as a result of our decision to retire the Aviall brand and trade name. As of December 31, 2021 and 2020, we had an indefinite-lived intangible asset with a carrying amount of $202 related to in process research and development for a next-generation air vehicle.The gross carrying amounts and accumulated amortization of our acquired finite-lived intangible assets were as follows at December 31:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 |
| | GrossCarryingAmount | | AccumulatedAmortization | | GrossCarryingAmount | | AccumulatedAmortization |
| Distribution rights | $2,554 | | | $1,321 | | | $2,812 | | | $1,427 | |
| Product know-how | 553 | | | 413 | | | 553 | | | 384 | |
| Customer base | 1,360 | | | 721 | | | 1,373 | | | 672 | |
| Developed technology | 626 | | | 526 | | | 626 | | | 502 | |
| Other | 301 | | | 250 | | | 303 | | | 238 | |
| Total | $5,394 | | | $3,231 | | | $5,667 | | | $3,223 | |
During 2020, we recorded impairments of $178 within Cost of Sales related to our distribution rights, primarily driven by airlines' decisions to retire certain aircraft. Amortization expense for acquired finite-lived intangible assets for the years ended December 31, 2021 and 2020 was $284 and $317. Estimated amortization expense for the five succeeding years is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2023 | | 2024 | | 2025 | | 2026 |
| Estimated amortization expense | $245 | | | $236 | | | $221 | | | $195 | | | $192 | |
Note 3 – Earnings Per ShareBasic and diluted earnings per share are computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings.Basic earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the basic weighted average common shares outstanding.Diluted earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the diluted weighted average common shares outstanding. 78
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Stock held by employee benefits trusts (in shares) | 0.6 | SEC-NUM |
EQUIFAX INC.CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| (In millions, except par values) | | September 30, 2022 | | December 31, 2021 |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 241.7 | | | $ | 224.7 | |
| Trade accounts receivable, net of allowance for doubtful accounts of $15.5 and $13.9 at September 30, 2022 and December 31, 2021, respectively | | 845.0 | | | 727.6 | |
| Prepaid expenses | | 141.2 | | | 108.4 | |
| Other current assets | | 67.0 | | | 60.2 | |
| Total current assets | | 1,294.9 | | | 1,120.9 | |
| Property and equipment: | | | | |
| Capitalized internal-use software and system costs | | 1,985.3 | | | 1,727.3 | |
| Data processing equipment and furniture | | 306.3 | | | 299.6 | |
| Land, buildings and improvements | | 257.3 | | | 250.3 | |
| Total property and equipment | | 2,548.9 | | | 2,277.2 | |
| Less accumulated depreciation and amortization | | (1,061.9) | | | (961.3) | |
| Total property and equipment, net | | 1,487.0 | | | 1,315.9 | |
| Goodwill | | 6,304.3 | | | 6,258.1 | |
| Indefinite-lived intangible assets | | 94.8 | | | 94.9 | |
| Purchased intangible assets, net | | 1,857.4 | | | 1,898.0 | |
| Other assets, net | | 269.6 | | | 353.1 | |
| Total assets | | $ | 11,308.0 | | | $ | 11,040.9 | |
| LIABILITIES AND EQUITY | | | | |
| Current liabilities: | | | | |
| Short-term debt and current maturities of long-term debt | | $ | 1,062.9 | | | $ | 824.8 | |
| Accounts payable | | 172.9 | | | 211.6 | |
| Accrued expenses | | 221.5 | | | 237.5 | |
| Accrued salaries and bonuses | | 159.5 | | | 257.9 | |
| Deferred revenue | | 107.2 | | | 121.3 | |
| Other current liabilities | | 294.7 | | | 638.2 | |
| Total current liabilities | | 2,018.7 | | | 2,291.3 | |
| Long-term debt | | 4,819.2 | | | 4,470.1 | |
| Deferred income tax liabilities, net | | 419.7 | | | 358.2 | |
| Long-term pension and other postretirement benefit liabilities | | 104.0 | | | 130.1 | |
| Other long-term liabilities | | 170.8 | | | 190.0 | |
| Total liabilities | | 7,532.4 | | | 7,439.7 | |
| Commitments and Contingencies (see Note 6) | | | | |
| | | | | |
| Equifax shareholders' equity: | | | | |
| Preferred stock, $0.01 par value: Authorized shares - 10.0; Issued shares - none | | — | | | — | |
| Common stock, $1.25 par value: Authorized shares - 300.0;Issued shares - 189.3 at September 30, 2022 and December 31, 2021;Outstanding shares - 122.4 and 122.1 at September 30, 2022 and December 31, 2021, respectively | | 236.6 | | | 236.6 | |
| Paid-in capital | | 1,580.1 | | | 1,536.7 | |
| Retained earnings | | 5,195.8 | | | 4,751.6 | |
| Accumulated other comprehensive loss | | (596.2) | | | (295.4) | |
| Treasury stock, at cost, 66.3 shares and 66.6 shares at September 30, 2022 and December 31, 2021, respectively | | (2,651.4) | | | (2,639.2) | |
| Stock held by employee benefit trusts, at cost, 0.6 shares at September 30, 2022 and December 31, 2021 | | (5.9) | | | (5.9) | |
| | | | | |
| Total Equifax shareholders’ equity | | 3,759.0 | | | 3,584.4 | |
| Noncontrolling interests including redeemable noncontrolling interests | | 16.6 | | | 16.8 | |
| Total equity | | 3,775.6 | | | 3,601.2 | |
| Total liabilities and equity | | $ | 11,308.0 | | | $ | 11,040.9 | |
See Notes to Consolidated Financial Statements.7
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Commercial paper, maximum borrowing capacity | 2.5 | SEC-NUM |
Cross-currency swapsTo hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated in foreign currencies, we entered into cross-currency swap contracts. The terms of these contracts effectively convert the interest payments and principal repayments on our 0.41% 2023 Swiss franc Bonds, 2.00% 2026 euro Notes, 5.50% 2026 pound sterling Notes and 4.00% 2029 pound sterling Notes from euros, pounds sterling and Swiss francs to U.S. dollars. These cross-currency swap contracts have been designated as cash flow hedges. For information regarding the terms of these contracts, see Note 18, Derivative instruments.In connection with the redemption of the 1.25% 2022 euro Notes, discussed above, associated cross-currency swap contracts with an aggregate notional amount of €1.25 billion were terminated. Shelf registration statement and other facilitiesAs of December 31, 2021, we have a commercial paper program that allows us to issue up to $2.5 billion of unsecured commercial paper to fund our working-capital needs. As of December 31, 2021 and 2020, we had no amounts outstanding under our commercial paper program.In 2019, we amended and restated our $2.5 billion syndicated, unsecured, revolving credit agreement, which is available for general corporate purposes or as a liquidity backstop to our commercial paper program. The commitments under the revolving credit agreement may be increased by up to $750 million with the agreement of the banks. Each bank that is a party to the agreement has an initial commitment term of five years. This term may be extended for up to two additional one-year periods with the agreement of the banks. Annual commitment fees for this agreement are 0.09% of the unused portion of the facility based on our current credit rating. Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) LIBOR plus 1% or (ii) the highest of (A) the syndication agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50% or (C) one-month LIBOR plus 1%. The agreement contains provisions relating to the determination of successor rates to address the possible phase-out or unavailability of designated reference rates. As of December 31, 2021 and 2020, no amounts were outstanding under this facility.In February 2020, we filed a shelf registration statement with the SEC that allows us to issue unspecified amounts of debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depository shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depository shares. Under this shelf registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance. This shelf registration statement expires in February 2023.Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement includes a financial covenant, which requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (Consolidated EBITDA) to (ii) Consolidated Interest Expense, each as defined and described in the credit agreement. We were in compliance with all applicable covenants under these arrangements as of December 31, 2021.Contractual maturities of debt obligationsThe aggregate contractual maturities of all borrowings due subsequent to December 31, 2021, are as follows (in millions):
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Maturity dates | | Amounts |
| 2022 | | $ | — | |
| 2023 | | 1,517 | |
| 2024 | | 1,400 | |
| 2025 | | 1,500 | |
| 2026 | | 2,746 | |
| Thereafter | | 27,075 | |
| Total | | $ | 34,238 | |
Interest costsInterest costs are expensed as incurred except to the extent such interest is related to construction in progress, in which case interest is capitalized. Interest costs capitalized for the years ended December 31, 2021, 2020 and 2019, were not material. Interest paid, including the ongoing impact of interest rate and cross-currency swap contracts, during the years ended December 31, 2021, 2020 and 2019, were $1.2 billion, $1.2 billion and $1.3 billion, respectively.F-36
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Weighted-average recognition period | 1.6 | SEC-NUM |
[Table of Contents](#i7f92822ddf844c24912627bf68509b56_7)
The following awards were outstanding at the end of 2022:•3,328,000 time-based RSUs, which vest upon continued employment or service over specified periods of time; and•121,000 performance-based RSUs, of which 82,000 were granted to executive officers subject to the determination of the attainment of performance targets for 2022. This determination occurred in September 2022, at which time at least 33% of the units vested, as a result of the long service of all executive officers receiving performance-based RSUs. The remaining awards vest upon continued employment over specified periods of time.The following table summarizes RSU transactions during 2022:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Number ofUnits(in 000’s) | | Weighted-AverageGrant Date FairValue |
| Outstanding at the end of 2021 | 4,349 | | | $ | 257.88 | |
| Granted | 1,679 | | | 476.06 | |
| Vested and delivered | (2,456) | | | 290.18 | |
| Forfeited | (123) | | | 332.84 | |
| | | | |
| Outstanding at the end of 2022 | 3,449 | | | $ | 338.41 | |
The weighted-average grant date fair value of RSUs granted was $476.06, $369.15, and $294.08 in 2022, 2021, and 2020, respectively. The remaining unrecognized compensation cost related to non-vested RSUs at the end of 2022 was $758 and the weighted-average period of time over which this cost will be recognized is 1.6 years. Included in the outstanding balance at the end of 2022 were approximately 1,210,000 RSUs vested but not yet delivered.Summary of Stock-Based CompensationThe following table summarizes stock-based compensation expense and the related tax benefits:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2022 | | 2021 | | 2020 |
| Stock-based compensation expense | $ | 724 | | | $ | 665 | | | $ | 619 | |
| Less recognized income tax benefit | 154 | | | 140 | | | 128 | |
| Stock-based compensation expense, net | $ | 570 | | | $ | 525 | | | $ | 491 | |
56
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Ownership percentage attributable to noncontrolling partner | 4 | SEC-NUM |
[Table of Contents](#ic4907372b5a74ad699ec049e915a6266_10)4. DISCONTINUED OPERATIONS In the first quarter of fiscal year 2021, we recorded a tax benefit of $10.3 primarily from the settlement of a state tax appeal related to the gain on the sale of our former Performance Materials Division in fiscal year 2017. The benefit is reflected within "Income from discontinued operations, net of tax" on our consolidated income statement for the three months ended 31 December 2020. The settlement did not have an impact on our statement of cash flows for the first three months of fiscal year 2021.
5. INVENTORIESThe components of inventories are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | 31 December | | 30 September |
| | | 2021 | | 2021 |
| Finished goods | | $158.5 | | | $150.7 | |
| Work in process | | 25.7 | | | 24.0 | |
| Raw materials, supplies and other | | 303.0 | | | 279.2 | |
| Inventories | | $487.2 | | | $453.9 | |
| | | | | |
| | | | | |
6. EQUITY AFFILIATESEquity Affiliate Investment in Jazan Integrated Gasification and Power Company (“JIGPC”)On 27 October 2021, we made an initial investment of $1.6 billion in Jazan Integrated Gasification and Power Company ("JIGPC"). JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra in the Jazan Economic City, Saudi Arabia. Our investment, which was made primarily in the form of shareholder loans, represents a 55% interest in the joint venture, of which 4% is attributable to the non-controlling partner of Air Products Qudra. Our $1.6 billion investment includes approximately $130 from the non-controlling partner.We expect to make an additional investment in JIGPC of approximately $1 billion in 2023.We determined JIGPC is a variable interest entity for which we are not the primary beneficiary as we do not have the power to direct the activities that are most significant to the economic performance of the joint venture. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Therefore, our investment in JIGPC has been accounted for under the equity method within the Middle East and India segment. Pursuant to the joint venture agreement, cash distributions will include preferred distributions to some shareholders. We record our share of income considering current distributions and projections of cash available to Air Products over the life of the venture.As of 31 December 2021, the carrying value of our investment totaled $1,696.1 and is presented as “Investments in and advances to equity affiliates” on our consolidated balance sheet. Our loss exposure is limited to our investment in the joint venture.JIGPC Joint VentureOn 27 September 2021, JIGPC signed definitive agreements for the acquisition of project assets from Aramco for $12 billion and entered into related project financing for the purchase. JIGPC will complete the acquisition of the project assets, which include power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities, in two phases. The first phase was completed on 27 October 2021 for $7 billion. The second phase is expected to be completed in 2023. JIGPC will commission, operate, and maintain the project assets to supply electricity, steam, hydrogen and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022.JIGPC accounted for the asset transfer as a financing. Accordingly, the joint venture recorded a financing receivable upon acquisition and will recognize financing income over the supply term.13
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Fair value of derivative instruments with credit-risk-related contingent features in a liability position | 187,485 | SEC-NUM |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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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-24 |
| | | | |
9. Financial InstrumentsDerivatives In the normal course of business, we use derivative financial instruments to manage foreign currency exchange rate risk. Derivative transactions are governed by a uniform set of policies and procedures covering areas such as authorization, counterparty exposure and hedging practices. Positions are monitored using techniques such as market value and sensitivity analyses. We do not enter into derivative transactions for trading purposes. We classify cash flows from our derivative programs as cash flows from operating activities in the Consolidated Cash Flows Statements. Certain derivatives give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally limited to the fair value of those contracts that are favorable to us, and the maximum amount of loss due to credit risk, based on the gross fair value of our derivative financial instruments that are in an asset position, was $167,733 as of August 31, 2022. We utilize standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations and for set-off of certain obligations in the event of an insolvency of one of the parties to the transaction. These provisions may reduce our potential overall loss resulting from the insolvency of a counterparty and reduce a counterparty’s potential overall loss resulting from our insolvency. Additionally, these agreements contain early termination provisions triggered by adverse changes in a counterparty’s credit rating, thereby enabling us to accelerate settlement of a transaction prior to its contractual maturity and potentially decrease our realized loss on an open transaction. Similarly, a decrement in our credit rating could trigger a counterparty’s early termination rights, thereby enabling a counterparty to accelerate settlement of a transaction prior to its contractual maturity and potentially increase our realized loss on an open transaction. The aggregate fair value of our derivative instruments with credit-risk-related contingent features that were in a liability position as of August 31, 2022 was $187,485. Our derivative financial instruments consist of deliverable and non-deliverable foreign currency forward contracts. Fair values for derivative financial instruments are based on prices computed using third-party valuation models and are classified as Level 2 in accordance with the three-level hierarchy of fair value measurements. All of the significant inputs to the third-party valuation models are observable in active markets. Inputs include current market-based parameters such as forward rates and yield curves. For additional information related to the three-level hierarchy of fair value measurements, see Note 12 (Retirement and Profit Sharing Plans) to these Consolidated Financial Statements. Cash Flow Hedges Certain of our subsidiaries are exposed to currency risk through their use of our global delivery resources. To mitigate this risk, we use foreign currency forward contracts to hedge the foreign exchange risk of the forecasted intercompany expenses denominated in foreign currencies for up to three years in the future. We have designated these derivatives as cash flow hedges. As of August 31, 2022 and 2021, we held no derivatives that were designated as fair value or net investment hedges. In order for a derivative to qualify for hedge accounting, the derivative must be formally designated as a fair value, cash flow or net investment hedge by documenting the relationship between the derivative and the hedged item. The documentation includes a description of the hedging instrument, the hedged item, the risk being hedged, our risk management objective and strategy for undertaking the hedge, the method for assessing the effectiveness of the hedge and the method for measuring hedge ineffectiveness. Additionally, the hedge relationship must be expected to be highly effective at offsetting changes in either the fair value or cash flows of the hedged item at both inception of the hedge and on an ongoing basis.For a cash flow hedge, the effective portion of the change in estimated fair value of a hedging instrument is recorded in Accumulated other comprehensive loss as a separate component of Shareholders’ Equity and is reclassified into Cost of services in the Consolidated Income Statements during the period in which the hedged transaction is recognized. The amounts related to derivatives designated as cash flow hedges that were reclassified into Cost of services were net gains of $92,275, $102,676 and $48,545 during fiscal 2022, 2021 and 2020, respectively. The ineffective portion of the change in fair value of a cash flow hedge is recognized immediately in Other income (expense), net in the Consolidated Income Statements and for fiscal 2022, 2021 and 2020, was not material. In addition, we did not discontinue any cash flow hedges during fiscal 2022, 2021 or 2020.
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Debt-issuance and debt extinguishment costs | 59.3 | SEC-NUM |
DOLLAR TREE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended |
| | | January 29, | | January 30, | | February 1, |
| (in millions) | | 2022 | | 2021 | | 2020 |
| Cash flows from operating activities: | | | | | | |
| Net income | | $ | 1,327.9 | | | $ | 1,341.9 | | | $ | 827.0 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
| Goodwill impairment | | — | | | — | | | 313.0 | |
| | | | | | | |
| Depreciation and amortization | | 716.0 | | | 686.6 | | | 645.4 | |
| Provision for deferred income taxes | | (23.2) | | | 30.7 | | | 9.1 | |
| Stock-based compensation expense | | 79.9 | | | 83.9 | | | 61.4 | |
| Amortization of debt discount and debt-issuance costs | | 8.9 | | | 4.0 | | | 6.9 | |
| Other non-cash adjustments to net income | | 11.2 | | | 19.0 | | | 24.5 | |
| Loss on debt extinguishment | | 43.8 | | | — | | | — | |
| Changes in operating assets and liabilities: | | | | | | |
| Merchandise inventories | | (940.4) | | | 97.1 | | | 13.6 | |
| Other current assets | | (49.9) | | | 1.7 | | | (8.4) | |
| Other assets | | (2.6) | | | (7.0) | | | 8.2 | |
| Accounts payable | | 403.8 | | | 142.6 | | | (79.8) | |
| Income taxes payable | | (3.7) | | | 23.6 | | | 2.7 | |
| Other current liabilities | | (36.5) | | | 203.4 | | | 24.3 | |
| Other liabilities | | (98.2) | | | 88.2 | | | (14.6) | |
| Operating lease right-of-use assets and liabilities, net | | (5.5) | | | 0.6 | | | 36.5 | |
| Net cash provided by operating activities | | 1,431.5 | | | 2,716.3 | | | 1,869.8 | |
| Cash flows from investing activities: | | | | | | |
| Capital expenditures | | (1,021.2) | | | (898.8) | | | (1,034.8) | |
| Proceeds from governmental grant | | 2.9 | | | — | | | 16.5 | |
| Proceeds from (payments for) fixed asset disposition | | (1.6) | | | 9.1 | | | (1.9) | |
| | | | | | | |
| | | | | | | |
| Net cash used in investing activities | | (1,019.9) | | | (889.7) | | | (1,020.2) | |
| Cash flows from financing activities: | | | | | | |
| Proceeds from long-term debt, net of discount | | 1,197.4 | | | — | | | — | |
| Principal payments for long-term debt | | (1,000.0) | | | (550.0) | | | (500.0) | |
| Debt-issuance and debt extinguishment costs | | (59.3) | | | — | | | — | |
| Proceeds from revolving credit facility | | — | | | 750.0 | | | — | |
| Repayments of revolving credit facility | | — | | | (750.0) | | | — | |
| Proceeds from stock issued pursuant to stock-based compensation plans | | 17.8 | | | 17.0 | | | 15.2 | |
| Cash paid for taxes on exercises/vesting of stock-based compensation | | (42.4) | | | (16.9) | | | (25.0) | |
| Payments for repurchase of stock | | (950.0) | | | (400.0) | | | (200.0) | |
| Net cash used in financing activities | | (836.5) | | | (949.9) | | | (709.8) | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (0.4) | | | 0.9 | | | (0.5) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | (425.3) | | | 877.6 | | | 139.3 | |
| Cash, cash equivalents and restricted cash at beginning of year | | 1,463.6 | | | 586.0 | | | 446.7 | |
| Cash, cash equivalents and restricted cash at end of year | | $ | 1,038.3 | | | $ | 1,463.6 | | | $ | 586.0 | |
| Supplemental disclosure of cash flow information: | | | | | | |
| Cash paid for: | | | | | | |
| Interest, net of amounts capitalized | | $ | 176.1 | | | $ | 152.9 | | | $ | 170.2 | |
| Income taxes | | $ | 363.4 | | | $ | 357.7 | | | $ | 266.8 | |
| Non-cash transactions: | | | | | | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | | $ | 1,495.3 | | | $ | 1,440.2 | | | $ | 1,286.1 | |
| Accrued capital expenditures | | $ | 68.3 | | | $ | 44.9 | | | $ | 51.1 | |
See accompanying Notes to Consolidated Financial Statements46
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Credit rates agreed by subsidiary for each year under settlement related to tax benefits from tax treatment of purchased power agreement | 11 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (a) | These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details. |
Total reclassifications out of accumulated other comprehensive income (loss) (AOCI) for Entergy Louisiana for the years ended December 31, 2021 and 2020 are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Amounts reclassified from AOCI | | Income Statement Location |
| | | 2021 | | 2020 | | |
| | | (In Thousands) | | |
| | | | | | | |
| Pension and other postretirement liabilities | | | | | | |
| Amortization of prior-service costs | | $4,920 | | | $6,179 | | | (a) |
| | | | | | | |
| Amortization of loss | | (2,322) | | | (1,557) | | | (a) |
| Settlement loss | | (2,484) | | | (243) | | | (a) |
| Total amortization | | 114 | | | 4,379 | | | |
| Income taxes | | 19 | | | (1,142) | | | Income taxes |
| Total amortization (net of tax) | | 133 | | | 3,237 | | | |
| | | | | | | |
| Total reclassifications for the period (net of tax) | | $133 | | | $3,237 | | | |
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (a) | These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and other postretirement cost. See Note 11 to the financial statements for additional details. |
NOTE 8. COMMITMENTS AND CONTINGENCIES (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)
Entergy and the Registrant Subsidiaries are involved in a number of legal, regulatory, and tax proceedings before various courts, regulatory authorities, and governmental agencies in the ordinary course of business. While management is unable to predict with certainty the outcome of such proceedings, management does not believe that the ultimate resolution of these matters will have a material adverse effect on Entergy’s results of operations, cash flows, or financial condition. Entergy discusses regulatory proceedings in Note 2 to the financial statements and discusses tax proceedings in Note 3 to the financial statements.
Vidalia Purchased Power Agreement
Entergy Louisiana has an agreement extending through the year 2031 to purchase energy generated by a hydroelectric facility known as the Vidalia project. Entergy Louisiana made payments under the contract of approximately $128.5 million in 2021, $132.7 million in 2020, and $135.5 million in 2019. If the maximum percentage (94%) of the energy is made available to Entergy Louisiana, current production projections would require estimated payments of approximately $137 million in 2022, and a total of $1.23 billion for the years 2023 through 2031. Entergy Louisiana currently recovers the costs of the purchased energy through its fuel adjustment clause.
In an LPSC-approved settlement related to tax benefits from the tax treatment of the Vidalia contract, Entergy Louisiana agreed to credit rates by $11 million each year for up to 10 years, beginning in October 2002. In 144
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Vested but deferred, weighted-average grant-date fair value (in dollars per share) | 80.02 | SEC-NUM |
that is measured against a three-year cumulative target established by the Compensation Committee at the award date and is not tied to the performance of peer companies. Restricted Stock UnitsA summary of the Company’s outstanding RSUs is presented below:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Restricted Stock Units | | Weighted-AverageGrant-DateFair Value |
| Restricted stock units outstanding at December 31, 2020 | 723,726 | | | $ | 95.67 | |
| Grants (1) | 252,613 | | | 143.20 | |
| Vests (2) | (330,053) | | | 96.70 | |
| Forfeitures and adjustments | (18,852) | | | 110.38 | |
| Restricted stock units outstanding at December 31, 2021 | 627,434 | | | $ | 113.84 | |
| Restricted stock units vested, but deferred at December 31, 2021 | 75,270 | | | $ | 80.02 | |
(1)The weighted average grant date fair value for RSUs granted in 2020 and 2019 was $96.33 and $102.86, respectively. (2)The total fair value of RSUs vested was $47.4 million, $32.3 million and $38.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. The following table shows a summary of RSU activity during the years ended December 31, 2021, 2020 and 2019:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | 2021 | | 2020 | | 2019 |
| RSU compensation expense | $ | 32.8 | | | $ | 29.4 | | | $ | 29.5 | |
| Income tax benefit | (5.9) | | | (5.2) | | | (5.3) | |
| RSU compensation expense, net of tax | $ | 26.9 | | | $ | 24.2 | | | $ | 24.2 | |
As of December 31, 2021, there was $22.4 million of unrecognized compensation cost related to outstanding RSUs. That cost is expected to be recognized over a weighted-average period of 0.97 years. Performance Share UnitsA summary of the Company’s outstanding PSUs is presented below:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | PerformanceShare Units | | Weighted-AverageGrant-DateFair Value |
| Performance share units outstanding at December 31, 2020 | 674,099 | | | $ | 101.45 | |
| Grants (1) | 208,040 | | | 148.04 | |
| Vests (2) | (177,157) | | | 123.84 | |
| Performance adjustment (3) | 28,290 | | | 125.57 | |
| Forfeitures and adjustments | (22,156) | | | 107.30 | |
| Performance share units outstanding at December 31, 2021 | 711,116 | | | $ | 110.31 | |
(1)The weighted average grant date fair value for PSUs granted in 2020 and 2019 was $87.53 and $105.23, respectively.(2)The total fair value of PSUs vested was $24.6 million, $24.9 million and $19.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. (3)Represents the change in PSUs issued based upon the attainment of performance goals established by the Company. PSU grants above represent initial target awards and do not reflect potential increases or decreases resulting from the financial performance objectives to be determined at the end of the prospective performance period. The actual number of PSUs to be issued at the end of each performance period will range from 0% to 200% of the initial target awards.F-64
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Milestone payments for net sales of product | 1.05 | SEC-NUM |
[Table of Contents](#ie2ffba3ee5384c86becdb38ff117ca9a_7)Note 15. Subsequent EventVillarisIn October 2022, we announced that we entered into an agreement to acquire Villaris Therapeutics, Inc. ("Villaris"), a biopharmaceutical company focused on the development of novel antibody therapeutics for vitiligo. Under the terms of the agreement, Incyte will acquire Villaris and the exclusive global rights to develop and commercialize auremolimab (VM6), an anti-IL-15Rβ monoclonal antibody, for all uses, including in vitiligo and other autoimmune and inflammatory diseases. Upon effectiveness of the agreement, Incyte will make an upfront payment of $70.0 million, and Villaris shareholders will be eligible for up to $310.0 million upon achievement of certain development and regulatory milestones, as well as up to an additional $1.05 billion in commercial milestones on net sales of the product. The agreement is subject to clearance by the U.S. antitrust authorities under the Hart-Scott-Rodino Act and will become effective as soon as this condition has been met.27
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Marketable securities, maximum maturity period | 24 | SEC-NUM |
[Table of Contents](#ie5b53d08516744208c4d15ed88453ce2_7)
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| | | December 31, 2020 |
| | | Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Level I | | Level II | | Level III |
| Financial Assets: | | | | | | | | | | | | | | |
| Cash Equivalents: | | | | | | | | | | | | | | |
| Money market funds | | $ | 438,854 | | | $ | — | | | $ | — | | | $ | 438,854 | | | $ | 438,854 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Marketable Securities: | | | | | | | | | | | | | | |
| Commercial paper | | 51,211 | | | — | | | — | | | 51,211 | | | — | | | 51,211 | | | — | |
| Certificates of deposits (1) | | 50,136 | | | 3 | | | — | | | 50,139 | | | — | | | 50,139 | | | — | |
| U.S. government notes | | 523,320 | | | 187 | | | (1) | | | 523,506 | | | 523,506 | | | — | | | — | |
| Corporate bonds | | 878,484 | | | 1,167 | | | (330) | | | 879,321 | | | — | | | 879,321 | | | — | |
| Agency securities | | 475,132 | | | 343 | | | (3) | | | 475,472 | | | — | | | 475,472 | | | — | |
| | | 1,978,283 | | | 1,700 | | | (334) | | | 1,979,649 | | | 523,506 | | | 1,456,143 | | | — | |
| Other Assets: | | | | | | | | | | | | | | |
| Money market funds - restricted | | 4,235 | | | — | | | — | | | 4,235 | | | 4,235 | | | — | | | — | |
| Total Financial Assets | | $ | 2,421,372 | | | $ | 1,700 | | | $ | (334) | | | $ | 2,422,738 | | | $ | 966,595 | | | $ | 1,456,143 | | | $ | — | |
| \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ |
| (1) As of December 31, 2020, all of our certificates of deposits were domestic deposits. |
As of December 31, 2021 and 2020, total unrealized losses of our marketable securities were $6.3 million and $0.3 million, respectively, none of which have been in a continuous unrealized loss position for more than 12 months. We invest in marketable securities that have maximum maturities of up to two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. We expect to realize the full value of these investments upon maturity or sale and therefore, we do not consider any of our marketable securities to be impaired as of December 31, 2021 and December 31, 2020. We did not recognize any credit losses or non-credit-related impairments related to our available-for-sale marketable securities for the years ended December 31, 2021, 2020, and 2019. As of December 31, 2021, the contractual maturities of our investments did not exceed 24 months. The fair values of available-for-sale marketable securities, by remaining contractual maturity, are as follows (in thousands):
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| | | December 31, 2021 |
| Due in 1 year or less | | $ | 1,691,472 | |
| Due in 1 year through 2 years | | 1,096,030 | |
| Total marketable securities | | $ | 2,787,502 | |
The weighted-average remaining duration of our current marketable securities is approximately 0.8 years as of December 31, 2021. 84
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Weighted average exercise price exercisable at end of year ($ per share) | 79.99 | 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:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| 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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Foreign currency translation adjustments | 1.3 | SEC-NUM |
[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
determined based on the technology cycle related to each developed technology, as well as the cash flows over the forecast period.
Customer relationships represent the fair value of future projected revenue that will be derived from sales to existing customers of Alaxala. Customer contracts and related relationships were valued using the multi-period excess earnings method. This method reflects the present value of the projected cash flows that are expected to be generated by the customer contracts and relationships less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on historical customer turnover rates.
Trade name relates to the “Alaxala” trade name. The fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name. The economic useful life was determined based on the expected life of the trade name and the cash flows anticipated over the forecast period.
Customer backlog relates to the unfulfilled customer contract orders. Backlog was valued using the multi-period excess earnings method. This method reflects the present value of the projected cash flows that are expected to be generated by the execution of the unfulfilled customer contract orders less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on the anticipated contract orders’ execution timeframe.
In connection with our acquisition of Alaxala, we assumed certain current debt liabilities of $20.2 million as of August 31, 2021. We concluded that the fair value of this debt approximated its book value as of the acquisition date. We repaid this debt in full in September and October 2021. During the post-acquisition period from September 1, 2021 through the repayment dates, interest expense related to Alaxala debt was not material.
The following unaudited pro forma financial information presents the combined results of operations of Fortinet, Inc. and Alaxala, as if Alaxala had been acquired as of the beginning of business on January 1, 2020. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business that would have been achieved if the acquisition had taken place at the beginning of business on January 1, 2020, or of the results of our future operations of the combined business. The following unaudited pro forma financial information for all periods presented includes purchase accounting adjustments for amortization of acquired intangible assets, depreciation of acquired property and equipment, the purchase accounting effect on inventory acquired and related tax effects (in millions):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| | March 31,2021 | | March 31,2020 | | | | |
| Pro forma revenue | $ | 746.6 | | | $ | 612.6 | | | | | |
| Pro forma net income attributable to Fortinet, Inc. | $ | 107.6 | | | $ | 101.4 | | | | | |
ShieldX Networks, Inc.
On March 10, 2021, we closed an acquisition of certain assets and liabilities of ShieldX Networks Inc. (“ShieldX”), a provider of a security platform focusing on protecting multi-cloud data centers from the risk of lateral movement that can lead to attacks such as ransomware, data loss and service disruption, for $10.8 million in cash, of which, $6.2 million was allocated to goodwill.
8. GOODWILL AND OTHER INTANGIBLE ASSETS—Net
Goodwill
The following table presents the changes in the carrying amount of goodwill (in millions):
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Amount |
| Balance—December 31, 2021 | $ | 125.1 | |
| Foreign currency translation adjustments | (1.3) | |
| Balance—March 31, 2022 | $ | 123.8 | |
15
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Costs incurred | 47.4 | SEC-NUM |
[Table of Contents](#i43adbcd383bc4dc48977980bcb999d17_79) HP INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)
Note 14: Litigation and Contingencies HP is involved in lawsuits, claims, investigations and proceedings, including those identified below, consisting of IP, commercial, securities, employment, employee benefits and environmental matters that arise in the ordinary course of business. HP accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. HP believes it has recorded adequate provisions for any such matters and, as of October 31, 2021, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in HP’s financial statements. HP reviews these matters at least quarterly and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Pursuant to the separation and distribution agreement, HP shares responsibility with Hewlett Packard Enterprise for certain matters, as indicated below, and Hewlett Packard Enterprise has agreed to indemnify HP in whole or in part with respect to certain matters. Based on its experience, HP believes that any damage amounts claimed in the specific matters discussed below are not a meaningful indicator of HP’s potential liability. Litigation is inherently unpredictable. However, HP believes it has valid defenses with respect to legal matters pending against it. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies.Litigation, Proceedings and InvestigationsCopyright Levies. Proceedings are ongoing or have been concluded involving HP in certain European countries, challenging the imposition or the modification of levies regimes upon IT equipment (such as PCs or printers) or the restrictions to exonerate the application of private copying levies on devices purchased by business users. The levies are generally based upon the number of products sold and the per-product amounts of the levies, which vary. Some European countries are expected to implement legislation to introduce or extend existing levy schemes to digital devices. HP, other companies and various industry associations have opposed the extension of levies to the digital environment and certain requirements for business sales exemptions, and have advocated alternative models of compensation to rights holders.Based on industry opposition to the extension of levies to digital products, HP’s assessments of the merits of various proceedings and HP’s estimates of the number of units impacted and the amounts of the levies, HP has accrued amounts that it believes are adequate to address the ongoing disputes.Hewlett-Packard Company v. Oracle Corporation. On June 15, 2011, HP filed suit against Oracle Corporation (“Oracle”) in California Superior Court in Santa Clara County in connection with Oracle’s March 2011 announcement that it was discontinuing software support for HP’s Itanium-based line of mission-critical servers. HP asserted, among other things, that Oracle’s actions breached the contract that was signed by the parties as part of the settlement of the litigation relating to Oracle’s hiring of Mark Hurd. In the first phase of the bifurcated trial, the court ruled that the contract at issue required Oracle to continue to offer its software products on HP’s Itanium-based servers for as long as HP decided to sell such servers. In the second phase, the jury returned a verdict in favor of HP, awarding HP approximately $3.0 billion in damages, which included approximately $1.7 billion for past lost profits and $1.3 billion for future lost profits. The court entered judgment for HP for this amount with interest accruing until the judgment is paid. Oracle appealed the trial court’s judgment and HP filed a cross-appeal challenging the trial court’s denial of prejudgment interest. The Court of Appeals affirmed both the trial court’s judgment and its denial of prejudgment interest to HP. Oracle filed a petition with the California Supreme Court for review, which was denied on September 29, 2021. On October 12, 2021, Oracle paid approximately $4.65 billion to satisfy the judgment with interest. During the fourth quarter of fiscal 2021, HP recorded approximately $2.3 billion as a gain (Interest and other, net) in relation to the damages awarded, representing HP’s interest in the amount recovered, which is being shared equally between HP and Hewlett Packard Enterprise, less $47.4 million reimbursed to Hewlett Packard Enterprise for certain costs incurred in the prosecution of the action prior to the Separation. Oracle has until December 28, 2021 to file a petition for certiorari asking the United States Supreme Court for review. Review by the United States Supreme Court is discretionary, and HP believes the likelihood the award of damages will be reduced or reversed is remote.Forsyth, et al. v. HP Inc. and Hewlett Packard Enterprise. This is a purported class and collective action filed on August 18, 2016 in the United States District Court, Northern District of California, against HP and Hewlett Packard Enterprise (“HPE”) alleging the defendants violated federal and state law by terminating older workers and replacing them with younger workers. In their most recent complaint, plaintiffs seek to represent (1) a putative nationwide federal Age Discrimination in Employment Act (ADEA) collective comprised of all former HP Inc. employees 40 years of age and older who had their employment terminated under a WFR plan in or after 2014 or 2015, depending on state law; and (2) a putative Rule 23 class under California law comprised of all former HP Inc. employees 40 years of age and older who had their employment terminated in California under a WFR plan in or after 2012. Excluded from the putative collective and class are employees who (a) signed a Waiver and General Release Agreement at termination, or (b) signed an Agreement to Arbitrate Claims. Similar 106
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Limitation on net operating loss carryforwards resulting from Federal CARES Act | 80 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
Included in the effect of the computation of the changes in deferred tax assets and liabilities is the recognition threshold and measurement of uncertain tax positions resulting in unrecognized tax benefits. The final economic outcome of such unrecognized tax benefits is generally the result of a negotiated settlement with the IRS that often differs from the amount that is recorded as realizable under GAAP. The intrinsic uncertainty with respect to all such tax positions means that the difference between current estimates of such amounts likely to be realized and actual amounts realized upon settlement may have an effect on income tax expense and the regulatory liability for income taxes in future periods.
Entergy anticipates that the effect of TCJA may continue to have ramifications that require adjustments in the future as certain events occur. These events include: 1) IRS audit adjustments to or amendments of federal and state income tax returns that include modifications to the computation of taxable income resulting from TCJA; and 2) additional guidance, interpretations, or rulings by the U.S. Department of the Treasury or the IRS. The potential exists for these types of events to result in future tax expense adjustments because of the difference in the federal corporate income tax rate between past and future periods and the effect of the tax rate change on ratemaking. In turn, these events also could potentially affect the regulatory liability for income taxes.
Coronavirus Aid, Relief, and Economic Security Act
In response to the economic impacts of the COVID-19 pandemic, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law on March 27, 2020. The CARES Act provisions that result in the most significant opportunities for tax relief to Entergy and the Registrant Subsidiaries are (i) permitting a five-year carryback of 2018-2020 NOLs, (ii) removing the 80 percent limitation on NOLs carried to tax years beginning before 2021, (iii) increasing the limitation on interest expense deductibility for 2019 and 2020, (iv) accelerating available refunds for minimum tax credit carryforwards, modifying limitations on charitable contributions during 2020, and (v) delaying the payment of employer payroll taxes. Entergy deferred approximately $64 million of 2020 payroll tax payments, payable in equal installments over two years. The initial installment of $32 million was paid in December 2021. The second installment will be paid in December 2022.
Entergy Wholesale Commodities Restructuring
In the fourth quarter 2019, two separate events occurred resulting in a reduction of tax expense of $174 million. In November 2019 an Entergy Wholesale Commodities subsidiary recognized a reduction in income tax expense of $18 million in connection with the accounting method on power contracts associated with the Palisades nuclear power station. Additionally, Entergy’s ownership of Indian Point 2 and Indian Point 3 was restructured. The restructuring required Entergy to recognize Indian Point 2 and Indian Point 3 nuclear decommissioning liabilities for income tax purposes resulting in a tax accounting permanent difference that reduced income tax expense, net of unrecognized tax benefits, by $156 million. The accrual of the nuclear decommissioning liabilities also required Entergy to recognize a gain for income tax purposes, a portion of which resulted in an increase in the tax basis of the assets. Recognition of the gain and the increase in the tax basis of the assets represents a tax accounting temporary difference.
Immediately prior to the restructuring, through its ownership of Indian Point 2 and Indian Point 3, Entergy donated property to Stony Brook University and recognized an associated tax deduction resulting in a decrease to tax expense of $19 million.
In the fourth quarter 2020, Entergy’s ownership of Palisades was restructured. The restructuring required Entergy to recognize Palisades’ nuclear decommissioning liability for income tax purposes resulting in a tax accounting permanent difference that reduced income tax expense, net of unrecognized tax benefits, by $9.2 million. The accrual of the nuclear decommissioning liability also required Entergy to recognize a gain for income tax purposes, a portion of which resulted in an increase in the tax basis of the assets. Recognition of the gain and the increase in the tax basis of the assets represents a tax accounting temporary difference.
121
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Deferred revenue acquired through acquisition of businesses | 10,591 | SEC-NUM |
[Table of Contents](#i2c45b01857824b67a12ec5acf3b2e95b_7)2. Revenue from Contracts with CustomersCapitalized Contract Acquisition CostsThe table below shows significant movements in capitalized contract acquisition costs (current and noncurrent) for the three months ended December 31, 2021 and 2020 (in thousands):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Three months endedDecember 31, |
| | | 2021 | | 2020 |
| Balance, beginning of period | | $ | 77,836 | | | $ | 70,396 | |
| Additional capitalized contract acquisition costs | | 10,512 | | | 9,725 | |
| Amortization of capitalized contract acquisition costs | | (9,414) | | | (8,152) | |
| Balance, end of period | | $ | 78,934 | | | $ | 71,969 | |
Amortization of capitalized contract acquisition costs was $9.4 million and $8.2 million for the three months ended December 31, 2021 and 2020, respectively, and is recorded in Sales and Marketing expense in the accompanying consolidated income statements. There was no impairment of any capitalized contract acquisition costs during any period presented.Contract BalancesTiming may differ between the satisfaction of performance obligations and the invoicing and collection of amounts related to the Company's contracts with customers. Liabilities are recorded for amounts that the Company has the unconditional right to transfer goods and services under contracts with customers. These liabilities are classified as current and non-current deferred revenue.The table below shows significant movements in the deferred revenue balances (current and noncurrent) for the three months ended December 31, 2021 and 2020 (in thousands):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Three months endedDecember 31, |
| | | 2021 | | 2020 |
| Balance, beginning of period | | $ | 1,489,842 | | | $ | 1,272,632 | |
| Amounts added but not recognized as revenues | | 441,591 | | | 421,918 | |
| Deferred revenue acquired through acquisition of businesses | | 10,591 | | | — | |
| Revenues recognized related to the opening balance of deferred revenue | | (365,525) | | | (335,725) | |
| Balance, end of period | | $ | 1,576,499 | | | $ | 1,358,825 | |
Remaining Performance ObligationsRemaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. As of December 31, 2021, the total non-cancelable remaining performance obligations under the Company's contracts with customers was approximately $1.6 billion and the Company expects to recognize revenues on approximately 65.9% of these remaining performance obligations over the next 12 months, 21.1% in year two, and the remaining balance thereafter.See Note 13, Segment Information, for disaggregated revenue by significant customer and geographic region, as well as disaggregated product revenue by systems and software.3. Fair Value MeasurementsIn accordance with the authoritative guidance on fair value measurements and disclosure under GAAP, the Company determines fair value using a fair value hierarchy that distinguishes between market participant assumptions developed based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances and expands disclosure about fair value measurements.Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date, essentially the exit price.10
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SARs, aggregate intrinsic value, vested and expected to vest | 421 | 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 | |
| | | | | | |
| 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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Less: Interest | 50 | SEC-NUM |
[Table of Contents](#i40ca88ef65884b508d3f9e19d0380e84_7)NOTE 17 - LEASESThe lease cost for operating leases were as follows:
| | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | Six Months Ended June 30, | |
| In millions | 2022 | 2021 | 2022 | 2021 | | |
| Operating lease costs | $ | 28 | | $ | 26 | | $ | 55 | | $ | 53 | | | |
Operating cash flows from operating leases were $56 million and $52 million for the six months ended June 30, 2022 and 2021, respectively.
New operating lease assets and liabilities entered into during the six months ended June 30, 2022 and 2021 were $59 million and $23 million, respectively. Supplemental balance sheet information related to leases was as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| In millions | June 30, 2022 | December 31, 2021 |
| Operating Leases | | |
| Operating lease right-of-use assets 1 | $ | 430 | | $ | 422 | |
| Current operating lease liabilities 2 | 90 | | 92 | |
| Noncurrent operating lease liabilities 3 | 343 | | 337 | |
| Total operating lease liabilities | $ | 433 | | $ | 429 | |
1.Included in "Deferred charges and other assets" in the Condensed Consolidated Balance Sheet.2.Included in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheet.3.Included in "Other noncurrent obligations" in the Condensed Consolidated Balance Sheet.
Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Lease Term and Discount Rate for Operating Leases | June 30, 2022 | December 31, 2021 |
| Weighted-average remaining lease term (years) | 8.32 | 8.50 |
| Weighted average discount rate | 2.14 | % | 2.01 | % |
Maturities of lease liabilities were as follows:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Maturity of Lease Liabilities at June 30, 2022 | Operating Leases |
| In millions |
| Remainder of 2022 | $ | 55 | |
| 2023 | 90 | |
| 2024 | 76 | |
| 2025 | 54 | |
| 2026 | 40 | |
| 2027 and thereafter | 168 | |
| Total lease payments | $ | 483 | |
| Less: Interest | 50 | |
| Present value of lease liabilities | $ | 433 | |
The Company has leases in which it is the lessor, with the largest being a result of the N&B transaction. In connection with the N&B Transaction, DuPont entered into leasing agreements with IFF, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories to IFF. These leases are classified as operating leases and lessor income and related expenses are not significant to the Company's Condensed Consolidated Balance Sheet or interim Consolidated Statement of Operations. Lease agreements where the Company is the lessor have final expirations through 2036.
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Other companies participating | 17 | SEC-NUM |
Baker Hughes CompanyNotes to Unaudited Condensed Consolidated Financial StatementsNOTE 16. COMMITMENTS AND CONTINGENCIESLITIGATIONWe are subject to legal proceedings arising in the ordinary course of our business. Because legal proceedings are inherently uncertain, we are unable to predict the ultimate outcome of such matters. We record a liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. Based on the opinion of management, we do not expect the ultimate outcome of currently pending legal proceedings to have a material adverse effect on our results of operations, financial position or cash flows. However, there can be no assurance as to the ultimate outcome of these matters.In January 2013, INEOS and Naphtachimie initiated expertise proceedings in Aix-en-Provence, France arising out of a fire at a chemical plant owned by INEOS in Lavera, France, which resulted in a 15-day plant shutdown and destruction of a steam turbine, which was part of a compressor train owned by Naphtachimie. The most recent quantification of the alleged damages is €250 million. Two of the Company's subsidiaries (and 17 other companies) were notified to participate in the proceedings. The proceedings are ongoing, and at this time, there is no indication that the Company's subsidiaries were involved in the incident. Although the outcome of the claims remains uncertain, our insurer has accepted coverage and is defending the Company in the expertise proceeding.On July 31, 2018, International Engineering & Construction S.A. ("IEC") initiated arbitration proceedings in New York administered by the International Center for Dispute Resolution ("ICDR") against the Company and its subsidiaries arising out of a series of sales and service contracts entered between IEC and the Company’s subsidiaries for the sale and installation of LNG plants and related power generation equipment in Nigeria ("Contracts"). Prior to the filing of the IEC Arbitration, the Company’s subsidiaries made demands for payment due under the Contracts. On August 15, 2018, the Company’s subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018, IEC filed a Petition to Compel Arbitration in the United States District Court for the Southern District of New York against the Company seeking to compel non-signatory Baker Hughes entities to participate in the arbitration filed by IEC. The complaint is captioned International Engineering & Construction S.A. et al. v. Baker Hughes, a GE company, LLC, et al. No. 18-cv-09241 ("S.D.N.Y 2018"); this action was dismissed by the Court on August 13, 2019. In the arbitration, IEC alleges breach of contract and other claims against the Company and its subsidiaries and seeks recovery of alleged compensatory damages, in addition to reasonable attorneys' fees, expenses and arbitration costs. On March 15, 2019, IEC amended its request for arbitration to alleged damages of $591 million of lost profits plus unspecified additional costs based on alleged non-performance of the contracts in dispute. The arbitration hearing was held from December 9, 2019 to December 20, 2019. On March 3, 2020, IEC amended their damages claim to $700 million of alleged loss cash flow or, in the alternative, $244.9 million of lost profits and various costs based on alleged non-performance of the contracts in dispute, and in addition $4.8 million of liquidated damages, $58.6 million in take-or-pay costs of feed gas, and unspecified additional costs of rectification and take-or-pay future obligations, plus unspecified interest and attorneys' fees. On May 3, 2020, the arbitration panel dismissed IEC's request for take-or-pay damages. On May 29, 2020, IEC quantified their claim for legal fees at $14.2 million and reduced their alternative claim from $244.9 million to approximately $235 million. The Company and its subsidiaries have contested IEC’s claims and are pursuing claims for compensation under the contracts. On October 31, 2020, the ICDR notified the arbitration panel’s final award, which dismissed the majority of IEC’s claims and awarded a portion of the Company’s claims. On January 27, 2021, IEC filed a petition to vacate the arbitral award in the Supreme Court of New York, County of New York. On March 5, 2021, the Company filed a petition to confirm the arbitral award, and on March 8, 2021, the Company removed the matter to the United States District Court for the Southern District of New York. On November 16, 2021, the court granted the Company's petition to confirm the award and denied IEC's petition to vacate. During the second quarter of 2022, IEC paid the amounts owed under the arbitration award, which had an immaterial impact on the Company’s financial statements. On February 3, 2022, IEC initiated another arbitration proceeding in New York administered by the ICDR against certain of the Company’s subsidiaries arising out of the same project which formed the basis of the first arbitration. On March 25, 2022, the Company's subsidiaries initiated a separate demand for ICDR arbitration against IEC for claims of additional costs and amounts due. At this time, we are not able to predict the outcome of this proceeding.On March 15, 2019 and March 18, 2019, the City of Riviera Beach Pension Fund and Richard Schippnick, respectively, filed in the Delaware Court of Chancery shareholder derivative lawsuits for and on the Company’s Baker Hughes Company 2022 Third Quarter Form 10-Q | 23
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2021 Projected ENEC Cost Incease | 18 | SEC-NUM |
2021 and 2022 ENEC (Expanded Net Energy Cost) Filings
In April 2021, APCo and WPCo (the Companies) requested a $73 million annual increase in ENEC rates based on a cumulative combined $55 million ENEC under-recovery as of February 28, 2021 and a combined $18 million increase in projected ENEC costs for the period September 2021 through August 2022. In September 2021, the WVPSC issued an order approving a $7 million overall increase in ENEC rates, including an approval for recovery of the Companies’ cumulative $55 million ENEC under-recovery balance and a $48 million reduction in projected costs for the period September 2021 through August 2022. Subsequently, the Companies submitted a request for reconsideration of this order, identifying flaws in the WVPSC’s calculation of forecasted future year fuel expense and purchased power costs.
In March 2022, the WVPSC issued an order granting the Companies’ request for reconsideration, in part, and approving $31 million in projected costs for the period September 2021 through August 2022. The order also reopened the 2021 ENEC case to require the Companies to explain the significant growth in the reported under-recovery of ENEC costs and to provide various other information including revised projected costs for the period March 2022 through August 2022. Also, in March 2022, the Companies filed testimony providing the information requested in the WVPSC’s order and requested a $155 million annual increase in ENEC rates effective May 1, 2022. In May 2022, the WVPSC issued an order approving a $93 million overall increase to ENEC rates to recover projected annual ENEC costs. However, the WVPSC stated that actual and projected ENEC costs are still subject to a prudency review.
In April 2022, the Companies submitted their 2022 annual ENEC filing with the WVPSC requesting a $297 million annual increase in ENEC revenues, inclusive of the previously requested $155 million increase, effective September 1, 2022. The procedural schedule is currently stayed amid negotiations to agree to a modified procedural schedule that suits all parties. As of June 30, 2022, the Companies’ cumulative ENEC under-recovery was $375 million. If any deferred ENEC costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.
June 2022 Storm Costs
In June 2022, the service territories of APCo and WPCo (the Companies) were impacted by strong winds from multiple storms resulting in system damages and power outages. As of June 30, 2022, the Companies incurred and deferred an estimated $7 million and $17 million in incremental distribution operation and maintenance expenses in Virginia and West Virginia, respectively, related to service restoration efforts. The Companies will seek recovery of these deferrals in future filings. If any of the storm restoration costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.
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Debt term | 397 | SEC-NUM |
[Table of Contents](#id0d7a71b05ce452ea9fdb54f3cb359c7_7)eBay Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)In March 2020, we issued $500 million of 1.900% fixed rate notes due 2025 and $500 million of 2.700% fixed rate notes due 2030. In June 2020, we issued $300 million of additional 1.900% fixed rate notes due 2025 and $450 million of additional 2.700% fixed rate notes due 2030.
We used a portion of these proceeds to complete a tender offer to purchase any and all of the $750 million aggregate principal amount of our 2.875% senior fixed rate notes due in 2021 for aggregate cash consideration paid of $771 million. The loss on extinguishment of $10 million (including an immaterial amount of fees and other costs associated with the tender) and the premium of $11 million were recorded in interest and other, net in our consolidated statement of income. In addition, we paid accrued interest up to the settlement date.
In June 2020, $500 million of our 2.150% senior fixed rate notes matured and were repaid.
In July 2020, we exercised our option to redeem in whole the 3.250% senior fixed rate notes due in 2020 at a price equal to 100% of the principal amount of $500 million, plus accrued interest.
In 2019, $400 million of floating rate notes and $1.15 billion of 2.200% fixed rate notes matured and were repaid.
None of the floating rate notes are redeemable prior to maturity. We may redeem some or all of the other fixed rate notes of each series at any time and from time to time prior to their maturity, generally at a make-whole redemption price, plus accrued and unpaid interest.
If a change of control triggering event (as defined in the applicable senior notes) occurs with respect to the 3.800% fixed rate notes due 2022, the floating rate notes due 2023, the 2.750% fixed rate notes due 2023, the 1.900% fixed rate notes due 2025, the 1.400% fixed rate notes due 2026, the 3.600% fixed rate notes due 2027, the 2.700% fixed rate notes due 2030, the 2.600% fixed rate notes due 2031 or the 3.650% fixed rate notes due 2051, we must, subject to certain exceptions, offer to repurchase all of the notes of the applicable series at a price equal to 101% of the principal amount, plus accrued and unpaid interest.
The indenture pursuant to which the senior notes were issued includes customary covenants that, among other things and subject to exceptions, limit our ability to incur, assume or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties, and also includes customary events of default with customary grace periods in certain circumstances, including payment defaults and bankruptcy-related defaults.
To help achieve our interest rate risk management objectives, during the second quarter of 2020, we entered into interest rate swap agreements that effectively converted $400 million of our LIBOR-based floating-rate debt to a fixed-rate basis. These swaps were designated as cash flow hedges and have maturity dates in 2023.
The effective interest rates for our senior notes include the interest payable, the amortization of debt issuance costs and the amortization of any original issue discount and premium on these senior notes. Interest on these senior notes is payable either quarterly or semiannually. Interest expense associated with these senior notes, including amortization of debt issuance costs, during the years ended December 31, 2021, 2020 and 2019 was approximately $257 million, $284 million and $301 million, respectively. As of December 31, 2021 and 2020, the estimated fair value of these senior notes, using Level 2 inputs, was approximately $9.5 billion and $8.3 billion, respectively.
Commercial Paper
We have a commercial paper program pursuant to which we may issue commercial paper notes in an aggregate principal amount at maturity of up to $1.5 billion outstanding at any time with maturities of up to 397 days from the date of issue. As of December 31, 2021 and 2020, there were no commercial paper notes outstanding.
Credit Agreement
In March 2020, we entered into a credit agreement that provides for an unsecured $2 billion five-year credit facility. We may also, subject to the agreement of the applicable lenders, increase commitments under the revolving 97
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Pre-tax benefit to earnings from settlement agreement | 15.6 | SEC-NUM |
Income Taxes, Net: The tax effect of temporary book-tax differences (differences between the periods in which transactions affect income in the financial statements and the periods in which they affect the determination of taxable income, including those differences relating to uncertain tax positions) is accounted for in accordance with the rate-making treatment of the applicable regulatory commissions and accounting guidance for income taxes. Differences in income taxes between the accounting guidance and the rate-making treatment of the applicable regulatory commissions are recorded as regulatory assets. As these assets are offset by deferred income tax liabilities, no carrying charge is collected. The amortization period of these assets varies depending on the nature and/or remaining life of the underlying assets and liabilities. For further information regarding income taxes, see Note 12, "Income Taxes," to the financial statements.
Securitized Stranded Costs: In 2018, a subsidiary of PSNH issued $635.7 million of securitized RRBs to finance PSNH's unrecovered remaining costs associated with the divestiture of its generation assets. Securitized regulatory assets, which are not earning an equity return, are being recovered over the amortization period of the associated RRBs. The PSNH RRBs are expected to be repaid by February 1, 2033. For further information, see Note 10, "Rate Reduction Bonds and Variable Interest Entities."
Storm Costs, Net: The storm cost deferrals relate to costs incurred for storm events at CL&P, NSTAR Electric and PSNH that each company expects to recover from customers. A storm must meet certain criteria to qualify for deferral and recovery with the criteria specific to each state jurisdiction and utility company. Once a storm qualifies for recovery, all qualifying expenses incurred during storm restoration efforts are deferred and recovered from customers. Costs for storms that do not meet the specific criteria are expensed as incurred. In addition to storm restoration costs, CL&P and PSNH are each allowed to recover pre-staging storm costs. Management believes all storm costs deferred were prudently incurred and meet the criteria for specific cost recovery in Connecticut, Massachusetts and New Hampshire, and that recovery from customers is probable through the applicable regulatory recovery processes. Each electric utility company either recovers a carrying charge on its deferred storm cost regulatory asset balance or the regulatory asset balance is included in rate base.
In 2021 and 2020, multiple tropical and severe storms caused extensive damage to CL&P’s electric distribution systems and customer outages, along with significant pre-staging costs. These storms resulted in deferred pre-staging and storm restoration costs at CL&P of $232 million for 2021 storms and $344 million for 2020 storms, including the catastrophic impact of Tropical Storm Isaias in August 2020, among others. Management believes that all of these storm costs were prudently incurred and meet the criteria for specific cost recovery. As part of CL&P’s October 1, 2021 settlement agreement described below, it agreed to freeze its current base distribution rates (including storm costs) until no earlier than January 1, 2024.
Of Eversource’s total deferred storm costs, $1.01 billion either has yet to be filed with the applicable regulatory commission or is pending regulatory approval (including $643 million at CL&P, $308 million at NSTAR Electric and $61 million at PSNH) as of December 31, 2021.
CL&P Tropical Storm Isaias Costs: On August 4, 2020, Tropical Storm Isaias caused catastrophic damage to our electric distribution system, which resulted in significant numbers and durations of customer outages, primarily in Connecticut. In terms of customer outages, this storm was one of the worst in CL&P’s history. PURA will investigate the prudency of costs incurred by CL&P to restore service in response to Tropical Storm Isaias. That investigation is expected to occur either in a separate proceeding not yet initiated or as part of CL&P’s next rate review proceeding. Tropical Storm Isaias resulted in deferred storm restoration costs of approximately $234 million at CL&P and $251 million at Eversource as of December 31, 2021. Although PURA found that CL&P’s performance in its preparation for and response to Tropical Storm Isaias fell below applicable performance standards in certain instances, CL&P believes it will be able to present credible evidence in a future proceeding demonstrating there is no reasonably close causal connection between the alleged sub-standard performance and the storm costs incurred. While it is possible that some amount of storm costs may be disallowed by the PURA in a future proceeding, any such amount cannot be estimated at this time. Eversource and CL&P continue to believe that these storm restoration costs associated with Tropical Storm Isaias were prudently incurred and meet the criteria for cost recovery; and as a result, management does not expect the storm cost review by the PURA to have a material impact on the financial position or results of operations of Eversource or CL&P.
NSTAR Electric Storm Threshold Filing: On December 22, 2021, the DPU approved NSTAR Electric to defer for future recovery the storm cost threshold amounts associated with six qualifying major storm events that occurred during 2020, totaling $7.2 million. The DPU approved the deferral of threshold costs that exceeded four storms (those recovered in base rates plus one additional storm) until the next rate case proceeding, at which time the DPU will determine the appropriate level of recovery of storm threshold amounts. In its January 14, 2022 distribution rate case filing, NSTAR Electric is also seeking recovery of the deferral of threshold costs for an additional seven storms in 2021. The pre-tax benefit to earnings for the deferral as a regulatory asset of threshold costs for both the 2020 and 2021 major storms was $15.6 million and was recorded in the fourth quarter of 2021.
Regulatory Tracker Mechanisms: The regulated companies' approved rates are designed to recover costs incurred to provide service to customers. The regulated companies recover certain of their costs on a fully-reconciling basis through regulatory commission-approved tracking mechanisms. The differences between the costs incurred (or the rate recovery allowed) and the actual revenues are recorded as regulatory assets (for undercollections) or as regulatory liabilities (for overcollections) to be included in future customer rates each year. Carrying charges are recovered in rates on all material regulatory tracker mechanisms.
The electric and natural gas distribution companies recover, on a fully reconciling basis, the costs associated with the procurement of energy supply, electric transmission related costs from FERC-approved transmission tariffs, energy efficiency programs, low income assistance programs, certain uncollectible accounts receivable for hardship customers, restructuring and stranded costs as a result of deregulation (including securitized RRB charges), certain capital tracking mechanisms for infrastructure improvements, and additionally for the Massachusetts utilities, pension and PBOP benefits, net metering for distributed generation, and solar-related programs.
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Forfeited (in dollars per share) | 165.98 | SEC-NUM |
BMO Share PlansAs part of the acquisition of the BMO Global Asset Management (EMEA)business, the Company will maintain certain legacy BMO Financial Group share based awards that were granted prior to the acquisition. All relevant awards are cash settled with the last vesting date in 2023. As of December 31, 2021, the liability related to these awards is $48 million and included in Other liabilities.Ameriprise Advisor Group Deferred Compensation PlanThe Advisor Group Deferral Plan, which was created in April 2009, allows for employee advisors to receive share-based bonus awards which are subject to future service requirements and forfeitures. The Advisor Group Deferral Plan is an unfunded non-qualified deferred compensation plan under section 409A of the Internal Revenue Code. The Advisor Group Deferral Plan also gives qualifying employee advisors the choice to defer a portion of their base salary or commissions. This deferral can be in the form of Ameriprise Financial stock or other investment options. Deferrals are not subject to future service requirements or forfeitures. Under the Advisor Group Deferral Plan, a maximum of 3.0 million shares may be issued. Awards granted under the Advisor Group Deferral Plan may be settled in cash and/or shares of the Company’s common stock according to the award’s terms. Share units receive dividend equivalents, as dividends are declared by the Company’s Board of Directors, until distribution and are subject to forfeiture until vested.Full Value Share Award Activity A summary of activity for the Company’s restricted stock awards, restricted stock units granted to employees (including advisors), compensation and commission deferrals into stock and deferred share units for 2021 is presented below (shares in millions):
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| | Shares | | Weighted Average Grant-date Fair Value |
| Non-vested shares at January 1 | 1.3 | | | $ | 144.10 | |
| Granted | 0.6 | | | 217.47 | |
| Deferred | 0.2 | | | 251.99 | |
| Vested | (0.7) | | | 177.39 | |
| Forfeited | (0.1) | | | 165.98 | |
| Non-vested shares at December 31 | 1.3 | | | 170.91 | |
The deferred shares in the table above primarily relate to franchise advisor voluntary deferrals of their commissions into Ameriprise Financial stock under the Franchise Advisor Deferral Plan that are fully vested at the deferral date. The fair value of full value share awards vested during the years ended December 31, 2021, 2020 and 2019 was $139 million, $124 million and $107 million, respectively. The weighted average grant date fair value for restricted shares, restricted stock units and deferred share units during 2021, 2020 and 2019 was $207.49, $163.54 and $129.30, respectively. The weighted average grant date fair value for franchise advisor and advisor group deferrals during 2021, 2020 and 2019 was $241.34, $147.96 and $136.81, respectively.Performance Share UnitsUnder the 2005 ICP, the Company’s Executive Leadership Team may be awarded a target number of performance share units (“PSUs”). PSUs will be earned only to the extent that the Company attains certain goals relating to the Company’s performance and relative total shareholder returns against peers over a three-year period. The awards also have a three-year service condition with cliff vesting with an accelerated service condition based on age and length of service. The actual number of PSUs ultimately earned could vary from zero, if performance goals are not met, to as much as 200% of the target for awards made prior to 2018 and 175% of the target for awards made in 2018 or later, if performance goals are significantly exceeded. The value of each target PSU is equal to the value of one share of Ameriprise Financial common stock. The total number of target PSUs outstanding at the end of December 31, 2021, 2020 and 2019 was 0.4 million, 0.4 million and 0.4 million, respectively. The PSUs are liability awards. During the years ended December 31, 2021, 2020 and 2019, the value of shares settled for PSU awards was $47 million, $34 million and $19 million, respectively. 134
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Due in one year or less, Amortized Cost | 1,257 | 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 | | | | | | | |
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| | | | | | | | | | | | | | |
| Total allowance for credit losses, ending balance | $ | 3 | | | $ | 8 | | | $ | 2 | | | $ | 13 | | | | | | | |
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| | 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 | | | | | | | |
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| (Decreases) increases to the allowance for credit losses on securities | (2) | | | 2 | | | — | | | | | | | |
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| | | | | | | | | | | | |
| 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.
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| | 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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Backlog | 40 | SEC-NUM |
[Table of Contents](#i11f673a761214399ab28a3a12dfa4686_7)
ADOBE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)The table below represents the final purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their respective estimated fair values as of October 7, 2021 and the associated estimated useful lives at that date. During the nine months ended September 2, 2022, we recorded purchase accounting adjustments that were not material based on changes to management’s estimates and assumptions in regards to the total purchase price and its related impact to goodwill.
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| (dollars in millions) | Amount | | Weighted Average Useful Life (years) |
| Purchased technology | $ | 331 | | | 4 |
| In-process research and development (1) | 19 | | | N/A |
| Trademarks | 4 | | | 3 |
| Customer contracts and relationships | 3 | | | 10 |
| Total identifiable intangible assets | 357 | | | |
| Net liabilities assumed | (36) | | | N/A |
| Goodwill (2) | 915 | | | N/A |
| Total purchase price | $ | 1,236 | | | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) Capitalized as purchased technology and considered indefinite lived until completion or abandonment of the associated research and development efforts.(2) Non-deductible for tax purposes.WorkfrontOn December 7, 2020, we completed the acquisition of Workfront, a privately held company that provides a workflow platform, for approximately $1.52 billion of cash consideration. The financial results of Workfront have been included in our condensed consolidated financial statements since the date of the acquisition. Workfront is reported as part of our Digital Experience reportable segment.The table below represents the final purchase price allocation to total identifiable intangible assets acquired and net liabilities assumed based on their estimated fair values as of December 7, 2020 and the associated estimated useful lives at that date.
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| (dollars in millions) | Amount | | Weighted Average Useful Life (years) |
| Customer contracts and relationships | $ | 290 | | | 10 |
| Purchased technology | 100 | | | 3 |
| Backlog | 40 | | | 2 |
| Trademarks | 30 | | | 5 |
| Total identifiable intangible assets | 460 | | | |
| Net liabilities assumed | (31) | | | N/A |
| Goodwill (1) | 1,095 | | | N/A |
| Total purchase price | $ | 1,524 | | | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) Non-deductible for tax purposes.Pro forma financial information has not been presented for these acquisitions as the impacts to our condensed consolidated financial statements were not material.13
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Percentage of ownership on outstanding shares | 44.3 | SEC-NUM |
CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)Unaudited Pro Forma InformationThe following unaudited pro forma financial information is presented to illustrate the estimated effects of the William Hill Acquisition as if it had occurred on January 1, 2020. The pro forma amounts include the historical operating results of the Company and William Hill prior to the acquisition, with adjustments directly attributable to the acquisition. The pro forma results include adjustments and consequential tax effects to reflect incremental amortization expense to be incurred based on preliminary fair values of the identifiable intangible assets acquired, eliminate gains and losses related to certain investments and adjustments to the timing of acquisition related costs and expenses incurred during the year ended December 31, 2021. The unaudited pro forma financial information is not necessarily indicative of the financial results that would have occurred had the William Hill Acquisition been consummated as of the dates indicated, nor is it indicative of any future results. The unaudited pro forma financial information does not include the operations of William Hill International as such operations were expected to be divested upon the acquisition date.
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| | Years Ended December 31, |
| (In millions) | 2021 | | 2020 |
| Net revenues | $ | 9,696 | | | $ | 3,834 | |
| Net loss | (893) | | | (1,991) | |
| Net loss attributable to Caesars | (896) | | | (1,989) | |
Consolidation of Horseshoe BaltimoreOn August 26, 2021, the Company increased its ownership interest in Horseshoe Baltimore, a property which it also manages, to approximately 75.8% for cash consideration of $55 million. Subsequent to the change in ownership, the Company was determined to have a controlling financial interest and has begun to consolidate the operations of Horseshoe Baltimore. Prior to the purchase, the Company held an interest in Horseshoe Baltimore of approximately 44.3% which was accounted for as an equity method investment. Our previously held investment was remeasured as of the date of our change in ownership and the Company recorded a gain of approximately $40 million, which was recorded in Other income (loss) on our Statements of Operations.
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| --- | --- | --- | --- | --- | --- |
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| (In millions) | Consideration |
| Cash for additional ownership interest | $ | 55 | |
| Preexisting relationships (net of receivable/payable) | 18 | |
| Preexisting relationships (net of previously held equity investment) | 81 | |
| Total purchase consideration | $ | 154 | |
Preliminary Purchase Price AllocationThe purchase price allocation for Horseshoe Baltimore is preliminary as it relates to determining the fair value of certain assets and liabilities, including potential goodwill, and is subject to change. The estimated fair values are based on management’s analysis, including preliminary work performed by a third-party valuation specialist, which is subject to finalization over the one-year measurement period. The following table summarizes the preliminary allocation of the purchase consideration to the [Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)76
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Long-term debt obligations | 41,600 | SEC-NUM |
AT&T INC.SEPTEMBER 30, 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ContinuedDollars in millions except per share amounts
The following is a summary of operating results included in income (loss) from discontinued operations for the third quarter and nine months ended September 30:
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| | Three months ended | | Nine months ended |
| | September 30, | | September 30, |
| | 20221 | | 2021 | | 2022 | | 2021 |
| Revenues | $ | 4 | | | $ | 8,596 | | | $ | 9,454 | | | $ | 24,963 | |
| Operating Expenses | | | | | | | |
| Cost of revenues | 1 | | | 4,392 | | | 5,481 | | | 13,830 | |
| Selling, general and administrative | 10 | | | 2,113 | | | 2,789 | | | 5,649 | |
| Asset abandonments and impairments | — | | | 57 | | | — | | | 4,612 | |
| Depreciation and amortization | 1 | | | 1,163 | | | 1,173 | | | 3,837 | |
| Total operating expenses | 12 | | | 7,725 | | | 9,443 | | | 27,928 | |
| Interest expense | — | | | 40 | | | 131 | | | 131 | |
| Equity in net income (loss) of affiliates | — | | | (93) | | | (27) | | | 25 | |
| Other income (expense) – net2 | 71 | | | 757 | | | (68) | | | 541 | |
| Total other income (expense) | 71 | | | 624 | | | (226) | | | 435 | |
| Income (Loss) before income taxes | 63 | | | 1,495 | | | (215) | | | (2,530) | |
| Income tax expense (benefit) | 10 | | | 241 | | | (69) | | | (45) | |
| Net income (loss) from discontinued operations | $ | 53 | | | $ | 1,254 | | | $ | (146) | | | $ | (2,485) | |
| 1Includes results from WarnerMedia operations in Mexico that were subject to regulatory approval that transferred in September 2022. |
| 2“Other income (expense) - net” includes a gain from post-closing adjustment related to the sale of the marketplace component of Xandr in the three and nine months ended September 30, 2022, and a gain of $766 from the sale of Playdemic for the three months and nine months ended September 30, 2021. |
The following is a summary of assets and liabilities attributable to discontinued operations, which were included in our Consolidated Balance Sheet at December 31, 2021:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| | | December 31, |
| | | 2021 |
| Assets: | | |
| Current assets | | $ | 9,005 | |
| Noncurrent Inventories and Theatrical Film and Television Production Costs | | 18,983 | |
| Property, plant and equipment, net | | 4,255 | |
| Goodwill | | 40,484 | |
| Other Intangibles – Net | | 40,273 | |
| Other assets | | 6,776 | |
| Total assets, discontinued operations | | $ | 119,776 | |
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| Liabilities: | | |
| Current liabilities | | $ | 12,912 | |
| Other liabilities | | 20,643 | |
| Total liabilities, discontinued operations | | $ | 33,555 | |
| | | |
In preparation for close, on April 7, 2022, Spinco drew $10,000 on its $10,000 term loan credit agreement (Spinco Term Loan), which conveyed to WBD. Total debt conveyed was approximately $41,600, which includes $1,600 of existing WarnerMedia debt, $30,000 of Spinco senior notes issued in March 2022 and the $10,000 Spinco Term Loan. WarnerMedia cash transfer to Discovery was approximately $2,660.35
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Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities, Other | 590 | SEC-NUM |
[Table of Contents](#ib75a44f638b042a5a7472d3f3be80b22_7)NOTE 16. ACQUISITIONSAcquisitions for the nine months ended September 30, 2022, were as follows.
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| Entity Acquired (Dollars in millions) | | Date of Acquisition | | Additional Percent Interest Acquired | | Payments to Former Owners | | Acquisition Related Debt Retirements | | Total Purchase Consideration(1) | | | | | | Goodwill Acquired | | Intangibles Recognized(2) | | | |
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| Meritor, Inc. | | 08/03/22 | | 100% | | $ | 2,613 | | | $ | 248 | | | $ | 2,861 | | | | | | | $ | 850 | | | $ | 1,610 | | | | |
| Jacobs Vehicle Systems | | 04/08/22 | | 100% | | 346 | | | — | | | 346 | | | | | | | 108 | | | 164 | | | | |
| Cummins Westport Joint Venture | | 02/07/22 | | 50% | | 42 | | | — | | | 42 | | | | | | | — | | | 20 | | | | |
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| (1) The newly consolidated entities were accounted for as business combinations. On the date of acquisition, Meritor, Inc. was included in the Components and New Power segments, Jacobs Vehicle Systems was included in the Components segment and Cummins Westport Joint Venture was included in the Engine segment. | |
| (2) Intangible assets acquired in the business combination were mostly technology and customer related. | |
Meritor, Inc.On August 3, 2022, we completed the acquisition of Meritor whereby we paid $36.50 per share for each outstanding share of Meritor, a global leader of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets. The total purchase price, including debt that was retired on the closing date of $248 million, was $2.9 billion. In addition, we assumed $1.0 billion of additional debt, of which $0.9 billion was retired prior to the end of the third quarter. The acquisition was funded with a combination of $2.0 billion in new debt (see NOTE 11, "DEBT" for additional details), cash on hand and additional commercial paper borrowings. The integration of Meritor’s people, technology and capabilities position us as one of the few companies able to provide integrated powertrain solutions across combustion and electric power applications at a time when demand for decarbonized solutions is continuing to accelerate. The majority of this business will be included within our Components segment with the exception of the electric powertrain business, which will be included in our New Power segment. The values assigned to individual assets acquired and liabilities assumed are preliminary based on management’s current best estimate and subject to change as certain matters are finalized. The primary areas that are preliminary include, but are not limited to, valuation of intangibles, legal and other contingent liabilities and deferred taxes. The preliminary purchase price allocation was as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| In millions | | |
| Cash and cash equivalents | | $ | 98 | |
| Accounts and notes receivable, net | | 640 | |
| Inventories | | 752 | |
| Property, plant and equipment | | 846 | |
| Intangible assets | | 1,610 | |
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| Investments and advances related to equity method investees | | 382 | |
| Goodwill | | 850 | |
| Pension assets | | 147 | |
| Other current and long-term assets | | 364 | |
| Accounts payable (principally trade) | | (711) | |
| Net deferred taxes | | (325) | |
| Pensions and other postretirement benefits | | (129) | |
| Long-term debt | | (962) | |
| Other current and long-term liabilities | | (590) | |
| Noncontrolling interests | | (111) | |
| Total purchase price | | $ | 2,861 | |
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26
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Expected future pre-tax compensation expense, nonvested restricted shares | 44.2 | SEC-NUM |
[Table of Contents](#iee2f14225b9a4b108d08cd0fe2886fa0_7)AMETEK, Inc.Notes to Consolidated Financial StatementsMarch 31, 2022(Unaudited)million non-vested stock options outstanding, which is expected to be recognized over a weighted average period of approximately two years.
Restricted Stock The following is a summary of the Company’s non-vested restricted stock activity and related information:
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| | Shares | | WeightedAverage Grant DateFair Value |
| | (In thousands) | | |
| Non-vested restricted stock outstanding at December 31, 2021 | 413 | | | $ | 96.07 | |
| Granted | 179 | | | 134.71 | |
| Vested | (107) | | | 86.05 | |
| Forfeited | (10) | | | 100.34 | |
| Non-vested restricted stock outstanding at March 31, 2022 | 475 | | | $ | 112.85 | |
The total fair value of restricted stock vested during the three months ended March 31, 2022 was $9.3 million. As of March 31, 2022, there was approximately $44.2 million of expected future pre-tax compensation expense related to the 0.5 million non-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.Performance Restricted Stock UnitsIn March 2022, the Company granted performance restricted stock units ("PRSU") to officers and certain key management-level employees. The PRSUs vest over a period up to three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which the Company achieves certain financial and market performance targets measured over the period from January 1 of the year of grant to December 31 of the third year. Half of the PRSUs were valued in a manner similar to restricted stock as the financial targets are based on the Company’s operating results, which represents a performance condition. The grant date fair value of these PRSUs are recognized as compensation expense over the vesting period based on the probable number of awards to vest at each reporting date. The other half of the PRSUs were valued using a Monte Carlo model as the performance target is related to the Company’s total shareholder return compared to a group of peer companies, which represents a market condition. The Company recognizes the grant date fair value of these awards as compensation expense ratably over the vesting period.
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Options forfeited or expired, Number of Shares | 90 | SEC-NUM |
Stock Option Activity
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| | | | | | Weighted | | |
| | | | Weighted | | Average | | |
| | | | Average | | Remaining | | Aggregate |
| | Number of | | Exercise | | Contractual | | Intrinsic |
| (Shares and intrinsic value in thousands) | Shares | | Price | | Life (Years) | | Value |
| Outstanding as of February 28, 2021 | 6,266 | | | $ | 67.57 | | | | | |
| Options granted | 922 | | | 136.88 | | | | | |
| Options exercised | (1,302) | | | 61.30 | | | | | |
| Options forfeited or expired | (90) | | | 90.25 | | | | | |
| Outstanding as of February 28, 2022 | 5,796 | | | $ | 79.66 | | | 4.2 | | $ | 196,694 | |
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| Exercisable as of February 28, 2022 | 3,031 | | | $ | 68.72 | | | 3.5 | | $ | 125,141 | |
Stock Option Information
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | Years Ended February 28 or 29 |
| | 2022 | | 2021 | | 2020 |
| Options granted | 922,475 | | | 1,607,401 | | | 1,601,489 | |
| Weighted average grant date fair value per share | $ | 42.31 | | | $ | 22.80 | | | $ | 22.10 | |
| Cash received from options exercised (in millions) | $ | 79.8 | | | $ | 143.1 | | | $ | 124.4 | |
| Intrinsic value of options exercised (in millions) | $ | 95.2 | | | $ | 94.0 | | | $ | 78.6 | |
| Realized tax benefits (in millions) | $ | 20.6 | | | $ | 25.5 | | | $ | 21.8 | |
For stock options, the fair value of each award is estimated as of the date of grant using a binomial valuation model. In computing the value of the option, the binomial model considers characteristics of fair-value option pricing that are not available for consideration under a closed-form valuation model (for example, the Black-Scholes model), such as the contractual term of the option, the probability that the option will be exercised prior to the end of its contractual life and the probability of termination or retirement of the option holder. For this reason, we believe that the binomial model provides a fair value that is more representative of actual experience and future expected experience than the value calculated using a closed-form model. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the recipients of share-based awards.
Assumptions Used to Estimate Option Values
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| | Years Ended February 28 or 29 |
| | 2022 | | 2021 | | 2020 |
| Dividend yield | | | 0.0 | % | | | | 0.0 | % | | | | 0.0 | % |
| Expected volatility factor (1) | 31.8 | % | - | 37.6 | % | | 36.1 | % | - | 56.1 | % | | 26.8 | % | - | 32.6 | % |
| Weighted average expected volatility | | | 36.2 | % | | | | 38.2 | % | | | | 29.2 | % |
| Risk-free interest rate (2) | 0.0 | % | - | 1.4 | % | | 0.1 | % | - | 0.7 | % | | 1.5 | % | - | 2.4 | % |
| Expected term (in years) (3) | | | 4.6 | | | | 4.6 | | | | 4.6 |
(1)Measured using historical daily price changes of our stock for a period corresponding to the term of the options and the implied volatility derived from the market prices of traded options on our stock.(2)Based on the U.S. Treasury yield curve at the time of grant.(3)Represents the estimated number of years that options will be outstanding prior to exercise.
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Net periodic pension benefit | 8.9 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Pension PlansWe have 2 major non-U.S. contributory defined benefit pension plans, both based in the U.K. Our subsidiaries maintain these plans to provide retirement benefits to existing and former employees participating in these plans. With respect to these plans, our historical policy has been to contribute annually to the plans, an amount to fund pension liabilities as actuarially determined and as required by applicable laws and regulations. Our contributions to these plans are invested by the plan trustee and, if these investments do not perform well in the future, we may be required to provide additional contributions to cover any pension underfunding. Effective July 1, 2007, we reached agreements with the active members of these plans to freeze future pension plan benefits. In return, the active members became eligible to enroll in a defined contribution plan. For these plans, as of December 31, 2021 and 2020, the fair values of pension plan assets were $411.1 million and $378.9 million, and the fair values of projected benefit obligations were $437.5 million and $470.1 million, respectively. As a result, these plans were underfunded by approximately $26.4 million and $91.2 million at December 31, 2021 and 2020.As of December 31, 2021, inclusive of individually immaterial plans not shown in the above table, for plans where total projected benefit obligations exceed plan assets, projected benefit obligations and the fair value of plan assets were $524.3 million and $438.2 million as of December 31, 2021, respectively, and $558.4 million and $403.5 million as of December 31, 2020, respectively.For plans where the accumulated benefit obligation exceeds plan assets, such obligations are the same as the projected benefit obligations.Items not yet recognized as a component of net periodic pension cost (benefit) for the major plans were $119.9 million and $165.9 million as of December 31, 2021 and 2020, respectively, and were included in accumulated other comprehensive loss in the accompanying consolidated balance sheets. During 2021, there were gains on plan obligations of $22.1 million as a result of changes in actuarial assumptions. During 2020, there were losses on plan obligations of $27.7 million primarily as a result of changes in assumptions resulting in a loss of $37.1 million which was partially offset by $9.5 million in net gains due to plan experience. Net periodic pension benefit was $8.9 million for the year ended December 31, 2021, and not material for the years ended December 31, 2020 and 2019.The following table provides amounts recognized related to our defined benefit pension plans within the following captions on our consolidated balance sheets (dollars in thousands):
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| | December 31, |
| | 2021 | | 2020 |
| Other assets, net | $ | 73,990 | | | $ | 58,410 | |
| Other current liabilities | 19,788 | | | 19,432 | |
| Other liabilities | 69,478 | | | 135,440 | |
The following table presents estimated future benefit payments over the next ten years, as of December 31, 2021. We will fund these obligations from the assets held by these plans. If the assets these plans hold are not sufficient to fund these payments, the company will fund the remaining obligations (dollars in thousands):
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| | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | 2027-2031 |
| Estimated future benefit payments for defined benefit plans | $ | 39,377 | | | $ | 39,103 | | | $ | 40,432 | | | $ | 42,190 | | | $ | 43,004 | | | $ | 231,643 | |
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Specified percentage of the fair market value of the common stock on the first or last day of the offering period whichever is lower at which stock is purchased (as a percent) | 85 | SEC-NUM |
[Table of Contents](#i300266b18f874ae1b9a15c90da441bb4_7)
Liability-Classified AwardsWe grant cash-based equity incentive awards to GRAIL employees. The cash to be awarded may subsequently increase or decrease in direct correlation to changes in the enterprise fair value of GRAIL, as defined under the Cash-Based Equity Appreciation Award Plan.Cash-based equity incentive award activity was as follows:
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| --- | --- | --- | --- | --- | --- |
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| In millions | |
| Outstanding at January 2, 2022 | $ | 184 | |
| Granted | 106 | |
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| Cancelled | (23) | |
| | |
| Outstanding at July 3, 2022 | $ | 267 | |
| Estimated liability as of July 3, 2022 (included in accrued liabilities) | $ | 40 | |
We recognized share-based compensation expense of $16 million and $29 million in Q2 2022 and YTD 2022, respectively. As of July 3, 2022, approximately $227 million of total unrecognized compensation cost related to awards issued to date was expected to be recognized over a weighted-average period of approximately 3.4 years.In connection with the acquisition of GRAIL, we assumed a performance-based award for which vesting is based on GRAIL’s future revenues. The award has an aggregate potential value of up to $78 million and expires, to the extent unvested, in August 2030. As of July 3, 2022, it was not probable that the performance conditions associated with the award will be achieved and, therefore, no share-based compensation expense, or corresponding liability, has been recognized in the condensed consolidated financial statements to-date.Employee Stock Purchase PlanThe price at which common stock is purchased under the Employee Stock Purchase Plan (ESPP) is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During YTD 2022, approximately 0.1 million shares were issued under the ESPP. As of July 3, 2022, there were approximately 13.0 million shares available for issuance under the ESPP.Share RepurchasesWe did not repurchase any shares during YTD 2022. As of July 3, 2022, authorizations to repurchase approximately $15 million of our common stock remained available under the $750 million share repurchase program authorized by our Board of Directors on February 5, 2020. The repurchases may be completed under a 10b5-1 plan or at management’s discretion.Share-Based CompensationShare-based compensation expense, which includes expense for both equity and liability-classified awards, reported in our condensed consolidated statements of operations was as follows:
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| In millions | Q2 2022 | | Q2 2021 | | YTD 2022 | | YTD 2021 |
| Cost of product revenue | $ | 7 | | | $ | 8 | | | $ | 13 | | | $ | 15 | |
| Cost of service and other revenue | 1 | | | 1 | | | 2 | | | 2 | |
| Research and development | 39 | | | 26 | | | 75 | | | 50 | |
| Selling, general and administrative | 44 | | | 45 | | | 93 | | | 80 | |
| Share-based compensation expense before taxes | 91 | | | 80 | | | 183 | | | 147 | |
| Related income tax benefits | (20) | | | (15) | | | (41) | | | (28) | |
| Share-based compensation expense, net of taxes | $ | 71 | | | $ | 65 | | | $ | 142 | | | $ | 119 | |
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Stock repurchase program, authorized amount | 500,000,000 | SEC-NUM |
[Table of](#ia143979d54ef4089bc700f871e6b0e92_7) [Contents](#ia143979d54ef4089bc700f871e6b0e92_7)In July 2020, the Company’s Board of Directors approved a stock repurchase program under which the Company may acquire shares of its common stock in open market or negotiated transactions up to an aggregate purchase price of $500,000,000 (the "2020 Stock Repurchase Program"). Purchases of common stock under the 2020 Stock Repurchase Program may be exercised at the Company’s discretion with the timing and number of shares repurchased depending on a variety of factors, including price, corporate and regulatory requirements and other corporate liquidity requirements and priorities. The 2020 Stock Repurchase Program does not have an expiration date and may be suspended or terminated at any time without prior notice. During the six months ended June 30, 2022, the Company had no repurchases of shares under this program. As of June 30, 2022, the Company had $316,148,000 remaining authorized for purchase under this program.
In May 2019, the Company commenced a fifth continuous equity program ("CEP V") under which the Company may sell (and/or enter into forward sale agreements for the sale of) up to $1,000,000,000 of its common stock from time to time. Actual sales will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company's common stock and the Company's determinations of the appropriate funding sources. The Company engaged sales agents for CEP V who receive compensation of up to 1.5% of the gross sales price for shares sold. The Company expects that, if entered into, it will physically settle each forward sale agreement on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will receive aggregate net cash proceeds at settlement equal to the number of shares underlying the particular forward agreement multiplied by the forward sale price. However, the Company may also elect to cash settle or net share settle a forward sale agreement. In connection with each forward sale agreement, the Company will pay the forward seller, in the form of a reduced initial forward sale price, a commission of up to 1.5% of the sales prices of all borrowed shares of common stock sold. During the three and six months ended June 30, 2022, the Company had no sales under this program. In December 2021, the Company entered into a forward contract under CEP V to sell 68,577 shares of common stock for approximate proceeds of $16,000,000 net of offering fees and discounts and based on the initial forward price, with settlement of the forward contract to occur on one or more dates not later than December 31, 2022. The final proceeds will be determined on the date(s) of settlement after adjustments for the Company's dividends and a daily interest factor. As of June 30, 2022, the Company had $705,961,000 remaining authorized for issuance under CEP V, after consideration of the forward contract.
In addition to CEP V, during the three months ended June 30, 2022, the Company completed an underwritten public offering of 2,000,000 shares of its common stock in connection with forward contracts entered into with certain financial institutions acting as forward purchasers. Assuming full physical settlement of the forward contracts, which the Company expects to occur no later than December 31, 2023, the Company will receive approximate proceeds of $494,200,000 net of offering fees and discounts and based on the initial forward price. The final proceeds will be determined on the date(s) of settlement and are subject to certain customary adjustments for the Company's dividends and a daily interest factor during the term of the forward contracts.
5. Investments
Unconsolidated Investments
As of June 30, 2022, the Company had investments in seven unconsolidated real estate entities with ownership interest percentages ranging from 20.0% to 50.0% and other unconsolidated investments including property technology and environmentally focused companies and investment management funds. The Company accounts for its investments in unconsolidated entities under the equity method of accounting or under the measurement alternative with the carrying amount of the investment adjusted to fair value when there is an observable transaction for the same or similar investment of the same issuer indicating a change in fair value. The significant accounting policies of the Company's unconsolidated investments are consistent with those of the Company in all material respects. Certain of these investments are subject to various buy‑sell provisions or other rights which are customary in real estate joint venture agreements. The Company and its partners in these entities may initiate these provisions to either sell the Company's interest or acquire the interest from the Company's partner.
Investments in Consolidated Real Estate Entities
During the six months ended June 30, 2022, the Company acquired two communities:
•Avalon Flatirons, located in Lafayette, CO, which contains 207 apartment homes and 16,000 square feet of commercial space and was acquired for a purchase price of $95,000,000.
•Waterford Court, located in Addison, TX, which contains 196 apartment homes and was acquired for a purchase price of $69,500,000.
The Company accounted for these purchases as asset acquisitions and recorded the acquired assets and assumed liabilities, including identifiable intangibles, at their relative fair values based on the purchase price and acquisition costs incurred. The 14
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Maximum Annual Granular Urea Tons Eligible for Purchase | 1.1 | SEC-NUM |
[Table of Contents](#i0302cc7c03c44d0c8270f104de834cdb_7)CF INDUSTRIES HOLDINGS, INC.
CHS also receives deliveries pursuant to a supply agreement under which CHS has the right to purchase annually from CFN up to approximately 1.1 million tons of granular urea and 580,000 tons of UAN at market prices. As a result of its equity interest in CFN, CHS is entitled to semi-annual cash distributions from CFN. We are also entitled to semi-annual cash distributions from CFN. The amounts of distributions from CFN to us and CHS are based generally on the profitability of CFN and determined based on the volume of granular urea and UAN sold by CFN to us and CHS pursuant to supply agreements, less a formula driven amount based primarily on the cost of natural gas used to produce the granular urea and UAN, and adjusted for the allocation of items such as operational efficiencies and overhead amounts. Additionally, under the terms of the strategic venture, we recognized an embedded derivative related to our credit rating. See Note 9—Fair Value Measurements for additional information.
15. Stockholders’ EquityTreasury StockOn November 3, 2021, our Board of Directors (the Board) authorized the repurchase of up to $1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program). Repurchases under the 2021 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, through block transactions or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors. In the three months ended March 31, 2022, we repurchased approximately 1.3 million shares under the 2021 Share Repurchase Program for $100 million. In the three months ended March 31, 2022, we retired 27,962 shares of repurchased stock, including shares repurchased under the share repurchase program that expired on December 31, 2021. At March 31, 2022, we held 1,563,679 shares of treasury stock. Accumulated Other Comprehensive LossChanges to accumulated other comprehensive loss and the impact on other comprehensive income (loss) are as follows:
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| | ForeignCurrencyTranslationAdjustment | | | | UnrealizedGain onDerivatives | | DefinedBenefitPlans | | AccumulatedOtherComprehensiveIncome (Loss) |
| | (in millions) |
| Balance as of December 31, 2020 | $ | (144) | | | | | $ | 4 | | | $ | (180) | | | $ | (320) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Reclassification to earnings(1) | — | | | | | — | | | 2 | | | 2 | |
| | | | | | | | | | |
| Effect of exchange rate changes and deferred taxes | 14 | | | | | — | | | (1) | | | 13 | |
| Balance as of March 31, 2021 | $ | (130) | | | | | $ | 4 | | | $ | (179) | | | $ | (305) | |
| | | | | | | | | | |
| Balance as of December 31, 2021 | $ | (141) | | | | | $ | 4 | | | $ | (120) | | | $ | (257) | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Reclassification to earnings(1) | — | | | | | — | | | 1 | | | 1 | |
| | | | | | | | | | |
| Effect of exchange rate changes and deferred taxes | (13) | | | | | — | | | 3 | | | (10) | |
| Balance as of March 31, 2022 | $ | (154) | | | | | $ | 4 | | | $ | (116) | | | $ | (266) | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Reclassifications out of accumulated other comprehensive loss to the consolidated statements of operations during the three months ended March 31, 2022 and 2021 were not material.
19
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Specific review of probable future collections based on receivable balances, threshold duration | 30 | SEC-NUM |
[Table of Contents](#ie1b09d57e49a40aaa81f572e6311eac9_10)DTE Energy Company — DTE Electric CompanyCombined Notes to Consolidated Financial Statements (Unaudited) — (Continued)The Registrants monitor the credit quality of their financing receivables on a regular basis by reviewing credit quality indicators and monitoring for trigger events, such as a credit rating downgrade or bankruptcy. Credit quality indicators include, but are not limited to, ratings by credit agencies where available, collection history, collateral, counterparty financial statements and other internal metrics. Utilizing such data, the Registrants have determined three internal grades of credit quality. Internal grade 1 includes financing receivables for counterparties where credit rating agencies have ranked the counterparty as investment grade. To the extent credit ratings are not available, the Registrants utilize other credit quality indicators to determine the level of risk associated with the financing receivable. Internal grade 1 may include financing receivables for counterparties for which credit rating agencies have ranked the counterparty as below investment grade; however, due to favorable information on other credit quality indicators, the Registrants have determined the risk level to be similar to that of an investment grade counterparty. Internal grade 2 includes financing receivables for counterparties with limited credit information and those with a higher risk profile based upon credit quality indicators. Internal grade 3 reflects financing receivables for which the counterparties have the greatest level of risk, including those in bankruptcy status.The following represents the Registrants' financing receivables by year of origination, classified by internal grade of credit risk. The related credit quality indicators and risk ratings utilized to develop the internal grades have been updated through March 31, 2022.
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| | DTE Energy | | DTE Electric |
| | Year of Origination |
| | 2022 | | 2021 | | 2020 and Prior | | Total | | 2022 and Prior |
| | (In millions) |
| Notes receivable | | | | | | | | | |
| Internal grade 1 | $ | — | | | $ | — | | | $ | 19 | | | $ | 19 | | | $ | 14 | |
| Internal grade 2 | 1 | | | 16 | | | 91 | | | 108 | | | 3 | |
| | | | | | | | | | |
| Total notes receivable(a) | $ | 1 | | | $ | 16 | | | $ | 110 | | | $ | 127 | | | $ | 17 | |
| | | | | | | | | | |
| Net investment in leases | | | | | | | | | |
| Net investment in leases, internal grade 1 | $ | — | | | $ | — | | | $ | 38 | | | $ | 38 | | | $ | — | |
| Net investment in leases, internal grade 2 | — | | | — | | | 191 | | | 191 | | | — | |
| Total net investment in leases(a) | $ | — | | | $ | — | | | $ | 229 | | | $ | 229 | | | $ | — | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)For DTE Energy, included in Current Assets — Other and Other Assets — Notes Receivable on the Consolidated Statements of Financial Position. For DTE Electric, included in Current Assets — Other on the Consolidated Statements of Financial Position.The allowance for doubtful accounts on accounts receivable for the utility entities is generally calculated using an aging approach that utilizes rates developed in reserve studies. DTE Electric and DTE Gas establish an allowance for uncollectible accounts based on historical losses and management's assessment of existing and future economic conditions, customer trends and other factors. Customer accounts are generally considered delinquent if the amount billed is not received by the due date, which is typically in 21 days, however, factors such as assistance programs may delay aggressive action. DTE Electric and DTE Gas generally assess late payment fees on trade receivables based on past-due terms with customers. Customer accounts are written off when collection efforts have been exhausted. The time period for write-off is 150 days after service has been terminated.The customer allowance for doubtful accounts for non-utility businesses and other receivables for both utility and non-utility businesses is generally calculated based on specific review of probable future collections based on receivable balances generally in excess of 30 days. Existing and future economic conditions, customer trends and other factors are also considered. Receivables are written off on a specific identification basis and determined based upon the specific circumstances of the associated receivable.Notes receivable for DTE Energy are primarily comprised of finance lease receivables and loans that are included in Notes Receivable and Other current assets on DTE Energy's Consolidated Statements of Financial Position. Notes receivable for DTE Electric are primarily comprised of loans.22
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Preferred stock, shares authorized (in shares) | 12 | SEC-NUM |
[Table of Contents](#i9e3d7fad53bb42b083be8286e4319cd4_10) Tax Allocation AgreementEvergy files a consolidated federal income tax return as well as unitary and combined income tax returns in several state jurisdictions with Kansas and Missouri being the most significant. Income taxes for consolidated or combined subsidiaries are allocated to the subsidiaries based on separate company computations of income or loss. The following table summarizes Evergy Kansas Central's and Evergy Metro's income taxes receivable from (payable to) Evergy.
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| | | | | |
| | | December 31 |
| | | 2021 | | 2020 |
| Evergy Kansas Central | | (millions) |
| Income taxes receivable from Evergy | | $ | 9.6 | | | $ | 25.3 | |
| | | | | |
| Evergy Metro | | | | |
| Income taxes receivable from (payable to) Evergy | | $ | (2.5) | | | $ | 3.2 | |
17. SHAREHOLDERS' EQUITY Evergy's authorized capital stock consists of 600 million shares of common stock, without par value, and 12 million shares of Preference Stock, without par value. Bluescape Energy Partners, LLC (Bluescape) Securities Purchase AgreementIn February 2021, Evergy entered into a securities purchase agreement with an affiliate of Bluescape. Pursuant to the securities purchase agreement, an affiliate of Bluescape agreed to purchase 2,269,447 shares of Evergy’s common stock for approximately $113.2 million and to receive a warrant to purchase up to 3,950,000 additional shares of Evergy’s common stock. Under the terms of the warrant, Evergy will have the option to elect a net cash settlement with respect to the exercise of the warrant under certain circumstances, or to net settle in shares of Evergy’s common stock. The warrant expires three years from issuance and has an exercise price equal to $64.70 per share. Following the satisfaction of customary closing conditions, Evergy completed the sale of its common stock and warrant to the affiliate of Bluescape in April 2021 for $112.5 million, net of issuance costs of $0.7 million. The Executive Chairman of Bluescape, C. John Wilder, joined the Evergy Board in March 2021.Evergy Registration StatementsIn September 2021, Evergy filed an automatic registration statement providing for the sale of unlimited amounts of securities with the SEC, which expires in September 2024. In September 2021, Evergy registered shares of its common stock with the SEC for its Dividend Reinvestment and Direct Stock Purchase Plan. Shares issued under the plan may be either newly issued shares or shares purchased on the open market.Evergy has registered shares of its common stock with the SEC for the Evergy, Inc. 401(k) Savings Plan. Shares issued under the plan may be either newly issued shares or shares purchased on the open market.Dividend Restrictions Evergy depends on its subsidiaries to pay dividends on its common stock. The Evergy Companies have certain restrictions stemming from statutory requirements, corporate organizational documents, covenants and other conditions that could affect dividend levels or the ability to pay dividends.The KCC order authorizing the merger transaction requires Evergy to maintain consolidated common equity of at least 35% of total consolidated capitalization.Under the Federal Power Act, Evergy Kansas Central, Evergy Metro and Evergy Missouri West generally can pay dividends only out of retained earnings. Certain conditions in the MPSC and KCC orders authorizing the merger transaction also require Evergy Kansas Central and Evergy Metro to maintain consolidated common equity of at least 40% of total capitalization. Other conditions in the MPSC and KCC merger orders require Evergy Kansas 142
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Weighted average remaining contractual life, Options outstanding | 6.7 | SEC-NUM |
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| PART II | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | Table of Contents |
A summary of stock option activity under our Long-Term Stock Incentive Plan is as follows:
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| | For the Years Ended |
| | February 28, 2022 | | February 28, 2021 | | February 29, 2020 |
| | NumberofOptions | | WeightedAverageExercisePrice | | NumberofOptions | | WeightedAverageExercisePrice | | NumberofOptions | | WeightedAverageExercisePrice |
| Outstanding as of March 1 | 4,399,807 | | | $ | 131.89 | | | 4,525,418 | | | $ | 108.87 | | | 5,691,219 | | | $ | 81.87 | |
| Granted | 513,829 | | | $ | 237.85 | | | 973,286 | | | $ | 154.62 | | | 639,957 | | | $ | 206.76 | |
| Exercised | (1,925,247) | | | $ | 86.92 | | | (1,025,179) | | | $ | 47.42 | | | (1,618,484) | | | $ | 41.77 | |
| Forfeited | (75,917) | | | $ | 192.96 | | | (56,897) | | | $ | 185.59 | | | (175,917) | | | $ | 201.44 | |
| Expired | (6,130) | | | $ | 226.46 | | | (16,821) | | | $ | 221.16 | | | (11,357) | | | $ | 224.07 | |
| Outstanding as of last day of February | 2,906,342 | | | $ | 178.62 | | | 4,399,807 | | | $ | 131.89 | | | 4,525,418 | | | $ | 108.87 | |
| Exercisable | 1,410,693 | | | $ | 161.53 | | | 2,754,888 | | | $ | 104.94 | | | 3,330,164 | | | $ | 75.61 | |
As of February 28, 2022, the aggregate intrinsic value of our options outstanding and exercisable was $123.1 million and $79.8 million, respectively. In addition, the weighted average remaining contractual life for our options outstanding and exercisable was 6.7 years and 5.1 years, respectively.
The fair value of stock options vested, and the intrinsic value of and tax benefit realized from the exercise of stock options, are as follows:
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| | | | | | | | | | | | | | | | | | |
| | For the Years Ended |
| | February 28,2022 | | February 28,2021 | | February 29,2020 |
| (in millions) | | | | | |
| Fair value of stock options vested | $ | 23.9 | | | $ | 21.1 | | | $ | 21.1 | |
| Intrinsic value of stock options exercised | $ | 269.1 | | | $ | 142.1 | | | $ | 255.0 | |
| Tax benefit realized from stock options exercised | $ | 62.9 | | | $ | 33.9 | | | $ | 60.4 | |
The weighted average grant-date fair value of stock options granted and the weighted average inputs used to estimate the fair value on the date of grant using the Black-Scholes option-pricing model are as follows:
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| | | | | | | | | | | | | | | | | | |
| | For the Years Ended |
| | February 28,2022 | | February 28,2021 | | February 29,2020 |
| Grant-date fair value | $ | 59.27 | | | $ | 31.26 | | | $ | 44.90 | |
| Expected life (1) | 6.3 years | | 6.3 years | | 6.0 years |
| Expected volatility (2) | 27.8 | % | | 26.6 | % | | 22.1 | % |
| Risk-free interest rate (3) | 1.2 | % | | 0.5 | % | | 2.5 | % |
| Expected dividend yield (4) | 1.3 | % | | 1.9 | % | | 1.5 | % |
(1)Based on historical experience of employees’ exercise behavior for similar type awards.(2)Based primarily on historical volatility levels of our Class A Stock.(3)Based on the implied yield currently available on U.S. Treasury zero coupon issues with a remaining term equal to the expected life.(4)Based on the calculated yield on our Class A Stock at date of grant using the current fiscal year projected annualized dividend distribution rate.
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| Constellation Brands, Inc. FY 2022 Form 10-K | #WORTHREACHINGFOR I 106 |
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Accrued settlement for state attorneys general | 141 | SEC-NUM |
[Table of Contents](#if58bf2b7da5f49b78db442640b215d13_7)includes a $1 billion unsecured revolving credit facility that matures on November 1, 2026 and a $4.7 billion unsecured term loan that matures on November 1, 2024.On November 1, 2021 we borrowed the full $4.7 billion under the unsecured term loan to fund a portion of the cash consideration for the acquisition of Mailchimp. See Note 7, "Long-Term Obligations and Commitments," for more information regarding the term loan.
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| --- | --- | --- |
| | | |
| Unsecured Revolving Credit Facility |
The credit agreement we entered into on November 1, 2021 includes a $1 billion unsecured revolving credit facility that will expire on November 1, 2026. Under this agreement we may, subject to certain customary conditions including lender approval, on one or more occasions increase commitments under the unsecured revolving credit facility in an amount not to exceed $250 million in the aggregate and may extend the maturity date up to two times. Advances under the unsecured revolving credit facility accrue interest at rates that are equal to, at our election, either (i) the alternate base rate plus a margin that ranges from 0.0% to 0.1%, or (ii) the Secured Overnight Finance Rate (SOFR) plus a margin that ranges from 0.69% to 1.1%. Actual margins under either election will be based on our senior debt credit ratings. The credit agreement includes customary affirmative and negative covenants, including financial covenants that require us to maintain a ratio of total gross debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA) of not greater than 3.25 to 1.00 and a ratio of annual EBITDA to annual interest expense of not less than 3.00 to 1.00 as of the last day of each fiscal quarter. As of April 30, 2022 we were compliant with all required covenants. At April 30, 2022 no amounts were outstanding under the unsecured revolving credit facility. We paid no interest on the unsecured revolving credit facility during the nine months ended April 30, 2022. We paid $1 million of interest on our previous unsecured revolving credit facility during the nine months ended April 30, 2021.
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| Other Current Liabilities |
Other current liabilities were as follows at the dates indicated:
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| (In millions) | April 30,2022 | | July 31,2021 |
| Executive deferred compensation plan liabilities | $ | 148 | | | $ | 153 | |
| Accrued settlement for state attorneys general | 141 | | | — | |
| Sales, property, and other taxes | 78 | | | 5 | |
| Current portion of operating lease liabilities | 77 | | | 66 | |
| Reserve for returns and credits | 74 | | | 21 | |
| Amounts due for share repurchases | 26 | | | 17 | |
| Merchant and consumer payments processing reserves | 21 | | | 10 | |
| Reserve for promotional discounts and rebates | 14 | | | 10 | |
| Interest payable | 12 | | | 1 | |
| Current portion of dividend payable | 11 | | | 9 | |
| | | | |
| Other | 68 | | | 66 | |
| Total other current liabilities | $ | 670 | | | $ | 358 | |
The balances of several of our other current liabilities, particularly our reserves for product returns and promotional discounts and rebates, are affected by the seasonality of our business. See Note 1, “Description of Business and Summary of Significant Accounting Policies – Seasonality,” for more information.
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| 7. Long-Term Obligations and Commitments |
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| Senior Unsecured Notes |
In June 2020 we issued four series of senior unsecured notes (together, the Notes) pursuant to a public debt offering. The proceeds from the issuance were $1.98 billion, net of debt discount of $2 million and debt issuance costs of $15 million.
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| | Intuit Q3 Fiscal 2022 Form 10-Q | 20 | |
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Net change (shares) | 1,040,600 | SEC-NUM |
THE HERSHEY COMPANYNOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(amounts in thousands, except share data or if otherwise indicated)
Depreciation and amortization expense included within segment income presented above is as follows:
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| | | Three Months Ended | | Nine Months Ended |
| | October 2, 2022 | | October 3, 2021 | | October 2, 2022 | | October 3, 2021 |
| North America Confectionery | $ | 56,678 | | | $ | 53,124 | | | $ | 170,025 | | | $ | 157,313 | |
| North America Salty Snacks | | 17,444 | | | 6,984 | | | 51,106 | | | 20,909 | |
| International | 5,929 | | | 5,547 | | | 17,510 | | | 17,203 | |
| Corporate | 14,149 | | | 12,368 | | | 40,441 | | | 36,528 | |
| Total | $ | 94,200 | | | $ | 78,023 | | | $ | 279,082 | | | $ | 231,953 | |
Additional information regarding our net sales disaggregated by geographical region is as follows:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | October 2, 2022 | | October 3, 2021 | | October 2, 2022 | | October 3, 2021 |
| Net sales: | | | | | | | | |
| United States | | $ | 2,392,590 | | | $ | 2,017,378 | | | $ | 6,793,283 | | | $ | 5,681,498 | |
| All other countries | | 335,563 | | | 342,461 | | | 973,673 | | | 963,711 | |
| Total | | $ | 2,728,153 | | | $ | 2,359,839 | | | $ | 7,766,956 | | | $ | 6,645,209 | |
14. TREASURY STOCK ACTIVITYA summary of our treasury stock activity is as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine Months Ended October 2, 2022 |
| | Shares | | Dollars |
| | | | In thousands |
| | | | |
| Milton Hershey School Trust repurchase | 1,000,000 | | | $ | 203,350 | |
| Shares repurchased in the open market to replace Treasury Stock issued for stock options and incentive compensation | 679,000 | | | 151,921 | |
| Total share repurchases | 1,679,000 | | | 355,271 | |
| Shares issued for stock options and incentive compensation | (638,400) | | | (26,564) | |
| Net change | 1,040,600 | | | $ | 328,707 | |
In February 2022, the Company entered into a Stock Purchase Agreement with Hershey Trust Company, as trustee for the Milton Hershey School Trust (the “School Trust”), pursuant to which the Company purchased 1,000,000 shares of the Company’s Common Stock from the School Trust at a price equal to $203.35 per share, for a total purchase price of $203,350.In July 2018, our Board of Directors approved a $500,000 share repurchase authorization to repurchase shares of our Common Stock. As of October 2, 2022, $109,983 remained available for repurchases of our Common Stock under this program. In May 2021, our Board of Directors approved an additional $500,000 share repurchase authorization. This program is to commence after the existing 2018 authorization is completed and is to be utilized at management’s discretion. We are authorized to purchase our outstanding shares in open market and privately negotiated transactions. The program has no expiration date and acquired shares of Common Stock will be held as treasury shares. Purchases under approved share repurchase authorizations are in addition to our practice of buying back shares sufficient to offset those issued under incentive compensation plans.
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| [Table of Contents](#i0bc28196a24d4084af1a4cbdf6bdf4bd_7) | The Hershey Company | Q3 2022 Form 10-Q | Page 30 | hsy-20221002_g2.jpg |
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Granted (in dollars per share) | 105.12 | SEC-NUM |
Preferred stock outstanding comprises $5,694 million of GE Series D preferred stock, in addition to $245 million of existing GE Series A, B and C preferred stock. The total carrying value of GE preferred stock at December 31, 2021 was $5,935 million and will increase to $5,940 million by the respective call dates through periodic accretion. Dividends on GE preferred stock are payable semi-annually in June and December and accretion is recorded on a quarterly basis. Dividends on GE preferred stock totaled $237 million, including cash dividends of $220 million, $474 million, including cash dividends of $295 million, and $460 million, including cash dividends of $295 million, for the years ended December 31, 2021, 2020 and 2019, respectively. On January 21, 2021, the GE Series D preferred stock became callable and its dividends converted from 5% fixed rate to 3-month LIBOR plus 3.33%. As of the filing date of this Form 10-K for the year ended December 31, 2021, the GE Series D preferred stock has not been called.
GE has 50 million authorized shares of preferred stock ($1.00 par value), of which 5,939,875 shares are outstanding as of December 31, 2021, 2020 and 2019. GE's authorized common stock consists of 1,650 million shares having a par value of $0.01 each, with 1,462 million shares issued. To facilitate settlement of employee compensation programs, we repurchased shares of 0.5 million and 0.1 million, for a total of $35.8 million and $15.3 million for the years ended December 31, 2021 and 2020, respectively.
Redeemable noncontrolling interests, presented within All other liabilities in our Statement of Financial Position, include common shares issued by our affiliates that are redeemable at the option of the holder of those interests and amounted to $148 million and $487 million as of December 31, 2021 and 2020, respectively. The decrease of $339 million was primarily due to a redeemable noncontrolling interest in our Aviation segment, which was converted into a mandatorily redeemable instrument and reclassified to All other current liabilities.
NOTE 16. SHARE-BASED COMPENSATION. We grant stock options, restricted stock units and performance share units to employees under the 2007 Long-Term Incentive Plan. Grants made under all plans must be approved by the Management Development and Compensation Committee of GE’s Board of Directors, which is composed entirely of independent directors. We record compensation expense for awards expected to vest over the vesting period. We estimate forfeitures based on experience and adjust expense to reflect actual forfeitures. When options are exercised, restricted stock units vest, and performance share awards are earned, we issue shares from treasury stock. Where applicable, the disclosures below have been adjusted to reflect the 1-for-8 reverse stock split effective July 30, 2021.
Stock options provide employees the opportunity to purchase GE shares in the future at the market price of our stock on the date the award is granted (the strike price). The options become exercisable over the vesting period, typically three years, and expire 10 years from the grant date if not exercised. Restricted stock units (RSU) provide an employee with the right to receive one share of GE stock when the restrictions lapse over the vesting period. Upon vesting, each RSU is converted into one share of GE common stock for each unit. Performance share units (PSU) and performance shares provide an employee with the right to receive shares of GE stock based upon achievement of certain performance or market metrics. Upon vesting, each PSU earned is converted into shares of GE common stock. We value stock options using a Black-Scholes option pricing model, RSUs using market price on grant date, and PSUs and performance shares using market price on grant date and a Monte Carlo simulation as needed based on performance metrics.
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| | | | | | | | | | | | | | | |
| WEIGHTED AVERAGE GRANT DATE FAIR VALUE | | 2021 | 2020 | 2019 |
| Stock options | | $ | 40.64 | | $ | 28.64 | | $ | 27.84 | |
| RSUs | | 104.98 | | 63.28 | | 80.96 | |
| PSUs/Performance shares | | 108.51 | | 63.28 | | 85.84 |
Key assumptions used in the Black-Scholes valuation for stock options include: risk free rates of 1.1%, 1.0%, and 2.5%, dividend yields of 0.3%, 0.4%, and 0.4%, expected volatility of 40%, 36%, and 33%, expected lives of 6.2 years, 6.1 years, and 6.0 years, and strike prices of $105.12, $84.48, and $80.00 for 2021, 2020, and 2019, respectively.
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| STOCK-BASED COMPENSATION ACTIVITY | Stock options | | RSUs |
| Shares (in thousands) | Weighted average exercise price | Weighted average contractual term (in years) | Intrinsic value (in millions) | | Shares (in thousands) | Weighted average grant date fair value | Weighted average contractual term (in years) | Intrinsic value (in millions) |
| Outstanding at January 1, 2021 | 50,046 | | $ | 145.26 | | | | | 7,561 | | $ | 72.35 | | | |
| Granted | 494 | | 105.12 | | | | | 2,972 | | 104.98 | | | |
| Exercised | (1,252) | | 74.19 | | | | | (1,639) | | 97.91 | | | |
| Forfeited | (933) | | 80.31 | | | | | (837) | | 82.81 | | | |
| Expired | (9,941) | | 159.46 | | | | | N/A | N/A | | |
| Outstanding at December 31, 2021 | 38,414 | | $ | 144.97 | | 4.2 | $ | 193 | | | 8,057 | | $ | 77.90 | | 1.6 | $ | 761 | |
| Exercisable at December 31, 2021 | 33,551 | | 153.11 | | 3.6 | 148 | | | N/A | N/A | N/A | N/A |
| Expected to vest | 4,557 | | $ | 88.70 | | 7.9 | $ | 42 | | | 6,830 | | $ | 78.75 | | 1.5 | $ | 645 | |
Total outstanding PSUs and performance shares at December 31, 2021 were 3,215 thousand shares with a weighted average fair value of $75.66. The intrinsic value and weighted average contractual term of PSUs and performance shares outstanding were $304 million and 2.3 years, respectively. 2021 FORM 10-K 75
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Net investment hedge of foreign operations, net of tax (c) | 2 | SEC-NUM |
Amcor plc and SubsidiariesConsolidated Statements of Comprehensive Income($ in millions)
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| | | | | | | | | | | | | | | | | | | | | |
| For the years ended June 30, | | 2022 | | 2021 | | 2020 |
| Net income | | $ | 815 | | | $ | 951 | | | $ | 616 | |
| Other comprehensive income/(loss): | | | | | | |
| Net gains/(losses) on cash flow hedges, net of tax (a) | | (7) | | | 26 | | | (22) | |
| Foreign currency translation adjustments, net of tax (b) | | (201) | | | 205 | | | (287) | |
| Net investment hedge of foreign operations, net of tax (c) | | — | | | — | | | (2) | |
| Pension, net of tax (d) | | 94 | | | 52 | | | (16) | |
| Other comprehensive income/(loss) | | (114) | | | 283 | | | (327) | |
| Total comprehensive income | | 701 | | | 1,234 | | | 289 | |
| Comprehensive income attributable to non-controlling interests | | (10) | | | (12) | | | (4) | |
| Comprehensive income attributable to Amcor plc | | $ | 691 | | | $ | 1,222 | | | $ | 285 | |
| | | | | | | |
| (a) Tax benefit related to cash flow hedges | | $ | 2 | | | $ | — | | | $ | — | |
| (b) Tax benefit/(expense) related to foreign currency translation adjustments | | $ | (5) | | | $ | 7 | | | $ | (2) | |
| (c) Tax benefit related to net investment hedge of foreign operations | | $ | — | | | $ | — | | | $ | 1 | |
| (d) Tax benefit/(expense) related to pension adjustments | | $ | (21) | | | $ | (14) | | | $ | 12 | |
See accompanying notes to consolidated financial statements.
50
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Tax expense from prior year tax positions | 20 | SEC-NUM |
[Table of Contents](#ib0ff9808fe764fdea19589324372f96b_7)Abbott Laboratories and SubsidiariesNotes to the Condensed Consolidated Financial StatementsSeptember 30, 2022(Unaudited)Note 10 — Litigation and Environmental Matters (Continued)Abbott is involved in various claims and legal proceedings, and Abbott estimates the range of possible loss for its legal proceedings and environmental exposures to be from approximately $40 million to $50 million. The recorded accrual balance at September 30, 2022 for these proceedings and exposures was approximately $45 million. This accrual represents management’s best estimate of probable loss, as defined by FASB ASC No. 450, “Contingencies.” Within the next year, legal proceedings may occur that may result in a change in the estimated loss accrued by Abbott. While it is not feasible to predict the outcome of all such proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on Abbott’s financial position, cash flows, or results of operations.
Note 11 — Post-Employment Benefits
Retirement plans consist of defined benefit, defined contribution, and medical and dental plans. Net periodic benefit costs, other than service costs, are recognized in the Other (income) expense, net line of the Condensed Consolidated Statement of Earnings. Net cost recognized for the three and nine months ended September 30 for Abbott’s major defined benefit plans and post-employment medical and dental benefit plans is as follows:
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| | | Defined Benefit Plans | | Medical and Dental Plans |
| | | Three MonthsEnded Sept. 30 | | Nine Months Ended Sept. 30 | | Three MonthsEnded Sept. 30 | | Nine Months Ended Sept. 30 |
| (in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
| Service cost - benefits earned during the period | | $ | 92 | | | $ | 98 | | | $ | 282 | | | $ | 294 | | | $ | 13 | | | $ | 14 | | | $ | 38 | | | $ | 42 | |
| Interest cost on projected benefit obligations | | 74 | | | 62 | | | 225 | | | 186 | | | 9 | | | 8 | | | 27 | | | 25 | |
| Expected return on plan assets | | (231) | | | (211) | | | (701) | | | (633) | | | (8) | | | (6) | | | (23) | | | (20) | |
| Net amortization of: | | | | | | | | | | | | | | | | |
| Actuarial loss, net | | 58 | | | 79 | | | 174 | | | 238 | | | 2 | | | 7 | | | 8 | | | 21 | |
| Prior service cost (credit) | | — | | | — | | | 1 | | | 1 | | | (6) | | | (7) | | | (18) | | | (21) | |
| Net cost (credit) | | $ | (7) | | | $ | 28 | | | $ | (19) | | | $ | 86 | | | $ | 10 | | | $ | 16 | | | $ | 32 | | | $ | 47 | |
Abbott funds its domestic defined benefit plans according to Internal Revenue Service funding limitations. International pension plans are funded according to similar regulations. In the first nine months of 2022 and 2021, $362 million and $366 million, respectively, were contributed to defined benefit plans. In the first nine months of 2022 and 2021, $28 million and $26 million, respectively, were contributed to the post-employment medical and dental plans.
Note 12 — Taxes on Earnings
Taxes on earnings reflect the estimated annual effective rates and include charges for interest and penalties. In the first nine months of 2022 and 2021, taxes on earnings include approximately $36 million and $97 million, respectively, in excess tax benefits associated with share-based compensation. In the first nine months of 2022, taxes on earnings also include approximately $20 million of tax expense as the result of the resolution of various tax positions related to prior years.
Tax authorities in various jurisdictions regularly review Abbott’s income tax filings. Abbott believes that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease approximately $75 million to $100 million, including cash adjustments, within the next twelve months as a result of concluding various domestic and international tax matters.19
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Number of shares added back for tax withholding on full value awards | 1.9 | SEC-NUM |
As of December 31, 2021 and 2020, amounts due from these three customers each exceeded 10% of gross trade receivables and accounted for 73% and 74%, respectively, of net trade receivables on a combined basis. As of December 31, 2021 and 2020, 27% and 28%, respectively, of net trade receivables were due from customers located outside the United States, the majority of which were from Europe. Our total allowance for doubtful accounts as of December 31, 2021 and 2020, was not material.4. Stock-based compensationOur Amended 2009 Plan authorizes for issuance to employees of Amgen and nonemployee members of our Board of Directors shares of our common stock pursuant to grants of equity-based awards, including RSUs, stock options and performance units. The pool of shares available under the Amended 2009 Plan is reduced by one share for each stock option granted and by 1.9 shares for other types of awards granted, including full-value awards. In general, if any shares subject to an award granted under the Amended 2009 Plan expire or become forfeited, terminated or canceled without the issuance of shares, the shares subject to such awards are added back into the authorized pool on the same basis that they were removed. In addition, under the Amended 2009 Plan, shares withheld to pay for minimum statutory tax obligations with respect to full-value awards are added back into the authorized pool on the basis of 1.9 shares. As of December 31, 2021, the Amended 2009 Plan provides for future grants and/or issuances of up to approximately 19 million shares of our common stock. Stock-based awards under our employee compensation plans are made with newly issued shares reserved for this purpose.The following table reflects the components of stock-based compensation expense recognized in our Consolidated Statements of Income (in millions):
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| | Years ended December 31, |
| | 2021 | | 2020 | | 2019 |
| RSUs | $ | 183 | | | $ | 178 | | | $ | 168 | |
| Performance units | 121 | | | 118 | | | 105 | |
| Stock options | 37 | | | 34 | | | 35 | |
| Total stock-based compensation expense, pretax | 341 | | | 330 | | | 308 | |
| Tax benefit from stock-based compensation expense | (74) | | | (72) | | | (67) | |
| Total stock-based compensation expense, net of tax | $ | 267 | | | $ | 258 | | | $ | 241 | |
Restricted stock units and stock optionsEligible employees generally receive an annual grant of RSUs and, for certain executive-level employees, stock options, with the size and type of award generally determined by the employee’s salary grade and performance level. Certain management and professional-level employees typically receive RSU grants upon commencement of employment. Nonemployee members of our Board of Directors also receive an annual grant of RSUs.Our RSU and stock option grants provide for accelerated or continued vesting in certain circumstances as defined in the plans and related grant agreements, including upon death, disability, termination in connection with a change in control and the retirement of employees who meet certain service and/or age requirements. RSUs and stock options generally vest in equal amounts on the second, third and fourth anniversaries of the grant date. RSUs accrue dividend equivalents, which are typically payable in shares only when and to the extent the underlying RSUs vest and are issued to the recipient.Restricted stock unitsThe grant date fair value of an RSU equals the closing price of our common stock on the grant date, as RSUs accrue dividend equivalents during their vesting period. The weighted-average grant date fair values per unit of RSUs granted during the years ended December 31, 2021, 2020 and 2019, were $233.10, $235.63 and $182.12, respectively. F-18
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Loss contingency, damages sought, value | 200 | SEC-NUM |
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| Notes to Consolidated Financial Statements | [Table of Contents](#if18581573a6045f6b6e889320c9d1887_7) |
Beginning in 2017, governmental and other entities in several states in the U.S. have filed lawsuits against oil and gas companies, including ConocoPhillips, seeking compensatory damages and equitable relief to abate alleged climate change impacts. Additional lawsuits with similar allegations are expected to be filed. The amounts claimed by plaintiffs are unspecified and the legal and factual issues are unprecedented, therefore, there is significant uncertainty about the scope of the claims and alleged damages and any potential impact on the Company’s financial condition. ConocoPhillips believes these lawsuits are factually and legally meritless and are an inappropriate vehicle to address the challenges associated with climate change and will vigorously defend against such lawsuits.Several Louisiana parishes and the State of Louisiana have filed 43 lawsuits under Louisiana’s State and Local Coastal Resources Management Act (SLCRMA) against oil and gas companies, including ConocoPhillips, seeking compensatory damages for contamination and erosion of the Louisiana coastline allegedly caused by historical oil and gas operations. ConocoPhillips entities are defendants in 22 of the lawsuits and will vigorously defend against them. Because Plaintiffs’ SLCRMA theories are unprecedented, there is uncertainty about these claims (both as to scope and damages) and we continue to evaluate our exposure in these lawsuits.In October 2020, the Bureau of Safety and Environmental Enforcement (BSEE) ordered the prior owners of Outer Continental Shelf (OCS) Lease P-0166, including ConocoPhillips, to decommission the lease facilities, including two offshore platforms located near Carpinteria, California. This order was sent after the current owner of OCS Lease P-0166 relinquished the lease and abandoned the lease platforms and facilities. BSEE’s order to ConocoPhillips is premised on its connection to Phillips Petroleum Company, a legacy company of ConocoPhillips, which held a historical 25 percent interest in this lease and operated these facilities but sold its interest approximately 30 years ago. ConocoPhillips is challenging the BSEE order but continues to evaluate its exposure in this matter.On May 10, 2021, ConocoPhillips filed arbitration under the rules of the Singapore International Arbitration Centre (SIAC) against Santos KOTN Pty Ltd. and Santos Limited for their failure to timely pay the $200 million bonus due upon final investment decision of the Barossa development project under the sale and purchase agreement. Santos KOTN Pty Ltd. and Santos Limited have filed a response and counterclaim, and the arbitration is underway.In July 2021, a federal securities class action was filed against Concho, certain of Concho’s officers, and ConocoPhillips as Concho’s successor in the United States District Court for the Southern District of Texas. On October 21, 2021, the court issued an order appointing Utah Retirement Systems and the Construction Laborers Pension Trust for Southern California as lead plaintiffs (Lead Plaintiffs). On January 7, 2022, the Lead Plaintiffs filed their consolidated complaint alleging that Concho made materially false and misleading statements regarding its business and operations in violation of the federal securities laws and seeking unspecified damages, attorneys’ fees, costs, equitable/injunctive relief, and such other relief that may be deemed appropriate. We believe the allegations in the action are without merit and are vigorously defending this litigation.
Note 10—Derivative and Financial InstrumentsWe use futures, forwards, swaps and options in various markets to meet our customer needs, capture market opportunities and manage foreign exchange currency risk.Commodity Derivative InstrumentsOur commodity business primarily consists of natural gas, crude oil, bitumen, LNG and NGLs.Commodity derivative instruments are held at fair value on our consolidated balance sheet. Where these balances have the right of setoff, they are presented on a net basis. Related cash flows are recorded as operating activities on our consolidated statement of cash flows. On our consolidated income statement, gains and losses are recognized either on a gross basis if directly related to our physical business or a net basis if held for trading. Gains and losses related to contracts that meet and are designated with the NPNS exception are recognized upon settlement. We generally apply this exception to eligible crude contracts and certain gas contracts. We do not apply hedge accounting for our commodity derivatives.
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| 17 | ConocoPhillips 2022 Q2 10-Q | |
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Purchase commitments, Due in 2024 | 159 | SEC-NUM |
[Table of Contents](#i02bedaa3ef9a402693e3fc0f0d740b61_7)
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| | | 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:
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| 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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Finance Lease, Liability, to be Paid, Year Three | 25 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)Debt at December 31 consisted of the following:
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| | | | | | | | | | | | |
| | 2021 | | 2020 |
| Unsecured debt | | | |
| Variable rate: Eurodollar plus 0.75% - 1.25% due 2022 | | | $13,819 | |
| 1.17% - 2.50% due through 2026 | $12,404 | | | 3,656 | |
| 2.60% - 3.20% due through 2030 | 7,001 | | | 6,989 | |
| 3.25% - 3.90% due through 2059 | 9,570 | | | 9,555 | |
| 3.95% - 5.15% due through 2059 | 13,993 | | | 13,917 | |
| 5.71% - 6.63% due through 2060 | 13,008 | | | 13,005 | |
| 6.88% - 8.75% due through 2043 | 1,853 | | | 2,252 | |
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| | | | |
| | | | |
| Other debt and notes | | | |
| Finance lease obligations due through 2044 | 180 | | | 203 | |
| Other notes | 93 | | | 187 | |
| Total debt | $58,102 | | | $63,583 | |
Total debt at December 31 is attributable to:
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| | 2021 | | 2020 |
| BCC | $1,525 | | | $1,640 | |
| Other Boeing | 56,577 | | | 61,943 | |
| Total debt | $58,102 | | | $63,583 | |
Scheduled principal payments for debt and minimum finance lease obligations for the next five years are as follows:
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| | 2022 | | 2023 | | 2024 | | 2025 | | 2026 |
| | | | | | | | | | |
| | | | | | | | | | |
| Debt | $1,236 | | | $5,101 | | | $5,066 | | | $4,302 | | | $7,952 | |
| Minimum finance lease obligations | $64 | | | $43 | | | $25 | | | $14 | | | $6 | |
Note 16 – Postretirement PlansMany of our employees have earned benefits under defined benefit pension plans. Nonunion and the majority of union employees that had participated in defined benefit pension plans transitioned to a company-funded defined contribution retirement savings plan in 2016. Additional union employees transitioned to company-funded defined contribution retirement savings plans effective January 1, 2019.We fund our major pension plans through trusts. Pension assets are placed in trust solely for the benefit of the plans’ participants and are structured to maintain liquidity that is sufficient to pay benefit obligations as well as to keep pace over the long-term with the growth of obligations for future benefit payments.We also have other postretirement benefits (OPB) other than pensions which consist principally of health care coverage for eligible retirees and qualifying dependents, and to a lesser extent, life insurance to certain groups of retirees. Retiree health care is provided principally until age 65 for approximately three-fourths of those participants who are eligible for health care coverage. Certain employee groups, including employees covered by most United Auto Workers bargaining agreements, are provided lifetime health care coverage. The funded status of the plans is measured as the 99
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Increase (Decrease) in ARO Due to Updated Cost Escalation Rates and Discount Rates | 550 | 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:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | 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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Lessor leasing arrangements, operating leases, term of contract | 12 | SEC-NUM |
INVITATION HOMES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollar amounts in thousands)
Note 6—Other Assets As of December 31, 2021 and 2020, the balances in other assets, net are as follows:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | December 31,2021 | | December 31, 2020 |
| Investments in debt securities, net | | $ | 157,173 | | | $ | 245,237 | |
| Amounts deposited and held by others | | 62,241 | | | 2,852 | |
| Prepaid expenses | | 41,490 | | | 41,347 | |
| Rent and other receivables, net | | 37,473 | | | 35,256 | |
| Held for sale assets(1) | | 20,022 | | | 44,163 | |
| ROU lease assets — operating and finance, net | | 16,975 | | | 21,705 | |
| Corporate fixed assets, net | | 16,595 | | | 9,995 | |
| Investments in equity securities | | 16,337 | | | 47,189 | |
| Deferred financing costs, net | | 8,751 | | | 11,637 | |
| Deferred leasing costs, net | | 5,837 | | | 7,631 | |
| Derivative instruments (Note 8) | | 6 | | | 1 | |
| Other | | 12,164 | | | 11,274 | |
| Total | | $ | 395,064 | | | $ | 478,287 | |
| | | |
| --- | --- | --- |
| | | |
| |
(1)As of December 31, 2021 and 2020, 80 and 179 properties, respectively, are classified as held for sale. Investments in Debt Securities, netIn connection with certain of our Securitizations (as defined in Note 7), we have retained and purchased certificates totaling $157,173, net of unamortized discounts of $1,937, as of December 31, 2021. These investments in debt securities are classified as held to maturity investments. As of December 31, 2021, we have not recognized any credit losses with respect to these investments in debt securities, and our retained certificates are scheduled to mature over the next one month to six years.Amounts Deposited and Held by OthersAmounts deposited and held by others consists of earnest money deposits for the acquisition of single-family residential properties, including deposits made to homebuilders, and amounts owed to us for sold homes. See Note 14 for additional information about commitments related to these deposits made to homebuilders.Rent and Other ReceivablesWe lease our properties to residents pursuant to leases that generally have an initial contractual term of at least 12 months, provide for monthly payments, and are cancelable by the resident and us under certain conditions specified in the related lease agreements. Rental revenues and other property income and the corresponding rent and other receivables are recorded net of any concessions and bad debt (including actual write-offs, credit reserves, and uncollectible amounts) for all periods presented.Variable lease payments consist of resident reimbursements for utilities, and various other fees, including late fees and lease termination fees, among others. Variable lease payments are charged based on the terms and conditions included in the resident leases. For the years ended December 31, 2021, 2020, and 2019, rental revenues and other property income includes $118,016, $91,573 and $92,759 of variable lease payments, respectively.F-20
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Net gain (loss) from disposal of discontinued operations, net of tax | 63 | SEC-NUM |
CROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF OPERATIONS ANDCOMPREHENSIVE INCOME (LOSS) (Unaudited)(Amounts in millions, except per share amounts)
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
| | 2022 | | 2021 | | | | |
| Net revenues: | | | | | | | |
| Site rental | $ | 1,576 | | | $ | 1,369 | | | | | |
| Services and other | 166 | | | 116 | | | | | |
| Net revenues | 1,742 | | | 1,485 | | | | | |
| Operating expenses: | | | | | | | |
| Costs of operations:(a) | | | | | | | |
| Site rental | 396 | | | 381 | | | | | |
| Services and other | 113 | | | 81 | | | | | |
| Selling, general and administrative | 181 | | | 164 | | | | | |
| Asset write-down charges | 14 | | | 3 | | | | | |
| | | | | | | | |
| Depreciation, amortization and accretion | 420 | | | 408 | | | | | |
| Total operating expenses | 1,124 | | | 1,037 | | | | | |
| Operating income (loss) | 618 | | | 448 | | | | | |
| Interest expense and amortization of deferred financing costs | (164) | | | (170) | | | | | |
| Gains (losses) on retirement of long-term obligations | (26) | | | (143) | | | | | |
| Interest income | — | | | 1 | | | | | |
| Other income (expense) | (1) | | | (8) | | | | | |
| Income (loss) before income taxes | 427 | | | 128 | | | | | |
| Benefit (provision) for income taxes | (6) | | | (7) | | | | | |
| Income (loss) from continuing operations | 421 | | | 121 | | | | | |
| Discontinued operations: | | | | | | | |
| Net gain (loss) from disposal of discontinued operations, net of tax | — | | | (63) | | | | | |
| Income (loss) from discontinued operations, net of tax | — | | | (63) | | | | | |
| Net income (loss) | 421 | | | 58 | | | | | |
| | | | | | | | |
| | | | | | | | |
| Net income (loss) | $ | 421 | | | $ | 58 | | | | | |
| Other comprehensive income (loss): | | | | | | | |
| Foreign currency translation adjustments | 1 | | | 1 | | | | | |
| Total other comprehensive income (loss) | 1 | | | 1 | | | | | |
| Comprehensive income (loss) | $ | 422 | | | $ | 59 | | | | | |
| Net income (loss), per common share: | | | | | | | |
| Income (loss) from continuing operations, basic | $ | 0.97 | | | $ | 0.28 | | | | | |
| Income (loss) from discontinued operations, basic | — | | | (0.15) | | | | | |
| Net income (loss)—basic | $ | 0.97 | | | $ | 0.13 | | | | | |
| Income (loss) from continuing operations, diluted | $ | 0.97 | | | $ | 0.28 | | | | | |
| Income (loss) from discontinued operations, diluted | — | | | (0.15) | | | | | |
| Net income (loss)—diluted | $ | 0.97 | | | $ | 0.13 | | | | | |
| Weighted-average common shares outstanding: | | | | | | | |
| Basic | 433 | | 432 | | | | | |
| Diluted | 434 | | 433 | | | | | |
| | | |
| --- | --- | --- |
| | | |
| |
(a)Exclusive of depreciation, amortization and accretion shown separately.
See notes to condensed consolidated financial statements.4
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Civil settlement amount | 18 | SEC-NUM |
medicines sold by us) and communications with competitors regarding the same. On November 30, 2018, the DOJ notified us that it had closed the investigation. The New York Attorney General has also requested that we provide information regarding business practices in the IV saline industry. We cooperated with that request and have been advised that the matter has now been closed.In August 2019, we were named in an amended complaint filed by Fayette County, Georgia in the MDL In re: National Prescription Opiate Litigation pending in the U.S. District Court, Northern District of Ohio. The complaint alleges that multiple manufacturers and distributors of opiate products improperly marketed and diverted these products, which caused harm to Fayette County. The complaint is limited in its allegations as to Baxter and does not distinguish between injectable opiate products and orally administered opiates. We manufactured generic injectable opiate products in our facility in Cherry Hill, NJ, which we divested in 2011.In November 2019, we and certain of our officers were named in a class action complaint captioned Ethan E. Silverman et al. v. Baxter International Inc. et al. that was filed in the United States District Court for the Northern District of Illinois. The plaintiff, who allegedly purchased shares of our common stock during the specified class period, filed this putative class action on behalf of himself and shareholders who acquired Baxter common stock between February 21, 2019 and October 23, 2019. The plaintiff alleges that we and certain officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements and failing to disclose material facts relating to certain intra-company transactions undertaken for the purpose of generating foreign exchange gains or avoiding foreign exchange losses, as well as our internal controls over financial reporting. On January 29, 2020, the Court appointed Varma Mutual Pension Insurance Company and Louisiana Municipal Police Employees Retirement System as lead plaintiffs in the case. Plaintiffs filed an amended complaint on June 25, 2020 containing substantially the same allegations. On August 24, 2020, we filed a motion to dismiss the amended complaint. On January 12, 2021, the Court granted our motion to dismiss the amended complaint but gave plaintiffs an opportunity to file a further-amended complaint. The parties reached an agreement to settle the case for $16 million, subject to the completion of confirmatory discovery and final approval by the Court. The Court granted final approval of the settlement on August 11, 2021 and the settlement became effective on September 13, 2021. In addition, we have received a stockholder request for inspection of our books and records in connection with the announcement made in our Form 8-K on October 24, 2019 that we had commenced an internal investigation into certain intra-company transactions that impacted our previously reported non-operating foreign exchange gains and losses. As initially disclosed on October 24, 2019, we also voluntarily advised the staff of the SEC of our internal investigation and we have been cooperating with the staff of the SEC. On February 18, 2022, we reached a settlement with the SEC, which resolved the SEC’s investigation into related matters. Without admitting or denying the findings in the administrative order issued by the SEC, we agreed to pay a civil penalty of $18 million and to cease and desist from violations of specified provisions of the federal securities laws and related rules. In the order, the SEC acknowledged the Company’s cooperation. We are fully accrued for the civil penalty as of December 31, 2021 and we expect to pay the penalty in the first quarter of 2022.In March 2020, two lawsuits were filed against us in the Northern District of Illinois by plaintiffs alleging injuries as a result of exposure to ethylene oxide used in our manufacturing facility in Mountain Home, Arkansas to sterilize certain of our products. The plaintiffs sought damages, including compensatory and punitive damages in an unspecified amount, and unspecified injunctive and declaratory relief. The parties reached agreement to settle these lawsuits in the third quarter of 2021 for amounts that are not material to our financial results, which were paid in the fourth quarter of 2021. The settlement of these claims does not preclude potential future lawsuits.In July 2021, Hill-Rom, Inc. received a subpoena (from the United States Office of Inspector General for the Department of Health and Human Services (the DHHS) requesting documents and information related to compliance with the False Claims Act and the Anti-Kickback Statute. Hillrom has been working with the DHHS and the DOJ to provide information responsive to the subpoena. Hillrom also voluntarily began a related internal review and Hillrom and now Baxter have been cooperating fully with the DHHS and the DOJ with respect to these matters. The DHHS often issues this type of subpoena when investigating alleged violations of the False Claims Act. On December 28, 2021, Linet Americas, Inc. (Linet) filed a complaint against Hill-Rom Holdings, Inc., Hill-Rom Company, Inc., and Hill-Rom Services, Inc. in the United States District Court for the Northern District of Illinois, captioned Linet Americas, Inc. v. Hill-Rom Holdings, Inc.; Hill-Rom Company, Inc.; Hill-Rom Services, Inc. Linet alleges that Hillrom violated Sections 1, 2 and 3 of The Sherman Antitrust Act of 1890 and the Illinois Antitrust Act by allegedly engaging in anti-competitive conduct in alleged markets for standard, ICU and birthing beds. Hillrom filed an answer to the complaint on January 28, 2022.76
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Gain on sale | 14.2 | SEC-NUM |
EXTRA SPACE STORAGE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)Amounts in thousands, except store and share data, unless otherwise stated
Dispositions
The Company disposed of two previously held for sale stores during the three months ended June 30, 2022, for approximately $38.7 million, resulting in a gain of $14.2 million. 8. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIESInvestments in unconsolidated real estate entities and cash distributions in unconsolidated real estate ventures represent the Company's interest in preferred stock of SmartStop Self Storage REIT, Inc. ("SmartStop") and the Company's noncontrolling interest in real estate joint ventures that own stores. The Company accounts for its investment in SmartStop preferred stock, which does not have a readily determinable fair value, at the transaction price less impairment, if any. The Company accounts for its investments in joint ventures using the equity method of accounting. The Company initially records these investments at cost and subsequently adjusts for cash contributions, distributions and net equity in income or loss, which is allocated in accordance with the provisions of the applicable partnership or joint venture agreement.In these joint ventures, the Company and the joint venture partner generally receive a preferred return on their invested capital. To the extent that cash or profits in excess of these preferred returns are generated through operations or capital transactions, the Company would receive a higher percentage of the excess cash or profits than its equity interest.
The Company separately reports investments with net equity less than zero in cash distributions in unconsolidated real estate ventures in the condensed consolidated balance sheets. The net equity of certain joint ventures is less than zero because distributions have exceeded the Company's investment in and share of income from these joint ventures. This is generally the result of financing distributions, capital events or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization while distributions do not.Net investments in unconsolidated real estate ventures and cash distributions in unconsolidated real estate ventures consist of the following:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of Stores | | Equity Ownership % | | Excess Profit % (1) | | June 30, | | December 31, |
| | 2022 | | 2021 |
| PRISA Self Storage LLC | 85 | | 4% | | 4% | | $ | 8,670 | | | $ | 8,792 | |
| Storage Portfolio II JV LLC | 36 | | 10% | | 30% | | (6,675) | | | (6,116) | |
| Storage Portfolio IV JV LLC | 32 | | 10% | | 30% | | 49,861 | | | 40,174 | |
| Storage Portfolio I LLC | 24 | | 34% | | 49% | | (40,456) | | | (40,168) | |
| PR II EXR JV LLC | 23 | | 25% | | 25% | | 111,125 | | | 70,403 | |
| ESS-CA TIVS JV LP | 16 | | 55% | | 60% | | 31,787 | | | 32,288 | |
| VRS Self Storage, LLC | 16 | | 45% | | 54% | | (15,083) | | | (14,269) | |
| ESS-NYFL JV LP | 11 | | 16% | | 24% | | 11,582 | | | 11,796 | |
| Extra Space Northern Properties Six LLC | 10 | | 10% | | 35% | | (3,162) | | | (3,029) | |
| Alan Jathoo JV LLC | 9 | | 10% | | 10% | | 7,506 | | | 7,621 | |
| ESS Bristol Investments LLC | 8 | | 10% | | 30% | | 2,148 | | | 2,628 | |
| ACPF-EXR JV LLC | 8 | | 10% | | 30% | | 11,225 | | | — | |
| PR EXR Self Storage, LLC | 5 | | 25% | | 40% | | 58,913 | | | 59,393 | |
| Storage Portfolio III JV LLC | 5 | | 10% | | 30% | | 5,533 | | | 5,596 | |
| Other unconsolidated real estate ventures | 16 | | 20-50% | | 20-50% | | 46,420 | | | 18,635 | |
| SmartStop Self Storage REIT, Inc. Preferred Stock (2) | n/a | | n/a | | n/a | | 200,000 | | | 200,000 | |
| Net Investments in and Cash distributions in unconsolidated real estate entities | 304 | | | | | | $ | 479,394 | | | $ | 393,744 | |
(1) Includes pro-rata equity ownership share and maximum potential promoted interest.20
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Aggregate cost | 631 | SEC-NUM |
Investment in EuroclearWe own a 9.8% stake in Euroclear as of December 31, 2021 that we originally purchased for $631 million, and we participate on the Euroclear Board of Directors. Euroclear is a provider of post-trade services, including settlement, central securities depositories and related services for cross-border transactions across asset classes. We classify our investment in Euroclear as an equity investment.In September 2021, we became aware of an observable price change in orderly transactions of similar Euroclear investments by a third party. The transactions resulted in a fair value adjustment of our Euroclear investment, and we recorded a gain of $34 million in other income, which includes the impact of foreign currency translation. Following the adjustment and as of December 31, 2021, the adjusted fair value of our Euroclear investment is $701 million. We are not aware of the occurrence of any observable price changes in orderly transactions of similar Euroclear investments since September 2021.On October 18, 2021, we announced that we had reached an agreement to sell our entire 9.8% stake in Euroclear for €709 million. The sale is subject to customary closing conditions and regulatory approval. As a result of our expectation to sell our Euroclear investment, we include this investment in other current assets as of December 31, 2021.Additionally, we recognized dividend income of $60 million and $19 million in 2021 and 2019, respectively, from Euroclear, included in other income. As a result of a 2020 European regulation limiting dividend payments, we did not receive a Euroclear dividend in 2020, but we received two dividend payments during 2021.Equity Method InvestmentsWe recognized ($42 million), $71 million and $62 million as other income/(expense) during 2021, 2020 and 2019, respectively, related to our equity method investments in OCC, BondLink, Inc., or BondLink and Bakkt, discussed below. BondLink and Bakkt became our equity method investments during 2021, and prior to that, as of December 31, 2020, OCC was our only equity method investment. Our equity method investments are included in other non-current assets in the accompanying consolidated balance sheets. Under the equity method of accounting, each reporting period we adjust the carrying value of our equity method investments on our balance sheet by recognizing our pro-rata share of the earnings or losses of each investment, with a corresponding adjustment in our statement of income to other income, after eliminating any intra-entity income or expenses. In addition, if and when our equity method investments issue cash dividends to us, we deduct the amount of these dividends from the carrying amount of that investment. Investment in OCCWe own a 40% interest in OCC through a direct investment by the NYSE and which is regulated by the SEC and the Commodity Futures Trading Commission, or CFTC, that we treat as an equity method investment. OCC serves as a clearing house for securities options, security futures, commodity futures and options on futures traded on various independent exchanges. OCC clears securities options traded on NYSE Arca and NYSE Amex Options, along with other non-affiliated exchanges, and is regulated by the SEC as a registered clearing agency and by the CFTC as a derivatives clearing organization.We recognized $51 million, $71 million and $62 million during 2021, 2020 and 2019, respectively, of equity earnings as our share of the OCC's estimated profits, which is included in other income.
Investment in BondLink, Inc.On May 12, 2021, we made a 35.0% strategic investment in BondLink, a financial technology company that provides cloud-based debt management software solutions to governments financing infrastructure in the municipal bond market. The Series B investment is designed to accelerate BondLink’s growth and product development, including by providing a variety of our market-leading data sets to municipalities as they prepare to issue bonds. We treat BondLink as an equity method investment which is included in other non-current assets in the accompanying consolidated balance sheet, and we record equity earnings of our share of BondLink's estimated profits, which we include in other income.
Investment in BakktFollowing Bakkt's October 15, 2021 merger with VIH, we initially held a 68% economic interest and we show our share of Bakkt's profits and losses in other income (Note 3). For the three months ended December 31, 2021, we recorded estimated equity losses of ($92 million) related to our investment in Bakkt, and as of December 31, 2021 our carrying value of our Bakkt investment is $1.6 billion.106
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Proceeds from debt, net of issuance costs | 741.0 | SEC-NUM |
[Table of Contents](#i8b61521b6679450490d14f6570be754a_7)CME GROUP INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)(unaudited)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| | | 2022 | | 2021 |
| Cash Flows from Operating Activities | | | | |
| Net income | | $ | 1,373.5 | | | $ | 1,085.4 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| Stock-based compensation | | 39.4 | | | 41.0 | |
| Amortization of purchased intangibles | | 115.5 | | | 120.0 | |
| Depreciation and amortization | | 66.5 | | | 74.7 | |
| | | | | |
| | | | | |
| | | | | |
| Net realized and unrealized (gains) losses on investments | | (3.0) | | | (20.7) | |
| Cash dividends in excess of earnings (undistributed net earnings) of unconsolidated subsidiaries | | (3.9) | | | 1.9 | |
| Deferred income taxes | | (12.0) | | | 19.2 | |
| Change in: | | | | |
| Accounts receivable | | (148.0) | | | (132.5) | |
| Other current assets | | (19.0) | | | (22.3) | |
| Other assets | | 52.1 | | | 31.1 | |
| Accounts payable | | 32.0 | | | (21.0) | |
| Income taxes payable | | (52.2) | | | (83.7) | |
| Other current liabilities | | 5.6 | | | 24.5 | |
| Other liabilities | | (39.0) | | | (17.3) | |
| Other | | 9.2 | | | 2.2 | |
| Net Cash Provided by Operating Activities | | 1,416.7 | | | 1,102.5 | |
| | | | | |
| Cash Flows from Investing Activities | | | | |
| Proceeds from maturities of available-for-sale marketable securities | | 3.9 | | | 5.7 | |
| Purchases of available-for-sale marketable securities | | (2.9) | | | (4.9) | |
| Purchases of property, net | | (41.3) | | | (68.2) | |
| | | | | |
| Investment in S&P/Dow Jones Indices LLC | | (410.0) | | | — | |
| Investments in privately-held equity investments | | (1.1) | | | (1.5) | |
| Purchase of non-controlling interest | | — | | | (12.5) | |
| Proceeds from sales of investments | | 10.9 | | | 13.4 | |
| Net Cash Used in Investing Activities | | (440.5) | | | (68.0) | |
| | | | | |
| Cash Flows from Financing Activities | | | | |
| | | | | |
| Proceeds from debt, net of issuance costs | | 741.0 | | | — | |
| Repayment of debt, including call premium | | (756.2) | | | — | |
| Cash dividends | | (1,906.8) | | | (1,540.0) | |
| | | | | |
| | | | | |
| Change in performance bond and guaranty fund contributions | | (19,519.2) | | | 54,518.0 | |
| Employee taxes paid on restricted stock vesting | | (5.3) | | | (13.5) | |
| Other | | (4.6) | | | (0.8) | |
| Net Cash (Used in) Provided by Financing Activities | | (21,451.1) | | | 52,963.7 | |
12
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Business Combination, Acquisition of Less than 100 Percent, Noncontrolling Interest, Fair Value | 110 | SEC-NUM |
FOX CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSof the adjustment that reflects a redemption in excess of fair value is presented within net income attributable to noncontrolling interests in the Statements of Operations.Concentrations of credit riskCash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.Generally, the Company does not require collateral to secure receivables. As of June 30, 2022, the Company had no customers that accounted for 10% or more of the Company's receivables. As of June 30, 2021, the Company had one individual customer that accounted for approximately 11% of the Company's receivables.NOTE 3. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONSAcquisitions are accounted for under ASC 805, "Business Combinations" ("ASC 805"), which requires, among other things, that an acquirer record any noncontrolling interests in an acquiree at their acquisition date fair value.The Company's acquisitions support the Company's strategy to strengthen its core brands and to selectively enhance production capabilities for its digital and linear platforms. For these acquisitions, the initial accounting for the business combination, including the allocation of the consideration transferred, is based on provisional amounts. The amounts allocated to intangible assets and goodwill, the estimates of useful lives and the related amortization expense are subject to changes pending the completion of the final valuations of certain assets and liabilities. A change in the allocation of consideration transferred and any estimates of useful lives could result in a change in the value allocated to the intangible assets that could impact future amortization expense.Fiscal 2022 and 2021During fiscal 2022, the Company made acquisitions, primarily consisting of three entertainment production companies, for total cash consideration of approximately $240 million. During fiscal 2021, the Company made one acquisition consisting of a digital media company and disposed of its sports marketing businesses. The incremental revenues and Segment EBITDA (as defined in Note 17—Segment Information) related to the fiscal 2022 acquisitions and the fiscal 2021 acquisition and disposals, included in the Company's consolidated results of operations, were not material individually or in the aggregate. The Company finalized its purchase price accounting for the fiscal 2021 acquisition during the fourth quarter of fiscal 2022 without any material adjustments.Fiscal 2020Acquisitions and DisposalsCredible AcquisitionIn October 2019, the Company acquired 67% of the equity in Credible, a U.S. consumer finance marketplace, for approximately $260 million in cash (the "Credible Acquisition"), net of cash acquired. The remaining 33% of Credible not owned by the Company was recorded at fair value on the acquisition date based on the Company's valuation of Credible's business using a market approach (a Level 3 measurement as defined in Note 6—Fair Value). The consideration transferred of approximately $260 million has been allocated, based on a final valuation of 100% of Credible, as follows: approximately $75 million to intangible assets with useful lives ranging from five to 10 years; approximately $285 million representing goodwill; approximately $(110) million to redeemable noncontrolling interests and the remainder to other net assets. The goodwill, which is not tax deductible, reflects the increased market penetration and synergies expected from combining the operations of Credible and the Company. The Company finalized its purchase price accounting for the acquisition during the second quarter of fiscal 2021 without any material adjustments.75
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