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Effective Tax Reconciliation, Change in Deferred Tax Valuation Allowance from Swiss Tax Reform | 62 | SEC-NUM |
impact of discrete items. The lower effective tax rate for the fiscal year ended June 30, 2022 is primarily due to (i) increased income tax benefit resulting from a relative increase in non-U.S. earnings that are subject to more favorable tax rates than in the U.S., and (ii) an increased U.S. foreign tax credit due to amended prior-year returns. The Company also recognized a net deferred benefit of $21 million related to recently enacted tax reform in Switzerland and related transition rules (collectively, “Swiss Tax Reform”) presented in the table above in two components, a gross $83 million deferred tax benefit partially offset by a $62 million valuation allowance charge. The net deferred benefit of $21 million is the best estimate of the deferred tax benefit arising from Swiss Tax Reform. Swiss Tax Reform benefits were partially offset by certain deemed income inclusions in the U.S.and a deferred income tax charge for establishing valuation allowances against the net deferred tax assets of certain Belgian operations. The income tax provision for the fiscal year ended June 30, 2021 was higher than the income tax provision for the fiscal year ended June 30, 2020 due to the sale of the Blow-Fill-Seal Business and an increase in state taxes, offset by an increase in foreign tax credits due to amended prior year returns, as well as a reduction in the foreign valuation allowance.
The Company intends to repatriate foreign earnings taxed in prior fiscal years as a result of the changes imposed by the 2017 U.S. Tax Cuts and Jobs Act. In addition to these foreign earnings previously taxed, as of June 30, 2022, for purposes of ASC 740-10-25-3, the Company had $241 million of undistributed earnings from non-U.S. subsidiaries that it intends to reinvest permanently in its non-U.S. operations. As these ASC 740-10-25-3 earnings are considered permanently reinvested, no tax provision has been accrued. It is not feasible to estimate the amount of tax that might be payable on the eventual remittance of such earnings.Deferred income taxes arise from temporary differences between the financial reporting and tax reporting bases of assets and liabilities, and operating loss and tax credit carryforwards for tax purposes. The components of the Company's deferred income tax assets and liabilities are as follows at June 30, 2022 and 2021:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Fiscal Year Ended June 30, |
| (Dollars in millions) | 2022 | | 2021 |
| Deferred income tax assets: | | | |
| Accrued liabilities | $ | 33 | | | $ | 43 | |
| Equity compensation | 14 | | | 15 | |
| Loss and tax credit carryforwards | 225 | | | 187 | |
| Foreign currency | 19 | | | 12 | |
| Pension | 17 | | | 24 | |
| Interest-related | 14 | | | 14 | |
| Deferred revenue | 1 | | | 3 | |
| | | | |
| Lease liabilities | 39 | | | 35 | |
| Euro-denominated debt | — | | | 23 | |
| Other | 2 | | | — | |
| Total deferred income tax assets | $ | 364 | | | $ | 356 | |
| Valuation allowance | (149) | | | (65) | |
| Net deferred income tax assets | $ | 215 | | | $ | 291 | |
| | | | |
| | | | |
| | Fiscal Year Ended June 30, |
| (Dollars in millions) | 2022 | | 2021 |
| Deferred income tax liabilities: | | | |
| | | | |
| | | | |
| Euro-denominated debt | $ | (6) | | | $ | — | |
| Property-related | (227) | | | (171) | |
| Goodwill and other intangibles | (113) | | | (194) | |
| Right-of-use assets | (21) | | | (18) | |
| Other | (1) | | | (6) | |
| | | | |
| Total deferred income tax liabilities | $ | (368) | | | $ | (389) | |
| | | | |
| Net deferred tax liability | $ | (153) | | | $ | (98) | |
96
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Cancelled | 53.77 | SEC-NUM |
rights. If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.
The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of June 30, 2022, approximately 35.7 million shares were available for future grants under this plan. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of June 30, 2022, the only performance-based awards issued and outstanding were restricted stock awards and units.
Stock options and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date. Time-based restricted stock awards, restricted stock units and stock options granted after January 1, 2017 generally vest on a ratable basis over three years, and awards granted prior to the amendment vest on a cliff basis over three years. The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.
Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.
The following table provides information on stock options outstanding and exercisable at June 30, 2022.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | StockOption Shares(in thousands) | | Weighted-AverageRemaining Term(in years) | | AggregateIntrinsicValue(in millions) | | Weighted-AverageExercise Price PerShare |
| Outstanding | | 1,792 | | | | | 3.1 | | | | $ | 43 | | | | | $ | 31.61 | | |
| Exercisable | | 1,792 | | | | | 3.1 | | | | 43 | | | | | 31.61 | | |
The Company received cash from the exercise of stock options in the amount of $9 million during the first six months of 2022, compared with $18 million in the first six months of 2021. The tax benefit realized as a result of stock option exercises and restricted stock releases was $17 million in the first six months of 2022, compared with $15 million in the first six months of 2021.
As of June 30, 2022, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $62 million, of which $34 million (1.8 million shares) was related to restricted stock awards and units with a performance-based vesting condition. The Company expects to recognize these amounts over a weighted-average period of approximately 1.7 years. There are no other contractual terms covering restricted stock awards once vested.
The following table summarizes restricted stock activity during the six-month period ended June 30, 2022.
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| | | | | | | | | | | | | | | | | | | | | |
| (In thousands of shares) | | Shares | | Weighted-AverageGrant-Date Fair ValuePer Share |
| Restricted stock at December 31, 2021 | | 2,557 | | | | $ | 49.38 | | |
| Granted in 2022 | | 1,045 | | | | 67.07 | | |
| Canceled in 2022 | | (48) | | | | 53.77 | | |
| Vested in 2022 | | (1,117) | | | | 49.66 | | |
| Restricted stock at June 30, 2022 | | 2,437 | | | | $ | 56.00 | | |
In February 2022, the Company granted 390 thousand performance-based stock awards and units, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company estimated the fair value of restricted stock awards and units with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on the risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter.
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Investment securities and cash collateral pledged to Huntington | 861 | SEC-NUM |
[Table of](#ib75bcbc468d84ef69c01608c63d6bb19_10) [Content](#ib75bcbc468d84ef69c01608c63d6bb19_10)Huntington enters into transactions with broker-dealers and banks for various risk management purposes. These types of transactions generally are high dollar volume. Huntington enters into collateral and master netting agreements with these counterparties, and routinely exchanges cash and high quality securities collateral. Huntington enters into transactions with customers to meet their financing, investing, payment and risk management needs. These types of transactions generally are low dollar volume. Huntington enters into master netting agreements with customer counterparties; however, collateral is generally not exchanged with customer counterparties.In addition to the customer derivative credit exposure, aggregate credit risk associated with broker-dealer and bank derivative transactions was net excess collateral of $280 million and net credit risk of $44 million at September 30, 2022 and December 31, 2021, respectively. The net credit risk associated with derivatives is calculated after considering master netting agreements and is reduced by collateral that has been pledged by the counterparty.At September 30, 2022, Huntington pledged $298 million of investment securities and cash collateral to counterparties, while other counterparties pledged $861 million of investment securities and cash collateral to Huntington to satisfy collateral netting agreements. In the event of credit downgrades, Huntington would not be required to provide additional collateral.The following tables present the gross amounts of these assets and liabilities with any offsets to arrive at the net amounts recognized in the Unaudited Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Offsetting of Financial Assets and Derivative Assets |
| | | | | Gross amountsoffset in the unauditedcondensedconsolidatedbalance sheets | | Net amounts ofassetspresented inthe unaudited condensedconsolidatedbalance sheets | | Gross amounts not offset in theunaudited condensed consolidatedbalance sheets | | |
| (dollar amounts in millions) | | Gross amountsof recognizedassets | | | | Financialinstruments | | Cash collateralreceived | | Net amount |
| September 30, 2022 | | $ | 2,523 | | | $ | (2,104) | | | $ | 419 | | | $ | (6) | | | $ | (121) | | | $ | 292 | |
| December 31, 2021 | | 1,065 | | | (465) | | | 600 | | | (65) | | | (31) | | | 504 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Offsetting of Financial Liabilities and Derivative Liabilities |
| | | | | Gross amountsoffset in the unauditedcondensedconsolidatedbalance sheets | | Net amounts ofliabilitiespresented inthe unaudited condensedconsolidatedbalance sheets | | Gross amounts not offset in theunaudited condensed consolidatedbalance sheets | | |
| (dollar amounts in millions) | | Gross amountsof recognizedliabilities | | | | Financialinstruments | | Cash collateraldelivered | | Net amount |
| September 30, 2022 | | $ | 2,663 | | | $ | (1,460) | | | $ | 1,203 | | | $ | (79) | | | $ | (148) | | | $ | 976 | |
| December 31, 2021 | | 743 | | | (624) | | | 119 | | | (3) | | | (116) | | | — | |
15. VIEs Unconsolidated VIEsThe following tables provide a summary of the assets and liabilities included in Huntington’s Unaudited Condensed Consolidated Financial Statements, as well as the maximum exposure to losses, associated with its interests related to unconsolidated VIEs for which Huntington holds an interest in, but is not the primary beneficiary, of the VIE at September 30, 2022, and December 31, 2021:
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| | | | | | | | | | | | | | | | | | |
| | September 30, 2022 |
| (dollar amounts in millions) | Total Assets | | Total Liabilities | | Maximum Exposure to Loss |
| Affordable Housing Tax Credit Partnerships | $ | 1,910 | | | $ | 1,169 | | | $ | 1,910 | |
| Trust Preferred Securities | 8 | | | 179 | | | — | |
| Other Investments | 522 | | | 148 | | | 522 | |
| Total | $ | 2,440 | | | $ | 1,496 | | | $ | 2,432 | |
82 Huntington Bancshares Incorporated
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Total fair value of debt securities, Maturity of 5-10 Years | 2,713 | SEC-NUM |
The following table presents the amortized cost and fair value of debt securities by contractual maturity as of December 31, 2021. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.
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| | | | | | | | | | | | | | | | | | |
| | Distribution of Maturities |
| (in millions) | 1 Year or Less | After 1 Year through 5 Years | After 5 Years through 10 Years | After 10 Years | Total |
| Amortized cost: | | | | | |
| U.S. Treasury and other | $11 | | $— | | $— | | $— | | $11 | |
| State and political subdivisions | — | | — | | — | | 2 | | 2 | |
| Mortgage-backed securities: | | | | | |
| Federal agencies and U.S. government sponsored entities | 7 | | 66 | | 1,914 | | 22,620 | | 24,607 | |
| Other/non-agency | — | | — | | — | | 397 | | 397 | |
| Collateralized loan obligations | — | | — | | 24 | | 1,184 | | 1,208 | |
| Total debt securities available for sale | 18 | | 66 | | 1,938 | | 24,203 | | 26,225 | |
| Mortgage-backed securities: | | | | | |
| Federal agencies and U.S. government sponsored entities | — | | — | | — | | 1,505 | | 1,505 | |
| | | | | | |
| Asset-backed securities | — | | — | | 737 | | — | | 737 | |
| Total debt securities held to maturity | — | | — | | 737 | | 1,505 | | 2,242 | |
| Total amortized cost of debt securities | $18 | | $66 | | $2,675 | | $25,708 | | $28,467 | |
| | | | | | |
| Fair value: | | | | | |
| U.S. Treasury and other | $11 | | $— | | $— | | $— | | $11 | |
| State and political subdivisions | — | | — | | — | | 2 | | 2 | |
| Mortgage-backed securities: | | | | | |
| Federal agencies and U.S. government sponsored entities | 7 | | 68 | | 1,957 | | 22,410 | | 24,442 | |
| Other/non-agency | — | | — | | — | | 405 | | 405 | |
| Collateralized loan obligations | — | | — | | 24 | | 1,183 | | 1,207 | |
| Total debt securities available for sale | 18 | | 68 | | 1,981 | | 24,000 | | 26,067 | |
| Mortgage-backed securities: | | | | | |
| Federal agencies and U.S. government sponsored entities | — | | — | | — | | 1,557 | | 1,557 | |
| | | | | | |
| Asset-backed securities | — | | — | | 732 | | — | | 732 | |
| Total debt securities held to maturity | — | | — | | 732 | | 1,557 | | 2,289 | |
| Total fair value of debt securities | $18 | | $68 | | $2,713 | | $25,557 | | $28,356 | |
Taxable interest income from investment securities as presented in the Consolidated Statements of Operations was $487 million, $519 million and $642 million for the years ended December 31, 2021, 2020 and 2019, respectively.The following table presents realized gains and losses on securities:
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| | Year Ended December 31, |
| (in millions) | 2021 | | 2020 | | 2019 |
| Gains on sale of debt securities(1) | $15 | | | $6 | | | $41 | |
| Losses on sale of debt securities | (5) | | | (2) | | | (16) | |
| Debt securities gains, net | $10 | | | $4 | | | $25 | |
| | | | | | |
(1) For the year ended December 31, 2019, $6 million of gains on sale of debt securities were recognized in mortgage banking fees in the Consolidated Statements of Operations, as they related to AFS securities held as economic hedges of the value of the MSR portfolio recognized using the amortization method.
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| | | Citizens Financial Group, Inc. | 94 |
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Finance Lease, Liability, Payments, Due Year Five | 57 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 18. LEASE COMMITMENTS (Continued)
Lease right-of-use assets and liabilities at December 31 were as follows (in millions):
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| | | | | | | | | | | | | | | |
| | | 2020 | | 2021 |
| Operating leases | | | | |
| Other assets, non-current | | $ | 1,287 | | | $ | 1,337 | |
| | | | | |
| Other liabilities and deferred revenue, current | | $ | 323 | | | $ | 345 | |
| Other liabilities and deferred revenue, non-current | | 991 | | | 1,048 | |
| Total operating lease liabilities | | $ | 1,314 | | | $ | 1,393 | |
| | | | | |
| Finance leases | | | | |
| Property and equipment, gross | | $ | 540 | | | $ | 715 | |
| Accumulated depreciation | | (50) | | | (68) | |
| Property and equipment, net | | $ | 490 | | | $ | 647 | |
| | | | | |
| Company excluding Ford Credit debt payable within one year | | $ | 46 | | | $ | 76 | |
| Company excluding Ford Credit long-term debt | | 368 | | | 489 | |
| Total finance lease liabilities | | $ | 414 | | | $ | 565 | |
The amounts contractually due on our lease liabilities as of December 31, 2021 were as follows (in millions):
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| | | | | | | | | | | | | | | |
| | | Operating Leases (a) | | Finance Leases |
| 2022 | | $ | 385 | | | $ | 94 | |
| 2023 | | 307 | | | 88 | |
| 2024 | | 223 | | | 70 | |
| 2025 | | 161 | | | 62 | |
| 2026 | | 128 | | | 57 | |
| Thereafter | | 335 | | | 288 | |
| Total | | 1,539 | | | 659 | |
| Less: Present value discount | | 146 | | | 94 | |
| Total lease liabilities | | $ | 1,393 | | | $ | 565 | |
\_\_\_\_\_\_\_\_\_\_(a) Excludes approximately $252 million in future lease payments for various operating leases commencing in a future period.153
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Alternative investments, unfunded commitments | 980 | SEC-NUM |
Risk-management instruments above are disclosed on a gross basis. There are various rights of setoff associated with certain of the risk-management instruments above that are subject to enforceable master netting arrangements or similar agreements. Although various rights of setoff and master netting arrangements or similar agreements may exist with the individual counterparties to the risk-management instruments above, individually, these financial rights are not material.We determine our Level 1 and Level 2 fair value measurements based on a market approach using quoted market values, significant other observable inputs for identical or comparable assets or liabilities, or discounted cash flow analyses. Level 3 fair value measurements for other investment securities are determined using unobservable inputs, including the investments' cost adjusted for impairments and price changes from orderly transactions. Fair values are not readily available for certain equity investments measured under the measurement alternative. As of June 30, 2022, we had approximately $980 million of unfunded commitments to invest in venture capital funds, which we anticipate will be paid over a period of up to 10 years. Contingent consideration liability relates to our liability arising in connection with the CVR issued as a result of the Prevail acquisition. The fair value of the CVR liability was estimated using a discounted cash flow analysis and Level 3 inputs, including projections representative of a market participant's view of the expected cash payment associated with the first potential regulatory approval of a Prevail compound in the applicable countries based on probabilities of technical success, timing of the potential approval events for the compounds, and an estimated discount rate. See Note 3 for additional information related to the CVR arrangement. The table below summarizes the contractual maturities of our investments in debt securities measured at fair value as of June 30, 2022:
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Maturities by Period |
| | Total | | Less Than1 Year | | 1-5Years | | 6-10Years | | More Than10 Years |
| Fair value of debt securities | $ | 553.4 | | | $ | 102.1 | | | $ | 170.4 | | | $ | 109.0 | | | $ | 171.9 | |
The net gains (losses) recognized in our consolidated condensed statements of operations for equity securities were $(118.9) million and $(544.3) million for the three and six months ended June 30, 2022, respectively, and $215.4 million and $517.0 million for the three and six months ended June 30, 2021, respectively. The net gains (losses) recognized for the three and six months ended June 30, 2022 and 2021 on equity securities sold during the respective periods were not material.We adjust our equity investments without readily determinable fair values based upon changes in the equity instruments' values resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. Downward adjustments resulting from an impairment are recorded based upon impairment considerations, including the financial condition and near term prospects of the issuer, general market conditions, and industry specific factors. Adjustments recorded for the three and six months ended June 30, 2022 and 2021 were not material.A summary of the amount of unrealized gains and losses in accumulated other comprehensive loss and the fair value of available-for-sale securities in an unrealized gain or loss position follows:
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| | | | | | | | | | | | |
| | June 30, 2022 | | December 31, 2021 |
| Unrealized gross gains | $ | 0.2 | | | $ | 9.7 | |
| Unrealized gross losses | 36.9 | | | 5.2 | |
| Fair value of securities in an unrealized gain position | 28.8 | | | 250.7 | |
| Fair value of securities in an unrealized loss position | 489.2 | | | 290.2 | |
We periodically assess our investment in available-for-sale securities for impairment losses and credit losses. The amount of credit losses are determined by comparing the difference between the present value of future cash flows expected to be collected on these securities and the amortized cost. Factors considered in assessing credit losses include the position in the capital structure, vintage and amount of collateral, delinquency rates, current credit support, and geographic concentration. Impairment and credit losses related to available-for-sale securities were not material for the three and six months ended June 30, 2022 and 2021.26
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Weighted-average exercise price of options outstanding (in dollars per share) | 48.30 | SEC-NUM |
[Table of Contents](#ic085909a172f44ef92ae922b1099b569_7)(11) Net Income Per Share
A reconciliation of basic and diluted share amounts is as follows:
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 26,2022 | | March 27,2021 | | March 26,2022 | | March 27,2021 |
| Basic weighted average common shares outstanding | 251,574 | | | 258,473 | | | 252,537 | | | 258,539 | |
| Weighted average common stock equivalents from assumed exercise of stock options and issuance of restricted stock units | 2,084 | | | 2,276 | | | 2,327 | | | 2,728 | |
| | | | | | | | |
| Diluted weighted average common shares outstanding | 253,658 | | | 260,749 | | | 254,864 | | | 261,267 | |
| Weighted-average anti-dilutive shares related to: | | | | | | | |
| Outstanding stock options and restricted stock units | 1,129 | | | 554 | | | 999 | | | 447 | |
| | | | | | | | |
(12) Stock-Based Compensation
The following presents stock-based compensation expense in the Company’s Consolidated Statements of Income:
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 26,2022 | | March 27,2021 | | March 26,2022 | | March 27,2021 |
| Cost of revenues | $ | 2.6 | | | $ | 2.3 | | | $ | 4.9 | | | $ | 4.5 | |
| Research and development | 2.8 | | | 2.3 | | | 5.5 | | | 4.8 | |
| Selling and marketing | 2.8 | | | 2.7 | | | 5.4 | | | 5.4 | |
| General and administrative | 9.6 | | | 9.7 | | | 20.7 | | | 20.9 | |
| | | | | | | | |
| | $ | 17.8 | | | $ | 17.0 | | | $ | 36.5 | | | $ | 35.6 | |
The Company granted options to purchase 0.6 million and 0.6 million shares of the Company's common stock during the six months ended March 26, 2022 and March 27, 2021, respectively, with weighted-average exercise prices of $71.10 and $68.64, respectively. There were 4.5 million options outstanding at March 26, 2022 with a weighted-average exercise price of $48.30.
The Company uses a binomial model to determine the fair value of its stock options. The weighted-average assumptions utilized to value these stock options are indicated in the following table:
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | March 26,2022 | | March 27,2021 | | March 26,2022 | | March 27,2021 |
| Risk-free interest rate | 1.1 | % | | 0.4 | % | | 1.1 | % | | 0.4 | % |
| Expected volatility | 34.2 | % | | 35.0 | % | | 34.2 | % | | 35.0 | % |
| Expected life (in years) | 4.8 | | 4.8 | | 4.8 | | 4.8 |
| Dividend yield | — | | | — | | | — | | | — | |
| Weighted average fair value of options granted | $ | 20.80 | | | $ | 21.17 | | | $ | 21.02 | | | $ | 20.08 | |
The Company granted 0.6 million and 0.5 million restricted stock units ("RSUs") during the six months ended March 26, 2022 and March 27, 2021, respectively, with weighted-average grant date fair values of $71.15 and $68.51 per unit, respectively. In addition, the Company granted 0.1 million and 0.1 million performance stock units ("PSUs") during the six months ended March 26, 2022 and March 27, 2021, respectively, to members of its senior management team, which have a weighted-average grant date fair value of $71.16 and $68.51 per unit, respectively. Each recipient of PSUs is eligible to receive between zero and 200% of the target number of shares of the Company’s common stock at the end of three years provided the Company’s defined Return on Invested Capital metrics are achieved. The Company also granted 0.1 million and 0.1 million of PSUs based on a three-year cumulative free cash flow measure ("FCF PSUs") to its senior management team, which had a grant date fair value of $71.16 and $68.51 per unit during the six months ended March 26, 2022 and March 27, 2021, respectively. 25
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Amount of non-cash compensation remaining in fiscal period | 32 | SEC-NUM |
market condition will affect the number of shares granted (as the market condition only affects shares granted in excess of certain financial performance targets), and our expectation of achieving the financial performance targets.In February 2021, we reserved a maximum of 0.7 million restricted shares for potential issuance as performance-based restricted shares to certain of our employees. The number of shares ultimately granted under this award is based on our actual financial performance as compared to financial performance targets set by our Board and the Compensation Committee for the year ending December 31, 2021, and is also subject to a market condition reduction based on how our 2021 total stockholder return, or TSR, compared to that of the S&P 500 Index. In 2021, a TSR share reduction was required to reflect that the S&P 500 Index TSR outperformed ours. Based on our actual 2021 financial performance as compared to the 2021 financial performance level thresholds, and as adjusted for the TSR haircut, 0.5 million restricted shares were awarded, which resulted in $58 million in compensation expenses that will be expensed over the three-year accelerated vesting period, including $32 million expensed during 2021.The following is a summary of nonvested restricted shares under all plans discussed above:
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| | | | | | | | | | | | |
| | Number of Restricted Stock Shares(in thousands) | | Weighted Average Grant-Date Fair Value per Share |
| Nonvested at January 1, 2019 | 4,470 | | $60.56 |
| Granted | 1,758 | | 75.75 | |
| Vested | (2,269) | | 57.92 | |
| Forfeited | (231) | | 67.66 | |
| Nonvested at December 31, 2019 | 3,728 | | 68.87 | |
| Granted | 1,697 | | 91.83 | |
| Vested | (2,035) | | 65.21 | |
| Forfeited | (154) | | 79.24 | |
| Nonvested at December 31, 2020 | 3,236 | | 82.73 | |
| Granted | 1,679 | | 115.28 | |
| Vested | (1,619) | | 78.07 | |
| Forfeited | (169) | | 101.47 | |
| Nonvested at December 31, 2021 | 3,127 | | 101.62 | |
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| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended December 31, |
| | | 2021 | | 2020 | | 2019 |
| Time-based restricted stock units granted (in thousands) (1) | | 1,196 | | 910 | | 997 |
| Total fair value of restricted stock vested under all restricted stock plans (in millions) | | $ | 184 | | | $ | 194 | | | $ | 173 | |
(1) The remaining shares granted are performance-based.Performance-based restricted shares have been presented in the table above to reflect the actual shares issued based on the achievement of past performance targets, also considering the impact of any market conditions. Non-vested performance-based restricted shares granted are presented in the table above at the target number of restricted shares that would vest if the performance targets are met. As of December 31, 2021, there were $161 million in total unrecognized compensation costs related to time-based and performance-based restricted stock. These costs are expected to be recognized over a weighted-average period of 1.5 years as the restricted stock vests. Employee Stock Purchase PlanWe offer our employees participation in our ESPP, under which we have reserved and may sell up to 25 million shares of our common stock to employees. The ESPP grants participating employees the right to acquire our stock in increments of 1% of eligible pay, with a maximum contribution of 25% of eligible pay, subject to applicable annual Internal Revenue Service, or IRS, limitations. Under our ESPP, participating employees are limited to $25,000 of common stock annually, and a maximum of 1,250 shares of common stock each offering period. There are two offering periods each year, from January 1st (or the first trading day thereafter) through June 30th (or the last trading day prior to such date) and from July 1st (or the first trading day thereafter) through December 31st (or the last trading day prior to such date). The purchase price per share of common stock is 85% of the lesser of the fair market value of the stock on the first or the last trading 120
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Shares issued, shares, share-based payment arrangement, after forfeiture (in shares) | 3 | SEC-NUM |
Stock options granted become exercisable as determined by the grant agreement and expire ten years after the date of grant under these plans. Restricted Stock Units ("RSU") vest as determined by the grant agreement and are subject to a service condition, which requires grantees to remain employed by the Company during the period following the date of grant. Under the terms of the RSUs, the vesting period is referred to as the restricted period. In addition to the service condition, certain granted RSUs are subject to performance requirements that can vary between the first year and up to the final year of the RSU award. If targeted performance is not met the RSU granted is adjusted to reflect the achievement level. Upon the expiration of the applicable restricted period and the satisfaction of all conditions imposed, the restrictions on RSUs will lapse, and shares of common stock will be issued as payment for each vested RSU. Upon death, disability or qualified retirement all awards become immediately exercisable for up to one year. Awards are expensed as compensation over their respective vesting periods or to the eligible retirement date if shorter. The Company records forfeitures on stock-based compensation as the participant terminates rather than estimating forfeitures.
During 2019, the Company granted certain performance-based RSUs issued under the 2016 Omnibus Incentive Plan to provide performance targets for the Company's previously disclosed three year restructuring program announced in November 2018. The adjusted operating income margin performance target approximates the adjusted operating income margin targets previously disclosed by the Company as part of its effort to support revenue growth and margin expansion. The performance period began on January 1, 2019 and concludes on December 31, 2022. Under this program the Company could issue up to 3 million shares of common stock if all performance targets are met within the period. See Note 16 Equity for more information.
Income Taxes
The Company’s tax expense includes U.S. and international income taxes plus the provision for U.S. taxes on undistributed earnings of international subsidiaries not deemed to be permanently invested. Tax credits and other incentives reduce tax expense in the year the credits are claimed. Certain items of income and expense are not reported in tax returns and financial statements in the same year. The tax effect of such temporary differences is reported as deferred income taxes. Deferred tax assets are recognized if it is more likely than not that the assets will be realized in future years. The Company establishes a valuation allowance for deferred tax assets for which realization is not likely.
The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes in the consolidated financial statements the impact of a tax position if that position is more likely than not of being sustained upon examination by the taxing authorities based on the technical merits of the position.
The Company’s tax positions are subject to ongoing examinations by the tax authorities. The Company operates within multiple taxing jurisdictions throughout the world and in the normal course of business is examined by taxing authorities in those jurisdictions. Adjustments to the uncertain tax positions are recorded when taxing authority examinations are completed, statutes of limitation are closed, changes in tax laws occur or as new information comes to light with regard to the technical merits of the tax position.
Earnings Per Share
Basic earnings per share are calculated by dividing net earnings attributable to Company’s shareholders by the weighted average number of shares outstanding for the period. Diluted earnings per share is calculated by dividing net earnings attributable to Company’s shareholders by the weighted average number of shares outstanding for the period, adjusted for the effect of an assumed exercise of all dilutive options outstanding at the end of the period, unless the impact of including these options is anti-dilutive.
Business Acquisitions
The Company acquires businesses as well as partial interests in businesses. Acquired businesses are accounted for using the acquisition method of accounting which requires the Company to record assets acquired and liabilities assumed at their respective fair values with the excess of the purchase price over estimated fair values recorded as goodwill.
The Company obtains information during due diligence and through other sources to establish respective fair values. Examples of factors and information that the Company uses to determine the fair values include: tangible and intangible asset valuations and appraisals, and evaluations of existing contingencies, liabilities, and product line information. If the initial valuation for an acquisition is incomplete by the end of the reporting period in which the acquisition occurred, the Company will record provisional estimates in the financial statements. The provisional estimates will be finalized as soon as information becomes available, but not later than one year from the acquisition date. 67
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Options Outstanding - Weighted-Average Exercise Price Per Share | 31.61 | SEC-NUM |
rights. If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan.
The Plan allows awards to Company employees for incentive stock options (ISOs), non-qualifying stock options (NQSOs), restricted stock, restricted stock units, and stock appreciation rights. Non-employee directors are eligible for grants of NQSOs, restricted stock, and stock appreciation rights. As of June 30, 2022, approximately 35.7 million shares were available for future grants under this plan. The ISOs and NQSOs have a term of 10 years, and the share-based awards generally vest upon time-based conditions or time and performance-based conditions. Time-based vesting generally occurs after three years. Performance-based vesting conditions generally include the attainment of goals related to Company financial performance. As of June 30, 2022, the only performance-based awards issued and outstanding were restricted stock awards and units.
Stock options and stock appreciation rights granted under the amended Plan have an exercise price of at least the fair market value of the underlying stock on the grant date and have an expiration date no later than 10 years from the grant date. Time-based restricted stock awards, restricted stock units and stock options granted after January 1, 2017 generally vest on a ratable basis over three years, and awards granted prior to the amendment vest on a cliff basis over three years. The Compensation Committee of the Board of Directors has the discretion to determine vesting schedules.
Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.
The following table provides information on stock options outstanding and exercisable at June 30, 2022.
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| | StockOption Shares(in thousands) | | Weighted-AverageRemaining Term(in years) | | AggregateIntrinsicValue(in millions) | | Weighted-AverageExercise Price PerShare |
| Outstanding | | 1,792 | | | | | 3.1 | | | | $ | 43 | | | | | $ | 31.61 | | |
| Exercisable | | 1,792 | | | | | 3.1 | | | | 43 | | | | | 31.61 | | |
The Company received cash from the exercise of stock options in the amount of $9 million during the first six months of 2022, compared with $18 million in the first six months of 2021. The tax benefit realized as a result of stock option exercises and restricted stock releases was $17 million in the first six months of 2022, compared with $15 million in the first six months of 2021.
As of June 30, 2022, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock awards and units was $62 million, of which $34 million (1.8 million shares) was related to restricted stock awards and units with a performance-based vesting condition. The Company expects to recognize these amounts over a weighted-average period of approximately 1.7 years. There are no other contractual terms covering restricted stock awards once vested.
The following table summarizes restricted stock activity during the six-month period ended June 30, 2022.
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| (In thousands of shares) | | Shares | | Weighted-AverageGrant-Date Fair ValuePer Share |
| Restricted stock at December 31, 2021 | | 2,557 | | | | $ | 49.38 | | |
| Granted in 2022 | | 1,045 | | | | 67.07 | | |
| Canceled in 2022 | | (48) | | | | 53.77 | | |
| Vested in 2022 | | (1,117) | | | | 49.66 | | |
| Restricted stock at June 30, 2022 | | 2,437 | | | | $ | 56.00 | | |
In February 2022, the Company granted 390 thousand performance-based stock awards and units, which are contingent on the achievement of the Company's financial performance metrics and its market-based conditions. On the date of grant, the Company estimated the fair value of restricted stock awards and units with market-based conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on the risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter.
65
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Acquisitions/Transferred Assets | 247 | SEC-NUM |
Changes in the postretirement benefit obligation and plan assets, as applicable, are detailed in the following table:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | U.S. Plans | | Non-U.S. Plans | | Postretirement Benefits |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| Benefit obligation at beginning of year | $ | 682 | | | $ | 621 | | | $ | 1,294 | | | $ | 1,099 | | | $ | 69 | | | $ | 64 | |
| Service cost for benefits earned | 1 | | | 1 | | | 42 | | | 24 | | | 1 | | | 1 | |
| Interest cost on projected benefit obligation | 12 | | | 17 | | | 10 | | | 13 | | | 1 | | | 2 | |
| Actuarial (gain) loss | (5) | | | 77 | | | (146) | | | 109 | | | (4) | | | 5 | |
| Plan amendments | — | | | — | | | (2) | | | — | | | — | | | — | |
| Adjustments for expense/tax contained in service cost | — | | | — | | | (2) | | | (1) | | | — | | | — | |
| Plan participants’ contributions | — | | | — | | | 4 | | | 3 | | | — | | | — | |
| Benefits paid | (37) | | | (34) | | | (34) | | | (28) | | | (4) | | | (3) | |
| Curtailments / settlements | — | | | — | | | (39) | | | (11) | | | — | | | — | |
| | | | | | | | | | | | |
| Translation adjustments | — | | | — | | | (93) | | | 86 | | | — | | | — | |
| Acquisitions/Transferred Liabilities | — | | | — | | | 465 | | | — | | | 3 | | | — | |
| Other | 9 | | | — | | | 2 | | | — | | | — | | | — | |
| Benefit obligation at end of year | $ | 662 | | | $ | 682 | | | $ | 1,501 | | | $ | 1,294 | | | $ | 66 | | | $ | 69 | |
| | | | | | | | | | | | |
| Fair value of plan assets at beginning of year | $ | 678 | | | $ | 602 | | | $ | 1,145 | | | $ | 1,005 | | | | | |
| Actual return on plan assets | 3 | | | 106 | | | 25 | | | 84 | | | | | |
| Employer contributions | 5 | | | 4 | | | 32 | | | 20 | | | | | |
| Participants’ contributions | — | | | — | | | 4 | | | 3 | | | | | |
| Benefits paid | (37) | | | (34) | | | (34) | | | (28) | | | | | |
| Settlements | — | | | — | | | (24) | | | (11) | | | | | |
| Translation adjustments | — | | | — | | | (74) | | | 70 | | | | | |
| Acquisitions/Transferred Assets | — | | | — | | | 247 | | | — | | | | | |
| Other | — | | | — | | | (1) | | | 2 | | | | | |
| Fair value of plan assets at end of year | $ | 649 | | | $ | 678 | | | $ | 1,320 | | | $ | 1,145 | | | | | |
| Funded status at end of year | $ | (13) | | | $ | (4) | | | $ | (181) | | | $ | (149) | | | | | |
The amounts recognized in the balance sheet are detailed in the following table:
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| | U.S. Plans | | Non-U.S. Plans |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 | | 2021 | | 2020 |
| Other assets | $ | 53 | | | $ | 54 | | | $ | 83 | | | $ | 47 | |
| Other current liabilities | (5) | | | (4) | | | (2) | | | (1) | |
| Retirement liabilities | (61) | | | (54) | | | (262) | | | (195) | |
| Net amount recognized | $ | (13) | | | $ | (4) | | | $ | (181) | | | $ | (149) | |
The amounts recognized in AOCI are detailed in the following table:
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| | U.S. Plans | | Non-U.S. Plans | | Postretirement Benefits |
| (DOLLARS IN MILLIONS) | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| Net actuarial loss | $ | 137 | | | $ | 134 | | | $ | 291 | | | $ | 454 | | | $ | 14 | | | $ | 19 | |
| Prior service cost (credit) | — | | | — | | | (3) | | | (2) | | | (15) | | | (21) | |
| Total AOCI (before tax effects) | $ | 137 | | | $ | 134 | | | $ | 288 | | | $ | 452 | | | $ | (1) | | | $ | (2) | |
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Disposal Group, Including Discontinued Operation, Liabilities, Noncurrent | 125 | SEC-NUM |
[Table of Contents](#i0fa971ac9e834218957059819155291f_10)Combined Notes to Consolidated Financial Statements(Dollars in millions, except per share data unless otherwise noted)
Note 2 — Mergers, Acquisitions, and DispositionsThe following table summarizes the effects of the changes in Generation's ownership interest in CENG in Exelon's Shareholders' Equity:
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| | | | | | | | | |
| | | For the Year Ended December 31, 2021 |
| Net income attributable to Exelon's common shareholders | | $ | 1,706 | |
| Pre-tax increase in Exelon's common stock for purchase of EDF's 49.99% equity interest(a) | | 1,080 | |
| Decrease in Exelon's common stock due to deferred tax liabilities resulting from purchase of EDF's 49.99% equity interest(a) | | (290) | |
| Change from net income attributable to common stock and transfers from noncontrolling interest | | $ | 2,496 | |
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\_\_\_\_\_\_\_\_\_(a)Represents non-cash activity in Exelon’s consolidated financial statements. Agreement for Sale of Generation’s Solar BusinessOn December 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable, for the sale of a significant portion of Generation’s solar business, including 360 MW of generation in operation or under construction across more than 600 sites across the United States. Generation will retain certain solar assets not included in this agreement, primarily Antelope Valley. Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions which were satisfied in the first quarter of 2021. The sale was completed on March 31, 2021 for a purchase price of $810 million. Exelon received cash proceeds of $675 million, net of $125 million long-term debt assumed by the buyer and certain working capital and other post-closing adjustments. Exelon recognized a pre-tax gain of $68 million which is included in Gain on sales of assets and businesses in the Consolidated Statements of Operations and Comprehensive Income. See Note 17 — Debt and Credit Agreements for additional information on the SolGen nonrecourse debt included as part of the transaction.Agreement for the Sale of a Generation Biomass FacilityOn April 28, 2021, Generation and ReGenerate entered into a purchase agreement, under which ReGenerate agreed to purchase Generation’s interest in the Albany Green Energy biomass facility. As a result, in the second quarter of 2021, Exelon recorded a pre-tax impairment charge of $140 million in Operating and maintenance expense in the Consolidated Statement of Operations and Comprehensive Income. Completion of the transaction was subject to the satisfaction of various customary closing conditions which were satisfied in the second quarter of 2021. The sale was completed on June 30, 2021 for a net purchase price of $36 million.Disposition of Oyster Creek On July 31, 2018, Generation entered into an agreement with Holtec and its indirect wholly owned subsidiary, OCEP, for the sale and decommissioning of Oyster Creek located in Forked River, New Jersey, which permanently ceased generation operations on September 17, 2018. Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions, including approval of the license transfer from the NRC and other regulatory approvals, and a private letter ruling from the IRS, which were satisfied in the second quarter of 2019. The sale was completed on July 1, 2019. Exelon recognized a loss on the sale in the third quarter of 2019, which was immaterial.Under the terms of the transaction, Generation transferred to OCEP substantially all the assets associated with Oyster Creek, including assets held in NDT funds, along with the assumption of liability for all responsibility for the site, including full decommissioning and ongoing management of the SNF until it is moved offsite. The terms of the transaction also include various forms of performance assurance for the obligations of OCEP to timely complete the required decommissioning, including a parental guaranty from Holtec for all performance and payment obligations of OCEP, and a requirement for Holtec to deliver a letter of credit to Generation upon the occurrence of specified events.201
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Title of 12(b) Security | Common stock, $2.00 par | SEC-NUM | United States Securities and Exchange CommissionWashington, D.C. 20549 Form 10-K
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| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the fiscal year ended December 31, 2021.
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ to \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_. Commission file number 000-04604 Cincinnati Financial Corporation (Exact name of registrant as specified in its charter)
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| Ohio | 31-0746871 |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
6200 S. Gilmore Road Fairfield, Ohio 45014-5141 (Address of principal executive offices) (Zip Code)(513) 870-2000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common stock, $2.00 par | | CINF | | Nasdaq Global Select Market |
Securities registered pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 if Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.Cincinnati Financial Corporation - 2021 10-K - Page 1
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Common stock, dividends per share (in usd per share) | 0.02 | SEC-NUM |
Howmet Aerospace Inc. and subsidiariesStatement of Changes in Consolidated Equity (unaudited)(U.S. dollars in millions, except per-share amounts)
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| | Howmet Aerospace Shareholders | | | | |
| | Preferredstock | | | | Commonstock | | Additionalcapital | | Retained earnings | | | | Accumulatedothercomprehensiveloss | | | | TotalEquity |
| Balance at December 31, 2020 | $ | 55 | | | | | $ | 433 | | | $ | 4,668 | | | $ | 364 | | | | | $ | (1,943) | | | | | $ | 3,577 | |
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| Net income | — | | | | | — | | | — | | | 80 | | | | | — | | | | | 80 | |
| Other comprehensive income ([I](#ib58fce0f7c97431fb8cb1c861d028b02_67)) | — | | | | | — | | | — | | | — | | | | | 2 | | | | | 2 | |
| Cash dividends declared: | | | | | | | | | | | | | | | | | |
| Preferred-Class A @ $0.9375 per share | — | | | | | — | | | — | | | (1) | | | | | — | | | | | (1) | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Stock-based compensation | — | | | | | — | | | 6 | | | — | | | | | — | | | | | 6 | |
| Common stock issued: compensation plans | — | | | | | 1 | | | (3) | | | — | | | | | — | | | | | (2) | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Balance at March 31, 2021 | $ | 55 | | | | | $ | 434 | | | $ | 4,671 | | | $ | 443 | | | | | $ | (1,941) | | | | | $ | 3,662 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Howmet Aerospace Shareholders | | | | |
| | Preferredstock | | | | Commonstock | | Additionalcapital | | Retained earnings | | | | Accumulatedothercomprehensiveloss | | | | TotalEquity |
| Balance at December 31, 2021 | $ | 55 | | | | | $ | 422 | | | $ | 4,291 | | | $ | 603 | | | | | $ | (1,863) | | | | | $ | 3,508 | |
| | | | | | | | | | | | | | | | | | |
| Net income | — | | | | | — | | | — | | | 131 | | | | | — | | | | | 131 | |
| Other comprehensive income ([I](#ib58fce0f7c97431fb8cb1c861d028b02_67)) | — | | | | | — | | | — | | | — | | | | | (1) | | | | | (1) | |
| Cash dividends declared: | | | | | | | | | | | | | | | | | |
| Preferred-Class A @ $0.9375 per share | — | | | | | — | | | — | | | (1) | | | | | — | | | | | (1) | |
| Common @ $0.02 per share | — | | | | | — | | | — | | | (8) | | | | | — | | | | | (8) | |
| Repurchase and retirement of common stock | — | | | | | (5) | | | (170) | | | — | | | | | — | | | | | (175) | |
| Stock-based compensation | — | | | | | — | | | 11 | | | — | | | | | — | | | | | 11 | |
| Common stock issued: compensation plans | — | | | | | 1 | | | (9) | | | — | | | | | — | | | | | (8) | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Balance at March 31, 2022 | $ | 55 | | | | | $ | 418 | | | $ | 4,123 | | | $ | 725 | | | | | $ | (1,864) | | | | | $ | 3,457 | |
The accompanying notes are an integral part of the consolidated financial statements.7
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Charter Holdings convertible preferred units | 38 | SEC-NUM |
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(dollars in millions, except per share amounts and where indicated)
Stock options and restricted stock units generally cliff vest three years from the date of grant. Stock options generally expire ten years from the grant date and restricted stock units have no voting rights. Restricted stock generally vests one year from the date of grant.
As of March 31, 2022, total unrecognized compensation remaining to be recognized in future periods totaled $380 million for stock options, $0.2 million for restricted stock and $378 million for restricted stock units and the weighted average period over which they are expected to be recognized is two years for stock options, one month for restricted stock and two years for restricted stock units.
The Company recorded stock compensation expense of $147 million and $134 million for the three months ended March 31, 2022 and 2021, respectively, which is included in operating costs and expenses.
12. Earnings Per Share
Basic earnings per common share is computed by dividing net income attributable to Charter shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share considers the impact of potentially dilutive securities using the treasury stock and if-converted methods and is based on the weighted average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, restricted stock, restricted stock units, equity awards with market conditions and Charter Holdings convertible preferred units and common units. Charter Holdings common units of 21 million and 15 million for the three months ended March 31, 2022 and 2021, respectively, were not included in the computation of diluted earnings per share as their effect would have been antidilutive. The following is the computation of diluted earnings per common share for the three months ended March 31, 2022 and 2021.
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | | | Three Months Ended March 31, |
| | | | | | 2022 | | 2021 |
| Numerator: | | | | | | | |
| Net income attributable to Charter shareholders | | | | | $ | 1,203 | | | $ | 807 | |
| Effect of dilutive securities: | | | | | | | |
| | | | | | | | |
| Charter Holdings convertible preferred units | | | | | — | | | 38 | |
| Net income attributable to Charter shareholders after assumed conversions | | | | | $ | 1,203 | | | $ | 845 | |
| | | | | | | | |
| Denominator: | | | | | | | |
| Weighted average common shares outstanding, basic | | | | | 170,688,127 | | | 191,404,527 | |
| Effect of dilutive securities: | | | | | | | |
| Assumed exercise or issuance of shares relating to stock plans | | | | | 3,812,345 | | | 5,134,509 | |
| | | | | | | | |
| Weighted average Charter Holdings convertible preferred units | | | | | — | | | 9,333,500 | |
| Weighted average common shares outstanding, diluted | | | | | 174,500,472 | | | 205,872,536 | |
| | | | | | | | |
| Basic earnings per common share attributable to Charter shareholders | | | | | $ | 7.05 | | | $ | 4.22 | |
| Diluted earnings per common share attributable to Charter shareholders | | | | | $ | 6.90 | | | $ | 4.11 | |
13. Contingencies
Sprint filed a patent suit against Charter and Bright House Networks, LLC ("Bright House") on December 2, 2017 in the United States District Court for the District of Delaware. The Company brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the United States District Court for the District of Delaware implicating Sprint's LTE technology and a similar suit against T-Mobile in the United States District Court for the Western District of Texas.
Sprint filed a subsequent patent suit against Charter on May 17, 2018. On February 18, 2020, Sprint filed a lawsuit against Charter, Bright House and Time Warner Cable Inc. in the United States District Court for the District of Kansas alleging that Charter misappropriated trade secrets from Sprint years ago through employees hired by Bright House. Charter, T-Mobile and
11
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Income tax benefit for adjustments associated to uncertain tax positions | 51 | SEC-NUM |
[Table of Contents](#i43adbcd383bc4dc48977980bcb999d17_79) HP INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)Note 6: Taxes on Earnings (Continued)position charges, and $9 million of other net tax charges. These charges were partially offset by income tax benefits of $393 million related to changes in valuation allowances, $89 million of tax effects related to internal reorganization, $50 million related to restructuring charges, and $16 million related to the filing of tax returns in various jurisdictions. In fiscal year 2021, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.In fiscal year 2020, HP recorded $244 million of net income tax benefits related to discrete items in the provision for taxes. This amount included tax benefits related to audit settlements of $124 million in various jurisdictions and $82 million related to restructuring benefits. Additionally, HP recorded benefits of $20 million related to proxy contest costs and $17 million of other net tax benefits. In fiscal year 2020, excess tax benefits associated with stock options, restricted stock units and performance-adjusted restricted stock units were immaterial.In fiscal year 2019, HP recorded $1.3 billion of net income tax benefits related to discrete items in the provision for taxes. This amount included tax benefits related to audit settlements of $1.0 billion, $75 million due to ability to utilize tax attributes, $57 million of restructuring benefits and net valuation allowance releases of $94 million. HP also recorded benefits of $78 million related to U.S. tax reform as a result of new guidance issued by the U.S. Internal Revenue Service (“IRS”). These benefits were partially offset by uncertain tax position charges of $51 million. In fiscal year 2019, in addition to the discrete items mentioned above, HP recorded excess tax benefits of $20 million associated with stock options, restricted stock units and performance-adjusted restricted stock units.As a result of certain employment actions and capital investments HP has undertaken, income from manufacturing and services in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, through 2029. The gross income tax benefits attributable to these actions and investments were estimated to be $385 million ($0.32 diluted net EPS) in fiscal year 2021, $344 million ($0.24 diluted net EPS) in fiscal year 2020 and $386 million ($0.25 diluted net EPS) in fiscal year 2019. Uncertain Tax PositionsA reconciliation of unrecognized tax benefits is as follows:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | For the fiscal years ended October 31 |
| | 2021 | | 2020 | | 2019 |
| | In millions |
| Balance at beginning of year | $ | 820 | | | $ | 929 | | | $ | 7,771 | |
| Increases: | | | | | |
| For current year’s tax positions | 63 | | | 59 | | | 79 | |
| For prior years’ tax positions | 92 | | | 71 | | | 172 | |
| Decreases: | | | | | |
| For prior years’ tax positions | (92) | | | (89) | | | (37) | |
| Statute of limitations expirations | (9) | | | (2) | | | (15) | |
| Settlements with taxing authorities | (54) | | | (148) | | | (7,041) | |
| Balance at end of year | $ | 820 | | | $ | 820 | | | $ | 929 | |
As of October 31, 2021, the amount of gross unrecognized tax benefits was $820 million, of which up to $660 million would affect HP’s effective tax rate if realized. As of October 31, 2020, the amount of unrecognized tax benefits was $820 million of which up to $657 million would affect HP’s effective tax rate if realized. The amount of unrecognized tax benefit changed by a net immaterial amount. HP recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in the provision for taxes in the Consolidated Statements of Earnings. As of October 31, 2021, 2020 and 2019, HP had accrued $70 million, $34 million and $56 million, respectively, for interest and penalties.HP engages in continuous discussions and negotiations with taxing authorities regarding tax matters in various jurisdictions. HP expects complete resolution of certain tax years with various tax authorities within the next 12 months. HP believes it is reasonably possible that its existing gross unrecognized tax benefits may be reduced by up to $72 million within the next 12 months, affecting HP’s effective tax rate if realized.84
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Preferred shares, authorized | 15,000,000 | SEC-NUM |
Table of Contents
Federal Realty Investment TrustConsolidated Balance Sheets
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | June 30, | | December 31, |
| | 2022 | | 2021 |
| | (In thousands, except share and per share data) |
| | (Unaudited) | | |
| ASSETS | | | |
| Real estate, at cost | | | |
| Operating (including $2,219,568 and $2,207,648 of consolidated variable interest entities, respectively) | $ | 9,076,274 | | | $ | 8,814,791 | |
| Construction-in-progress (including $24,865 and $18,752 of consolidated variable interest entities, respectively) | 630,287 | | | 607,271 | |
| | | | |
| | 9,706,561 | | | 9,422,062 | |
| Less accumulated depreciation and amortization (including $418,633 and $389,950 of consolidated variable interest entities, respectively) | (2,648,474) | | | (2,531,095) | |
| Net real estate | 7,058,087 | | | 6,890,967 | |
| Cash and cash equivalents | 176,559 | | | 162,132 | |
| Accounts and notes receivable, net | 187,370 | | | 169,007 | |
| Mortgage notes receivable, net | 9,499 | | | 9,543 | |
| Investment in partnerships | 13,515 | | | 13,027 | |
| Operating lease right of use assets | 89,613 | | | 90,743 | |
| Finance lease right of use assets | 49,190 | | | 49,832 | |
| Prepaid expenses and other assets | 226,608 | | | 237,069 | |
| | | | |
| TOTAL ASSETS | $ | 7,810,441 | | | $ | 7,622,320 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| Liabilities | | | |
| Mortgages payable, net (including $317,619 and $335,301 of consolidated variable interest entities, respectively) | $ | 321,975 | | | $ | 339,993 | |
| | | | |
| Notes payable, net | 301,480 | | | 301,466 | |
| Senior notes and debentures, net | 3,406,895 | | | 3,406,088 | |
| Accounts payable and accrued expenses | 226,660 | | | 235,168 | |
| Dividends payable | 87,397 | | | 86,538 | |
| Security deposits payable | 27,232 | | | 25,331 | |
| Operating lease liabilities | 71,827 | | | 72,661 | |
| Finance lease liabilities | 72,019 | | | 72,032 | |
| Other liabilities and deferred credits | 209,217 | | | 206,187 | |
| Total liabilities | 4,724,702 | | | 4,745,464 | |
| Commitments and contingencies (Note 6) | | | |
| Redeemable noncontrolling interests | 209,312 | | | 213,708 | |
| Shareholders’ equity | | | |
| Preferred shares, authorized 15,000,000 shares, $.01 par: | | | |
| 5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding | 150,000 | | | 150,000 | |
| 5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 392,878 and 399,896 shares issued and outstanding, respectively | 9,822 | | | 9,997 | |
| Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 80,896,804 and 78,603,305 shares issued and outstanding, respectively | 813 | | | 790 | |
| Additional paid-in capital | 3,758,161 | | | 3,488,794 | |
| Accumulated dividends in excess of net income | (1,126,463) | | | (1,066,932) | |
| Accumulated other comprehensive income (loss) | 3,550 | | | (2,047) | |
| Total shareholders’ equity of the Trust | 2,795,883 | | | 2,580,602 | |
| Noncontrolling interests | 80,544 | | | 82,546 | |
| Total shareholders’ equity | 2,876,427 | | | 2,663,148 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 7,810,441 | | | $ | 7,622,320 | |
The accompanying notes are an integral part of these consolidated statements.3
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Options vested and expected to vest, Weighted average exercise price (in dollars per share) | 112.70 | SEC-NUM |
[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the stock option activity and related information for the periods presented below (in millions, except exercise prices and contractual life):
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Options Outstanding |
| | Numberof Shares | | Weighted-AverageExercisePrice | | Weighted-AverageRemainingContractualLife (Years) | | AggregateIntrinsicValue |
| Balance—December 31, 2021 | 2.7 | | | $ | 92.87 | | | 4.0 | | $ | 729.9 | |
| Granted | 0.3 | | | 310.54 | | | | | |
| Forfeited | — | | | 178.88 | | | | | |
| Exercised | (0.1) | | | 86.37 | | | | | |
| Balance—March 31, 2022 | 2.9 | | | $ | 112.70 | | | | | |
| Options vested and expected to vest—March 31, 2022 | 2.9 | | | $ | 112.70 | | | 4.0 | | $ | 655.3 | |
| Options exercisable—March 31, 2022 | 1.8 | | | $ | 66.68 | | | 3.0 | | $ | 482.4 | |
The aggregate intrinsic value represents the difference between the exercise price of stock options and the quoted market price of our common stock on March 31, 2022 for all in-the-money stock options. Stock compensation expense is recognized on a straight-line basis over the vesting period of each stock option. As of March 31, 2022, total compensation expense related to unvested stock options granted to employees but not yet recognized was $67.0 million, with a weighted-average remaining vesting period of 3.1 years.
Additional information related to our stock options is summarized below (in millions, except per share amounts):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| | March 31,2022 | | March 31,2021 | | | | |
| Weighted-average fair value per share granted | $ | 111.62 | | | $ | 56.49 | | | | | |
| Intrinsic value of options exercised | $ | 29.9 | | | $ | 22.3 | | | | | |
| Fair value of options vested | $ | 10.2 | | | $ | 7.0 | | | | | |
Stock-Based Compensation Expense
Stock-based compensation expense, including stock-based compensation expense related to awards classified as liabilities, is included in costs and expenses as follows (in millions):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| | March 31,2022 | | March 31,2021 | | | | |
| Cost of product revenue | $ | 0.4 | | | $ | 0.4 | | | | | |
| Cost of service revenue | 4.5 | | | 3.5 | | | | | |
| Research and development | 15.1 | | | 13.0 | | | | | |
| Sales and marketing | 26.7 | | | 26.8 | | | | | |
| General and administrative | 7.2 | | | 6.3 | | | | | |
| Total stock-based compensation expense | $ | 53.9 | | | $ | 50.0 | | | | | |
21
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Benefits from business restructuring | 45 | SEC-NUM |
Note 17 - Income Taxes
Amcor plc is a tax resident of the United Kingdom of Great Britain and Northern Ireland ("UK").
The components of income from continuing operations before income taxes and equity in income/(loss) of affiliated companies were as follows:
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| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| ($ in millions) | | 2022 | | 2021 | | 2020 |
| Domestic (UK) | | $ | (58) | | | $ | (25) | | | $ | (36) | |
| Foreign | | 1,173 | | | 1,218 | | | 861 | |
| Total income from continuing operations before income taxes and equity in income/(loss) of affiliated companies | | $ | 1,115 | | | $ | 1,193 | | | $ | 825 | |
Income tax expense consisted of the following:
| | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| ($ in millions) | | 2022 | | 2021 | | 2020 |
| Current tax | | | | | | |
| Domestic (UK) | | $ | 2 | | | $ | 11 | | | $ | 1 | |
| Foreign | | 331 | | | 246 | | | 300 | |
| Total current tax | | 333 | | | 257 | | | 301 | |
| Deferred tax | | | | | | |
| Domestic (UK) | | (10) | | | (1) | | | 1 | |
| Foreign | | (23) | | | 5 | | | (115) | |
| Total deferred tax | | (33) | | | 4 | | | (114) | |
| Income tax expense | | $ | 300 | | | $ | 261 | | | $ | 187 | |
The deferred tax benefit in fiscal year 2020 related to undistributed foreign earnings and included the tax impact of the EC Remedy sale of $83 million.
The following is a reconciliation of income tax computed at the UK statutory tax rate of 19.0%, 19.0%, and 18.5% for fiscal years 2022, 2021, and 2020, respectively, to income tax expense.
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| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| ($ in millions) | | 2022 | | 2021 | | 2020 |
| Income tax expense at statutory rate | | $ | 212 | | | $ | 227 | | | $ | 153 | |
| Foreign tax rate differential | | 43 | | | 18 | | | 70 | |
| | | | | | | |
| Non-deductible expenses, non-taxable items, net | | (2) | | | 2 | | | 13 | |
| Tax law changes | | (1) | | | (1) | | | (30) | |
| Change in valuation allowance | | 4 | | | 40 | | | (17) | |
| Uncertain tax positions, net | | 62 | | | 32 | | | — | |
| Other (1) | | (18) | | | (57) | | | (2) | |
| Income tax expense | | $ | 300 | | | $ | 261 | | | $ | 187 | |
(1)In fiscal year 2022, Other is comprised of adjustments to prior year, movements in deferred tax positions of $13 million, and other individually immaterial items. In fiscal year 2021, Other is comprised of adjustments to prior fiscal year, including one related to the crystallization of benefits from business restructuring of $45 million and other individually immaterial items.
Amcor operates in over forty different jurisdictions with a wide range of statutory tax rates. The tax expense from operating in non-UK jurisdictions in excess of the UK statutory tax rate is included in the line "Foreign tax rate differential" in the above tax rate reconciliation table. For fiscal year 2022, the Company's effective tax rate was 26.9% as compared to the effective tax rates of 21.9% and 22.6% for fiscal years 2021 and 2020, respectively, with the increase in fiscal year 2022 predominantly attributable to an increase in tax provisions for uncertain tax positions. For fiscal year 2021, the Company's effective tax rate was higher than its UK statutory tax rate primarily due to pretax income being earned in jurisdictions outside 90
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Impairment of intangible assets | 9 | SEC-NUM |
NOTE 19 - RESTRUCTURING AND OTHER COSTS
During the year ended December 31, 2021, the Company recorded net restructuring and other costs of $20 million, which consists primarily of severance and other restructuring costs of $23 million, offset by adjustments to inventory reserve of $3 million.
During the year ended December 31, 2020, the Company recorded restructuring and other costs of $123 million which consists primarily of inventory write-downs of $31 million, accelerated depreciation of $14 million, severance costs of $23 million, indefinite-lived intangible asset impairment of $39 million, and other impairments of $8 million.
During the year ended December 31, 2019, the Company recorded restructuring and other costs of $128 million, which consists primarily of inventory write-downs of $20 million, accelerated depreciation of $3 million, severance costs of $37 million, fixed asset impairments of $33 million, and $9 million related to impairments of both definite-lived and indefinite-lived intangible assets.
The details of total restructuring and other costs for the years ended 2021, 2020 and 2019 were as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| Affected Line Item in the Consolidated Statements of Operations | | Year Ended December 31, |
| (in millions) | | 2021 | | 2020 | | 2019 |
| | | | | | | |
| Cost of products sold | | $ | (3) | | | $ | 44 | | | $ | 25 | |
| Selling, general, and administrative expenses | | 6 | | | 2 | | | 23 | |
| Restructuring and other costs | | 17 | | | 77 | | | 81 | |
| Other income and expenses | | — | | | — | | | (1) | |
| Total restructuring and other costs | | $ | 20 | | | $ | 123 | | | $ | 128 | |
Restructuring Programs and Accruals
In 2018, the Board of Directors of the Company approved a plan to restructure and simplify the Company’s business, which was expanded in 2020 for certain portfolio optimization objectives including the exit of the Company's traditional orthodontics business as well as portions of its laboratory business. These plans are nearing completion as of the end of 2021 and are expected to result in total charges of approximately $345 million, of which $321 million has been incurred as of December 31, 2021. For the year ended December 31, 2021, the Company made a $3 million adjustment related to inventory reserves and recorded severance costs of $2 million related to these plans. Remaining expenses in 2021 pertain to minor restructuring actions taken during the year. These expenses are included in the above table.
The Company's restructuring accruals at December 31, 2021 were as follows:
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| | | Severance |
| (in millions) | | 2019 and Prior Plans | | 2020 Plans | | 2021 Plans | | Total |
| | | | | | | | | |
| Balance at December 31, 2020 | | $ | 12 | | | $ | 17 | | | $ | — | | | $ | 29 | |
| Provisions and adjustments | | 3 | | | 3 | | | 13 | | | 19 | |
| Amounts applied | | (10) | | | (11) | | | (4) | | | (25) | |
| Change in estimates | | (2) | | | (7) | | | — | | | (9) | |
| Balance at December 31, 2021 | | $ | 3 | | | $ | 2 | | | $ | 9 | | | $ | 14 | |
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Vested (in dollars per share) | 105.23 | SEC-NUM |
[Table of Contents](#i5b8426ad342a427bafdce79a90546c91_7)Etsy, Inc.Notes to Consolidated Financial StatementsNote 11—Stockholders’ EquityIn December 2020, the Board of Directors approved a stock repurchase program that enabled the Company to repurchase up to $250 million of its common stock. The program was completed in the third quarter of 2022.Effective May 3, 2022, the Board of Directors approved a new stock repurchase program that authorizes the Company to repurchase up to an additional $600 million of its common stock. The program does not have a time limit and may be modified, suspended, or terminated at any time by the Board of Directors. The number of shares repurchased and the timing of repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, and general market conditions, along with the Company’s working capital requirements, general business conditions, and other factors.Under the stock repurchase programs, the Company may purchase shares of its common stock through various means, including open market transactions, privately negotiated transactions, tender offers, or any combination thereof. In addition, open market repurchases of common stock could be made pursuant to trading plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which would permit common stock to be repurchased at a time that the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.The following table summarizes the Company’s cumulative share repurchase activity under the programs noted above, excluding shares withheld to satisfy tax withholding obligations in connection with the vesting of employee restricted stock units (“RSUs”) (in thousands, except share and per share amounts):
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| | Shares Repurchased | | Average Price Paid per Share (1) | | Value of Shares Repurchased (1) | | Remaining Amount Authorized |
| Balance as of January 1, 2022 | | | | | | | $ | 127,217 | |
| Repurchases of common stock for the three months ended: | | | | | | | |
| March 31, 2022 | 420,398 | | | $ | 148.83 | | | $ | 62,574 | | | (62,574) | |
| June 30, 2022 | 690,992 | | | 89.97 | | | 62,178 | | | (62,178) | |
| New Authorization as of May 3, 2022 | — | | | — | | | — | | | 600,000 | |
| Repurchases of common stock for the three months ended: | | | | | | | |
| September 30, 2022 | 1,503,505 | | | 100.15 | | | 150,595 | | | (150,595) | |
| Balance as of September 30, 2022 | 2,614,895 | | | $ | 105.28 | | | $ | 275,347 | | | $ | 451,870 | |
(1) Average price paid per share excludes broker commissions. Value of shares repurchased includes broker commissions.All repurchases were made using cash resources, and all repurchased shares of common stock have been retired.Note 12—Stock-Based CompensationDuring the three and nine months ended September 30, 2022, the Company granted RSUs, including financial performance-based restricted stock units (“Financial PBRSUs”) and total shareholder return performance-based restricted stock units (“TSR PBRSUs”), under its 2015 Equity Incentive Plan (“2015 Plan”) and, pursuant to the evergreen increase provision of the 2015 Plan, 6,351,106 additional shares were added to the total number of shares available for issuance under the 2015 Plan effective as of January 3, 2022. At September 30, 2022, 50,391,850 shares were authorized under the 2015 Plan and 32,035,675 shares were available for future grant.The following table summarizes the activity for the Company’s unvested RSUs, which includes Financial PBRSUs and TSR PBRSUs, during the nine months ended September 30, 2022:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Shares | | Weighted-AverageGrant Date Fair Value |
| Unvested at December 31, 2021 | 3,506,721 | | | $ | 137.87 | |
| Granted | 4,895,738 | | | 120.39 | |
| Vested | (897,273) | | | 105.23 | |
| Forfeited/Canceled | (500,420) | | | 157.15 | |
| Unvested at September 30, 2022 | 7,004,766 | | | 128.29 | |
26
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Lessee, Operating Lease, Liability, Payments, Due Year Five | 21 | SEC-NUM |
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| [Table of Contents](#i35a0317244714ddbbfcfc1f7731c8932_7) | emn-20220630_g1.jpg | |
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS9.LEASES AND OTHER COMMITMENTS
Leases
There are two types of leases: finance and operating. Both types of leases have associated right-to-use assets and lease liabilities that are valued at the present value of the lease payments and recognized on the Unaudited Consolidated Statements of Financial Position. The discount rate used in the measurement of a right-to-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the collateralized incremental borrowing rate is used. The Company elected the accounting policy not to apply the recognition and measurement requirements to short-term leases with a term of 12 months or less and do not include a bargain purchase option.
The Company has operating leases, as a lessee, with customary terms that do not include: significant variable lease payments; significant reasonably certain extensions or options required to be included in the lease term; restrictions; or other covenants for real property, rolling stock, and machinery and equipment. Real property leases primarily consist of office space and rolling stock leases primarily for railcars and fleet vehicles. At June 30, 2022 and December 31, 2021, operating right-to-use assets of $209 million and $216 million, respectively, are included as part of "Other noncurrent assets" on the Unaudited Consolidated Statements of Financial Position. The operating right-to-use assets include $3 million and $3 million, respectively, of assets previously classified as lease intangibles and $6 million and $5 million, respectively, of prepaid lease assets. Operating lease liabilities are included as part of "Payables and other current liabilities" and "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position.
As of June 30, 2022, reconciliation of lease payments and operating lease liabilities is provided below:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| (Dollars in millions) | | Operating Lease Liabilities |
| Remainder of 2022 | | $ | 29 | |
| 2023 | | 50 | |
| 2024 | | 37 | |
| 2025 | | 30 | |
| 2026 | | 21 | |
| 2027 and beyond | | 53 | |
| Total lease payments | | 220 | |
| Less: amounts of lease payments representing interest | | 20 | |
| Present value of future lease payments | | 200 | |
| Less: current obligations under leases | | 50 | |
| Long-term lease obligations | | $ | 150 | |
The Company has operating leases, primarily leases for railcars, with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease that will expire beginning third quarter 2023. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote.
22
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Common dividends declared (in dollars per share) | 4.10 | SEC-NUM |
[Table of Contents](#i02bedaa3ef9a402693e3fc0f0d740b61_7)Other IndemnificationsAs is customary in our industry and as provided for in local law in the U.S. and other jurisdictions, many of our standard contracts provide remedies to our customers and others with whom we enter into contracts, such as defense, settlement, or payment of judgment for IP claims related to the use of our products. From time to time, we indemnify customers, as well as our suppliers, contractors, lessors, lessees, companies that purchase our businesses or assets and others with whom we enter into contracts, against combinations of loss, expense, or liability arising from various triggering events related to the sale and the use of our products, the use of their goods and services, the use of facilities and state of our owned facilities, the state of the assets and businesses that we sell and other matters covered by such contracts, usually up to a specified maximum amount. In addition, from time to time we also provide protection to these parties against claims related to undiscovered liabilities, additional product liabilities or environmental obligations. In our experience, claims made under such indemnifications are rare and the associated estimated fair value of the liability is not material.12. Restructuring, Impairment and Disposal ChargesFrom time to time, we initiate cost reduction activities to integrate acquired businesses, to align our workforce with strategic business activities, or to improve efficiencies in our operations. We recognized charges of $8 million and $39 million in the fiscal quarter and three fiscal quarters ended July 31, 2022, respectively, and $25 million and $123 million in the fiscal quarter and three fiscal quarters ended August 1, 2021, respectively. These charges were primarily recognized in operating expenses.The following table summarizes the significant activities within, and components of, the restructuring liabilities during the three fiscal quarters ended July 31, 2022:
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| | | | | | | | | | | | | | | | | | | | | |
| | | Employee Termination Costs | | Other Exit Costs | | Total |
| | | | | | | |
| | | (In millions) |
| Balance as of October 31, 2021 | | $ | 4 | | | $ | — | | | $ | 4 | |
| Restructuring charges | | 19 | | | 2 | | | 21 | |
| Utilization | | (21) | | | (2) | | | (23) | |
| Balance as of July 31, 2022 | | $ | 2 | | | $ | — | | | $ | 2 | |
Restructuring, impairment and disposal charges for the three fiscal quarters ended July 31, 2022 included $16 million for the write-down of certain lease-related right-of-use assets and other lease-related charges. As of July 31, 2022, short-term and long-term lease liabilities included $56 million of liabilities related to restructuring activities.13. Subsequent EventsPreferred Stock Cash Dividends DeclaredOn August 31, 2022, our Board of Directors declared a quarterly cash dividend of $20.00 per share on our Mandatory Convertible Preferred Stock, payable on September 30, 2022 to stockholders of record on September 15, 2022.Common Stock Cash Dividends DeclaredOn August 31, 2022, our Board of Directors declared a quarterly cash dividend of $4.10 per share on our common stock, payable on September 30, 2022 to stockholders of record on September 22, 2022.
23
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Granted (in shares) | 2,134 | SEC-NUM |
[Table of Contents](#if58bf2b7da5f49b78db442640b215d13_7)
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| --- | --- | --- |
| | | |
| Restricted Stock Unit and Restricted Stock Activity |
A summary of restricted stock unit (RSU) and restricted stock activity for the nine months ended April 30, 2022 was as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| (Shares in thousands) | Numberof Shares | | WeightedAverageGrant DateFair Value |
| Nonvested at July 31, 2021 | 9,038 | | | $ | 345.86 | |
| | | | |
| Granted (1) | 2,134 | | | 568.65 | |
| Vested | (2,205) | | | 318.74 | |
| Forfeited | (813) | | | 354.69 | |
| Nonvested at April 30, 2022 | 8,154 | | | $ | 410.63 | |
(1)Includes approximately 583,000 RSUs granted to the employees of Mailchimp in substitution of outstanding equity incentive awards with a grant date fair value of $355 million and approximately 325,000 RSUs granted to the employees of Mailchimp in connection with the acquisition with a grant date fair value of $211 million. See Note 5, "Business Combinations."At April 30, 2022, there was approximately $2.8 billion of unrecognized compensation cost related to non-vested RSUs and restricted stock with a weighted average vesting period of 2.7 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.
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| --- | --- | --- |
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| Stock Option Activity |
A summary of stock option activity for the nine months ended April 30, 2022 was as follows:
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| | | | | | | | | | | | |
| | Options Outstanding |
| (Shares in thousands) | Number of Shares | | WeightedAverageExercisePrice Per Share |
| Balance at July 31, 2021 | 2,204 | | | $ | 251.48 | |
| | | | |
| Granted | — | | | — | |
| Exercised | (151) | | | 166.02 | |
| Canceled or expired | (20) | | | 503.05 | |
| Balance at April 30, 2022 | 2,033 | | | $ | 255.38 | |
| | | | |
| Exercisable at April 30, 2022 | 1,400 | | | $ | 188.29 | |
At April 30, 2022, there was approximately $53 million of unrecognized compensation cost related to non-vested stock options with a weighted average vesting period of 2.6 years. We will adjust unrecognized compensation cost for actual forfeitures as they occur.
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| 11. Litigation |
Beginning in May 2019, various legal proceedings were filed and certain regulatory inquiries were commenced in connection with our provision and marketing of free online tax preparation programs. We believe that the allegations contained within these legal proceedings are without merit and continue to defend our interests in them. These proceedings included, among others, multiple putative class actions that were consolidated into a single putative class action in the Northern District of California in September 2019 (the “Intuit Free File Litigation”). In August 2020, the Ninth Circuit Court of Appeals ordered that the putative class action claims be resolved through arbitration. In May 2021, the Intuit Free File Litigation was dismissed on a non-class basis after we entered into an agreement that resolved the matter on an individual non-class basis for an immaterial amount, without any admission of wrongdoing.These proceedings also included individual demands for arbitration that were filed beginning in October 2019. On February 23, 2022 and May 23, 2022, we entered into settlement agreements that will resolve all of these pending arbitration claims, without any admission of wrongdoing. The ultimate amount that we are required to pay under these agreements will depend on the number of claimants that provide releases of claims thereunder. During the nine months ended April 30, 2022, we accrued an immaterial amount based on our estimate of the probable payments we could make under these agreements. While we believe our accrual is adequate, the final payments required under these agreements could differ from our recorded estimate.
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| | Intuit Q3 Fiscal 2022 Form 10-Q | 26 | |
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Impact of Frutarom acquisition, shares | 141,740,461 | SEC-NUM |
INTERNATIONAL FLAVORS & FRAGRANCES INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| (DOLLARS IN MILLIONS) | Commonstock | | Capital inexcess ofpar value | | Retainedearnings | | Accumulated othercomprehensive(loss) income | | Treasury stock | | Non-controllinginterest | | Total |
| Shares | | Cost | Shares | | Cost | |
| Balance at December 31, 2018 | 128,526,137 | | | $ | 16 | | | $ | 3,794 | | | $ | 3,956 | | | $ | (702) | | | (21,906,935) | | | $ | (1,031) | | | $ | 10 | | | $ | 6,043 | |
| Net income | | | | | | | 456 | | | | | | | | | 4 | | | 460 | |
| Adoption of ASU 2016-02 | | | | | | | 23 | | | | | | | | | | | 23 | |
| Adoption of ASU 2017-12 | | | | | | | (1) | | | 1 | | | | | | | | | — | |
| Cumulative translation adjustment | | | | | | | | | 23 | | | | | | | | | 23 | |
| Losses on derivatives qualifying as hedges; net of tax ($1) | | | | | | | | | (3) | | | | | | | | | (3) | |
| Pension liability and postretirement adjustment; net of tax ($8) | | | | | | | | | (36) | | | | | | | | | (36) | |
| Cash dividends declared ($2.96 per share) | | | | | | | (316) | | | | | | | | | | | (316) | |
| Stock options/SSARs | | | | | 7 | | | | | | | 14,346 | | | 1 | | | | | 8 | |
| Vested restricted stock units and awards | | | | | (10) | | | | | | | 153,751 | | | 7 | | | | | (3) | |
| Stock-based compensation | | | | | 34 | | | | | | | | | | | | | 34 | |
| Redeemable NCI | | | | | (2) | | | | | | | | | | | | | (2) | |
| Dividends on noncontrolling interest and other | | | | | | | — | | | | | | | | | (2) | | | (2) | |
| Balance at December 31, 2019 | 128,526,137 | | | $ | 16 | | | $ | 3,823 | | | $ | 4,118 | | | $ | (717) | | | (21,738,838) | | | $ | (1,023) | | | $ | 12 | | | $ | 6,229 | |
| Net income | | | | | | | 363 | | | | | | | | | 1 | | | 364 | |
| Cumulative translation adjustment | | | | | | | | | 88 | | | | | | | | | 88 | |
| Losses on derivatives qualifying as hedges; net of tax $1 | | | | | | | | | (9) | | | | | | | | | (9) | |
| Pension liability and postretirement adjustment; net of tax ($9) | | | | | | | | | (60) | | | | | | | | | (60) | |
| Cash dividends declared ($3.04 per share) | | | | | | | (325) | | | | | | | | | | | (325) | |
| Stock options/SSARs | | | | | — | | | | | | | 57,652 | | | 3 | | | | | 3 | |
| Vested restricted stock units and awards | | | | | (8) | | | | | | | 93,039 | | | 3 | | | | | (5) | |
| Stock-based compensation | | | | | 36 | | | | | | | | | | | | | 36 | |
| Redeemable NCI | | | | | 2 | | | | | | | | | | | | | 2 | |
| Dividends on noncontrolling interest and other | | | | | | | | | | | | | | | (1) | | | (1) | |
| Balance at December 31, 2020 | 128,526,137 | | | $ | 16 | | | $ | 3,853 | | | $ | 4,156 | | | $ | (698) | | | (21,588,147) | | | $ | (1,017) | | | $ | 12 | | | $ | 6,322 | |
| Net income | | | | | | | 270 | | | | | | | | | 3 | | | 273 | |
| | | | | | | | | | | | | | | | | | |
| Cumulative translation adjustment | | | | | | | | | (848) | | | | | | | | | (848) | |
| Gain on derivatives qualifying as hedges; net of tax ($1) | | | | | | | | | 8 | | | | | | | | | 8 | |
| Pension liability and postretirement adjustment; net of tax ($4) | | | | | | | | | 115 | | | | | | | | | 115 | |
| Cash dividends declared ($3.12 per share) | | | | | | | (785) | | | | | | | | | | | (785) | |
| Stock options/SSARs | | | | | 4 | | | | | | | 159,222 | | | 7 | | | | | 11 | |
| Impact of N&B Merger | 141,740,461 | | | 18 | | | 15,936 | | | | | | | | | | | 22 | | | 15,976 | |
| Conversion of tangible equity units | 5,460,031 | | | 1 | | | (1) | | | | | | | | | | | | | — | |
| | | | | | | | | | | | | | | | | | |
| Vested restricted stock units and awards | | | | | (18) | | | | | | | 276,280 | | | 13 | | | | | (5) | |
| Stock-based compensation | | | | | 54 | | | | | | | | | | | | | 54 | |
| Redeemable NCI | | | | | (2) | | | | | | | | | | | | | (2) | |
| Dividends on noncontrolling interest and other | | | | | | | | | | | | | | | (2) | | | (2) | |
| Balance at December 31, 2021 | 275,726,629 | | | $ | 35 | | | $ | 19,826 | | | $ | 3,641 | | | $ | (1,423) | | | (21,152,645) | | | $ | (997) | | | $ | 35 | | | $ | 21,117 | |
See Notes to Consolidated Financial Statements
56
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Number of aircrafts ordered | 100 | SEC-NUM |
Notes to the Consolidated Financial StatementsNOTE 7. COMMITMENTS AND CONTINGENCIES
Aircraft Purchase Commitments
Our future aircraft purchase commitments totaled approximately $19.9 billion at September 30, 2022.
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| --- | --- | --- | --- | --- | --- |
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| Aircraft purchase commitments |
| (in millions) | Total |
| Three months ending December 31, 2022 | $ | 1,380 | |
| 2023 | 3,440 | |
| 2024 | 3,640 | |
| 2025 | 4,230 | |
| 2026 | 3,700 | |
| Thereafter | 3,500 | |
| Total | $ | 19,890 | |
Our future aircraft purchase commitments included the following aircraft at September 30, 2022:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Aircraft purchase commitments by fleet type | |
| Aircraft Type | Purchase Commitments |
| A220-300 | 50 | |
| A321-200neo | 147 | |
| A330-900neo | 20 | |
| A350-900 | 18 | |
| B-737-900ER | 3 | |
| B-737-10 | 100 | |
| Total | 338 | |
Aircraft Orders
During the June 2022 quarter, we agreed to acquire four B-737-900ER and one A330-900 aircraft. Deliveries of the pre-owned B-737-900ER aircraft are expected to occur by the end of 2022 and delivery of the new A330-900 aircraft is expected to occur in 2024.
In July 2022, we entered into a purchase agreement with Boeing for 100 Boeing 737-10 aircraft, the largest model in the 737 MAX family of aircraft, to start delivery in 2025 with the option to purchase an additional thirty 737-10 aircraft. Also in July 2022, we exercised purchase rights for 12 A220-300 aircraft with Airbus.
Legal Contingencies
We are involved in various legal proceedings related to employment practices, environmental issues, antitrust matters and other matters concerning our business. We record liabilities for losses from legal proceedings when we determine that it is probable that the outcome in a legal proceeding will be unfavorable and the amount of loss can be reasonably estimated. Although the outcome of the legal proceedings in which we are involved cannot be predicted with certainty, we believe that the resolution of current matters will not have a material adverse effect on our Condensed Consolidated Financial Statements.
Delta Air Lines, Inc. September 2022 Form 10-Q 15
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Auditor Firm ID | 34 | SEC-NUM |
[Table of Contents](#i82eec5aa49a24290a07e4a9f99c1e608_7) Item 8. Financial Statements and Supplementary DataIndex to Consolidated Financial Statements
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| | Page |
| [Consolidated Statements of Income](#i82eec5aa49a24290a07e4a9f99c1e608_55) | [48](#i82eec5aa49a24290a07e4a9f99c1e608_55) |
| [Consolidated Statements of Comprehensive Income](#i82eec5aa49a24290a07e4a9f99c1e608_58) | [49](#i82eec5aa49a24290a07e4a9f99c1e608_58) |
| [Consolidated Balance Sheets](#i82eec5aa49a24290a07e4a9f99c1e608_61) | [50](#i82eec5aa49a24290a07e4a9f99c1e608_61) |
| [Consolidated Statements of Equity](#i82eec5aa49a24290a07e4a9f99c1e608_64) | [51](#i82eec5aa49a24290a07e4a9f99c1e608_64) |
| [Consolidated Statements of Cash Flows](#i82eec5aa49a24290a07e4a9f99c1e608_67) | [52](#i82eec5aa49a24290a07e4a9f99c1e608_67) |
| [Notes to Consolidated Financial Statements](#i82eec5aa49a24290a07e4a9f99c1e608_70) | [53](#i82eec5aa49a24290a07e4a9f99c1e608_70) |
| [Schedule II - Valuation and Qualifying Accounts](#i82eec5aa49a24290a07e4a9f99c1e608_148) | [99](#i82eec5aa49a24290a07e4a9f99c1e608_148) |
| [Report of Independent Registered Public Accounting Firm](#i82eec5aa49a24290a07e4a9f99c1e608_151) (PCAOB ID No. 34) | [100](#i82eec5aa49a24290a07e4a9f99c1e608_151) |
46
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Changes in value, tax effect | 1 | SEC-NUM |
Notes to the Consolidated Financial StatementsOther Contingencies
General Indemnifications
We are the lessee under many commercial real estate leases. It is common in these transactions for us, as the lessee, to agree to indemnify the lessor and the lessor's related parties for tort, environmental and other liabilities that arise out of or relate to our use or occupancy of the leased premises. This type of indemnity would typically make us responsible to indemnified parties for liabilities arising out of the conduct of, among others, contractors, licensees and invitees at, or in connection with, the use or occupancy of the leased premises. This indemnity often extends to related liabilities arising from the negligence of the indemnified parties but usually excludes any liabilities caused by either their sole or gross negligence or their willful misconduct.
Our aircraft and other equipment lease and financing agreements typically contain provisions requiring us, as the lessee or obligor, to indemnify the other parties to those agreements, including certain of those parties' related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or other equipment.
We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft and other equipment lease and financing agreements described above. While our insurance does not typically cover environmental liabilities, we have insurance policies in place as required by applicable environmental laws.
Some of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to specified changes in laws or regulations. In some of these financing transactions, we also bear the risk of changes in tax laws that would subject payments to non-U.S. lenders to withholding taxes.
We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict (1) when and under what circumstances these provisions may be triggered and (2) the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.
Other
We have certain contracts for goods and services that require us to pay a penalty, acquire inventory specific to us or purchase contract-specific equipment, as defined by each respective contract, if we terminate the contract without cause prior to its expiration date. Because these obligations are contingent on our termination of the contract without cause prior to its expiration date, no obligation would exist unless such a termination occurs.
NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| Components of accumulated other comprehensive loss |
| (in millions) | Pension and Other Benefit Liabilities | Other | Total |
| Balance at January 1, 2022 (net of tax effect of $1,184) | $ | (7,170) | | $ | 40 | | $ | (7,130) | |
| | | | |
| Reclassifications into earnings (net of tax effect of $56)(1) | 184 | | — | | 184 | |
| Balance at September 30, 2022 (net of tax effect of $1,128) | $ | (6,986) | | $ | 40 | | $ | (6,946) | |
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| Balance at January 1, 2021 (net of tax effect of $1,764) | $ | (9,078) | | $ | 40 | | $ | (9,038) | |
| Changes in value (net of tax effect of $1) | 3 | | — | | 3 | |
| Reclassifications into earnings (net of tax effect of $71)(1) | 235 | | — | | 235 | |
| Balance at September 30, 2021 (net of tax effect of $1,692) | $ | (8,840) | | $ | 40 | | $ | (8,800) | |
(1)Amounts reclassified from accumulated other comprehensive loss for pension and other benefit liabilities are recorded in pension and related benefit in non-operating expense in our income statement.
Delta Air Lines, Inc. September 2022 Form 10-Q 16
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Cash | 1.1 | SEC-NUM |
[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Platform Extension functionality, and, over time, to innovate and rebrand certain of Alaxala’s switches to offer a broader suite of secure switches globally.
Under the acquisition method of accounting in accordance with ASC 805, the total purchase price was allocated to Alaxala’s identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values using management’s best estimates and assumptions to assign fair value as of the acquisition date. The following table provides the assets acquired and liabilities assumed as of the date of acquisition:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (in millions) | Estimated Fair Value |
| ASSETS | |
| Cash | $ | 1.1 | |
| Accounts receivable—net | 15.6 | |
| Inventory | 33.4 | |
| Prepaid expenses and other current assets | 2.9 | |
| Property and equipment | 5.3 | |
| Goodwill | 25.5 | |
| Other intangible assets | 48.0 | |
| Other long-term assets | 5.2 | |
| TOTAL ASSETS | $ | 137.0 | |
| | |
| LIABILITIES | |
| Accounts payable | $ | 11.0 | |
| Current portion of long-term debt | 20.2 | |
| Accrued and other current liabilities | 17.1 | |
| Other long-term liabilities | 6.7 | |
| TOTAL LIABILITIES | $ | 55.0 | |
| NON-CONTROLLING INTERESTS | $ | 17.8 | |
| Net purchase consideration | $ | 64.2 | |
The excess of the purchase consideration and the fair value of non-controlling interests over the fair value of net tangible and identified intangible assets acquired was recorded as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce of Alaxala and the anticipated operational synergies.
The fair value of the non-controlling interests of $17.8 million was estimated based on the non-controlling interests’ respective share of the fair value of Alaxala.
Identified intangible assets acquired and their estimated useful lives (in years) as of August 31, 2021, were as follows (in millions, except years):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Fair Value | | Estimated Useful Life (in years) |
| Developed technology | $ | 26.6 | | | 4 |
| Customer relationships | 10.0 | | | 10 |
| Trade name | 6.4 | | | 10 |
| Backlog | 5.0 | | | 1 |
| Total identified intangible assets: | $ | 48.0 | | | |
Developed technology relates to Alaxala’s network equipment. We valued the developed technology using the relief-from-royalty method under the income approach. This method reflects the present value of the projected cost savings that are expected to be realized by the owner of the royalty granted in exchange for the use of the asset. The economic useful life was 14
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Available for sale securities, weighted average coupon rate (in percent) | 3.24 | SEC-NUM |
[Table of Contents](#i6f5a02f7aeae4b00b01c55901eb4a1a5_4)Assets and Liabilities Measured at Fair Value on a Recurring BasisAssets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Quoted Pricein Active Marketsfor IdenticalAssets (Level 1) | | SignificantOtherObservableInputs (Level 2) | | SignificantUnobservableInputs (Level 3) | | Total |
| Balance at March 31, 2022 | | | | | | | |
| Assets | | | | | | | |
| Fair value - OCI | | | | | | | |
| U.S. Treasury and U.S. GSE securities | $ | 5,604 | | | $ | 8 | | | $ | — | | | $ | 5,612 | |
| Residential mortgage-backed securities - Agency | — | | | 160 | | | — | | | 160 | |
| Available-for-sale investment securities | $ | 5,604 | | | $ | 168 | | | $ | — | | | $ | 5,772 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Fair value - Net income | | | | | | | |
| Marketable equity securities | $ | 272 | | | $ | — | | | $ | — | | | $ | 272 | |
| | | | | | | | |
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| Balance at December 31, 2021 | | | | | | | |
| Assets | | | | | | | |
| Fair value - OCI | | | | | | | |
| U.S. Treasury and U.S. GSE securities | $ | 6,505 | | | $ | 9 | | | $ | — | | | $ | 6,514 | |
| Residential mortgage-backed securities - Agency | — | | | 186 | | | — | | | 186 | |
| Available-for-sale investment securities | $ | 6,505 | | | $ | 195 | | | $ | — | | | $ | 6,700 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Fair value - Net income | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Marketable equity securities | $ | 461 | | | $ | — | | | $ | — | | | $ | 461 | |
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.Available-for-Sale Investment SecuritiesInvestment securities classified as available-for-sale consist of U.S. Treasury and U.S. GSE securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The fair value estimates of U.S. GSE securities and RMBS are classified as Level 2 and are valued by maximizing the use of relevant observable inputs, including quoted prices for similar securities, benchmark yield curves and market-corroborated inputs.The Company validates the fair value estimates provided by pricing services primarily by comparing to valuations obtained through other pricing sources. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates.At March 31, 2022, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $160 million, a weighted-average coupon of 3.24% and a weighted-average remaining maturity of two years.Marketable Equity SecuritiesThe Company holds non-controlling equity positions in payment service entities that have actively traded stock and therefore have readily determinable fair values. The Company classifies these equity securities as Level 1, the fair value estimates of which are determined based on quoted share prices for the same securities.Derivative Financial InstrumentsThe Company's derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models, containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and 28
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Net identifiable assets acquired | 761 | SEC-NUM |
New Accounting Pronouncements
Recently issued ASUs effective after March 31, 2022 are not expected to have a material effect on DXC's consolidated financial statements.
Note 2 - Acquisitions
Fiscal 2021 Acquisitions
AXA Bank Germany Acquisition
On January 1, 2021, DXC completed its acquisition of AXA Bank Germany ("AXA Bank"), a German retail bank, from AXA Group for the total consideration of $101 million. In connection with its acquisition of AXA Bank, DXC received cash of $294 million which includes customer deposit liabilities totaling $197 million. DXC recorded goodwill associated with the acquisition of AXA Bank totaling $2 million. The AXA bank has been consolidated within FDB and will be part of the FDB sale previously disclosed.
Fiscal 2020 Acquisitions
Luxoft Acquisition
On June 14, 2019, DXC completed the acquisition of Luxoft, a digital service provider whose offerings encompass strategic consulting, custom software development services, and digital solution engineering for total consideration of $2.0 billion. The acquisition combined Luxoft’s digital engineering capabilities with DXC’s expertise in IT modernization and integration. The purchase agreement was entered into by DXC and Luxoft on January 6, 2019 and the transaction was closed on June 14, 2019.
The transaction between DXC and Luxoft is an acquisition, with DXC as the acquirer and Luxoft as the acquiree, based on the fact that DXC acquired 100% of the equity interests and voting rights in Luxoft, and that DXC is the entity that transferred the cash consideration.
The Company's allocation of the purchase price to the assets acquired and liabilities assumed as of the Luxoft acquisition date is as follows:
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| (in millions) | | Fair Value |
| Cash and cash equivalents | | $ | 113 | |
| Accounts receivable | | 233 | |
| Other current assets | | 15 | |
| Total current assets | | 361 | |
| Property and equipment | | 31 | |
| Intangible assets | | 577 | |
| Other assets | | 99 | |
| Total assets acquired | | 1,068 | |
| Accounts payable, accrued payroll, accrued expenses, and other current liabilities | | (121) | |
| Deferred revenue | | (8) | |
| Long-term deferred tax liabilities and income tax payable | | (106) | |
| Other liabilities | | (72) | |
| Total liabilities assumed | | (307) | |
| Net identifiable assets acquired | | 761 | |
| | | |
| Goodwill | | 1,262 | |
| Total consideration transferred | | $ | 2,023 | |
79
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Long-term Debt, Current Maturities | 565 | SEC-NUM |
Long-term debt consists of the following:
| | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | |
| (Millions) | | | | | | 2022 | | 2021 |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| 2.50% Notes due August 2, 2022 | | | | | | $ | — | | | $ | 450 | |
| 3.65% Notes due March 15, 2023 | | | | | | 566 | | | 566 | |
| 3.95% Notes due March 15, 2025 | | | | | | 850 | | | 850 | |
| 3.30% Notes due March 19, 2025 | | | | | | 300 | | | 300 | |
| 4.15% Notes due March 15, 2028 | | | | | | 1,000 | | | 1,000 | |
| 2.375% Notes due April 24, 2030 | | | | | | 500 | | | 500 | |
| 3.80% Notes due August 2, 2042 | | | | | | 163 | | | 163 | |
| 4.80% Notes due March 15, 2048 | | | | | | 700 | | | 700 | |
| 3.125% Notes due April 24, 2050 | | | | | | 500 | | | 500 | |
| Finance leases | | | | | | 16 | | | 19 | |
| Other(1) | | | | | | (34) | | | (38) | |
| Total | | | | | | $ | 4,561 | | | $ | 5,010 | |
| Less current portion | | | | | | 565 | | | — | |
| Total long-term debt | | | | | | $ | 3,996 | | | $ | 5,010 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Includes unamortized net discount/premium on debt issuances and debt issuance costs.Principal amounts of long-term debt mature as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| (Millions) | | |
| 2024 | | $ | 10 | |
| 2025 | | $ | 1,153 | |
| 2026 | | $ | 3 | |
| 2027 | | $ | — | |
| Thereafter | | $ | 2,863 | |
Debt ExtinguishmentsOn March 4, 2022, we completed the redemption of all $450 million outstanding aggregate principal amount of our 2.50% Senior Notes due August 2, 2022. The consideration for the redemption was $453 million, including $3 million of premium. We recognized a loss of $4 million (including the $3 million of premium and other costs), which was recorded in Interest expense in the Consolidated Statement of Earnings. In addition, we paid accrued and unpaid interest on the redeemed notes through the date of settlement. We used a combination of cash on hand and short-term debt to fund the redemption.On January 22, 2020, we completed the redemption of all $500 million outstanding aggregate principal amount of our 4.25% Senior Notes due 2021. On January 24, 2020, we settled tender offers to purchase $1.2 billion in aggregate principal amount of certain senior unsecured debt, comprising $329 million of 3.30% Senior Notes due 2021, $634 million of 3.65% Senior Notes due 2023, and $237 million of 3.80% Senior Notes due 2043. The consideration for the redemption and the tender offers was $1.765 billion, including $65 million of premium. We recognized a loss of $75 million (including $65 million of premium, fees and other costs paid with the tender offers and unamortized debt issuance costs), which was recorded in Interest expense in the Consolidated Statement of Earnings. In addition, we paid accrued and unpaid interest on the purchased notes through the dates of settlement.Debt RepaymentsIn March 2021, we repaid our 3.30% $321 million notes and floating rate $400 million notes, and in May 2021, we repaid our 8.875% $200 million notes.In 2020, we also repaid our $499 million Senior Term Loan due 2021.Debt IssuancesOn April 24, 2020, we issued senior notes in an aggregate principal amount of $1 billion, consisting of $500 million aggregate principal amount of notes bearing interest at a fixed rate of 2.375% per annum, due April 24, 2030, and $500 million aggregate principal amount of notes bearing interest at a fixed rate of 3.125% per annum, due April 24, 2050. On May 1, 2020, we used $300 million of the net proceeds to repay $300 million of borrowings outstanding under a revolving credit facility. The 61
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Weighted-average exercise price, Expired (in dollars per share) | 53.75 | SEC-NUM |
date fair values, were as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| years ended December 31 | 2021 | 2020 | 2019 |
| Expected volatility | 24 | % | 26 | % | 19 | % |
| Expected life (in years) | 5.5 | 5.5 | 5.5 |
| Risk-free interest rate | 0.8 | % | 0.6 | % | 2.5 | % |
| Dividend yield | 1.3 | % | 1.2 | % | 1.0 | % |
| Fair value per stock option | $ | 16 | | $ | 16 | | $ | 15 | |
The following table summarizes stock option activity for the year ended December 31, 2021 and the outstanding stock options as of December 31, 2021.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| (options and aggregate intrinsic values in thousands) | Options | Weighted-averageexerciseprice | Weighted-averageremainingcontractualterm(in years) | Aggregateintrinsicvalue |
| Outstanding as of January 1, 2021 | 20,196 | | $ | 56.88 | | | |
| Granted | 4,034 | | $ | 77.32 | | | |
| Exercised | (2,759) | | $ | 49.68 | | | |
| Forfeited | (729) | | $ | 76.33 | | | |
| Expired | (46) | | $ | 53.75 | | | |
| Outstanding as of December 31, 2021 | 20,696 | | $ | 61.14 | | 5.9 | $ | 511,187 | |
| Vested or expected to vest as of December 31, 2021 | 20,391 | | $ | 60.91 | | 5.9 | $ | 508,645 | |
| Exercisable as of December 31, 2021 | 13,821 | | $ | 53.46 | | 4.6 | $ | 447,799 | |
The aggregate intrinsic value in the table above represents the difference between the exercise price and our closing stock price on the last trading day of the year. The total intrinsic value of options exercised in 2021, 2020 and 2019 was $78 million, $131 million and $272 million, respectively.As of December 31, 2021, $60 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over a weighted-average period of approximately 1.7 years.RSUsRSUs are granted to employees and non-employee directors. RSUs granted to employees generally vest in one-third increments over a three-year period. RSUs granted to non-employee directors generally vest immediately on the grant date and are issued with a six-month claw-back provision. The grant-date fair value, adjusted for estimated forfeitures, is recognized as expense on a straight-line basis over the substantive vesting period. The fair value of RSUs is determined based on the number of shares granted and the closing price of our common stock on the date of grant.The following table summarizes nonvested RSU activity for the year ended December 31, 2021.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| (share units in thousands) | Share units | Weighted-averagegrant-datefair value |
| Nonvested RSUs as of January 1, 2021 | 1,138 | | $ | 73.11 | |
| Granted | 714 | | $ | 77.84 | |
| Replacement RSUs granted in acquisition | 668 | | $ | 80.86 | |
| Vested | (591) | | $ | 71.63 | |
| Forfeited | (131) | | $ | 77.75 | |
| Nonvested RSUs as of December 31, 2021 | 1,798 | | $ | 78.01 | |
In connection with the Hillrom acquisition, during the fourth quarter of 2021, we issued 668 thousand replacement RSUs to holders of Hillrom equity awards. Refer to Note 2 for additional information regarding the Hillrom acquisition.78
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Payment for Pension and Other Postretirement Benefits | 773 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 17. RETIREMENT BENEFITS (Continued)
The actuarial (gain)/loss for our pension benefit obligations in 2020 and 2021 was primarily related to changes in discount rates.
Pension Plan Contributions
Our policy for funded pension plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. We may make contributions beyond those legally required.
In 2021, we contributed $773 million to our global funded pension plans and made $387 million of benefit payments to participants in unfunded plans. During 2022, we expect to contribute between $600 million and $800 million of cash to our global funded pension plans. We also expect to make about $390 million of benefit payments to participants in unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2022.
Expected Future Benefit Payments
The expected future benefit payments at December 31, 2021 were as follows (in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Benefit Payments |
| | | Pension | | |
| | | U.S. Plans | | Non-U.S.Plans | | WorldwideOPEB |
| 2022 | | $ | 2,700 | | | $ | 1,490 | | | $ | 335 | |
| 2023 | | 2,670 | | | 1,350 | | | 330 | |
| 2024 | | 2,680 | | | 1,360 | | | 330 | |
| 2025 | | 2,680 | | | 1,380 | | | 330 | |
| 2026 | | 2,650 | | | 1,380 | | | 330 | |
| 2027-2031 | | 12,805 | | | 7,035 | | | 1,620 | |
Pension Plan Asset Information
Investment Objectives and Strategies. Our investment objectives for the U.S. plans are to minimize the volatility of the value of our U.S. pension assets relative to U.S. pension obligations and to ensure assets are sufficient to pay plan benefits. Our largest non-U.S. plans (e.g., United Kingdom and Canada) have similar investment objectives to the U.S. plans.
Investment strategies and policies for the U.S. plans and the largest non-U.S. plans reflect a balance of risk-reducing and return-seeking considerations. The objective of minimizing the volatility of assets relative to obligations is addressed primarily through asset-liability matching, asset diversification, and hedging. The fixed income asset allocation matches the bond-like and long-dated nature of the pension obligations. Assets are broadly diversified within asset classes to achieve risk-adjusted returns that, in total, lower asset volatility relative to the obligations. Strategies to address the goal of ensuring sufficient assets to pay benefits include target allocations to a broad array of asset classes, and strategies within asset classes that provide adequate returns, diversification, and liquidity.148
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Projected interest costs on long-term and current debt Due in fiscal 2027 | 161 | SEC-NUM |
[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 16 – COMMITMENTS AND CONTINGENCIES
Contractual ObligationsThe following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2022:
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| | | | | Payments Due in Fiscal | | |
| (In millions) | | Total | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter |
| Debt service (1) | | $ | 8,151 | | | $ | 429 | | | $ | 170 | | | $ | 665 | | | $ | 161 | | | $ | 661 | | | $ | 6,065 | |
| Unconditional purchase obligations (2) | | 4,742 | | | 2,852 | | | 705 | | | 637 | | | 132 | | | 133 | | | 283 | |
| Gross unrecognized tax benefits and interest – current (3) | | 2 | | | 2 | | | — | | — | | — | | — | | — |
| Transition Tax payable(4) | | 215 | | | 27 | | | 42 | | | 65 | | | 81 | | | — | | | — | |
| Total contractual obligations(5) | | $ | 13,110 | | | $ | 3,310 | | | $ | 917 | | | $ | 1,367 | | | $ | 374 | | | $ | 794 | | | $ | 6,348 | |
| | | | | | | | | | | | | | | |
(1)Includes long-term and current debt and the related projected interest costs. Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2023, 2024, 2025, 2026, 2027 and thereafter are projected to be $174 million, $170 million, $165 million, $161 million, $161 million and $1,765 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2022.(2)Unconditional purchase obligations primarily include: royalty payments pursuant to license agreements, inventory commitments, information technology contract commitments, capital expenditure commitments, advertising commitments and third-party distribution commitments. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2022, without consideration for potential renewal periods.(3)Refer to Note 9 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2022, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $73 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.(4)The Transition Tax may be paid over an eight-year period and this amount represents the remaining liability as of June 30, 2022.(5)Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases.
Legal Proceedings
The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, tax and privacy. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements.
F-63
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Number of entities that filed claims | 9 | SEC-NUM |
[Table of Contents](#i0302cc7c03c44d0c8270f104de834cdb_7)CF INDUSTRIES HOLDINGS, INC.
16. ContingenciesLitigationWest Fertilizer Co.On April 17, 2013, there was a fire and explosion at the West Fertilizer Co. fertilizer storage and distribution facility in West, Texas. According to published reports, 15 people were killed and approximately 200 people were injured in the incident, and the fire and explosion damaged or destroyed a number of homes and buildings around the facility. Various subsidiaries of CF Industries Holdings, Inc. (the CF Entities) were named as defendants along with other companies in lawsuits filed in 2013, 2014 and 2015 in the District Court of McLennan County, Texas by the City of West, individual residents of the County and other parties seeking recovery for damages allegedly sustained as a result of the explosion. The cases were consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption “In re: West Explosion Cases.” The two-year statute of limitations expired on April 17, 2015. As of that date, over 400 plaintiffs had filed claims, including at least 9 entities, 325 individuals, and 80 insurance companies. Plaintiffs allege various theories of negligence, strict liability, and breach of warranty under Texas law. Although we did not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities manufactured and sold to others were delivered to the facility and may have been stored at the West facility at the time of the incident. All but two of the claims, including all wrongful death and personal injury claims, have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance. The two remaining subrogation and statutory indemnification claims have not yet been set for trial. We believe we have strong legal and factual defenses and intend to continue defending the CF Entities vigorously in the remaining lawsuits. Based upon currently available information, we expect any potential loss to be immaterial and fully indemnified by insurance.Other LitigationFrom time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities. Based on the information available as of the date of this filing, we believe that the ultimate outcome of these routine matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.EnvironmentalFrom time to time, we receive notices from governmental agencies or third parties alleging that we are a potentially responsible party at certain cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act or other environmental cleanup laws. In 2011, we received a notice from the Idaho Department of Environmental Quality (IDEQ) that alleged that we were a potentially responsible party for the cleanup of a former phosphate mine site we owned in the late 1950s and early 1960s located in Georgetown Canyon, Idaho. The current owner of the property and a former mining contractor received similar notices for the site. In 2014, we and the current property owner entered into a Consent Order with IDEQ and the U.S. Forest Service to conduct a remedial investigation and feasibility study of the site. A remedial investigation was submitted to the agencies in 2021. The next step will be a risk assessment, followed by a feasibility study. In 2015, we and several other parties received a notice that the U.S. Department of the Interior and other trustees intended to undertake a natural resource damage assessment for 18 former phosphate mines and three former processing facilities in southeast Idaho. The Georgetown Canyon former mine and processing facility was included in the group of former mines and processing facilities identified by the trustees. In June 2021, we received another notice from the U.S. Department of the Interior that the natural resource damage trustees were commencing a ‘subsequent’ phase of the natural resource damage assessment, but no further details were provided with respect to said assessment. Because the former Georgetown Canyon mine site is still in the risk assessment and feasibility study stage, we are not able to estimate at this time our potential liability, if any, with respect to the cleanup of the site or a possible claim for natural resource damages. However, based on the results of the site investigation conducted to date, we do not expect the remedial or financial obligations to which we may be subject involving this or other cleanup sites will have a material adverse effect on our consolidated financial position, results of operations or cash flows.20
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Equity Units Annual Distribution Rate | 6.125 | SEC-NUM |
Long-term Debt Subsequent Event
In July 2022, AEP Texas retired $400 million of Senior Unsecured Notes.
In July 2022, APCo issued $100 million of variable rate Other Long-term Debt due in 2023.
In July 2022, I&M retired $8 million of Notes Payable related to DCC Fuel.
In July 2022, KPCo issued $75 million of variable rate Other Long-term Debt due in 2023.
Equity Units (Applies to AEP)
2020 Equity Units
In August 2020, AEP issued 17 million Equity Units initially in the form of corporate units, at a stated amount of $50 per unit, for a total stated amount of $850 million. Net proceeds from the issuance were approximately $833 million. The proceeds were used to support AEP’s overall capital expenditure plans.
Each corporate unit represents a 1/20 undivided beneficial ownership interest in $1,000 principal amount of AEP’s 1.30% Junior Subordinated Notes (notes) due in 2025 and a forward equity purchase contract which settles after three years in 2023. The notes are expected to be remarketed in 2023, at which time the interest rate will reset at the then current market rate. Investors may choose to remarket their notes to receive the remarketing proceeds and use those funds to settle the forward equity purchase contract, or accept the remarketed debt and use other funds for the equity purchase. If the remarketing is unsuccessful, investors have the right to put their notes to AEP at a price equal to the principal. The Equity Units carry an annual distribution rate of 6.125%, which is comprised of a quarterly coupon rate of interest of 1.30% and a quarterly forward equity purchase contract payment of 4.825%.
Each forward equity purchase contract obligates the holder to purchase, and AEP to sell, for $50 a number of shares in common stock in accordance with the conversion ratios set forth below (subject to an anti-dilution adjustment):
•If the AEP common stock market price is equal to or greater than $99.95: 0.5003 shares per contract.•If the AEP common stock market price is less than $99.95 but greater than $83.29: a number of shares per contract equal to $50 divided by the applicable market price. The holder receives a variable number of shares at $50.•If the AEP common stock market price is less than or equal to $83.29: 0.6003 shares per contract.
A holder’s ownership interest in the notes is pledged to AEP to secure the holder’s obligation under the related forward equity purchase contract. If a holder of the forward equity purchase contract chooses at any time to no longer be a holder of the notes, such holder’s obligation under the forward equity purchase contract must be secured by a U.S. Treasury security which must be equal to the aggregate principal amount of the notes.
At the time of issuance, the $850 million of notes were recorded within Long-term Debt on the balance sheets. The present value of the purchase contract payments of $121 million were recorded in Deferred Credits and Other Noncurrent Liabilities with a current portion in Other Current Liabilities at the time of issuance, representing the obligation to make forward equity contract payments, with an offsetting reduction to Paid-in Capital. The difference between the face value and present value of the purchase contract payments will be accreted to Interest Expense on the statements of income over the three year period ending in 2023. The liability recorded for the contract payments is considered non-cash and excluded from the statements of cash flows. Until settlement of the forward equity purchase contract, earnings per share dilution resulting from the equity unit issuance will be determined under the treasury stock method. The maximum amount of shares AEP will be required to issue to settle the purchase contract is 10,205,100 shares (subject to an anti-dilution adjustment).
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Thereafter | 3,016 | SEC-NUM |
[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7)
11. DEBTThe following is a summary of debt outstanding, net of unamortized issuance costs and discounts, as of December 31, 2021 and 2020:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 |
| | (in millions) |
| | | | |
| | | | |
| | | | |
| | | | |
| 4.15%, senior notes, due 2024 (net of $0 and $1 unamortized issuance costs and $0 and $1 discount, respectively) | $ | — | | | $ | 698 | |
| 1.50%, Euro-denominated senior notes, due 2025 (net of $2 and $2 unamortized issuance costs and $1 and $2 discount, respectively) | 790 | | | 857 | |
| 4.25%, senior notes, due 2026 (net of $0 and $2 unamortized issuance costs, respectively) | — | | | 648 | |
| 1.60%, Euro-denominated senior notes, due 2028 (net of $3 and $3 unamortized issuance costs, respectively) | 563 | | | 612 | |
| 4.35%, senior notes, due 2029 (net of $2 and $3 unamortized issuance costs, respectively) | 298 | | | 297 | |
| 4.40%, senior notes, due 2046 (net of $3 and $3 unamortized issuance costs and $1 and $1 discount, respectively) | 296 | | | 296 | |
| 5.40%, senior notes, due 2049 (net of $4 and $4 unamortized issuance costs and $1 and $1 discount, respectively) | 345 | | | 345 | |
| 3.10%, senior notes, due 2051 (net of $17 and $0 unamortized issuance costs and $33 and $0 discount, respectively) | 1,450 | | | — | |
| Tranche A Term Loan, due 2026 (net of $2 and $1 unamortized issuance costs, respectively) | 311 | | | 320 | |
| Finance leases and other | 14 | | | 28 | |
| Total debt | 4,067 | | | 4,101 | |
| Less: current portion | (8) | | | (90) | |
| Long-term debt | $ | 4,059 | | | $ | 4,011 | |
The principal maturities of debt, at nominal value, are as follows:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Debt and Finance Lease Obligations |
| | (in millions) |
| 2022 | $ | 8 | |
| 2023 | 15 | |
| 2024 | 27 | |
| 2025 | 810 | |
| 2026 | 260 | |
| Thereafter | 3,016 | |
| Total | $ | 4,136 | |
Credit AgreementAptiv PLC and its wholly-owned subsidiary, Aptiv Corporation, entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), under which it maintains senior unsecured credit facilities currently consisting of a term loan (the “Tranche A Term Loan”) and a revolving credit facility of $2 billion (the “Revolving Credit Facility”). During 2020, Aptiv Global Financing Limited (“AGFL”), a wholly-owned subsidiary of Aptiv PLC, executed a joinder agreement to the Credit Agreement, which allows it to act as a borrower under the Credit Agreement, and a guaranty supplement, under which AGFL guarantees the obligations under the Credit Agreement, subject to certain exceptions.The Credit Agreement was entered into in March 2011 and has been subsequently amended and restated on several occasions, most recently on June 24, 2021. The June 2021 amendment, among other things, (1) refinanced and replaced the existing term loan A and revolver with a new term loan A that matures in five years, and a new five-year revolving credit facility with aggregate commitments of $2 billion, (2) utilized the Company’s existing sustainability-linked metrics and commitments, that, if achieved, would change the facility fee and interest rate margins as described below, (3) removed prior 84
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Liquidation preference per share (in dollars per share) | 100.00 | SEC-NUM |
During the year ended December 31, 2021, the Company repurchased 5,337,122 shares of the Company’s outstanding common stock at a cost of $844.4 million, exclusive of commissions, leaving $842.1 million remaining under the May 2021 repurchase authorization at December 31, 2021. During the years ended December 31, 2020 and 2019, the Company repurchased 2,438,975 and 2,417,498 shares of the Company’s outstanding common stock at a cost, exclusive of commissions, of $299.8 million and $274.9 million, respectively. The timing and the amount of future repurchases will depend on market conditions, the Company’s financial condition, results of operations and liquidity and other factors. Issuance of Mandatory Convertible Preferred StockIn March 2018, the Company issued 2,875,000 shares of the MCPS at a public offering price of $100.00 per share. The net proceeds from the sale of the MCPS was $276.4 million after deducting underwriting discounts and offering expenses. Each outstanding share of MCPS converted in March 2021 into 0.9405 of common stock, or 2,703,911 shares of common stock in total plus an immaterial amount of cash in lieu of fractional shares. The Company used a portion of its treasury stock for the common stock, using the average cost method to account for the reissuance of such shares.Dividends on the MCPS were payable on a cumulative basis when, as and if declared, at an annual rate of 6.50% of the liquidation preference of $100.00 per share. The Company paid preferred stock dividends of $4.7 million and $18.7 million for the years ended December 31, 2021 and 2020, respectively.
21. Stock Based Compensation In accordance with the guidance on share-based compensation, the Company recognized stock-based compensation costs based on the grant date fair value. For the years ended December 31, 2021, 2020 and 2019, the Company recognized compensation costs net of a 5% per year estimated forfeiture rate on a pro-rated basis over the remaining vesting period.Long-Term Equity Incentive PlanUnder the Assurant, Inc. 2017 Long-Term Equity Incentive Plan (the “ALTEIP”), as amended in May 2021, the Company is authorized to issue up to 1,840,112 new shares of the Company’s common stock to employees, officers and non-employee directors. Under the ALTEIP, the Company may grant awards based on shares of its common stock, including stock options, stock appreciation rights, restricted stock (including performance shares), unrestricted stock, restricted stock units (“RSUs”), performance share units (“PSUs”) and dividend equivalents. All share-based grants are awarded under the ALTEIP.The Compensation Committee of the Board (the “Compensation Committee”) awards RSUs and PSUs annually. RSUs and PSUs are promises to issue actual shares of common stock at the end of a vesting period or performance period. The RSUs granted to employees under the ALTEIP are based on salary grade and performance and generally vest one-third each year over a three-year period. RSUs receive dividend equivalents in cash during the restricted period and do not have voting rights during the restricted period. RSUs granted to non-employee directors also vest one-third each year over a three-year period, however, issuance of vested shares and payment of dividend equivalents is deferred until separation from Board service. PSUs accrue dividend equivalents during the performance period based on a target payout and will be paid in cash at the end of the performance period based on the actual number of shares issued. Under the ALTEIP, the Company’s CEO is authorized by the Board to grant common stock, restricted stock and RSUs to employees other than the Company’s executive officers. The Compensation Committee recommends the annual share allotment that can be awarded by the CEO under this program. Restricted stock and RSUs granted under this program may have different vesting periods.The fair value of RSUs is estimated using the fair market value of a share of the Company’s common stock at the date of grant. The fair value of PSUs is estimated using the Monte Carlo simulation model. The number of shares of common stock a participant will receive upon vesting of a PSU award is contingent upon the Company’s performance with respect to selected metrics, as identified below. The payout levels for 2021, 2020 and 2019 awards can vary between 0% and 200% (maximum) of the target (100%) ALTEIP award amount, based on the Company’s level of performance against the selected metrics.2021, 2020 and 2019 PSU Performance Goals. The Compensation Committee established total shareholder return and net operating income per diluted share, excluding reportable catastrophes, as the two equally weighted performance measures for PSU awards in 2021, 2020 and 2019. Total shareholder return is defined as appreciation in the Company’s common stock plus dividend yield to stockholders and will be measured by the performance of the Company relative to the S&P 500 Index over the three-year performance period. Net operating income per diluted common share, excluding reportable catastrophes, is a Company-specific profitability metric and is defined as the Company’s net operating income, excluding reportable catastrophes, divided by the number of fully diluted common shares outstanding at the end of the period. This metric is an absolute metric F-63
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Remaining authorized repurchase amount | 1,172 | SEC-NUM |
H. Earnings Per ShareBasic earnings per share (“EPS”) amounts are computed by dividing earnings, after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.The information used to compute basic and diluted EPS attributable to Howmet common shareholders was as follows (shares in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | First quarter ended | | |
| | March 31, | | |
| | 2022 | | 2021 | | | | |
| | | | | | | | |
| | | | | | | | |
| Net income attributable to common shareholders | $ | 131 | | | $ | 80 | | | | | |
| Less: preferred stock dividends declared | 1 | | | 1 | | | | | |
| Net income available to Howmet Aerospace common shareholders - basic and diluted | $ | 130 | | | $ | 79 | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Average shares outstanding - basic | 419 | | | 434 | | | | | |
| Effect of dilutive securities: | | | | | | | |
| Stock options | — | | | 1 | | | | | |
| Stock and performance awards | 6 | | | 4 | | | | | |
| | | | | | | | |
| Average shares outstanding - diluted | 425 | | | 439 | | | | | |
Common stock outstanding at March 31, 2022 and 2021 was approximately 418 million and 434 million, respectively. On August 18, 2021, the Company announced that its Board of Directors authorized a share repurchase program of up to $1,500 of the Company's outstanding common stock. In the quarter ended March 31, 2022, the Company repurchased approximately 5 million shares of its common stock at an average price of $34.00 per share (excluding commissions cost) for $175 in cash. All of the shares repurchased have been retired. After giving effect to the share repurchases made through March 31, 2022, approximately $1,172 Board authorization remains available. Under the Company’s share repurchase programs (the “Share Repurchase Programs”), the Company may repurchase shares by means of trading plans established from time to time in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, block trades, private transactions, open market repurchases and/or accelerated share repurchase agreements or other derivative transactions. There is no stated expiration for the Share Repurchase Programs. Under its Share Repurchase Programs, the Company may repurchase shares from time to time, in amounts, at prices, and at such times as the Company deems appropriate, subject to market conditions, legal requirements and other considerations, including limits under its Five-Year Revolving Credit Agreement (the “Credit Agreement”) (see [Note N](#ib58fce0f7c97431fb8cb1c861d028b02_82)). The Company is not obligated to repurchase any specific number of shares or to do so at any particular time, and the Share Repurchase Programs may be suspended, modified or terminated at any time without prior notice.The approximately 15 million decrease in average shares outstanding (basic) for the first quarter of 2022 compared to the first quarter of 2021 was primarily due to the approximately 19 million shares repurchased during 2021 and 2022. As average shares outstanding are used in the calculation for both basic and diluted EPS, the full impact of share repurchases was not realized in EPS in the first quarter of 2022 as share repurchases occurred at varying points during the quarter.The following shares were excluded from the calculation of average shares outstanding – diluted as their effect was anti-dilutive (shares in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | First quarter ended | | |
| | March 31, | | |
| | 2022 | | 2021 | | | | |
| | | | | | | | |
| Stock options(1) | — | | | 1 | | | | | |
| | | | | | | | |
(1)There were no anti-dilutive shares as of March 31, 2022. The weighted average exercise price per share of options excluded from diluted EPS was $31.86 as of March 31, 2021.
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Fair Value, Mortgage-backed securities | 1,073,536 | SEC-NUM |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 |
| (In thousands) | Foreign Government | | Corporate | | Total | | Foreign Government | | Corporate | | Total |
| Allowance for expected credit losses, beginning of period | $ | 1,264 | | | $ | 518 | | | $ | 1,782 | | | $ | — | | | $ | — | | | $ | — | |
| Cumulative effect adjustment resulting from changes in accounting principles | — | | | — | | | — | | | 35,645 | | | — | | | 35,645 | |
| Expected credit losses on securities for which credit losses were not previously recorded | 19,072 | | | 16 | | | 19,088 | | | 12,590 | | | 7,058 | | | 19,648 | |
| Expected credit losses (gains) on securities for which credit losses were previously recorded | 2,438 | | | (513) | | | 1,925 | | | 373 | | | (3,841) | | | (3,468) | |
| Reduction due to disposals | (552) | | | (5) | | | (557) | | | (47,344) | | | (2,699) | | | (50,043) | |
| Allowance for expected credit losses, end of period | $ | 22,222 | | | $ | 16 | | | $ | 22,238 | | | $ | 1,264 | | | $ | 518 | | | $ | 1,782 | |
During the year ended December 31, 2021, the Company increased the allowance for expected credit losses utilizing its credit loss assessment process and inputs used in its credit loss model, primarily due to foreign government securities that had no reserve in prior periods. During the year ended December 31, 2020, the Company decreased the allowance for expected credit losses primarily due to the disposition of securities which previously had an allowance recorded. The amortized cost and fair value of fixed maturity securities at December 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| (In thousands) | AmortizedCost (1) | | Fair Value |
| Due in one year or less | $ | 1,589,823 | | | $ | 1,586,470 | |
| Due after one year through five years | 7,574,884 | | | 7,659,231 | |
| Due after five years through ten years | 4,148,118 | | | 4,184,007 | |
| Due after ten years | 2,086,810 | | | 2,110,874 | |
| Mortgage-backed securities | 1,071,282 | | | 1,073,536 | |
| Total | $ | 16,470,917 | | | $ | 16,614,118 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) Amortized cost is reduced by the allowance for expected credit losses of $387 thousand related to held to maturity securities. At December 31, 2021 and 2020, there were no investments, other than investments in United States government and government agency securities, which exceeded 10% of common stockholders’ equity. At December 31, 2021, investments with a carrying value of $1,853 million were on deposit in custodial or trust accounts, of which $1,213 million was on deposit with insurance regulators, $602 million was on deposit in support of the Company’s underwriting activities at Lloyd’s, $33 million was on deposit as security for reinsurance clients and $5 million was on deposit as security for letters of credit issued in support of the Company’s reinsurance operations.
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Preferred stock, par value (usd per share) | 0.001 | SEC-NUM |
[Table of Contents](#i30d98ad3bee64d018232130137db9899_7) INTUITIVE SURGICAL, INC.CONSOLIDATED BALANCE SHEETS(IN MILLIONS, EXCEPT PAR VALUE AMOUNTS)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 1,290.9 | | | $ | 1,622.6 | |
| Short-term investments | 2,913.1 | | | 3,488.8 | |
| Accounts receivable, net of allowances of $20.2 and $17.7 as of December 31, 2021, and 2020, respectively | 782.7 | | | 645.5 | |
| Inventory | 587.1 | | | 601.5 | |
| Prepaids and other current assets | 271.1 | | | 267.5 | |
| Total current assets | 5,844.9 | | | 6,625.9 | |
| Property, plant, and equipment, net | 1,876.4 | | | 1,577.3 | |
| Long-term investments | 4,415.5 | | | 1,757.7 | |
| Deferred tax assets | 441.4 | | | 367.7 | |
| Intangible and other assets, net | 633.2 | | | 503.6 | |
| Goodwill | 343.6 | | | 336.7 | |
| Total assets | $ | 13,555.0 | | | $ | 11,168.9 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 121.2 | | | $ | 81.6 | |
| Accrued compensation and employee benefits | 350.1 | | | 235.0 | |
| Deferred revenue | 377.2 | | | 350.3 | |
| Other accrued liabilities | 301.3 | | | 298.3 | |
| Total current liabilities | 1,149.8 | | | 965.2 | |
| Other long-term liabilities | 453.7 | | | 444.6 | |
| Total liabilities | 1,603.5 | | | 1,409.8 | |
| Commitments and contingencies (Note 8) | | | |
| Stockholders’ equity: | | | |
| Preferred stock, 2.5 shares authorized, $0.001 par value, issuable in series; no shares issued and outstanding as of December 31, 2021, and 2020 | — | | | — | |
| Common stock, 600.0 shares authorized, $0.001 par value, 357.7 shares and 353.1 shares issued and outstanding as of December 31, 2021, and 2020, respectively | 0.4 | | | 0.4 | |
| Additional paid-in capital | 7,164.0 | | | 6,444.9 | |
| Retained earnings | 4,760.9 | | | 3,261.3 | |
| Accumulated other comprehensive income (loss) | (24.2) | | | 24.9 | |
| Total Intuitive Surgical, Inc. stockholders’ equity | 11,901.1 | | | 9,731.5 | |
| Noncontrolling interest in joint venture | 50.4 | | | 27.6 | |
| Total stockholders’ equity | 11,951.5 | | | 9,759.1 | |
| Total liabilities and stockholders’ equity | $ | 13,555.0 | | | $ | 11,168.9 | |
The accompanying notes are an integral part of these Consolidated Financial Statements.83
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Other Investing Activities | 30 | SEC-NUM |
EOG RESOURCES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In Millions)(Unaudited)
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Nine Months EndedSeptember 30, |
| | 2022 | | 2021 |
| Cash Flows from Operating Activities | | | |
| Reconciliation of Net Income to Net Cash Provided by Operating Activities: | | | |
| Net Income | $ | 5,482 | | | $ | 2,679 | |
| Items Not Requiring (Providing) Cash | | | |
| Depreciation, Depletion and Amortization | 2,664 | | | 2,741 | |
| Impairments | 240 | | | 170 | |
| Stock-Based Compensation Expenses | 99 | | | 117 | |
| Deferred Income Taxes | (240) | | | (244) | |
| Gains on Asset Dispositions, Net | (101) | | | (46) | |
| Other, Net | (15) | | | 15 | |
| Dry Hole Costs | 41 | | | 28 | |
| Mark-to-Market Financial Commodity Derivative Contracts | | | |
| Total Losses | 4,215 | | | 1,288 | |
| Net Cash Payments for Settlements of Financial Commodity Derivative Contracts | (3,257) | | | (516) | |
| Other, Net | 33 | | | 8 | |
| Changes in Components of Working Capital and Other Assets and Liabilities | | | |
| Accounts Receivable | (1,008) | | | (639) | |
| Inventories | (311) | | | 95 | |
| Accounts Payable | 301 | | | 115 | |
| Accrued Taxes Payable | 24 | | | 286 | |
| Other Assets | (271) | | | (55) | |
| Other Liabilities | (548) | | | (317) | |
| Changes in Components of Working Capital Associated with Investing Activities | 301 | | | (100) | |
| Net Cash Provided by Operating Activities | 7,649 | | | 5,625 | |
| Investing Cash Flows | | | |
| Additions to Oil and Gas Properties | (3,390) | | | (2,689) | |
| Additions to Other Property, Plant and Equipment | (248) | | | (147) | |
| Proceeds from Sales of Assets | 310 | | | 154 | |
| Other Investing Activities | (30) | | | — | |
| Changes in Components of Working Capital Associated with Investing Activities | (301) | | | 100 | |
| Net Cash Used in Investing Activities | (3,659) | | | (2,582) | |
| Financing Cash Flows | | | |
| Long-Term Debt Repayments | — | | | (750) | |
| Dividends Paid | (3,821) | | | (1,278) | |
| Treasury Stock Purchased | (95) | | | (33) | |
| Proceeds from Stock Options Exercised and Employee Stock Purchase Plan | 17 | | | 9 | |
| Repayment of Finance Lease Liabilities | (27) | | | (27) | |
| Net Cash Used in Financing Activities | (3,926) | | | (2,079) | |
| Effect of Exchange Rate Changes on Cash | (1) | | | — | |
| Increase in Cash and Cash Equivalents | 63 | | | 964 | |
| Cash and Cash Equivalents at Beginning of Period | 5,209 | | | 3,329 | |
| Cash and Cash Equivalents at End of Period | $ | 5,272 | | | $ | 4,293 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.-7-
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Outstanding, Aggregate Intrinsic Value | 19.2 | SEC-NUM |
[Table of Contents](#i90c0b6fc77a94e699123e3f505f83787_7)8. Earnings per Share of Common StockThe numerator for the calculation of basic and diluted earnings per share is net earnings. The following table sets forth the computation of basic and diluted weighted-average shares used in the earnings per share calculations:
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| | Three Months EndedJune 30, | | Six Months EndedJune 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| Denominator for basic earnings per share - weighted average shares | 155,692,240 | | | 160,241,814 | | | 156,351,739 | | | 160,880,724 | |
| Effect of dilutive stock options and share units | 939,432 | | | 1,490,159 | | | 1,118,514 | | | 1,374,828 | |
| Denominator for diluted earnings per share | 156,631,672 | | | 161,731,973 | | | 157,470,253 | | | 162,255,552 | |
9. Stock Based CompensationThe Company adopted the A. O. Smith Combined Incentive Compensation Plan (the Incentive Plan) effective January 1, 2007. The Incentive Plan was most recently reapproved by stockholders on April 15, 2020. The Incentive Plan is a continuation of the A. O. Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002. The number of shares available for granting of options or share units at June 30, 2022 was 7,144,796. Upon stock option exercise or share unit vesting, shares are issued from treasury stock.Total stock based compensation expense recognized in the three months ended June 30, 2022 and 2021 was $1.4 million and $1.5 million, respectively. Total stock based compensation expense recognized in the six months ended June 30, 2022 and 2021 was $9.0 million and $8.9 million, respectively.Stock Options The stock options granted in the six months ended June 30, 2022 and 2021 have three year pro rata vesting from the date of grant. Stock options are issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant. For active employees, all options granted in 2022 and 2021 expire ten years after the date of grant. The Company’s stock options are expensed ratably over the three year vesting period; however, included in the stock option expense for the six months ended June 30, 2022 and 2021 was expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period. Stock based compensation expense attributable to stock options in the three months ended June 30, 2022 and 2021 was $0.6 million and $0.5 million, respectively. Stock based compensation expense attributable to stock options in the six months ended June 30, 2022 and 2021 was $4.5 million and $4.1 million, respectively.Changes in options, all of which relate to the Company’s Common Stock, were as follows for the six months ended June 30, 2022:
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| | Weighted-Avg. PerShareExercisePrice | | Number ofOptions | | AverageRemainingContractualLife | | AggregateIntrinsicValue(dollars inmillions) |
| Outstanding at January 1, 2022 | $ | 47.73 | | | 2,252,498 | | | | | |
| Granted | 74.14 | | | 321,600 | | | | | |
| Exercised | 35.80 | | | (25,638) | | | | | |
| Forfeited | 58.09 | | | (10,094) | | | | | |
| Outstanding at June 30, 2022 | 51.16 | | | 2,538,366 | | | 7 years | | $ | 19.2 | |
| Exercisable at June 30, 2022 | 46.82 | | | 1,716,451 | | | 6 years | | $ | 16.0 | |
12
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Weighted average exercise price, options granted (in dollars per share) | 34.73 | SEC-NUM |
[Table of Contents](#i1d117440a79147f69db4408bc4f22334_10)Part IV
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IRON MOUNTAIN INCORPORATEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)DECEMBER 31, 2021(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)A summary of stock option activity for the year ended December 31, 2021 is as follows:
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| | OPTIONS | | WEIGHTEDAVERAGEEXERCISE PRICE | | WEIGHTED AVERAGEREMAININGCONTRACTUALTERM (YEARS) | | AGGREGATEINTRINSICVALUE |
| Outstanding at December 31, 2020 | 4,732,519 | | | $ | 35.83 | | | | | |
| Granted | 429,618 | | | 34.73 | | | | | |
| Exercised | (869,855) | | | 34.26 | | | | | |
| Forfeited | (16,304) | | | 35.37 | | | | | |
| Expired | (51,905) | | | 34.27 | | | | | |
| Outstanding at December 31, 2021 | 4,224,073 | | | $ | 36.06 | | | 5.75 | | $ | 68,747 | |
| Options exercisable at December 31, 2021 | 3,168,908 | | | $ | 36.60 | | | 4.90 | | $ | 49,850 | |
| Options expected to vest | 1,054,641 | | | $ | 34.42 | | | 8.34 | | $ | 18,888 | |
RESTRICTED STOCK UNITSOur RSUs generally have a vesting period of three years from the date of grant. However, RSUs granted to our non-employee directors vest immediately upon grant. All RSUs accrue dividend equivalents associated with the underlying stock as we declare dividends. Dividends will generally be paid to holders of RSUs in cash upon the vesting date of the associated RSU and will be forfeited if the RSU does not vest. The fair value of RSUs is the excess of the market price of our common stock at the date of grant over the holder's purchase price (which is typically zero). The fair value of RSUs vested during the years ended December 31, 2021, 2020 and 2019, are as follows:
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| | YEAR ENDED DECEMBER 31, |
| | 2021 | | 2020 | | 2019 |
| Fair value of RSUs vested | $ | 29,332 | | | $ | 26,492 | | | $ | 21,191 | |
A summary of RSU activity for the year ended December 31, 2021 is as follows:
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| | RSUs | | WEIGHTED-AVERAGEGRANT-DATE FAIR VALUE |
| Non-vested at December 31, 2020 | 1,294,006 | | | $ | 33.02 | |
| Granted | 1,178,170 | | | 34.98 | |
| Vested | (862,377) | | | 34.01 | |
| Forfeited | (206,166) | | | 32.65 | |
| Non-vested at December 31, 2021 | 1,403,633 | | | $ | 34.11 | |
PERFORMANCE UNITSThe PUs we issue vest based on our performance against predefined operational and share based targets. For awards granted in 2019 and thereafter, the vesting is subject to a minimum level of return on invested capital (“ROIC”) in the third year of the performance period, and thereafter the number of PUs earned is based on (i) the revenue performance for each year averaged at the end of the three-year performance period, (ii) the revenue exit rate of new products in the last quarter of the three-year performance period and (iii) a relative TSR target. With respect to the PUs granted in 2019 and thereafter, the number of PUs earned may range from 0% to approximately 238% of the initial award.
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| | IRON MOUNTAIN 2021 FORM 10-K | 92 |
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Purchases of products and services | 218 | SEC-NUM |
Baker Hughes (BKR). In September 2019, we reduced our ownership percentage in Baker Hughes from 50.2% to 36.8%. As a result, we deconsolidated our Baker Hughes segment and recognized a loss of $8,715 million ($8,238 million after-tax) in discontinued operations. We have continuing involvement with BKR primarily through our remaining interest, ongoing purchases and sales of products and services, transition services that we provide to BKR, as well as an aeroderivative joint venture (JV) we formed with BKR in the fourth quarter of 2019. The JV is a 50-50 joint venture between GE and BKR and was consolidated by GE due to the significance of our investment in BKR. In the fourth quarter of 2021, our investment in BKR fell below 20%, and we deconsolidated the JV. We recognized a pre-tax gain of $71 million in continuing operations in Other income in our Statement of Earnings (Loss) as a result of deconsolidation.
For the year ended December 31, 2021, we had sales of $716 million and purchases of $218 million with BKR for products and services outside of the JV. We collected net cash of $631 million from BKR related to sales, purchases and transition services. For the year ended December 31, 2021, we had sales of $364 million to BKR for products and services from the JV, and we collected cash of $489 million. The deconsolidation of the JV is not expected to have a material impact on Cash from operating activities (CFOA). In addition, for the year ended December 31, 2021, we received $39 million of repayments on the promissory note receivable from BKR and dividends of $173 million on our investment.
Transportation. In February 2019, we completed the spin-off and subsequent merger of our Transportation business with Wabtec. As a result, we recorded a gain of $3,471 million ($2,508 million after-tax) in discontinued operations.
Bank BPH. The mortgage portfolio in Poland (Bank BPH) comprises floating rate residential mortgages, 87% of which are indexed to or denominated in foreign currencies (primarily Swiss francs). At December 31, 2021, the total portfolio had a carrying value, net of reserves, of $1,799 million with a 2.05% 90-day delinquency rate and an average loan to value ratio of approximately 58.0%. The portfolio is recorded at the lower of cost or fair value, less cost to sell, which reflects market yields as well as estimates with respect to ongoing litigation in Poland related to foreign currency-denominated mortgages and other factors. Loss from discontinued operations for the year ended December 31, 2021 included $509 million non-cash pre-tax charges, reflecting estimates with respect to ongoing litigation as well as market yields. To ensure appropriate capital levels, during the fourth quarter of 2021, we made a capital contribution of $360 million into Bank BPH. Future changes in the estimated legal liabilities or market yields could result in further losses and capital contributions related to these loans in future reporting periods. See Note 22 for further information.
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| RESULTS OF DISCONTINUED OPERATIONSFor the year ended December 31, 2021 | GECAS | Baker Hughes | Transportation | Other | Total | | | |
| Total revenues | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | | |
| Cost of equipment and services sold | (398) | | — | | — | | — | | (398) | | | | |
| Other income, costs and expenses | 1,992 | | (10) | | (6) | | (584) | | 1,393 | | | | |
| | | | — | | | | | | |
| Earnings (loss) of discontinued operations before income taxes | 1,594 | | (10) | | (6) | | (584) | | 995 | | | | |
| Benefit (provision) for income taxes | (258) | | 2 | | (1) | | (78) | | (335) | | | | |
| Earnings (loss) of discontinued operations, net of taxes(a) | 1,336 | | (8) | | (6) | | (662) | | 660 | | | | |
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| Gain (loss) on disposal before income taxes | (3,312) | | 4 | | — | | 61 | | (3,246) | | | | |
| Benefit (provision) for income taxes | (570) | | — | | — | | (38) | | (608) | | | | |
| Gain (loss) on disposal, net of taxes | (3,882) | | 4 | | — | | 23 | | (3,855) | | | | |
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| Earnings (loss) from discontinued operations, net of taxes | $ | (2,546) | | $ | (4) | | $ | (6) | | $ | (639) | | $ | (3,195) | | | | |
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| For the year ended December 31, 2020 | | | | | |
| Total revenues | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Cost of equipment and services sold | (2,555) | | — | | — | | — | | (2,555) | |
| Other income, costs and expenses | 1,781 | | 2 | | — | | (197) | | 1,586 | |
| | | | — | | | |
| Earnings (loss) of discontinued operations before income taxes | (773) | | 2 | | 1 | | (197) | | (968) | |
| Benefit (provision) for income taxes | (13) | | (13) | | 9 | | 105 | | 89 | |
| Earnings (loss) of discontinued operations, net of taxes(a) | (786) | | (10) | | 9 | | (93) | | (879) | |
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| Gain (loss) on disposal before income taxes | — | | (23) | | (12) | | 3 | | (31) | |
| Benefit (provision) for income taxes | — | | — | | — | | (1) | | (1) | |
| Gain (loss) on disposal, net of taxes | — | | (23) | | (12) | | 2 | | (32) | |
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| Earnings (loss) from discontinued operations, net of taxes | $ | (786) | | $ | (33) | | $ | (2) | | $ | (90) | | $ | (911) | |
2021 FORM 10-K 57
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Spent Nuclear Fuel Treasury Interest Rate | 0.051 | SEC-NUM |
[Table of Contents](#i0fa971ac9e834218957059819155291f_10)Combined Notes to Consolidated Financial Statements(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingenciesextended during 2020 to provide for the reimbursement of SNF storage costs through December 31, 2022. FitzPatrick also has a separate settlement agreement in place with the DOE which was established in 2021 to provide for reimbursement of SNF storage costs through December 31, 2022. Generation submits annual reimbursement requests to the DOE for costs associated with the storage of SNF. In all cases, reimbursement requests are made only after costs are incurred and only for costs resulting from DOE delays in accepting the SNF.Under the settlement agreements, Generation received total cumulative cash reimbursements of $1,492 million through December 31, 2021 for costs incurred. After considering the amounts due to co-owners of certain nuclear stations and to the former owner of Oyster Creek, Generation received net cumulative cash reimbursements of $1,294 million. As of December 31, 2021 and 2020, the amount of SNF storage costs for which reimbursement has been or will be requested from the DOE under the DOE settlement agreements is as follows:
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| | December 31, 2021 | | December 31, 2020 |
| DOE receivable - current(a) | $ | 241 | | | $ | 129 | |
| DOE receivable - noncurrent(b) | 85 | | | 70 | |
| Amounts owed to co-owners(c) | (35) | | | (23) | |
\_\_\_\_\_\_\_\_\_\_(a)Recorded in Other accounts receivable.(b)Recorded in Deferred debits and other assets, other.(c)Recorded in Other accounts receivable. Represents amounts owed to the co-owners of Peach Bottom, Quad Cities, and Nine Mile Point Unit 2 generating facilities.The Standard Contracts with the DOE also required the payment to the DOE of a one-time fee applicable to nuclear generation through April 6, 1983. The below table outlines the SNF liability recorded at Exelon as of December 31, 2021 and 2020:
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| | December 31, 2021 | | December 31, 2020 |
| Former ComEd units(a) | $ | 1,083 | | | $ | 1,082 | |
| Fitzpatrick(b) | 127 | | | 126 | |
| Total SNF Obligation | $ | 1,210 | | | $ | 1,208 | |
\_\_\_\_\_\_\_\_\_\_(a)ComEd previously elected to defer payment of the one-time fee of $277 million for its units (which are now part of Generation), with interest to the date of payment, until just prior to the first delivery of SNF to the DOE. The unfunded liabilities for SNF disposal costs, including the one-time fee, were transferred to Generation as part of Exelon’s 2001 corporate restructuring. (b)A prior owner of FitzPatrick elected to defer payment of the one-time fee of $34 million, with interest to the date of payment, for the FitzPatrick unit. As part of the FitzPatrick acquisition on March 31, 2017, Generation assumed a SNF liability for the DOE one-time fee obligation with interest related to FitzPatrick along with an offsetting asset, included in Other deferred debits and other assets, for the contractual right to reimbursement from NYPA, a prior owner of FitzPatrick, for amounts paid for the FitzPatrick DOE one-time fee obligation.Interest for SNF liabilities accrues at the 13-week Treasury Rate. The 13-week Treasury Rate in effect for calculation of the interest accrual at December 31, 2021 was 0.051% for the deferred amount transferred from ComEd and 0.041% for the deferred FitzPatrick amount.The following table summarizes sites for which Exelon does not have an outstanding SNF Obligation:
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| Description | Sites |
| Fees have been paid | Former PECO units, Clinton and Calvert Cliffs |
| Outstanding SNF Obligation remains with former owners | Nine Mile Point, Ginna and TMI |
Environmental Remediation MattersGeneral (All Registrants). The Registrants’ operations have in the past, and may in the future, require substantial expenditures to comply with environmental laws. Additionally, under Federal and state environmental laws, the Registrants are generally liable for the costs of remediating environmental contamination of property 308
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Income from Discontinued Operations Before Income Taxes | 114 | SEC-NUM |
[Table of Contents](#ie1b09d57e49a40aaa81f572e6311eac9_10)DTE Energy Company — DTE Electric CompanyCombined Notes to Consolidated Financial Statements (Unaudited) — (Continued)NOTE 4 — DISCONTINUED OPERATIONSSeparation of DT MidstreamOn July 1, 2021, DTE Energy completed the separation of DT Midstream, its former natural gas pipeline, storage, and gathering non-utility business. The table below reflects the financial results of DT Midstream that are included in discontinued operations within the Consolidated Statements of Operations. These results include the impact of tax-related adjustments and all transaction costs related to the separation. General corporate overhead costs have been excluded and no portion of corporate interest costs were allocated to discontinued operations.
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| | | | | | Three Months Ended March 31, |
| | | | | | | | 2021 |
| | | | | | | | (In millions) |
| Operating Revenues — Non-utility operations | | | | | | | $ | 197 | |
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| Operating Expenses | | | | | | | |
| Cost of gas and other — non-utility | | | | | | | 5 | |
| Operation and maintenance(a) | | | | | | | 41 | |
| Depreciation and amortization | | | | | | | 41 | |
| Taxes other than income | | | | | | | 7 | |
| Asset (gains) losses and impairments, net | | | | | | | (1) | |
| | | | | | | | 93 | |
| Operating Income | | | | | | | 104 | |
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| Other (Income) and Deductions | | | | | | | |
| Interest expense | | | | | | | 26 | |
| Interest income | | | | | | | (3) | |
| Other income | | | | | | | (33) | |
| | | | | | | | (10) | |
| Income from Discontinued Operations Before Income Taxes | | | | | | | 114 | |
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| Income Tax Expense | | | | | | | 34 | |
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| Net Income from Discontinued Operations, Net of Taxes | | | | | | | 80 | |
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| Less: Net Income Attributable to Noncontrolling Interests | | | | | | | 3 | |
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| Net Income from Discontinued Operations | | | | | | | $ | 77 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Includes separation transaction costs of $10 million for the three months ended March 31, 2021 for various legal, accounting and other professional services fees.25
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Redemption charges | 75.6 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 4.875% senior notes are guaranteed on a senior basis by us. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1, with the first interest payment made on March 1, 2016. The 4.875% senior notes are redeemable at our option, in whole or in part, prior to December 1, 2025 at a redemption price equal to the greater of (1) 100% of the principal amount of the 4.875% senior notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon to December 1, 2025 (not including any portions of payments of interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture governing these notes). In addition, at any time on or after December 1, 2025, the 4.875% senior notes may be redeemed by us, in whole or in part, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. If a change of control triggering event (as defined in the indenture governing these notes) occurs, we are obligated to make an offer to purchase the then outstanding 4.875% senior notes at a redemption price of 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The amount of the 4.875% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheets was $595.5 million and $594.5 million at December 31, 2021 and 2020, respectively.On September 26, 2014, CBRE Services issued $300.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025. On December 12, 2014, CBRE Services issued an additional $125.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025 at a price equal to 101.5% of their face value, plus interest deemed to have accrued from September 26, 2014. The 5.25% senior notes were unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 5.25% senior notes were jointly and severally guaranteed on a senior basis by us and each domestic subsidiary of CBRE Services that guaranteed our 2019 Credit Agreement. Interest accrued at a rate of 5.25% per year and was payable semi-annually in arrears on March 15 and September 15. We redeemed these notes in full on December 28, 2020 and incurred charges of $75.6 million, including a premium of $73.6 million and the write-off of $2.0 million of unamortized premium and debt issuance costs. We funded this redemption using cash on hand. The indenture governing our 4.875% senior notes and 2.500% senior notes contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. In addition, these indentures require that the 4.875% senior notes and 2.500% senior notes be jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and any domestic subsidiary that guarantees the 2021 Credit Agreement. In addition, our 2021 Credit Agreement also requires us to maintain a minimum coverage ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to consolidated EBITDA (as defined in the 2021 Credit Agreement) of 4.25x (and in the case of the first four full fiscal quarters following consummation of a qualified acquisition (as defined in the 2021 Credit Agreement), 4.75x) as of the end of each fiscal quarter. Our coverage ratio of consolidated EBITDA to consolidated interest expense was 54.94x for the year ended December 31, 2021, and our leverage ratio of total debt less available cash to consolidated EBITDA was (0.04)x as of December 31, 2021.Short-Term BorrowingsWe had short-term borrowings of $1.3 billion and $1.4 billion as of December 31, 2021 and 2020, respectively, with related weighted average interest rates of 1.6% and 1.7%, respectively, which are included in the accompanying consolidated balance sheets.Revolving Credit FacilitiesThe revolving credit facility under the 2021 Credit Agreement allows for borrowings outside of the U.S., with a $200.0 million sub-facility available to CBRE Services, one of our Canadian subsidiaries, one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $320.0 million sub-facility available to CBRE Services and one of our U.K. subsidiaries. Borrowings under the revolving credit facility bear interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.68% to 1.075% or (2) the daily rate plus 0.0% to 0.075%, in each case as determined by reference to our Credit Rating (as defined in the 2021 Credit Agreement). The 2021 Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). 95
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Equity Method Investment, Ownership Percentage | 50 | SEC-NUM |
The major classes of KPCo and KTCo’s assets and liabilities presented in Assets Held for Sale and Liabilities Held for Sale on the balance sheets of AEP and AEPTCo are shown in the table below:
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| | | AEP | | AEPTCo |
| | | June 30, 2022 | | December 31, 2021 | | June 30, 2022 | | December 31, 2021 |
| | | (in millions) |
| ASSETS | | | | | | | | |
| Accounts Receivable and Accrued Unbilled Revenues | | $ | 87.1 | | | $ | 33.2 | | | $ | 1.9 | | | $ | 1.5 | |
| Fuel, Materials and Supplies | | 37.4 | | | 30.6 | | | — | | | — | |
| Property, Plant and Equipment, Net | | 2,358.0 | | | 2,302.7 | | | 166.9 | | | 165.3 | |
| Regulatory Assets | | 484.5 | | | 484.7 | | | — | | | — | |
| Other Classes of Assets that are not Major | | 47.5 | | | 68.5 | | | 2.7 | | | 1.1 | |
| Total Major Classes of Assets Held for Sale | | 3,014.5 | | | 2,919.7 | | | 171.5 | | | 167.9 | |
| Loss on the Expected Sale of Kentucky Operations | | (68.8) | | | — | | | — | | | — | |
| Assets Held for Sale | | $ | 2,945.7 | | | $ | 2,919.7 | | | $ | 171.5 | | | $ | 167.9 | |
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| LIABILITIES | | | | | | | | |
| Accounts Payable | | $ | 74.3 | | | $ | 53.4 | | | $ | 1.2 | | | $ | 1.1 | |
| Long-term Debt Due Within One Year | | 415.0 | | | 200.0 | | | — | | | — | |
| Customer Deposits | | 38.0 | | | 32.4 | | | — | | | — | |
| Deferred Income Taxes | | 453.5 | | | 441.6 | | | 16.2 | | | 15.4 | |
| Long-term Debt | | 688.3 | | | 903.1 | | | — | | | — | |
| Regulatory Liabilities and Deferred Investment Tax Credits | | 140.1 | | | 148.1 | | | 7.9 | | | 7.6 | |
| Other Classes of Liabilities that are not Major | | 91.1 | | | 102.3 | | | 2.3 | | | 3.5 | |
| Liabilities Held for Sale | | $ | 1,900.3 | | | $ | 1,880.9 | | | $ | 27.6 | | | $ | 27.6 | |
DISPOSITIONS
Disposition of Mineral Rights (Generation & Marketing Segment) (Applies to AEP)
In June 2022, AEP closed on the sale of certain mineral rights to a nonaffiliated third-party and received $120 million of proceeds. The sale resulted in a pretax gain of $116 million in the second quarter of 2022.
IMPAIRMENTS
Flat Ridge 2 Wind LLC (Generation & Marketing Segment) (Applies to AEP)
In April 2019, AEP acquired Sempra Renewables LLC and its ownership interests in 724 MWs of wind generation and battery assets. The acquisition included a 50% ownership interest in five non-consolidated joint ventures, including Flat Ridge 2 Wind LLC (Flat Ridge 2), and two tax equity partnerships. The five non-consolidated joint ventures are jointly owned and operated by BP Wind Energy. Flat Ridge 2 sells electricity to three counterparties through long-term PPAs.
Regarding AEP’s investment in Flat Ridge 2, in June 2022, as a result of deteriorating financial performance, sale negotiations AEP’s ongoing evaluation and ultimate decision to exit the investment in the near term, in June 2022 management determined a decline in the fair value of AEP’s investment in Flat Ridge 2 was other than temporary. In accordance with the accounting guidance for “Investments - Equity Method and Joint Ventures”, AEP recorded a pretax other than temporary impairment charge of $186 million in Equity Earnings (Losses) of Unconsolidated Subsidiaries in AEP’s Statement of Income in the second quarter of 2022. AEP’s determination of fair value utilized ASC 820 Fair Value Measurement market approach to valuation and was based on Level 2 pricing information from a third-party market participant. The carrying value of the investment in Flat Ridge 2 was not material to AEP as of June 30, 2022.
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Indemnification assets | 42.8 | SEC-NUM |
[Table of Contents](#i89c3c9328e454b30b2c14123b867f3f0_7)EQUINIX, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Estimated future amortization expense related to these intangibles is as follows (in thousands):
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| --- | --- | --- | --- | --- | --- |
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| Years ending: | |
| 2022 | $ | 196,744 | |
| 2023 | 195,030 | |
| 2024 | 193,722 | |
| 2025 | 191,158 | |
| 2026 | 190,802 | |
| Thereafter | 967,811 | |
| Total | $ | 1,935,267 | |
Other AssetsOther assets consisted of the following as of December 31 (in thousands):
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| | 2021 | | 2020 |
| Deferred tax assets, net | $ | 59,816 | | | $ | 66,424 | |
| Prepaid expenses (1) | 87,758 | | | 82,443 | |
| Debt issuance costs, net | 2,130 | | | 4,261 | |
| Deposits | 70,548 | | | 69,043 | |
| Restricted cash | 908 | | | 9,691 | |
| Derivative instruments | 59,917 | | | 2,793 | |
| Contract assets, non-current | 55,486 | | | 54,050 | |
| Contract costs | 325,510 | | | 267,978 | |
| Equity method investments | 245,049 | | | 163,071 | |
| Other assets (2) | 18,944 | | | 56,293 | |
| Total other assets | $ | 926,066 | | | $ | 776,047 | |
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(1)Prepaid expenses included $46.0 million and $21.1 million of capitalized CCA implementation costs, net as of December 31, 2021 and 2020, respectively. (2)In connection with the Metronode Acquisition in 2018, we had indemnification assets of $42.8 million as of December 31, 2020, which represented the seller's obligation under the purchase agreement to reimburse pre-acquisition tax liabilities settled after the acquisition. The amount was insignificant as of December 31, 2021.F-34
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Decrease in deferred tax asset valuation allowance | 5 | SEC-NUM |
The following table presents the tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities:
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| | December 31, |
| (in millions) | 2021 | | 2020 |
| Deferred tax assets: | | | |
| Other comprehensive income | $227 | | | $29 | |
| Allowance for credit losses | 448 | | | 622 | |
| State net operating loss carryforwards | 50 | | | 71 | |
| Accrued expenses not currently deductible | 676 | | | 77 | |
| Investment and other tax credit carryforwards | 110 | | | 99 | |
| | | | |
| Total deferred tax assets | 1,511 | | | 898 | |
| Valuation allowance | (103) | | | (98) | |
| Deferred tax assets, net of valuation allowance | 1,408 | | | 800 | |
| Deferred tax liabilities: | | | |
| Leasing transactions | 331 | | | 459 | |
| Amortization of intangibles | 379 | | | 376 | |
| Depreciation | 256 | | | 262 | |
| Pension and other employee compensation plans | 132 | | | 107 | |
| Partnerships | 95 | | | 76 | |
| Deferred Income | 85 | | | 62 | |
| MSRs | 130 | | | 87 | |
| Total deferred tax liabilities | 1,408 | | | 1,429 | |
| Net deferred tax liability | $— | | | $629 | |
Deferred tax assets are recognized for net operating loss carryforwards and tax credit carryforwards. Valuation allowances are recorded as necessary to reduce deferred tax assets to the amounts that management concludes are more likely than not to be realized.At December 31, 2021, the Company had state tax net operating loss carryforwards of $812 million. Limitations on the ability to realize these carryforwards are reflected in the associated valuation allowance. At December 31, 2021, the Company had a valuation allowance of $103 million against various deferred tax assets related to state net operating losses and state tax credits, as it is management’s current assessment that it is more likely than not that the Company will not recognize a portion of the deferred tax assets related to these items. The valuation allowance increased $5 million during the year ended December 31, 2021. Effective with the fiscal year ended September 30, 1997, the reserve method for bad debts was no longer permitted for tax purposes. The repeal of the reserve method required the recapture of the reserve balance in excess of certain base year reserve amounts attributable to years ended prior to 1988. At December 31, 2021, the Company’s base year loan loss reserves attributable to years ended prior to 1988, for which no deferred income taxes have been provided, was $557 million. This base year reserve may become taxable if certain distributions are made with respect to the stock of the Company or if the Company ceases to qualify as a bank for tax purposes. No actions are planned that would cause this reserve to become wholly or partially taxable. Citizens files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal or state and local income tax examinations by major tax authorities for years before 2018.
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| | | Citizens Financial Group, Inc. | 144 |
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Blended statutory Income tax rate, percent | 22.5 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
•Restructuring and related costs of $73.4 million which includes severance and retention costs, as well as $40.9 million in impairment charges for certain definite-lived intangible and production assets. The impairment charges of $40.9 million were driven by the change in strategy for the combined company's entertainment assets.Pursuant to Topic 805, unaudited supplemental pro forma results of operations for the year ended December 29, 2019, as if the acquisition of eOne had occurred on December 31, 2018, the first day of the Company’s 2019 fiscal year are presented below (in millions, except per share amounts):
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| | | Year Ended |
| (In millions, except per share data) | | December 29, 2019 |
| Revenues | | $ | 5,936.0 | |
| Net earnings | | 351.3 | |
| Net earnings attributable to Hasbro, Inc. | | 345.9 | |
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| Net earnings per common share attributable to Hasbro, Inc.: | | |
| Diluted | | $ | 2.51 | |
| Basic | | $ | 2.51 | |
These pro forma results do not represent financial results that would have been realized had the acquisition occurred on December 31, 2018.The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, as if the acquisition had occurred on December 31, 2018, including the following:•elimination of transaction costs of $24.3 million for the year ended December 29, 2019, incurred by Hasbro and eOne related to the eOne Acquisition, included in Selling, Distribution and Administration;•additional amortization expense of $38.8 million for the year ended December 29, 2019, that would have been recognized as a result of the allocation of purchase consideration to definite-lived intangible assets subject to amortization;•estimated differences in interest expense of $75.4 million for the year ended December 29, 2019, as a result of incurring new debt and extinguishing historical eOne debt;•total adjustments to Other (Income) Expense of $74.8 million for the year ended December 29, 2019, consisting of:◦elimination of a gain of $94.6 million for the year ended December 29, 2019, related to the mark to market of foreign exchange forward and option contracts, which the Company entered into in order to hedge a portion of the British pound sterling purchase price for the eOne Acquisition; and◦elimination of a charge of $19.8 million for the year ended December 29, 2019, related to premiums paid by eOne in connection with the 2019 early redemption and refinancing of its senior secured notes and the related write-off of unamortized deferred finance charges associated with the senior secured notes;•the income tax effect of the pro forma adjustments resulted in income tax benefits of $12.3 million for the year ended December 29, 2019, calculated using a blended statutory income tax rate of 22.5% for the eOne adjustments, and a blended statutory tax rate of 21% for the Hasbro adjustments.91
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Preferred Stock, Shares Outstanding | 2.475 | SEC-NUM |
[Table of Contents](#i769337f517694ce29a72abc52f207787_10)
Notes to Consolidated Financial Statements — (Continued)Becton, Dickinson and Company
Share RepurchasesIn fiscal year 2021, the Company executed two accelerated share repurchase agreements and accounted for each agreement as two transactions upon prepayment: (1) the initial delivery of shares was recorded as an increase to Common stock in treasury to recognize the acquisition of common stock acquired in a treasury stock transaction, and (2) the remaining amount of shares was recorded as a decrease to Capital in excess of par value to recognize a net share-settled forward sale contract indexed to the Company's own common stock. The impacts of these accelerated share repurchase transactions were as follows:
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| Execution Date | | Settlement Date | | Aggregate Common Stock Repurchased (millions of dollars) | | Initial Shares Delivered (in thousands) | | Additional Shares Delivered at Settlement (in thousands) (a) | | Total Shares Delivered (in thousands) |
| Q3 2021 | | Q4 2021 | | $ | 500 | | | 1,658 | | | 403 | | 2,062 | |
| Q4 2021 | | Q1 2022 | | 750 | | | 2,515 | | | 462 | | 2,977 | |
(a) Upon final settlement of each repurchase agreement and the forward sale contract, the Company’s receipt of additional shares was recorded as an increase to Common stock in treasury and an offsetting increase to Capital in excess of par value. The final settlement for the fourth quarter transaction amounted to $150 million.The Company also repurchased approximately 2.066 million shares of its common stock during fiscal year 2021 through open market repurchases, which were recorded as a $500 million increase to Common stock in treasury. The share repurchases discussed above were made pursuant to the repurchase program authorized by the Board of Directors on September 24, 2013 for 10 million shares, for which there is no expiration date. In November 2021, the Board of Directors authorized the Company to repurchase up to an additional 10 million shares of BD common stock, for which there is no expiration date.Common and Preferred Stock Conversions and OfferingsIn accordance with their terms, the Company's 2.475 million mandatory convertible preferred shares that were issued in May 2017 in connection with the Company's acquisition of Bard were converted into 11.703 million shares of BD common stock on the mandatory conversion date of May 1, 2020.Also in May 2020, the Company completed registered public offerings of equity securities including:•6.250 million shares of the Company's common stock for net proceeds of $1.459 billion (gross proceeds of $1.500 billion).•1.500 million shares of the Company's mandatory convertible preferred stock (ownership is held in the form of depositary shares, each representing a 1/20th interest in a share of preferred stock) for net proceeds of $1.459 billion (gross proceeds of $1.500 billion). If and when declared, dividends on the mandatory convertible preferred stock will be payable on a cumulative basis at an annual rate of 6.00% on the liquidation preference of $1,000 per preferred share ($50 per depositary share). The shares of preferred stock are convertible to a minimum of 5.2 million and up to a maximum of 6.2 million shares of Company common stock at an exchange ratio, based on the market price of the Company’s common stock at the date of conversion, and no later than the mandatory conversion date of June 1, 2023.65
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Accumulated impairment loss, goodwill | 371 | SEC-NUM |
FOX CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSThe changes in the carrying value of goodwill, by segment, are as follows:
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| | Cable Network Programming | | Television | | Other,Corporate andEliminations | | Total Goodwill |
| | (in millions) |
| Balance, June 30, 2020 | $ | 1,032 | | | $ | 2,155 | | | $ | 222 | | | $ | 3,409 | |
| Acquisitions(a) | 32 | | | — | | | — | | | 32 | |
| Disposals(a) | (5) | | | — | | | (1) | | | (6) | |
| Balance, June 30, 2021 | $ | 1,059 | | | $ | 2,155 | | | $ | 221 | | | $ | 3,435 | |
| Acquisitions and other(a) | — | | | 86 | | | 33 | | | 119 | |
| Balance, June 30, 2022 | $ | 1,059 | | | $ | 2,241 | | | $ | 254 | | | $ | 3,554 | |
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| (a) | See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Acquisitions and Disposals." |
The carrying amount of Television segment goodwill was net of accumulated impairments of $371 million as of June 30, 2022 and 2021.NOTE 9. BORROWINGSPublic Debt - Senior Notes IssuedThe Company has issued senior notes (the "Notes") under an Indenture, dated as of January 25, 2019, by and between the Company and The Bank of New York Mellon, as Trustee (the "2019 Indenture"). The Notes are direct unsecured obligations of the Company and rank pari passu with all other senior indebtedness of the Company, including the indebtedness under the Revolving Credit Agreement described below. Redemption may occur, at the option of the holders, at 101% of the principal amount plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. The Notes are subject to certain covenants, which, among other things, limit the Company's ability and the ability of the Company's subsidiaries, to create liens and engage in merger, sale or consolidation transactions. The 2019 Indenture does not contain any financial maintenance covenants.In April 2020, the Company issued $1.2 billion of senior notes and used the net proceeds for general corporate purposes. In January 2019, the Company issued $6.8 billion of senior notes and used the net proceeds, together with available cash on its balance sheet, to fund the Dividend and to pay fees and expenses 82
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Exercised (in dollars per share) | 50.51 | 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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Options vested (in dollars per share) | 42.78 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)Stock OptionsThe following summarizes the assumptions used in the Black-Scholes model to value stock options granted under the Stock Plan during the years ended December 31:
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| | 2021 | | 2020 | | 2019 |
| Risk-free interest rate | 0.8% - 1.3% | | 0.3% - 1.5% | | 1.4% - 2.6% |
| Volatility (a) | 27.2 | % | | 21.1 | % | | 19.9 | % |
| Dividend yield (b) | 0.4 | % | | 0.4 | % | | 0.4 | % |
| Expected years until exercise | 5.5 - 8.0 | | 5.5 - 8.0 | | 5.5 - 8.0 |
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| (a) Expected volatility is based on a weighted average blend of the company’s historical stock price volatility from July 2, 2016 (the date of separation from Danaher) through the stock option grant date and the average historical stock price volatility of a group of peer companies for the expected term of the options. |
| (b) The dividend yield is calculated by dividing our annual dividend, based on the most recent quarterly dividend rate, by Fortive’s closing stock price on the grant date. |
The following summarizes option activity under the Stock Plan (in millions, except price per share and numbers of years):
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| | Options (a) | | WeightedAverageExercisePrice | | Weighted AverageRemainingContractual Term(years) | | AggregateIntrinsicValue |
| Outstanding as of January 1, 2019 (a) | 11.9 | | | $ | 36.22 | | | | | |
| Granted | 2.7 | | | 57.28 | | | | | |
| Exercised | (1.4) | | | 28.14 | | | | | |
| Canceled/forfeited | (0.9) | | | 55.01 | | | | | |
| Outstanding as of December 31, 2019 (a) | 12.3 | | | 40.50 | | | | | |
| Granted | 2.3 | | | 63.09 | | | | | |
| Exercised | (1.9) | | | 26.32 | | | | | |
| Canceled/forfeited | (0.7) | | | 61.39 | | | | | |
| Adjustment due to Vontier Separation (b) | (1.4) | | | 44.94 | | | | | |
| Outstanding as of December 31, 2020 | 10.6 | | | 50.07 | | | | | |
| Granted | 2.0 | | | 69.07 | | | | | |
| Exercised | (1.5) | | | 36.40 | | | | | |
| Canceled/forfeited | (0.7) | | | 64.28 | | | | | |
| Outstanding as of December 31, 2021 | 10.4 | | | 54.81 | | | 6 | | $ | 224.3 | |
| Vested and expected to vest as of December 31, 2021 (c) | 10.3 | | | 54.62 | | | 6 | | $ | 222.9 | |
| Vested as of December 31, 2021 | 4.8 | | | 42.78 | | | 4 | | $ | 160.9 | |
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| (a) The outstanding options as of December 31, 2019 have been adjusted by a factor of 1.20, as noted above, due to the Separation. (b) The “Adjustment due to Vontier Separation” reflects the cancellation of outstanding options held by Vontier employees as of October 8, 2020, which were replaced with Vontier options issued by Vontier as part of the Separation.(c) The “expected to vest” options are the net unvested options that remain after applying the forfeiture rate assumption to total unvested options. |
The aggregate intrinsic values in the table above represent the total pretax intrinsic value (the difference between the closing stock price of Fortive common stock on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2021. The amount of aggregate intrinsic value will change based on the price of Fortive’s common stock. 97
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Estimated annual amortization expense, year one | 309.8 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)During the year ended December 31, 2019, we recorded an intangible asset impairment of $89.8 million in our Real Estate Investments segment. This non-cash write-off related to intangibles acquired in the REIM Acquisitions, including unamortizable management contracts relating to relationships with open-end funds and the Clarion Partners trade name in the U.S., as well as amortizable management contracts relating to relationships with closed-end funds and separate accounts in the U.S.Amortization expense related to intangible assets, excluding amortization of transition costs, was $276.5 million, $227.1 million and $225.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated annual amortization expense for each of the years ending December 31, 2022 through December 31, 2026 and thereafter approximates $309.8 million, $284.6 million, $248.5 million, $201.3 million and $161.4 million, respectively.10.Investments in Unconsolidated SubsidiariesInvestments in unconsolidated subsidiaries are accounted for under the equity method of accounting. Our investment ownership percentages in equity method investments vary, generally ranging up to 50.0%. The following table represents the composition of investment in unconsolidated subsidiaries (dollars in thousands):
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| | | | December 31, |
| Investment type | | | 2021 | | 2020 |
| Real estate investments | | | $ | 453,813 | | | $ | 340,248 | |
| | | | | | |
| Investment in Altus: | | | | | |
| Class A common stock (22 million shares) | | | 229,900 | | | — | |
| Alignment shares (1) | | | 114,727 | | | — | |
| Private placement warrants (2) | | | 23,741 | | | — | |
| Subtotal | | | $ | 368,368 | | | $ | — | |
| | | | | | |
| Other (3) | | | $ | 373,907 | | | $ | 112,117 | |
| | | | | | |
| Total investment in unconsolidated subsidiaries | | | $ | 1,196,088 | | | $ | 452,365 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)The alignment shares, also known as Class B common shares, will automatically convert into Altus Class A common shares based on the achievement of certain total return thresholds on Altus Class A common shares as of the relevant measurement date over the seven fiscal years following the merger.(2)These warrants entitle us to purchase one share of Altus Class A common stock at $11.00 per share, subject to adjustment.(3)Consists of our investments in Industrious and other non-public entities.Combined condensed financial information for the entities accounted for using the equity method is as follows (dollars in thousands):
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| | December 31, |
| | 2021 | | 2020 |
| Combined Condensed Balance Sheets Information: | | | |
| Current assets | $ | 7,127,598 | | | $ | 6,508,718 | |
| Non-current assets | 30,586,991 | | | 24,343,229 | |
| Total assets | $ | 37,714,589 | | | $ | 30,851,947 | |
| | | | |
| Current liabilities | $ | 3,128,205 | | | $ | 3,164,135 | |
| Non-current liabilities | 8,875,779 | | | 6,696,352 | |
| Total liabilities | $ | 12,003,984 | | | $ | 9,860,487 | |
| | | | |
| Non-controlling interests | $ | 588,067 | | | $ | 460,904 | |
92
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Deferred storm coats | 162 | SEC-NUM |
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| FINANCIAL STATEMENTS | REGULATORY MATTERS |
Clean Energy ConnectionOn July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per kilowatt subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion and the projects are expected to be completed by the end of 2024. This investment will be included in base rates offset by the revenue from the subscription fees and the credits will be included for recovery in the fuel cost recovery clause. The FPSC approved the program in January 2021.On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection to the Supreme Court of Florida. The Supreme Court of Florida heard the oral argument on February 9, 2022. On May 27, 2022, the Supreme Court of Florida issued an order remanding the case back to the FPSC so that the FPSC can amend its order to better address some of the arguments raised by LULAC. On September 23, 2022, the FPSC issued a revised order and submitted it on September 26, 2022, to the Supreme Court of Florida. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.Storm Protection PlanOn April 11, 2022, Duke Energy Florida filed a Storm Protection Plan for approval with the FPSC. The plan, which covers investments for the 2023-2032 time frame, reflects approximately $7 billion of capital investment in transmission and distribution meant to strengthen its infrastructure, reduce outage times associated with extreme weather events, reduce restoration costs and improve overall service reliability. The evidentiary hearing began on August 2, 2022. On October 4, 2022, the FPSC voted to approve Duke Energy Florida’s plan with one modification to remove the transmission loop radially fed program, representing a reduction of approximately $80 million over the 10-year period starting in 2025.Hurricane Ian On September 28, 2022, much of Duke Energy Florida’s service territory was impacted by Hurricane Ian, which caused significant damage resulting in more than 1.1 million outages. Duke Energy Florida's September 30, 2022 Condensed Consolidated Balance Sheets included an estimate of approximately $162 million related to deferred Hurricane Ian storm costs incurred through September 30, 2022, consistent with the FPSC's storm rule, in Regulatory assets within Other Noncurrent Assets. Total storm restoration costs, including capital, are estimated to be in the range of $325 million to $375 million by the end of the year. The estimate will change as Duke Energy Florida receives additional information on actual costs. After depleting any existing storm reserves, which were approximately $107 million before Hurricane Ian, Duke Energy Florida is permitted to petition the FPSC for recovery of additional incremental operation and maintenance costs resulting from the storm and to replenish the retail customer storm reserve to approximately $132 million. Duke Energy Florida plans to make this petition in late 2022 or early 2023.Duke Energy OhioDuke Energy Ohio Electric Base Rate CaseDuke Energy Ohio filed with the PUCO an electric distribution base rate case application on October 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in electric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase in the customer's total bill across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last electric distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust the caps on its Distribution Capital Investment Rider (DCI Rider). The Staff of the PUCO (Staff) report was issued on May 19, 2022, recommending an increase in electric distribution base rates of $2 million to $15 million with an ROE range of 8.84% to 9.85%. On September 19, 2022, Duke Energy Ohio filed a Stipulation and Recommendation with the PUCO, which includes an increase in overall electric distribution base rates of approximately $23 million and an ROE of 9.5%. The stipulation is among all but one party to the proceeding. The four-day hearing ended on October 11, 2022. Initial briefs were filed on October 31, 2022, and reply briefs are due November 14, 2022. Duke Energy Ohio cannot predict the outcome of this matter.Energy Efficiency Cost RecoveryIn response to changes in Ohio law that eliminated Ohio's energy efficiency mandates, the PUCO issued an order on February 26, 2020, directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020. Duke Energy Ohio took the following actions:•On March 27, 2020, Duke Energy Ohio filed an application for rehearing seeking clarification on the final true up and reconciliation process after 2020. On November 18, 2020, the PUCO issued an order replacing the cost cap previously imposed upon Duke Energy Ohio with a cap on shared savings recovery. On December 18, 2020, Duke Energy Ohio filed an additional application for rehearing challenging, among other things, the imposition of the cap on shared savings. On January 13, 2021, the application for rehearing was granted for further consideration.•On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposed a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review.•On November 18, 2020, the PUCO issued an order directing all utilities to set their energy efficiency riders to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs.•On June 14, 2021, the PUCO requested each utility to file by July 15, 2021, a proposal to reestablish low-income programs through December 31, 2021. Duke Energy Ohio filed its application on July 14, 2021.50
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Common stock, par value (in dollars per share) | 0.01 | SEC-NUM |
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| [Table of Contents](#i35a0317244714ddbbfcfc1f7731c8932_7) | emn-20220630_g1.jpg | |
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
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| | June 30, | | December 31, |
| (Dollars in millions, except per share amounts) | 2022 | | 2021 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | 456 | | | $ | 459 | |
| Trade receivables, net of allowance for doubtful accounts | 1,210 | | | 1,091 | |
| Miscellaneous receivables | 425 | | | 489 | |
| Inventories | 1,826 | | | 1,504 | |
| Other current assets | 86 | | | 96 | |
| Assets held for sale | — | | | 1,007 | |
| Total current assets | 4,003 | | | 4,646 | |
| Properties | | | |
| Properties and equipment at cost | 12,743 | | | 12,680 | |
| Less: Accumulated depreciation | 7,784 | | | 7,684 | |
| Net properties | 4,959 | | | 4,996 | |
| Goodwill | 3,663 | | | 3,641 | |
| Intangible assets, net of accumulated amortization | 1,248 | | | 1,362 | |
| Other noncurrent assets | 1,002 | | | 874 | |
| Total assets | $ | 14,875 | | | $ | 15,519 | |
| | | | |
| Liabilities and Stockholders' Equity | | | |
| Current liabilities | | | |
| Payables and other current liabilities | $ | 2,169 | | | $ | 2,133 | |
| Borrowings due within one year | 979 | | | 747 | |
| Liabilities held for sale | — | | | 91 | |
| Total current liabilities | 3,148 | | | 2,971 | |
| Long-term borrowings | 4,012 | | | 4,412 | |
| Deferred income tax liabilities | 738 | | | 810 | |
| Post-employment obligations | 768 | | | 811 | |
| Other long-term liabilities | 802 | | | 727 | |
| Total liabilities | 9,468 | | | 9,731 | |
| Stockholders' equity | | | |
| Common stock ($0.01 par value – 350,000,000 shares authorized; shares issued – 222,316,005 and 221,809,309 for 2022 and 2021, respectively) | 2 | | | 2 | |
| Additional paid-in capital | 2,179 | | | 2,187 | |
| Retained earnings | 8,857 | | | 8,557 | |
| Accumulated other comprehensive income (loss) | (143) | | | (182) | |
| | 10,895 | | | 10,564 | |
| Less: Treasury stock at cost (99,558,298 and 92,892,229 shares for 2022 and 2021, respectively) | 5,572 | | | 4,860 | |
| Total Eastman stockholders' equity | 5,323 | | | 5,704 | |
| Noncontrolling interest | 84 | | | 84 | |
| Total equity | 5,407 | | | 5,788 | |
| Total liabilities and stockholders' equity | $ | 14,875 | | | $ | 15,519 | |
The accompanying notes are an integral part of these consolidated financial statements.5
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Purchase price of common stock as percentage of market value | 95 | SEC-NUM |
remeasured at each reporting date during the vesting period based on the change in the ADP stock price. Dividend cash equivalents are paid on share-settled units, and dividend cash equivalents are not paid on cash-settled units. •Performance-Based Restricted Stock Units. Performance-based restricted stock units generally vest over a one to three year performance period and a subsequent service period of up to 38 months. Under these programs, the Company communicates “target awards” at the beginning of the performance period with possible payouts at the end of the performance period ranging from 0% to 200% of the “target awards.” Awards are generally forfeited if the employee ceases to be employed by the Company prior to vesting.
Performance-based restricted stock units cannot be transferred and are settled in either cash or stock, depending on the employee's home country. Compensation expense relating to the issuance of performance-based restricted stock units settled in cash is recognized over the vesting period initially based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded during the performance period based on probable and actual performance against targets. In addition, compensation expense is remeasured at each reporting period during the vesting period based on the change in the ADP stock price. Compensation expense relating to the issuance of performance-based restricted stock units settled in stock is recorded over the vesting period based on the fair value of the award on the grant date with subsequent adjustments to the number of units awarded based on the probable and actual performance against targets. Dividend equivalents are paid on awards under the performance-based restricted stock unit program. •Employee Stock Purchase Plan. The Company offers an employee stock purchase plan that allows eligible employees to purchase shares of common stock at a price equal to 95% of the market value for the Company's common stock on the last day of the offering period. This plan has been deemed non-compensatory and, therefore, no compensation expense has been recorded.
The Company currently utilizes treasury stock to satisfy stock option exercises, issuances under the Company's employee stock purchase plan, and restricted stock awards. From time to time, the Company may repurchase shares of its common stock under its authorized share repurchase program. The Company repurchased 1.4 million and 2.6 million shares in the three months ended September 30, 2022 and 2021, respectively. The Company considers several factors in determining when to execute share repurchases, including, among other things, actual and potential acquisition activity, cash balances and cash flows, issuances due to employee benefit plan activity, and market conditions.
The following table represents pre-tax stock-based compensation expense for the three and three months ended September 30, 2022 and 2021, respectively:
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| | Three Months Ended | | |
| | September 30, | | |
| | 2022 | | 2021 | | | | |
| Operating expenses | $ | 6.0 | | | $ | 4.8 | | | | | |
| Selling, general and administrative expenses | 37.1 | | | 31.3 | | | | | |
| System development and programming costs | 7.5 | | | 6.2 | | | | | |
| Total stock-based compensation expense | $ | 50.6 | | | $ | 42.3 | | | | | |
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During the three months ended September 30, 2022, the following activity occurred under the Company’s existing plans.17
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Redemption price percentage, following change in control | 101 | SEC-NUM |
[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)On August 13, 2015, CBRE Services issued $600.0 million in aggregate principal amount of 4.875% senior notes due March 1, 2026 at a price equal to 99.24% of their face value. The 4.875% senior notes are unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 4.875% senior notes are guaranteed on a senior basis by us. Interest accrues at a rate of 4.875% per year and is payable semi-annually in arrears on March 1 and September 1, with the first interest payment made on March 1, 2016. The 4.875% senior notes are redeemable at our option, in whole or in part, prior to December 1, 2025 at a redemption price equal to the greater of (1) 100% of the principal amount of the 4.875% senior notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon to December 1, 2025 (not including any portions of payments of interest accrued as of the date of redemption) discounted to the date of redemption on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture governing these notes). In addition, at any time on or after December 1, 2025, the 4.875% senior notes may be redeemed by us, in whole or in part, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to (but excluding) the date of redemption. If a change of control triggering event (as defined in the indenture governing these notes) occurs, we are obligated to make an offer to purchase the then outstanding 4.875% senior notes at a redemption price of 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. The amount of the 4.875% senior notes, net of unamortized discount and unamortized debt issuance costs, included in the accompanying consolidated balance sheets was $595.5 million and $594.5 million at December 31, 2021 and 2020, respectively.On September 26, 2014, CBRE Services issued $300.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025. On December 12, 2014, CBRE Services issued an additional $125.0 million in aggregate principal amount of 5.25% senior notes due March 15, 2025 at a price equal to 101.5% of their face value, plus interest deemed to have accrued from September 26, 2014. The 5.25% senior notes were unsecured obligations of CBRE Services, senior to all of its current and future subordinated indebtedness, but effectively subordinated to all of its current and future secured indebtedness. The 5.25% senior notes were jointly and severally guaranteed on a senior basis by us and each domestic subsidiary of CBRE Services that guaranteed our 2019 Credit Agreement. Interest accrued at a rate of 5.25% per year and was payable semi-annually in arrears on March 15 and September 15. We redeemed these notes in full on December 28, 2020 and incurred charges of $75.6 million, including a premium of $73.6 million and the write-off of $2.0 million of unamortized premium and debt issuance costs. We funded this redemption using cash on hand. The indenture governing our 4.875% senior notes and 2.500% senior notes contain restrictive covenants that, among other things, limit our ability to create or permit liens on assets securing indebtedness, enter into sale/leaseback transactions and enter into consolidations or mergers. In addition, these indentures require that the 4.875% senior notes and 2.500% senior notes be jointly and severally guaranteed on a senior basis by CBRE Group, Inc. and any domestic subsidiary that guarantees the 2021 Credit Agreement. In addition, our 2021 Credit Agreement also requires us to maintain a minimum coverage ratio of consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated interest expense of 2.00x and a maximum leverage ratio of total debt less available cash to consolidated EBITDA (as defined in the 2021 Credit Agreement) of 4.25x (and in the case of the first four full fiscal quarters following consummation of a qualified acquisition (as defined in the 2021 Credit Agreement), 4.75x) as of the end of each fiscal quarter. Our coverage ratio of consolidated EBITDA to consolidated interest expense was 54.94x for the year ended December 31, 2021, and our leverage ratio of total debt less available cash to consolidated EBITDA was (0.04)x as of December 31, 2021.Short-Term BorrowingsWe had short-term borrowings of $1.3 billion and $1.4 billion as of December 31, 2021 and 2020, respectively, with related weighted average interest rates of 1.6% and 1.7%, respectively, which are included in the accompanying consolidated balance sheets.Revolving Credit FacilitiesThe revolving credit facility under the 2021 Credit Agreement allows for borrowings outside of the U.S., with a $200.0 million sub-facility available to CBRE Services, one of our Canadian subsidiaries, one of our Australian subsidiaries and one of our New Zealand subsidiaries and a $320.0 million sub-facility available to CBRE Services and one of our U.K. subsidiaries. Borrowings under the revolving credit facility bear interest at varying rates, based at our option, on either (1) the applicable fixed rate plus 0.68% to 1.075% or (2) the daily rate plus 0.0% to 0.075%, in each case as determined by reference to our Credit Rating (as defined in the 2021 Credit Agreement). The 2021 Credit Agreement requires us to pay a fee based on the total amount of the revolving credit facility commitment (whether used or unused). 95
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Maturities of derivative instruments | 18 | SEC-NUM |
5. DERIVATIVE FINANCIAL INSTRUMENTSOur operations in foreign countries expose us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, primarily the Euro. To manage this risk, we hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we seek to limit the risk that counterparties to these contracts may be unable to perform. We also seek to limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrealized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes. The derivative instruments we use to hedge our exposures for certain monetary assets and liabilities are not designated as hedges and, as a result, changes in their fair value are recorded in Other income (expense), net on our Condensed Consolidated Statements of Income. The derivative instruments we use to hedge our exposures for forecasted product sales are designated as cash flow hedges and have maturities of 18 months or less. Upon executing a hedging contract and each reporting period thereafter, we assess hedge effectiveness using regression analysis. The unrealized gains or losses on these hedges are recorded in Accumulated other comprehensive income (“AOCI”) and are reclassified into Product sales on our Condensed Consolidated Statements of Income when the respective hedged transactions affect earnings. The majority of gains and losses related to the hedged forecasted transactions reported in AOCI as of September 30, 2022 are expected to be reclassified to Product sales within 12 months.The cash flow effects of our derivative contracts for the nine months ended September 30, 2022 and 2021 were included within Net cash provided by operating activities on our Condensed Consolidated Statements of Cash Flows.We had notional amounts of foreign currency exchange contracts outstanding of $3.0 billion as of September 30, 2022 and $2.9 billion as of December 31, 2021. While all our derivative contracts allow us the right to offset assets and liabilities, we have presented amounts on a gross basis. The following table summarizes the classification and fair values of derivative instruments in our Condensed Consolidated Balance Sheets:
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| | | September 30, 2022 |
| | | Derivative Assets | | Derivative Liabilities |
| (in millions) | | Classification | | Fair Value | | Classification | | Fair Value |
| Derivatives designated as hedges: | | | | | | | | |
| Foreign currency exchange contracts | | Prepaid and other current assets | | $ | 215 | | | Accrued and other current liabilities | | $ | — | |
| Foreign currency exchange contracts | | Other long-term assets | | 17 | | | Other long-term obligations | | — | |
| Total derivatives designated as hedges | | | | 232 | | | | | — | |
| Derivatives not designated as hedges: | | | | | | | | |
| Foreign currency exchange contracts | | Prepaid and other current assets | | 10 | | | Accrued and other current liabilities | | 2 | |
| Total derivatives not designated as hedges | | | | 10 | | | | | 2 | |
| Total derivatives | | | | $ | 242 | | | | | $ | 2 | |
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Repayments of Lines of Credit | 2.1 | SEC-NUM |
[Table of Contents](#if5e2d1c13bd74a82945554c9f702e646_7) D.R. HORTON, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)June 30, 2022Homebuilding
The Company has a $2.19 billion senior unsecured homebuilding revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $3.0 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is April 20, 2026. Borrowings and repayments under the facility totaled $2.5 billion and $2.1 billion, respectively, during the nine months ended June 30, 2022. At June 30, 2022, there were $400 million of borrowings outstanding at a 4.8% annual interest rate and $188.7 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $1.60 billion.
The Company’s homebuilding revolving credit facility imposes restrictions on its operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if the leverage ratio exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. The credit agreement governing the facility and the indentures governing the senior notes also impose restrictions on the creation of secured debt and liens. At June 30, 2022, the Company was in compliance with all of the covenants, limitations and restrictions of its homebuilding revolving credit facility and public debt obligations.
The Company’s homebuilding revolving credit facility is guaranteed by D.R. Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.
D.R. Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2021, registering debt and equity securities that the Company may issue from time to time in amounts to be determined.
In July 2019, the Board of Directors authorized the repurchase of up to $500 million of the Company’s debt securities. The authorization has no expiration date. All of the $500 million authorization was remaining at June 30, 2022.
Forestar
Forestar has a $410 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $600 million, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash. Letters of credit issued under the facility reduce the available borrowing capacity. The maturity date of the facility is April 16, 2025. At June 30, 2022, there were no borrowings outstanding and $56.0 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $354.0 million.
The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
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Minimum percentage chance of tax benefit realization in final settlement | 50 | SEC-NUM |
GoodwillGoodwill represents the difference between the total purchase price and the fair value of identifiable assets and liabilities acquired in business acquisitions. The Company tests goodwill for impairment at the reporting unit level as of November 30 every year or more frequently if events or changes in circumstances indicate the asset might be impaired. A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded.The Company identifies their reporting units by assessing whether the components of their reporting segments constitute businesses for which discrete financial information is available and management of each reporting unit regularly reviews the operating results of those components. The Company has identified seven reporting units under the Nourish, Health & Biosciences, Scent and Pharma Solutions segments: (1) Nourish, (2) Fragrance Compounds, (3) Fragrance Ingredients, (4) Cosmetic Actives, (5) Health & Biosciences, (6) Microbial Control and (7) Pharma Solutions. These reporting units were determined based on the level at which the performance is measured and reviewed by segment management. In cases where the components of an operating segment have similar economic characteristics, they are aggregated into a single reporting unit.When testing goodwill for impairment, the Company has the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If the Company elects to bypass the qualitative assessment for any reporting units, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value of a reporting unit exceeds its fair value, the Company performs a quantitative goodwill impairment test.Under the quantitative goodwill impairment test, if a reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge based on that difference, and the impairment charge will be limited to the amount of goodwill allocated to that reporting unit.Income TaxesThe Company accounts for taxes under the asset and liability method. Under this method, deferred income taxes are recognized for temporary differences between the financial statement and tax return bases of assets and liabilities, based on enacted tax rates and other provisions of the tax law. The effect of a change in tax laws or rates on deferred tax assets and liabilities is recognized as income in the period in which such change is enacted. Future tax benefits are recognized to the extent that the realization of such benefits is more likely than not, and a valuation allowance is established for any portion of a deferred tax asset that management believes may not be realized.The Company recognizes uncertain tax positions that it has taken or expects to take on a tax return. Pursuant to accounting requirements, the Company first determines whether it is “more likely than not” its tax position will be sustained if the relevant tax authority were to audit the position with full knowledge of all the relevant facts and other information. For those tax positions that meet this threshold, the Company measures the amount of tax benefit based on the largest amount of tax benefit that it has a greater than 50% chance of realizing in a final settlement with the relevant authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard. The Company maintains a cumulative risk portfolio relating to all of its uncertainties in income taxes in order to perform this analysis, but the evaluation of its tax positions requires significant judgment and estimation in part because, in certain cases, tax law is subject to varied interpretation, and whether a tax position will ultimately be sustained may be uncertain.Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.Retirement BenefitsCurrent service costs of retirement plans and postretirement health care and life insurance benefits are accrued. Prior service costs resulting from plan improvements are amortized over periods ranging from 10 to 20 years.Financial InstrumentsDerivative financial instruments are used to manage interest and foreign currency exposures. The gain or loss on the hedging instrument is recorded in earnings at the same time as the transaction being hedged is recorded in earnings. The associated asset or liability related to the open hedge instrument is recorded in Prepaid expenses and Other current assets or Other current liabilities, as applicable. 60
| string | null | null |
Gross unrecognized tax benefits and interest - current | 2 | SEC-NUM |
[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 16 – COMMITMENTS AND CONTINGENCIES
Contractual ObligationsThe following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Payments Due in Fiscal | | |
| (In millions) | | Total | | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter |
| Debt service (1) | | $ | 8,151 | | | $ | 429 | | | $ | 170 | | | $ | 665 | | | $ | 161 | | | $ | 661 | | | $ | 6,065 | |
| Unconditional purchase obligations (2) | | 4,742 | | | 2,852 | | | 705 | | | 637 | | | 132 | | | 133 | | | 283 | |
| Gross unrecognized tax benefits and interest – current (3) | | 2 | | | 2 | | | — | | — | | — | | — | | — |
| Transition Tax payable(4) | | 215 | | | 27 | | | 42 | | | 65 | | | 81 | | | — | | | — | |
| Total contractual obligations(5) | | $ | 13,110 | | | $ | 3,310 | | | $ | 917 | | | $ | 1,367 | | | $ | 374 | | | $ | 794 | | | $ | 6,348 | |
| | | | | | | | | | | | | | | |
(1)Includes long-term and current debt and the related projected interest costs. Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s finance leases. Interest costs on long-term and current debt in fiscal 2023, 2024, 2025, 2026, 2027 and thereafter are projected to be $174 million, $170 million, $165 million, $161 million, $161 million and $1,765 million, respectively. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2022.(2)Unconditional purchase obligations primarily include: royalty payments pursuant to license agreements, inventory commitments, information technology contract commitments, capital expenditure commitments, advertising commitments and third-party distribution commitments. Future royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2022, without consideration for potential renewal periods.(3)Refer to Note 9 – Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2022, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties, was $73 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.(4)The Transition Tax may be paid over an eight-year period and this amount represents the remaining liability as of June 30, 2022.(5)Refer to Note 7 – Leases for information regarding future minimum lease payments relating to the Company’s operating leases.
Legal Proceedings
The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business, including product liability matters (including asbestos-related claims), advertising, regulatory, employment, intellectual property, real estate, environmental, trade relations, tax and privacy. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s business, results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for such litigation and legal proceedings are not material to the Company’s consolidated financial statements.
F-63
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Lessor, Operating Lease, Payments to be Received | 7,126 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS
NOTE 12. NET INVESTMENT IN OPERATING LEASES
Net investment in operating leases consists primarily of lease contracts for vehicles with individuals, daily rental companies, government entities, and fleet customers. Assets subject to operating leases are depreciated using the straight-line method over the term of the lease to reduce the asset to its estimated residual value. Estimated residual values are based on assumptions for used vehicle prices at lease termination and the number of vehicles that are expected to be returned.
The net investment in operating leases at December 31 was as follows (in millions):
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 2020 | | 2021 |
| Company excluding Ford Credit | | | |
| Vehicles, net of depreciation | $ | 1,304 | | | $ | 1,194 | |
| Ford Credit Segment | | | |
| Vehicles and other equipment, at cost (a) | 32,486 | | | 29,982 | |
| Accumulated depreciation | (5,839) | | | (4,815) | |
| Total Ford Credit Segment | 26,647 | | | 25,167 | |
| Total | $ | 27,951 | | | $ | 26,361 | |
\_\_\_\_\_\_\_\_\_\_(a)Includes Ford Credit’s operating lease assets of $12.8 billion and $7.5 billion at December 31, 2020 and 2021, respectively, that have been included in securitization transactions. These net investments in operating leases are available only for payment of the debt or other obligations issued or arising in the securitization transactions; they are not available to pay other obligations or the claims of other creditors.
Ford Credit Segment
Included in Ford Credit interest, operating, and other expense is operating lease depreciation expense, which includes gains and losses on disposal of assets along with fees assessed to a customer at lease termination such as excess wear and use and excess mileage that are considered variable lease payments. Operating lease depreciation expense for the years ended December 31 was as follows (in millions):
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | 2019 | | 2020 | | 2021 |
| Operating lease depreciation expense | $ | 3,635 | | | $ | 3,235 | | | $ | 1,626 | |
The amounts contractually due on operating leases at December 31, 2021 were as follows (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter | | Total |
| Operating lease payments | $ | 3,848 | | | $ | 2,278 | | | $ | 855 | | | $ | 138 | | | $ | 7 | | | $ | 7,126 | |
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2023 | 484,444 | SEC-NUM |
EXTRA SPACE STORAGE INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (continued)Amounts in thousands, except store and share data, unless otherwise statedThe components of term debt are summarized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Term Debt | June 30, 2022 | | December 31, 2021 | | Fixed Rate | | Variable Rate (2) | | | | Maturity Dates |
| Secured fixed-rate (1) | $ | 868,912 | | | $ | 930,830 | | | 2.27% - 4.50% | | | | | | February 2023 - February 2030 |
| Secured variable-rate (1) | 424,328 | | | 392,679 | | | | | 2.60% - 3.29% | | | | January 2023 - September 2030 |
| Unsecured fixed-rate | 3,930,376 | | | 3,575,000 | | | 2.35% - 4.39% | | | | | | February 2024 - March 2032 |
| Unsecured variable-rate | 594,624 | | | 550,000 | | | | | 2.74% | | | | February 2024 - October 2026 |
| Total | 5,818,240 | | | 5,448,509 | | | | | | | | | |
| | | | | | | | | | | | |
| Less: Unamortized debt issuance costs | (29,600) | | | (25,762) | | | | | | | | | |
| Total | $ | 5,788,640 | | | $ | 5,422,747 | | | | | | | | | |
| | | | | | | | | | | | |
| (1) The loans are collateralized by mortgages on real estate assets and the assignment of rents. |
| (2) Basis rates include 30-day USD LIBOR, Term SOFR and Daily Simple SOFR. |
The following table summarizes the scheduled maturities of term debt, excluding available extensions, at June 30, 2022:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | |
| 2022 | $ | — | |
| 2023 | 484,444 | |
| 2024 | 425,000 | |
| 2025 | 611,939 | |
| 2026 | 804,380 | |
| Thereafter | 3,492,477 | |
| | $ | 5,818,240 | |
At June 30, 2022, the terms of the Second Amended and Restated Credit Agreement dated June 22, 2021 (the "Credit Agreement") are as follows:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Debt Capacity | | Maturity Date |
| Revolving Credit Facility | | $ | 1,250,000 | | | June 2025 |
| Tranche 1 Term Loan Facility (1) | | 400,000 | | | January 2027 |
| Tranche 2 Term Loan Facility (1) | | 425,000 | | | October 2026 |
| Tranche 3 Term Loan Facility (1) | | 245,000 | | | January 2025 |
| Tranche 4 Term Loan Facility (1) | | 255,000 | | | June 2026 |
| Tranche 5 Term Loan Facility (1) | | 425,000 | | | February 2024 |
| | | $ | 3,000,000 | | | |
(1) The term loan amounts have been fully drawn as of June 30, 2022.
Pursuant to the terms of the Credit Agreement, the Company may request an extension of the term of the revolving credit facility for up to two additional periods of six months each, after satisfying certain conditions.
As of June 30, 2022, amounts outstanding under the revolving credit facility bore interest at floating rates, at the Company’s option, equal to either (i) LIBOR plus the applicable Eurodollar rate margin or (ii) the applicable base rate which is the applicable margin plus the highest of (a) 0.0%, (b) the federal funds rate plus 0.50%, (c) U.S. Bank’s prime rate or (d) the Eurodollar rate plus 1.00%. Per the Credit Agreement, the applicable Eurodollar rate margin and applicable base rate margin are based on the Company’s achieved debt rating, with the Eurodollar rate margin ranging from 0.7% to 1.6% per annum and the applicable base rate margin ranging from 0.00% to 0.60% per annum.
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Minimum interest coverage ratio | 3.00 | SEC-NUM |
[Table of Contents](#i754bc30884284e56b9b1a914458fa36e_7)Prior Credit Facility
Prior to the Revolving Credit Facility, we were party to a credit facility agreement with Bank of America, N.A., as administrative agent, and a syndicate of financial institutions, as lenders and other agents (as amended from time to time, the “Prior Credit Facility”). The Prior Credit Facility provided for a senior unsecured $2.0 billion term loan facility and a senior unsecured $3.0 billion revolving credit facility. In August 2022, all borrowings outstanding and other amounts due under the Prior Credit Facility were repaid and the Prior Credit Facility was terminated.
Bridge Facility
On August 1, 2022, in connection with our entry into the EVO merger agreement, we obtained commitments for a $4.3 billion, 364-day senior unsecured bridge facility (the "Bridge Facility"). Upon the execution of permanent financing, including the issuance of our senior unsecured notes and entry into the Revolving Credit Facility described above, the aggregate commitments under the Bridge Facility were reduced to zero and terminated. For the three and nine months ended September 30, 2022, we recognized expense of $17.3 million related to commitment fees associated with the Bridge Facility, which was presented within interest expense in our consolidated statement of income.
Fair Value of Long-Term Debt
As of September 30, 2022, our senior notes had a total carrying amount of $11.9 billion and an estimated fair value of $10.4 billion. The estimated fair value of our senior notes was based on quoted market prices in an active market and is considered to be a Level 1 measurement of the valuation hierarchy.
As of September 30, 2022, our Convertible Notes had a total carrying amount of $1.5 billion and an estimated fair value of $1.4 billion. The estimated fair value of our Convertible Notes was based on a lattice pricing model and is considered to be a Level 3 measurement of the valuation hierarchy.
The fair value of other long-term debt approximated its carrying amount at September 30, 2022.
Compliance with Covenants
The Convertible Notes include customary covenants and events of default for convertible notes of this type. The Revolving Credit Agreement contains customary affirmative covenants and restrictive covenants, including, among others, financial covenants based on net leverage and interest coverage ratios, and customary events of default. As of September 30, 2022, financial covenants under the Revolving Credit Agreement required a leverage ratio of 3.75 to 1.00 and an interest coverage ratio of 3.00 to 1.00. We were in compliance with all applicable covenants as of September 30, 2022.
Derivative Agreements
We had previously entered into interest rate swap agreements with financial institutions to hedge changes in cash flows attributable to interest rate risk on a portion of our variable-rate debt instruments. Net amounts to be received or paid under the swap agreements were reflected as adjustments to interest expense. Since we had designated the interest rate swap agreements as portfolio cash flow hedges, unrealized gains or losses resulting from adjusting the swaps to fair value were recorded as components of other comprehensive income (loss). The fair values of our interest rate swaps were determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. These derivative instruments were classified within Level 2 of the valuation hierarchy.
In August 2022, in connection with entry into the Revolving Credit Agreement and repayment of amounts outstanding under the Prior Credit Facility, we terminated and settled our existing interest rate swap agreements. The termination resulted in the recognition of a net gain of $1.2 million, including the reclassification of $0.5 million of accumulated losses from the separate component of equity. The net gain was presented in interest expense in our consolidated statement of income for the three and nine months ended September 30, 2022. As of December 30, 2021, accounts payable and accrued liabilities included $28.8 million related to the interest rate swaps.
22
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Consolidated adjustment net worth, minimum amount, minimum net worth at acquisition, percent of net cash proceeds | 25 | SEC-NUM |
The Company’s commercial paper program requires the Company to maintain liquidity facilities either in an available amount equal to any outstanding notes from the program or in an amount sufficient to maintain the ratings assigned to the notes issued from the program. The Company’s commercial paper is rated AMB-1 by A.M. Best, P-3 by Moody’s and A-2 by S&P. The Company’s subsidiaries do not maintain commercial paper or other borrowing facilities. This program is currently backed up by the Credit Facility, of which $495.5 million was available at December 31, 2021, and $4.5 million letters of credit were outstanding.The Company did not use the commercial paper program during the years ended December 31, 2021 or 2020 and there were no amounts relating to the commercial paper program outstanding as of December 31, 2021 or 2020. Covenants The Credit Facility contains restrictive covenants including:(i)Maintenance of a maximum consolidated total debt to capitalization ratio on the last day of any fiscal quarter of not greater than 0.35 to 1.0, subject to certain exceptions; and(ii)Maintenance of a consolidated adjusted net worth in an amount not less than a “Minimum Amount” equal to the sum of (a) $4.20 billion, (b) 25% of consolidated net income (if positive) for each fiscal quarter ending after December 31, 2021 and (c) 25% of the net cash proceeds received from any capital contribution to, or issuance of any capital stock, disqualified capital stock and hybrid securities.In the event of a breach of certain covenants, all obligations under the Credit Facility, including unpaid principal and accrued interest and outstanding letters of credit, may become immediately due and payable. Interest Rate DerivativesIn March 2018, the Company exercised a series of derivative transactions it had entered into in 2017 to hedge the interest rate risk related to expected borrowing to finance the TWG acquisition. The Company determined that the derivatives qualified for hedge accounting as effective cash flow hedges and recognized a deferred gain of $26.7 million upon settlement that was reported through other comprehensive income. The deferred gain is being recognized as a reduction in interest expense related to the 2023 Senior Notes, the 2028 Senior Notes and the 2048 Subordinated Notes on an effective yield basis. The amortization of the deferred gain was $3.0 million for the years ended December 31, 2021, 2020 and 2019. The remaining deferred gain as of December 31, 2021 and 2020 was $15.6 million and $18.6 million, respectively.
20. Equity Transactions Common StockChanges in the number of shares of common stock outstanding are as follows for the periods presented:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | December 31, |
| | 2021 | | 2020 | | 2019 |
| Shares of common stock outstanding, beginning | 57,967,808 | | | 59,945,893 | | | 61,908,979 | |
| Vested restricted stock and restricted stock units, net (1) | 214,116 | | | 213,569 | | | 248,333 | |
| Issuance related to performance share units (1) | 91,845 | | | 157,155 | | | 117,581 | |
| Issuance related to ESPP | 113,555 | | | 90,166 | | | 88,498 | |
| Issuance related to MCPS | 2,703,911 | | | — | | | — | |
| Shares of common stock repurchased | (5,337,122) | | | (2,438,975) | | | (2,417,498) | |
| Shares of common stock outstanding, ending | 55,754,113 | | | 57,967,808 | | | 59,945,893 | |
(1)Vested restricted stock, restricted stock units and performance share units are shown net of shares of common stock retired to cover participant income tax liabilities.
The Company is authorized to issue 800,000,000 shares of common stock. In addition, 150,001 shares of Class B common stock and 400,001 shares of Class C common stock are authorized but have not been issued. Stock RepurchaseIn January and May 2021, the Company’s Board of Directors (the “Board”) authorized the Company to repurchase up to $600.0 million and $900.0 million, respectively, aggregate cost at purchase of its outstanding common stock. F-62
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LAX Redevelopment Project, Total Expected Outlay | 230 | SEC-NUM |
Aircraft Maintenance and Parts Management
Through its acquisition of Virgin America, the Company has a separate maintenance-cost-per-hour contract for management and repair of certain rotable parts to support Airbus airframe and engine maintenance and repair. In 2017, Alaska entered into a similar contract for maintenance on its B737-800 aircraft engines. These agreements require monthly payments based upon utilization, such as flight hours, cycles and age of the aircraft, and, in turn, the agreement transfers certain risks to the third-party service provider. There are minimum payments under both agreements, which are reflected in the table above. Accordingly, payments could differ materially based on actual aircraft utilization.
Aircraft Maintenance Deposits
Certain Airbus leases include contractually required maintenance deposit payments to the lessor, which collateralize the lessor for future maintenance events should the Company not perform required maintenance. Payments of such deposits follow contractual terms and timing, regardless of operating status of the respective aircraft. Most of the lease agreements provide that maintenance deposits are reimbursable upon completion of the major maintenance event in an amount equal to the lesser of (i) the amount qualified for reimbursement from maintenance deposits held by the lessor associated with the specific major maintenance event or (ii) the qualifying costs related to the specific major maintenance event.
Los Angeles International Airport (LAX) Construction
In May 2019, we executed an amended lease agreement with Los Angeles World Airports, which includes an agreement to renovate and upgrade the fuel system, jet bridges and concourse facilities at Terminal 6 of LAX. Project terms and pre-construction readiness was approved and finalized in 2020. We expect construction will be completed by mid 2024. Under the terms of the agreement, we expect to have total reimbursable cash outlays for the project of approximately $230 million. To date, we have made total cash outlays of $71 million and have received reimbursement for $8.7 million of that total.
Contingencies The Company is a party to routine litigation matters incidental to its business and with respect to which no material liability is expected. Liabilities for litigation related contingencies are recorded when a loss is determined to be probable and estimable.
In 2015, three flight attendants filed a class action lawsuit seeking to represent all Virgin America flight attendants for damages based on alleged violations of California and City of San Francisco wage and hour laws. The court certified a class of approximately 1,800 flight attendants in November 2016. The Company believes the claims in this case are without factual and legal merit.
In July 2018, the Court granted in part Plaintiffs' motion for summary judgment, finding Virgin America, and Alaska Airlines, as a successor-in-interest to Virgin America, responsible for various damages and penalties sought by the class members. On February 4, 2019, the Court entered final judgment against Virgin America and Alaska Airlines in the amount of approximately $78 million. It did not award injunctive relief against Alaska Airlines. In February 2021, an appellate court reversed portions of the lower court decision and significantly reduced the judgment, again without awarding injunctive relief against Alaska. The determination of total judgment has not been completed as of the date of this filing. Based on the facts and circumstances available, the Company believes the range of potential loss to be between $0 and $22 million, and holds an accrual for $22 million in Other accrued liabilities on the consolidated balance sheets.
The Company has asked the U.S. Supreme Court to review the case on the basis that the California laws on which the judgment is based are invalid as applied to airlines pursuant to the U.S. Constitution and provisions of federal law that were enacted to shield inter-state common carriers from a patchwork of state and local wage and hour regulations such as those at issue in this case. If appeal efforts are unsuccessful, compliance with the California laws may have an adverse impact on the Company's operations and financial position, and collective bargaining agreements.
The Company is involved in other litigation around the application of state and local employment laws, like many air carriers. Our defenses are similar to those identified above, including that the state and local laws are preempted by federal law and are unconstitutional because they impede interstate commerce. None of these additional disputes are material.
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Deferred financing and debt redemption costs | 9,089 | SEC-NUM |
DAVITA INC.CONSOLIDATED STATEMENTS OF CASH FLOW(unaudited)(dollars in thousands)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Six months ended June 30, |
| | 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 490,334 | | | $ | 642,576 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 344,120 | | | 335,390 | |
| | | | |
| | | | |
| Stock-based compensation expense | 50,109 | | | 51,717 | |
| Deferred income taxes | 9,069 | | | 40,685 | |
| Equity investment loss (income), net | 90 | | | (2,764) | |
| | | | |
| Other non-cash charges, net | (32,858) | | | 1,274 | |
| Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | | | |
| Accounts receivable | (132,043) | | | (117,171) | |
| Inventories | (1,927) | | | (3,270) | |
| Other receivables and prepaid and other current assets | (61,811) | | | 14,465 | |
| Other long-term assets | (49,093) | | | (13,706) | |
| Accounts payable | 24,517 | | | (47,390) | |
| Accrued compensation and benefits | (102,513) | | | (90,381) | |
| Other current liabilities | 42,517 | | | 25,090 | |
| Income taxes | (63,638) | | | 10,753 | |
| Other long-term liabilities | (6,557) | | | (13,232) | |
| Net cash provided by operating activities | 510,316 | | | 834,036 | |
| Cash flows from investing activities: | | | |
| Additions of property and equipment | (265,461) | | | (294,438) | |
| Acquisitions | (9,491) | | | (23,890) | |
| Proceeds from asset and business sales | 114,829 | | | 29,774 | |
| Purchase of debt investments held-to-maturity | (89,530) | | | (7,923) | |
| Purchase of other debt and equity investments | (3,010) | | | (2,164) | |
| Proceeds from debt investments held-to-maturity | 8,415 | | | 7,923 | |
| Proceeds from sale of other debt and equity investments | 3,775 | | | 11,908 | |
| | | | |
| Purchase of equity method investments | (23,806) | | | (6,029) | |
| Distributions from equity method investments | 1,047 | | | 1,140 | |
| Net cash used in investing activities | (263,232) | | | (283,699) | |
| Cash flows from financing activities: | | | |
| Borrowings | 1,182,911 | | | 1,611,086 | |
| Payments on long-term debt | (841,687) | | | (754,407) | |
| Deferred financing and debt redemption costs | — | | | (9,089) | |
| Purchase of treasury stock | (617,432) | | | (560,507) | |
| Distributions to noncontrolling interests | (118,315) | | | (99,362) | |
| Net payments related to stock purchases and awards | (47,866) | | | (43,605) | |
| Contributions from noncontrolling interests | 9,116 | | | 15,925 | |
| Proceeds from sales of additional noncontrolling interests | 3,673 | | | — | |
| Purchases of noncontrolling interests | (15,365) | | | (4,493) | |
| Net cash (used in) provided by financing activities | (444,965) | | | 155,548 | |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,342) | | | (1,197) | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (199,223) | | | 704,688 | |
| Cash, cash equivalents and restricted cash at beginning of the year | 554,960 | | | 501,790 | |
| Cash, cash equivalents and restricted cash at end of the period | $ | 355,737 | | | $ | 1,206,478 | |
See notes to condensed consolidated financial statements.4
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Loss (gain) upon change of control, net | 1,042 | SEC-NUM |
[Table of Contents](#ifa3dff468a15495db7b57c65ada0de74_7)Healthpeak Properties, Inc.CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)(Unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Three Months EndedMarch 31, |
| | 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income (loss) | $ | 75,343 | | | $ | 149,423 | |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
| Depreciation and amortization of real estate, in-place lease, and other intangibles | 177,733 | | | 157,538 | |
| Amortization of stock-based compensation | 4,721 | | | 4,364 | |
| Amortization of deferred financing costs | 2,689 | | | 2,213 | |
| Straight-line rents | (11,158) | | | (9,135) | |
| | | | |
| Amortization of nonrefundable entrance fees and above/below market lease intangibles | (24,725) | | | (23,764) | |
| Equity loss (income) from unconsolidated joint ventures | (2,148) | | | (1,008) | |
| Distributions of earnings from unconsolidated joint ventures | 237 | | | 237 | |
| | | | |
| Loss (gain) on sale of real estate under direct financing leases | (22,693) | | | — | |
| Deferred income tax expense (benefit) | (79) | | | (1,148) | |
| Impairments and loan loss reserves (recoveries), net | 132 | | | 3,242 | |
| Loss (gain) on debt extinguishments | — | | | 164,292 | |
| Loss (gain) on sales of real estate, net | (3,785) | | | (259,662) | |
| Loss (gain) upon change of control, net | — | | | (1,042) | |
| Casualty-related loss (recoveries), net | — | | | 859 | |
| | | | |
| | | | |
| Other non-cash items | (1,593) | | | (726) | |
| Changes in: | | | |
| Decrease (increase) in accounts receivable and other assets, net | (4,144) | | | 11,567 | |
| Increase (decrease) in accounts payable, accrued liabilities, and deferred revenue | 3,653 | | | (74,524) | |
| Net cash provided by (used in) operating activities | 194,183 | | | 122,726 | |
| Cash flows from investing activities: | | | |
| Acquisitions of real estate | (134,067) | | | (14,914) | |
| Development, redevelopment, and other major improvements of real estate | (178,285) | | | (135,339) | |
| Leasing costs, tenant improvements, and recurring capital expenditures | (22,839) | | | (20,710) | |
| Proceeds from sales of real estate, net | 13,265 | | | 937,492 | |
| | | | |
| Contributions to unconsolidated joint ventures | (1,486) | | | (5,924) | |
| Distributions in excess of earnings from unconsolidated joint ventures | 3,875 | | | 10,825 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Proceeds from sales/principal repayments on loans receivable and direct financing leases | 75,435 | | | — | |
| Investments in loans receivable and other | (1,860) | | | (3,704) | |
| | | | |
| Net cash provided by (used in) investing activities | (245,962) | | | 767,726 | |
| Cash flows from financing activities: | | | |
| Borrowings under bank line of credit and commercial paper | 3,732,668 | | | 3,437,200 | |
| Repayments under bank line of credit and commercial paper | (3,567,830) | | | (2,528,640) | |
| | | | |
| Repayments and repurchase of debt, excluding bank line of credit and commercial paper | (1,270) | | | (1,491,754) | |
| | | | |
| Payments for debt extinguishment and deferred financing costs | — | | | (158,011) | |
| | | | |
| Issuance of common stock and exercise of options, net of offering costs | (4) | | | 1,087 | |
| Repurchase of common stock | (11,352) | | | (12,165) | |
| Dividends paid on common stock | (163,447) | | | (164,118) | |
| | | | |
| Distributions to and purchase of noncontrolling interests | (7,509) | | | (7,718) | |
| Contributions from and issuance of noncontrolling interests | 233 | | | — | |
| Net cash provided by (used in) financing activities | (18,511) | | | (924,119) | |
| | | | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | (70,290) | | | (33,667) | |
| Cash, cash equivalents and restricted cash, beginning of period | 219,448 | | | 181,685 | |
| Cash, cash equivalents and restricted cash, end of period | $ | 149,158 | | | $ | 148,018 | |
See accompanying Notes to the Unaudited Consolidated Financial Statements.7
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Dividend Equivalents (in shares) | 6 | SEC-NUM |
[Table of Contents](#ic0f1e00f8fa04a87b8ba424679040b3d_7)
A reconciliation of the number of options outstanding and exercisable as of October 31, 2021, is:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Shares(in thousands) | | Weighted-AverageExercise Price | | Weighted-AverageRemaining ContractualTerm (Years) | | AggregateIntrinsic Value(in thousands) |
| Stock Options Outstanding at October 25, 2020 | | 21,073 | | | $ | 30.39 | | | | | |
| Granted | | 1,277 | | | 47.45 | | | | | |
| Exercised | | (3,050) | | | 17.61 | | | | | |
| Forfeited | | (277) | | | 37.23 | | | | | |
| Expired | | (1) | | | 36.25 | | | | | |
| Stock Options Outstanding at October 31, 2021 | | 19,022 | | | $ | 33.49 | | | 4.9 | | $ | 182,432 | |
| Stock Options Exercisable at October 31, 2021 | | 13,047 | | | $ | 29.91 | | | 3.8 | | $ | 164,766 | |
The weighted-average grant date fair value of stock options granted and the total intrinsic value of options exercised during each of the past three fiscal years, are:
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Year Ended |
| | | October 31, | | October 25, | | October 27, |
| (in thousands, except per share amounts) | | 2021 | | 2020 | | 2019 |
| Weighted-average Grant Date Fair Value | | $ | 7.52 | | | $ | 7.71 | | | $ | 9.24 | |
| Intrinsic Value of Exercised Options | | 94,108 | | | 182,821 | | | 138,282 | |
The fair value of each option award is calculated on the date of grant using the Black-Scholes valuation model utilizing the following weighted-average assumptions:
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Year Ended |
| | | October 31, | | October 25, | | October 27, |
| | | 2021 | | 2020 | | 2019 |
| Risk-free Interest Rate | | 1.0 | % | | 1.7 | % | | 2.8 | % |
| Dividend Yield | | 2.1 | % | | 2.0 | % | | 1.9 | % |
| Stock Price Volatility | | 20.0 | % | | 19.0 | % | | 19.0 | % |
| Expected Option Life | | 7.4 years | | 7.5 years | | 8.0 years |
As part of the annual valuation process, the Company reassesses the appropriateness of the inputs used in the valuation models. The Company establishes the risk-free interest rate using U.S. Treasury yields as of the grant date. The dividend yield is based on the dividend rate approved by the Company’s Board of Directors and the stock price on the grant date. The expected volatility assumption is based primarily on historical volatility. The expected life assumption is based on an analysis of past exercise behavior by option holders. In performing the valuations for option grants, the Company has not stratified option holders as exercise behavior has historically been consistent across all employees. Restricted Stock Units: Restricted stock units are valued equal to the market price of the common stock on the date of the grant and generally vest after three years. These awards accumulate dividend equivalents, which are provided as additional units and are subject to the same vesting requirements as the underlying grant. A reconciliation of the restricted stock units as of October 31, 2021, is:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Shares(in thousands) | | Weighted-AverageGrant DateFair Value | Weighted-AverageRemaining ContractualTerm (Years) | AggregateIntrinsic Value(in thousands) |
| Restricted Stock Units Outstanding at October 25, 2020 | | 188 | | | $ | 45.91 | | | |
| Granted | | 225 | | | 47.52 | | | |
| Dividend Equivalents | | 6 | | | 46.62 | | | |
| Vested | | (31) | | | 46.56 | | | |
| Forfeited | | (3) | | | 46.52 | | | |
| Restricted Stock Units Outstanding at October 31, 2021 | | 385 | | | $ | 46.81 | | 1.7 | $ | 16,277 | |
The weighted-average grant date fair value of restricted stock units granted and the total fair value of restricted stock units granted during each of the past three fiscal years, are:
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Fiscal Year Ended |
| | | October 31, | | October 25, | | October 27, |
| (in thousands, except per share amounts) | | 2021 | | 2020 | | 2019 |
| Weighted-average Grant Date Fair Value | | $ | 47.52 | | | $ | 45.88 | | | $ | — | |
| Fair Value of Restricted Stock Units Granted | | 10,699 | | | 9,383 | | | — | |
| Fair Value of Restricted Stock Units Vested | | $ | 1,460 | | | $ | 839 | | | $ | — | |
60
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Long-Term Debt, Maturity, Year One | 1,236 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)Debt at December 31 consisted of the following:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 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 | |
| | | | |
| | | | |
| | | | |
| 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:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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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Environmental loss contingencies, net of expected recoveries, in excess of accrual | 160 | SEC-NUM |
[Table of Contents](#i4552998170a04ab690e0e4bebd2d8dfd_7)
FMC CORPORATIONNotes to Condensed Consolidated Financial Statements (unaudited) — (Continued)
The estimated reasonably possible environmental loss contingencies, net of expected recoveries, exceed amounts accrued by approximately $160 million at September 30, 2022. This reasonably possible estimate is based upon information available as of the date of the filing but the actual future losses may be higher given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of potentially responsible parties, technology and information related to individual sites. Potential environmental obligations that have not been reserved may be material to any one quarter's or year's results of operations in the future. However, we believe any such liability arising from such potential environmental obligations is not likely to have a material adverse effect on our liquidity or financial condition as it may be satisfied over many years.The table below provides a roll forward of our environmental recoveries representing probable realization of claims against insurance carriers and other third parties. These recoveries are recorded as "Prepaid and other current assets" and "Other assets including long-term receivables, net" in the condensed consolidated balance sheets.
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| (in Millions) | December 31, 2021 | | Increase (Decrease) in recoveries | | Cash received | | | | September 30, 2022 |
| Environmental recoveries | $ | 4.5 | | | $ | 2.0 | | | $ | (0.5) | | | | | $ | 6.0 | |
| | | | | | | | | | |
Our net environmental provisions relate to costs for the continued cleanup of both continuing and discontinued manufacturing operations from previous years. The net provisions are comprised as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| (in Millions) | 2022 | | 2021 | | 2022 | | 2021 |
| Environmental provisions, net - recorded to liabilities (1) | $ | 7.3 | | | $ | 8.1 | | | $ | 10.4 | | | $ | 15.6 | |
| Environmental provisions, net - recorded to assets (2) | (0.1) | | | (0.1) | | | (2.0) | | | (0.7) | |
| Environmental provision, net | $ | 7.2 | | | $ | 8.0 | | | $ | 8.4 | | | $ | 14.9 | |
| | | | | | | | |
| Continuing operations (3) | $ | 3.4 | | | $ | 3.7 | | | $ | 1.0 | | | $ | 3.3 | |
| Discontinued operations (4) | 3.8 | | | 4.3 | | | 7.4 | | | 11.6 | |
| Environmental provision, net | $ | 7.2 | | | $ | 8.0 | | | $ | 8.4 | | | $ | 14.9 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)See above roll forward of our total environmental reserves as presented on the condensed consolidated balance sheets.(2)See above roll forward of our total environmental recoveries as presented on the condensed consolidated balance sheets.(3)Recorded as a component of "Restructuring and other charges (income)" on the condensed consolidated statements of income (loss). See Note 9. Environmental obligations for continuing operations primarily represent obligations at shut down or abandoned facilities within businesses that do not meet the criteria for presentation as discontinued operations.(4)Recorded as a component of "Discontinued operations, net of income taxes" on the condensed consolidated statements of income (loss). See Note 11.
A more complete description of our environmental contingencies and the nature of our potential obligations are included in Notes 1 and 12 to our consolidated financial statements in our 2021 Form 10-K. See Note 12 to our consolidated financial statements in our 2021 Form 10-K for a description of significant updates to material environmental sites. There have been no significant updates since the information included in our 2021 Form 10-K other than the update provided below.
Note 13: Earnings Per ShareEarnings per common share ("EPS") is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis.Our potentially dilutive securities include potential common shares related to our stock options, restricted stock and restricted stock units. Diluted earnings per share ("Diluted EPS") considers the impact of potentially dilutive securities except in periods in which there is a loss from continuing operations because the inclusion of the potential common shares would have an antidilutive effect. Diluted EPS excludes the impact of potential common shares related to our stock options in periods in which the option exercise price is greater than the average market price of our common stock for the period. For the three and nine months ended September 30, 2022 there were 0.5 million and 0.4 million potential common shares excluded from Diluted EPS, 32
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Decrease in capital in excess of par value | 150 | SEC-NUM |
[Table of Contents](#i210a9c6b74ef4ff89c48a86e24b71d45_7)
Humana Inc.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)amended, or in privately-negotiated transactions, including pursuant to accelerated share repurchase agreements with investment banks, subject to certain regulatory restrictions on volume, pricing, and timing.On January 11, 2022, we entered into separate accelerated stock repurchase agreements, the January 2022 ASR Agreements, with Mizuho Markets Americas LLC, or Mizuho, and Wells Fargo Bank, or Wells Fargo, to repurchase $1 billion of our common stock as part of the $3 billion repurchase program authorized by the Board of Directors on February 18, 2021. On January 12, 2022, in accordance with the January 2022 ASR Agreements, we made a payment of $1 billion ($500 million to Mizuho and $500 million to Wells Fargo) and received an initial delivery of 2.2 million shares of our common stock (1.08 million shares each from Mizuho and Wells Fargo). In January 2022, we recorded the payments to Mizuho and Wells Fargo as a reduction to stockholders’ equity, consisting of an $850 million increase in treasury stock, which reflects the value of the initial 2.2 million shares received upon initial settlement, and a $150 million decrease in capital in excess of par value, which reflects the value of stock held back by Mizuho and Wells Fargo pending final settlement of the January 2022 ASR Agreements. Upon final settlement of the January 2022 ASR Agreements with Mizuho and Wells Fargo on March 29, 2022 and March 30, 2022, respectively, we received an additional 0.1 million shares and 0.1 million shares, respectively, as determined by the average daily volume weighted-averages share price of our common stock during the term of the agreement, less a discount, of $410.96 and $411.66, respectively, bringing the total shares received under the January 2022 ASR Agreements to 2.4 million. In addition, upon settlement we reclassified the $150 million value of stock initially held back by Mizuho and Wells Fargo from capital in excess of par value to treasury stock. Our remaining repurchase authorization was $2 billion as of November 1, 2022.In connection with employee stock plans, we acquired 0.07 million common shares for $32 million and 0.09 million common shares for $36 million during the nine months ended September 30, 2022 and 2021, respectively.
For additional information regarding our stockholders' equity, refer to Note 16 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our 2021 Form 10-K.
11. INCOME TAXESThe effective income tax rate was 8.2% and 22.5% for the three and nine months ended September 30, 2022, respectively, and 7.2% and 15.4% for the three and nine months ended September 30, 2021, respectively. The year-over-year increase in the effective income tax rates is primarily due to the impact of the August 2021 acquisition of the remaining 60% interest in KAH. In that period, we recognized a $1.1 billion mark-to-market gain related to our previously held 40% investment in KAH. This unrealized gain was not taxable, thereby reducing the effective income tax rate for the three and nine months ended September 30, 2021. The increase is partially offset by the August 2022 disposition of our 60% interest in KAH Hospice, which resulted in an increase to our tax basis in both the shares sold and the shares retained, thereby reducing the effective income tax rate for the three and nine months ended September 30, 2022.
On August 16, 2022, the Inflation Reduction Act was signed into law. The Inflation Reduction Act includes various tax provisions, which are effective for the tax years beginning on or after January 1, 2023. We do not expect these tax changes to have a material impact on our consolidated financial statements.
For additional information regarding income taxes, refer to Note 2 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in our 2021 Form 10-K.
23
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Number of registered shares of common stock that my be issued pursuant to plan (in shares) | 12 | SEC-NUM |
CSX CORPORATION
PART IIItem 8. Financial Statements and Supplementary DataNOTE 4. Stock Plans and Share-Based Compensation, continued
The restricted stock activity related to the outstanding long-term incentive plans and other awards and corresponding fair value is summarized as follows:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Restricted Stock Units and Awards Outstanding (in Thousands) | | Weighted-Average Fair Value at Grant Date |
| Unvested at December 31, 2020 | 1,055 | | | $ | 22.36 | |
| Granted | 561 | | | 29.84 | |
| Forfeited | (50) | | | 27.31 | |
| Vested | (543) | | | 21.26 | |
| Unvested at December 31, 2021 | 1,023 | | | $ | 27.53 | |
As of December 2021, unrecognized compensation expense for these restricted stock units and awards was approximately $12 million, which will be expensed over a weighted-average remaining period of two years.
Stock Awards for Directors CSX’s non-management directors receive a base annual retainer of $122,500 to be paid quarterly in cash, unless the director chooses to defer the retainer in the form of cash or CSX common stock. Additionally, non-management directors receive an annual grant of common stock in the amount of approximately $172,500, with the number of shares to be granted based on the average closing price of CSX stock in the months of November, December and January. The independent non-executive Chairman also receives an annual grant of common stock in the amount of approximately $250,000, with the number of shares to be granted based on the average closing price of CSX stock in the months of November, December, and January. These awards are evaluated periodically by the Board of Directors.
Employee Stock Purchase PlanIn May 2018, shareholders approved the 2018 CSX Employee Stock Purchase Plan (“ESPP”) for the benefit of Company employees. The Company registered 12 million (split-adjusted) shares of common stock that may be issued pursuant to this plan. Under the ESPP, employees may contribute between 1% and 10% of base compensation, after-tax, to purchase up to $25,000 of market value CSX common stock per year at 85% of the closing market price on either the grant date or the last day of the six-month offering period, whichever is lower. During 2021, 2020 and 2019, the Company issued the following shares under this program.
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | Fiscal Years |
| | 2021 | | 2020 | | 2019 |
| Shares issued (in thousands) | 730 | | | 726 | | | 747 | |
| Weighted average purchase price per share | $ | 21.90 | | | $ | 20.13 | | | $ | 17.57 | |
CSX 2021 Form 10-K p.67
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LIBOR plus interest rate margin | 2.00 | SEC-NUM |
DAVITA INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)(unaudited)(dollars and shares in thousands, except per share data)
The following table summarizes the Company’s interest rate cap agreements outstanding as of June 30, 2022 and December 31, 2021, which are classified in "Other long-term assets" on its consolidated balance sheet:
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| | | | | | | | | | Six months ended June 30, 2022 | | Fair value |
| | Notional amount | | LIBOR maximum rate | | Effective date | | Expiration date | | Debt expense | | Recorded OCI gain | | June 30, 2022 | | December 31, 2021 |
| 2019 cap agreements | $ | 3,500,000 | | | 2.00% | | 6/30/2020 | | 6/30/2024 | | $ | 2,754 | | | $ | 72,416 | | | $ | 84,619 | | | $ | 12,203 | |
See Note 9 for further details on amounts reclassified from accumulated other comprehensive loss and recorded as debt expense related to the Company’s interest rate cap agreements for the three and six months ended June 30, 2022 and 2021.The Company’s weighted average effective interest rate on its senior secured credit facilities at the end of the second quarter of 2022 was 3.77%, based on the current margins in effect for its senior secured credit facilities as of June 30, 2022, as detailed in the table above.The Company’s overall weighted average effective interest rate for the three and six months ended June 30, 2022 was 3.68% and 3.41%, and as of June 30, 2022 was 4.10%.As of June 30, 2022, the Company’s interest rates were fixed on approximately 50% of its total debt.As of June 30, 2022, the Company had $575,000 available and $425,000 drawn on its $1,000,000 revolving line of credit under its senior secured credit facilities. Credit available under this facility is reduced by the amount of any letters of credit outstanding under this facility, of which there were none as of June 30, 2022. The Company also had approximately $108,070 in letters of credit outstanding under a separate bilateral secured letter of credit facility as of June 30, 2022. 7. Commitments and contingenciesThe majority of the Company’s revenues are from government programs and may be subject to adjustment as a result of: (i) examination by government agencies or contractors, for which the resolution of any matters raised may take extended periods of time to finalize; (ii) differing interpretations of government regulations by different Medicare contractors or regulatory authorities; (iii) differing opinions regarding a patient’s medical diagnosis or the medical necessity of services provided; and (iv) retroactive applications or interpretations of governmental requirements. In addition, the Company’s revenues from commercial payors may be subject to adjustment as a result of potential claims for refunds, as a result of government actions or as a result of other claims by commercial payors.The Company operates in a highly regulated industry and is a party to various lawsuits, demands, claims, qui tam suits, governmental investigations (which frequently arise from qui tam suits) and audits (including, without limitation, investigations or other actions resulting from its obligation to self-report suspected violations of law) and other legal proceedings, including, without limitation, those described below. The Company records accruals for certain legal proceedings and regulatory matters to the extent that the Company determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. As of June 30, 2022 and December 31, 2021, the Company’s total recorded accruals with respect to legal proceedings and regulatory matters, net of anticipated third party recoveries, were immaterial. While these accruals reflect the Company’s best estimate of the probable loss for those matters as of the dates of those accruals, the recorded amounts may differ materially from the actual amount of the losses for those matters, and any anticipated third party recoveries for any such losses may not ultimately be recoverable. Additionally, in some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal proceedings and regulatory matters, which also may be impacted by various factors, including, without limitation, that they may involve indeterminate claims for monetary damages or may involve fines, penalties or non-monetary remedies; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; are in the early stages of the proceedings; or may result in a change of business practices. Further, there may be various levels of judicial review available to the Company in connection with any such proceeding.The following is a description of certain lawsuits, claims, governmental investigations and audits and other legal proceedings to which the Company is subject.12
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Line of credit facility, capacity available for specific purpose other than for trade purchases | 500 | SEC-NUM |
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| Notes to Consolidated Financial Statements | [Table of Contents](#if18581573a6045f6b6e889320c9d1887_7) |
In May 2022, we redeemed $1,250 million principal amount of our 4.95 percent Notes due 2026. We paid premiums above face value of $79 million to redeem the debt and recognized a loss on debt extinguishment of $83 million which is included in the "Other expenses" line on our consolidated income statement. We also paid $500 million to retire the outstanding principal amount of the floating rate notes due 2022 at maturity.
In the first quarter of 2022, we completed a debt refinancing consisting of three concurrent transactions: a tender offer to repurchase existing debt for cash; exchange offers to retire certain debt in exchange for new debt and cash; and a new debt issuance to partially fund the cash paid in the tender and exchange offers.
Tender OfferIn March 2022, we repurchased a total of $2,716 million aggregate principal amount of debt as listed below. We paid premiums above face value of $333 million to repurchase these debt instruments and recognized a gain on debt extinguishment of $155 million which is included in the "Other expenses" line on our consolidated income statement.
•3.75% Notes due 2027 with principal of $1,000 million (partial repurchase of $804 million)•4.3% Notes due 2028 with principal of $1,000 million (partial repurchase of $777 million)•2.4% Notes due 2031 with principal of $500 million (partial repurchase of $273 million) •4.875% Notes due 2047 with principal of $800 million (partial repurchase of $481 million)•4.85% Notes due 2048 with principal of $600 million (partial repurchase of $381 million)
Exchange OffersAlso in March 2022, we completed two concurrent debt exchange offers through which $2,544 million of aggregate principal of existing notes was tendered and accepted in exchange for a combination of new notes and cash. The debt exchange offers were treated as debt modifications for accounting purposes resulting in a portion of the unamortized debt discount, premiums and debt issuance costs of the existing notes being allocated to the new notes on the settlement dates of the exchange offers. We paid premiums above face value of $883 million, comprised of $872 million of cash as well as new notes, which were capitalized as additional debt discount. We incurred expenses of $28 million in the exchanges which are included in the "Other expenses" line on our consolidated income statement.
The notes tendered and accepted in the exchange offers were:•7% Debentures due 2029 with principal amount of $200 million (partial exchange of $88 million)•6.95% Notes due 2029 with principal amount of $1,549 million (partial exchange of $354 million) •7.4% Notes due 2031 with principal amount of $500 million (partial exchange of $118 million)•7.25% Notes due 2031 with principal amount of $500 million (partial exchange of $100 million)•7.2% Notes due 2031 with principal amount of $575 million (partial exchange of $128 million)•5.95% Notes due 2036 with principal amount of $500 million (partial exchange of $174 million)•5.9% Notes due 2038 with principal amount of $600 million (partial exchange of $250 million)•6.5% Notes due 2039 with principal amount of $2,750 million (partial exchange of $1,162 million)•5.95% Notes due 2046 with principal amount of $500 million (partial exchange of $171 million)
The notes tendered and accepted were exchanged for the following new notes: •3.758% Notes due 2042 with principal amount of $785 million•4.025% Notes due 2062 with principal amount of $1,770 million
New Debt IssuanceOn March 8, 2022, we issued the following new notes consisting of:•2.125% Notes due 2024 with principal of $900 million •2.4% Notes due 2025 with principal of $900 million •3.8% Notes due 2052 with principal of $1,100 million
In February 2022, we refinanced our revolving credit facility from a total borrowing capacity of $6.0 billion to $5.5 billion with an expiration date of February 2027. Our revolving credit facility may be used for direct bank borrowings, the issuance of letters of credit totaling up to $500 million, or as support for our commercial paper program. The revolving credit facility is broadly syndicated among financial institutions and does not contain any material adverse change provisions or any covenants requiring maintenance of specified financial ratios or credit ratings. The facility agreement contains a cross-default provision relating to the failure to pay principal or interest on other debt obligations of $200 million or more by ConocoPhillips, or any of its consolidated subsidiaries. The amount of the facility is not subject to redetermination prior to its expiration date.
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| 11 | ConocoPhillips 2022 Q2 10-Q | |
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Banking Regulation, Maximum Leverage Payout Ratio | 3.9 | SEC-NUM |
Bank and other loans
The Company has entered into syndicated and bilateral multi-currency credit facilities with financial institutions. On April 26, 2022, the Company terminated the three-, four-, and five-year syndicated facility agreements, which collectively provided for $3.8 billion of credit facilities. On the same day, the Company entered into three- and five-year syndicated facility agreements that each provide a revolving credit facility of $1.9 billion or $3.8 billion in total. The facilities are unsecured and have contractual maturities in April 2025 and April 2027, respectively. The agreements include customary terms and conditions for a syndicated facility of this nature, and the revolving tranches have two 12-month options available to management to extend the maturity date.
Interest charged on borrowings under the credit facilities is based on the applicable market rate plus the applicable margin. As of June 30, 2022 and 2021, the Company's credit facilities amounted to $3.8 billion.
As of June 30, 2022 and 2021, the Company has $1.4 billion and $2.0 billion of undrawn commitments, respectively. The Company incurs facility fees of 0.125% on the undrawn commitments. Such facility fees incurred were immaterial in the fiscal years ended June 30, 2022, 2021, and 2020, respectively.
At June 30, 2022 and 2021, land and buildings with a carrying value of $38 million and $19 million, respectively, have been pledged as security for bank and other loans.
Redemption of term debt
The Company may redeem its long-term debt, in whole or in part, at any time or from time to time prior to its maturity. The redemption prices typically represent 100% of the principal amount of the relevant debt plus any accrued and unpaid interest. In addition, for notes that are redeemed by the Company before their stated permitted redemption date, a make-whole premium is payable.
On December 15, 2021, the Company redeemed U.S. private placement notes of a principal amount of $275 million at maturity using the proceeds from the commercial paper program. The notes carried an interest rate of 5.95%.
On July 15, 2021, the Company redeemed all $400 million outstanding amount of the 4.50% senior notes due in October 2021 at a price equal to the principal plus accrued interest.
Priority, Guarantees, and Financial Covenants
All the notes are general unsecured senior obligations of the Company and are fully and unconditionally guaranteed on a joint and several basis by certain existing subsidiaries that guarantee its other indebtedness.
The Company's primary bank debt facilities and notes are unsecured and subject to negative pledge arrangements limiting the amount of secured indebtedness the Company can incur to 10.0% of total tangible assets, subject to some exceptions and variations by facility. As of June 30, 2022, the Company is required to satisfy certain financial covenants pursuant to its bank debt facilities, which are tested as of the last day of each quarterly and annual financial period. The covenants require the Company to maintain a leverage ratio of not higher than 3.9 times, which is calculated as total net debt divided by Adjusted EBITDA. As of June 30, 2022 and 2021, the Company was in compliance with all debt covenants.
83
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Gain (Loss) on Disposition of Property Plant Equipment | 39 | SEC-NUM |
FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 21. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)
Other Global Redesign Actions. In 2018, we announced our plan to end production at the Ford Aquitaine Industries plant in Bordeaux, France. We ceased production and closed the facility in July 2019. In March 2019, we announced our plan to phase-out the production of the C-Max at the Saarlouis Body and Assembly Plant in Germany. We ceased production of the C-Max in June 2019. In March 2021, we announced our plan to phase-out the production of the Mondeo at the Valencia Plant in Spain.
In addition, we are continuing to reduce our global workforce and take other restructuring actions.
The following table summarizes the activities for the years ended December 31, which are recorded in Other liabilities and deferred revenue (in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | | 2020 | | 2021 |
| Beginning balance | | $ | 734 | | | $ | 1,732 | |
| Changes in accruals (a) | | 1,598 | | | 1,150 | |
| Payments | | (631) | | | (1,883) | |
| Foreign currency translation | | 31 | | | (49) | |
| Ending balance | | $ | 1,732 | | | $ | 950 | |
\_\_\_\_\_\_\_\_\_\_(a) Excludes pension costs of $268 million and $156 million in 2020 and 2021, respectively.
We recorded $1.4 billion of non-cash charges in 2019 for the impairment of our India Automotive operations, accelerated depreciation, and other items. In 2020, we recorded $1.4 billion of non-cash charges related to the write-off of certain tax and other assets in South America, accelerated depreciation, and other items. In addition, we recognized a pre-tax net gain on sale of assets in Brazil and Russia of $39 million, with cash proceeds of $128 million. In 2021, we recorded $739 million for accelerated depreciation and other non-cash items.
We estimate that we will incur about $2 billion in total charges in 2022 related to the actions above, primarily attributable to employee separations and dealer and supplier settlements. We continue to review our global businesses and may take additional restructuring actions in markets where a path to sustained profitability is not feasible when considering the capital allocation required for those markets.
United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) Voluntary Separation Packages
As agreed in the collective bargaining agreement ratified in November 2019, during the first quarter of 2020, we offered voluntary separation packages to our UAW hourly workforce who were eligible for normal or early retirement, and recorded associated costs of $201 million in Cost of sales. All separations occurred during 2020.
Ford Credit
In June 2021, Ford Credit announced the plan of its subsidiaries in Brazil and Argentina to cease originating receivables by the end of 2021 and begin the process of selling or otherwise winding down their operations in those markets. We recorded approximately $11 million related to employee separation costs in Ford Credit interest, operating, and other expenses, the majority of which was paid in 2021.
Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at December 31, 2021 of $379 million are associated with Ford Credit’s investments in Brazil and Argentina that it no longer plans to operate. We expect to reclassify these losses to income upon sale, transfer, or substantially complete liquidation of Ford Credit’s investments, which may occur over multiple reporting periods. In the fourth quarter of 2021, we recognized a $14 million gain on the liquidation of an entity in Brazil. The timing for the completion of the remaining actions is uncertain, as they may be subject to regulatory approval. We expect the majority of losses to be recognized in 2022.
166
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Noncurrent Inventories and Theatrical Film and Television Production Costs | 18,983 | 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 | |
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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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Debt service coverage ratio | 1.2 | 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:
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| 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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Options Exercisable, Weighted Average Remaining Contractual Life | 4.3 | SEC-NUM |
[Table of Contents](#i30d98ad3bee64d018232130137db9899_7)The aggregate intrinsic value of stock options exercised under the Company’s stock plans determined as of the date of option exercise was $613 million, $598 million, and $512 million during the years ended December 31, 2021, 2020, and 2019, respectively. Cash received from option exercises and employee stock purchase plans for the years ended December 31, 2021, 2020, and 2019, was $276 million, $309 million, and $273 million, respectively. The income tax benefit from stock options exercised was $138 million for the year ended December 31, 2021.The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2021 (number of shares and aggregate intrinsic value in millions):
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| | | Options Outstanding | | Options Exercisable |
| Range ofExercise Prices | | Numberof Shares | | Weighted-AverageRemainingContractual Life | | Weighted-AverageExercise PricePer Share | | AggregateIntrinsicValue (1) | | Numberof Shares | | Weighted-AverageRemainingContractual Life | | Weighted-AverageExercise PricePer Share | | AggregateIntrinsicValue (1) |
| $29.91-$49.34 | | 1.4 | | | 1.9 | | $ | 45.18 | | | | | 1.4 | | | | | $ | 45.18 | | | |
| $51.02-$57.11 | | 1.4 | | | 2.5 | | $ | 54.39 | | | | | 1.4 | | | | | $ | 54.39 | | | |
| $57.48-$59.46 | | 1.4 | | | 2.9 | | $ | 58.78 | | | | | 1.4 | | | | | $ | 58.78 | | | |
| $59.58-$77.00 | | 1.3 | | | 2.8 | | $ | 69.07 | | | | | 1.3 | | | | | $ | 69.07 | | | |
| $77.04-$139.52 | | 1.6 | | | 5.6 | | $ | 108.72 | | | | | 1.6 | | | | | $ | 108.24 | | | |
| $143.49-$174.26 | | 1.4 | | | 7.1 | | $ | 168.88 | | | | | 1.1 | | | | | $ | 169.46 | | | |
| $175.53-$182.83 | | 1.3 | | | 7.6 | | $ | 179.91 | | | | | 0.7 | | | | | $ | 180.38 | | | |
| $182.90-$245.60 | | 1.3 | | | 8.7 | | $ | 234.88 | | | | | 0.4 | | | | | $ | 230.62 | | | |
| $249.83-$341.16 | | 0.1 | | | 9.1 | | $ | 270.94 | | | | | — | | | | | $ | 251.85 | | | |
| $347.42-$347.42 | | 0.5 | | | 9.6 | | $ | 347.42 | | | | | 0.1 | | | | | $ | 347.42 | | | |
| Total | | 11.7 | | | 5.1 | | $ | 125.07 | | | $ | 2,737 | | | 9.4 | | | 4.3 | | $ | 99.52 | | | $ | 2,453 | |
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(1)The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $359.30 as of December 31, 2021, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date.As of December 31, 2021, a total of 11.5 million shares of stock options vested and expected to vest had a weighted-average remaining contractual life of 5.0 years, an aggregate intrinsic value of $2.72 billion, and a weighted-average exercise price of $122.97.Restricted Stock Units InformationRSU activity for the year ended December 31, 2021, was as follows (in millions, except per share amounts):
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| | Shares | | Weighted-AverageGrant Date Fair Value |
| Unvested balance as of December 31, 2020 | 5.3 | | | $ | 163.30 | |
| Granted | 1.9 | | | $ | 256.52 | |
| Vested | (2.1) | | | $ | 145.60 | |
| Forfeited | (0.3) | | | $ | 193.61 | |
| Unvested balance as of December 31, 2021 | 4.8 | | | $ | 207.37 | |
As of December 31, 2021, 4.3 million shares of RSUs were expected to vest with an aggregate intrinsic value of $1.56 billion. The aggregate vesting date fair value of RSUs vested was $578 million, $478 million, and $433 million during the years ended December 31, 2021, 2020, and 2019, respectively.112
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Deposit Liabilities, Collateral Issued, Financial Instruments | 2.1 | SEC-NUM |
[Table of Contents](#if5e2d1c13bd74a82945554c9f702e646_7) D.R. HORTON, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – (Continued)June 30, 2022Forestar’s revolving credit facility and its senior notes are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, financial services or rental operations. At June 30, 2022, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.
In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. The authorization has no expiration date. All of the $30 million authorization was remaining at June 30, 2022.
Financial Services
The Company’s mortgage subsidiary, DHI Mortgage, has a mortgage repurchase facility that provides financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to the counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames from 45 to 60 days in accordance with the terms of the mortgage repurchase facility. In February 2022, the mortgage repurchase facility was amended to increase its capacity and extend its maturity date to February 17, 2023. The total capacity of the facility is $1.6 billion; however, the capacity automatically increases during certain higher volume periods and can be further increased through additional commitments. The total capacity of the facility at June 30, 2022 was $2.1 billion.
As of June 30, 2022, $2.1 billion of mortgage loans held for sale with a collateral value of $2.0 billion were pledged under the mortgage repurchase facility. As a result of advance paydowns totaling $632.0 million, DHI Mortgage had an obligation of $1.4 billion outstanding under the mortgage repurchase facility at June 30, 2022 at a 3.3% annual interest rate.
The mortgage repurchase facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or rental operations. The facility contains financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable leverage ratio and its minimum required liquidity. These covenants are measured and reported to the lenders monthly. At June 30, 2022, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facility.
Rental
On March 4, 2022, the Company’s rental subsidiary, DRH Rental, entered into a $625 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $1.25 billion, subject to certain conditions and availability of additional bank commitments. On March 17, 2022, DRH Rental utilized the accordion feature and increased the size of the facility to $750 million through an additional commitment. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. The maturity date of the facility is March 4, 2026. Availability under the revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. At June 30, 2022, the borrowing base limited the available capacity under the facility to $649.6 million. At June 30, 2022, there were $175 million of borrowings outstanding at a 3.1% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $474.6 million.
The revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. At June 30, 2022, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.
DRH Rental’s revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of the Company’s homebuilding, Forestar or financial services operations.
22
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TOTAL LIABILITIES | 55.0 | SEC-NUM |
[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Platform Extension functionality, and, over time, to innovate and rebrand certain of Alaxala’s switches to offer a broader suite of secure switches globally.
Under the acquisition method of accounting in accordance with ASC 805, the total purchase price was allocated to Alaxala’s identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values using management’s best estimates and assumptions to assign fair value as of the acquisition date. The following table provides the assets acquired and liabilities assumed as of the date of acquisition:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (in millions) | Estimated Fair Value |
| ASSETS | |
| Cash | $ | 1.1 | |
| Accounts receivable—net | 15.6 | |
| Inventory | 33.4 | |
| Prepaid expenses and other current assets | 2.9 | |
| Property and equipment | 5.3 | |
| Goodwill | 25.5 | |
| Other intangible assets | 48.0 | |
| Other long-term assets | 5.2 | |
| TOTAL ASSETS | $ | 137.0 | |
| | |
| LIABILITIES | |
| Accounts payable | $ | 11.0 | |
| Current portion of long-term debt | 20.2 | |
| Accrued and other current liabilities | 17.1 | |
| Other long-term liabilities | 6.7 | |
| TOTAL LIABILITIES | $ | 55.0 | |
| NON-CONTROLLING INTERESTS | $ | 17.8 | |
| Net purchase consideration | $ | 64.2 | |
The excess of the purchase consideration and the fair value of non-controlling interests over the fair value of net tangible and identified intangible assets acquired was recorded as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce of Alaxala and the anticipated operational synergies.
The fair value of the non-controlling interests of $17.8 million was estimated based on the non-controlling interests’ respective share of the fair value of Alaxala.
Identified intangible assets acquired and their estimated useful lives (in years) as of August 31, 2021, were as follows (in millions, except years):
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | Fair Value | | Estimated Useful Life (in years) |
| Developed technology | $ | 26.6 | | | 4 |
| Customer relationships | 10.0 | | | 10 |
| Trade name | 6.4 | | | 10 |
| Backlog | 5.0 | | | 1 |
| Total identified intangible assets: | $ | 48.0 | | | |
Developed technology relates to Alaxala’s network equipment. We valued the developed technology using the relief-from-royalty method under the income approach. This method reflects the present value of the projected cost savings that are expected to be realized by the owner of the royalty granted in exchange for the use of the asset. The economic useful life was 14
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Ownership interest | 86.5 | SEC-NUM |
[Table of Contents](#i9e3d7fad53bb42b083be8286e4319cd4_10) EVERGY, INC.EVERGY KANSAS CENTRAL, INC.EVERGY METRO, INC.Combined Notes to Consolidated Financial Statements The notes to consolidated financial statements that follow are a combined presentation for Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc., all registrants under this filing. The terms "Evergy," "Evergy Kansas Central," "Evergy Metro" and "Evergy Companies" are used throughout this report. "Evergy" refers to Evergy, Inc. and its consolidated subsidiaries, unless otherwise indicated. "Evergy Kansas Central" refers to Evergy Kansas Central, Inc. and its consolidated subsidiaries, unless otherwise indicated. "Evergy Metro" refers to Evergy Metro, Inc. and its consolidated subsidiaries, unless otherwise indicated. "Evergy Companies" refers to Evergy, Evergy Kansas Central and Evergy Metro, collectively, which are individual registrants within the Evergy consolidated group. 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganizationEvergy is a public utility holding company incorporated in 2017 and headquartered in Kansas City, Missouri. Evergy operates primarily through the following wholly-owned direct subsidiaries listed below.•Evergy Kansas Central, Inc. (Evergy Kansas Central) is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South, Inc. (Evergy Kansas South). •Evergy Metro, Inc. (Evergy Metro) is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas.•Evergy Missouri West, Inc. (Evergy Missouri West) is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri.•Evergy Transmission Company, LLC (Evergy Transmission Company) owns 13.5% of Transource Energy, LLC (Transource) with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of American Electric Power Company, Inc. (AEP). Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the equity method.Evergy Kansas Central also owns a 50% interest in Prairie Wind Transmission, LLC (Prairie Wind), which is a joint venture between Evergy Kansas Central and subsidiaries of AEP and Berkshire Hathaway Energy Company. Prairie Wind owns a 108-mile, 345 kV double-circuit transmission line that provides transmission service in the Southwest Power Pool, Inc. (SPP). Evergy Kansas Central accounts for its investment in Prairie Wind under the equity method.
Evergy Kansas Central, Evergy Kansas South, Evergy Metro and Evergy Missouri West conduct business in their respective service territories using the name Evergy. Collectively, the Evergy Companies have approximately 15,400 MWs of owned generating capacity and renewable power purchase agreements and engage in the generation, transmission, distribution and sale of electricity to approximately 1.6 million customers in the states of Kansas and Missouri.Principles of ConsolidationEach of Evergy's, Evergy Kansas Central's and Evergy Metro's consolidated financial statements includes the accounts of their subsidiaries and variable interest entities (VIEs) of which they are the primary beneficiary. Undivided interests in jointly-owned generation facilities are included on a proportionate basis. Intercompany transactions have been eliminated. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate in one segment).87
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Equity investment, discount due to lack of marketability | 800 | SEC-NUM |
[Table of](#i7d20a63dbc7f4057897188cf4f4b9871_7) [Contents](#i7d20a63dbc7f4057897188cf4f4b9871_7)The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 | | June 30, 2022 |
| | TotalEstimatedFair Value | | Cost orAmortizedCost | | GrossUnrealizedGains | | GrossUnrealizedLosses | | TotalEstimatedFair Value |
| Cash | $ | 10,942 | | | $ | 9,825 | | | $ | — | | | $ | — | | | $ | 9,825 | |
| Level 1 securities: | | | | | | | | | |
| Money market funds | 20,312 | | | 18,816 | | | — | | | — | | | 18,816 | |
| Equity securities (1)(3) | 1,646 | | | | | | | | | 4,946 | |
| Level 2 securities: | | | | | | | | | |
| Foreign government and agency securities | 181 | | | 50 | | | — | | | (1) | | | 49 | |
| U.S. government and agency securities | 4,300 | | | 2,344 | | | — | | | (122) | | | 2,222 | |
| Corporate debt securities | 35,764 | | | 21,756 | | | — | | | (673) | | | 21,083 | |
| Asset-backed securities | 6,738 | | | 3,736 | | | — | | | (164) | | | 3,572 | |
| Other fixed income securities | 686 | | | 407 | | | — | | | (18) | | | 389 | |
| Equity securities (1)(3) | 15,740 | | | | | | | | | 30 | |
| | $ | 96,309 | | | $ | 56,934 | | | $ | — | | | $ | (978) | | | $ | 60,932 | |
| Less: Restricted cash, cash equivalents, and marketable securities (2) | (260) | | | | | | | | | (222) | |
| Total cash, cash equivalents, and marketable securities | $ | 96,049 | | | | | | | | | $ | 60,710 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $119 million and $(4.2) billion in Q2 2021 and Q2 2022, and $122 million and $(12.3) billion for the six months ended June 30, 2021 and 2022.(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable fixed income securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”(3)Our equity investment in Rivian had a fair value of $15.6 billion and $4.1 billion as of December 31, 2021 and June 30, 2022, respectively. The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $800 million as of December 31, 2021, which expired in Q1 2022. The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2022 (in millions):
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | AmortizedCost | | EstimatedFair Value |
| Due within one year | $ | 29,370 | | | $ | 29,344 | |
| Due after one year through five years | 14,776 | | | 13,967 | |
| Due after five years through ten years | 796 | | | 760 | |
| Due after ten years | 2,167 | | | 2,060 | |
| Total | $ | 47,109 | | | $ | 46,131 | |
Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.Equity Warrants and Non-Marketable Equity InvestmentsWe hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2021 and June 30, 2022, these warrants had a fair value of $3.4 billion and $2.4 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.As of December 31, 2021 and June 30, 2022, equity investments not accounted for under the equity-method and without readily determinable fair values had a carrying value of $603 million and $768 million, and are recorded within “Other assets” 11
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Performance obligation expected recognition period for three-fourths of remaining obligation | 12 | SEC-NUM |
[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Disaggregation of Revenue
The following table presents our revenue disaggregated by major product and service lines (in millions):
| | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| | March 31,2022 | | March 31,2021 | | | | |
| Product | $ | 371.0 | | | $ | 240.7 | | | | | |
| Service: | | | | | | | |
| Security subscription | 312.9 | | | 255.3 | | | | | |
| Technical support and other | 270.9 | | | 214.3 | | | | | |
| Total service revenue | 583.8 | | | 469.6 | | | | | |
| Total revenue | $ | 954.8 | | | $ | 710.3 | | | | | |
Deferred Revenue
During the three months ended March 31, 2022 and 2021, we recognized $507.3 million and $417.9 million in service revenue that was included in the deferred revenue balance as of December 31, 2021 and 2020, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $3.66 billion, which was substantially comprised of deferred security subscription and technical support services revenue. We expect to recognize approximately $1.89 billion as revenue over the next 12 months and the remainder thereafter.
Accounts receivable
Trade accounts receivable are recorded at the invoiced amount. Our accounts receivable balance is reduced by an allowance for expected credit losses. We measure expected credit losses of accounts receivable on a collective (pooled) basis, aggregating accounts receivable that are either current or no more than 60 days past due, and aggregating accounts receivable that are more than 60 days past due. We apply a credit-loss percentage to each of the pools that is based on our historical credit losses. We review whether each of our significant accounts receivable that is more than 60 days past due continues to exhibit similar risk characteristics with the other accounts receivable in the pool. If we determine that it does not, we evaluate it for expected credit losses on an individual basis. Expected credit losses are recorded as general and administrative expenses on our consolidated statements of income.
The allowance for credit losses was $2.5 million and $2.4 million as of March 31, 2022 and December 31, 2021, respectively. Provisions, write-offs and recoveries were not material during the three months ended March 31, 2022 and 2021.
Deferred Contract Costs Amortization of deferred contract costs during the three months ended March 31, 2022 and 2021 were $52.5 million and $39.7 million, respectively.
9
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Common stock, shares outstanding (shares) | 1 | SEC-NUM |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in millions, except share data)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | March 31,2022 | | December 31,2021 |
| | (unaudited) | | |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| Cash and cash equivalents | $ | 2,431 | | | $ | 601 | |
| Accounts receivable, less allowance for doubtful accounts of $161 and $157, respectively | 2,530 | | | 2,579 | |
| Prepaid expenses and other current assets | 555 | | | 386 | |
| Total current assets | 5,516 | | | 3,566 | |
| | | | |
| INVESTMENT IN CABLE PROPERTIES: | | | |
| Property, plant and equipment, net of accumulated depreciation of $34,897 and $34,253, respectively | 34,173 | | | 34,310 | |
| Customer relationships, net of accumulated amortization of $14,542 and $14,180, respectively | 3,699 | | | 4,060 | |
| Franchises | 67,347 | | | 67,346 | |
| Goodwill | 29,563 | | | 29,562 | |
| Total investment in cable properties, net | 134,782 | | | 135,278 | |
| | | | |
| OTHER NONCURRENT ASSETS | 3,650 | | | 3,647 | |
| | | | |
| Total assets | $ | 143,948 | | | $ | 142,491 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| Accounts payable and accrued liabilities | $ | 9,386 | | | $ | 9,461 | |
| Current portion of long-term debt | 4,543 | | | 2,997 | |
| Total current liabilities | 13,929 | | | 12,458 | |
| | | | |
| LONG-TERM DEBT | 90,679 | | | 88,564 | |
| DEFERRED INCOME TAXES | 19,070 | | | 19,096 | |
| OTHER LONG-TERM LIABILITIES | 4,326 | | | 4,217 | |
| | | | |
| SHAREHOLDERS’ EQUITY: | | | |
| Class A common stock; $0.001 par value; 900 million shares authorized; | | | |
| 173,597,377 and 172,741,236 shares issued, respectively | — | | | — | |
| Class B common stock; $0.001 par value; 1,000 shares authorized; | | | |
| 1 share issued and outstanding | — | | | — | |
| Preferred stock; $0.001 par value; 250 million shares authorized;no shares issued and outstanding | — | | | — | |
| Additional paid-in capital | 26,865 | | | 26,725 | |
| Accumulated deficit | (11,472) | | | (12,675) | |
| Treasury stock at cost; 5,739,096 and no shares, respectively | (3,333) | | | — | |
| Total Charter shareholders’ equity | 12,060 | | | 14,050 | |
| Noncontrolling interests | 3,884 | | | 4,106 | |
| Total shareholders’ equity | 15,944 | | | 18,156 | |
| | | | |
| Total liabilities and shareholders’ equity | $ | 143,948 | | | $ | 142,491 | |
The accompanying notes are an integral part of these consolidated financial statements.1
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Estimated Amortization Expense, Year Five | 108 | SEC-NUM |
[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7)
7. INTANGIBLE ASSETS AND GOODWILLThe changes in the carrying amount of intangible assets and goodwill were as follows as of December 31, 2021 and 2020. See Note 20. Acquisitions and Divestitures for a further description of the goodwill and intangible assets resulting from Aptiv’s acquisitions in 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | As of December 31, 2021 | | As of December 31, 2020 |
| | Estimated UsefulLives | | GrossCarryingAmount | | AccumulatedAmortization | | NetCarryingAmount | | GrossCarryingAmount | | AccumulatedAmortization | | NetCarryingAmount |
| | (Years) | | (in millions) | | (in millions) |
| Amortized intangible assets: | | | | | | | | | | | | | |
| Patents and developed technology | 3-15 | | $ | 673 | | | $ | 506 | | | $ | 167 | | | $ | 672 | | | $ | 461 | | | $ | 211 | |
| Customer relationships | 9-14 | | 1,186 | | | 578 | | | 608 | | | 1,179 | | | 495 | | | 684 | |
| Trade names | 15-20 | | 75 | | | 50 | | | 25 | | | 76 | | | 48 | | | 28 | |
| Total | | | 1,934 | | | 1,134 | | | 800 | | | 1,927 | | | 1,004 | | | 923 | |
| Unamortized intangible assets: | | | | | | | | | | | | | |
| In-process research and development | — | | 4 | | | — | | | 4 | | | — | | | — | | | — | |
| Trade names | — | | 160 | | | — | | | 160 | | | 168 | | | — | | | 168 | |
| Goodwill | — | | 2,511 | | | — | | | 2,511 | | | 2,580 | | | — | | | 2,580 | |
| Total | | | $ | 4,609 | | | $ | 1,134 | | | $ | 3,475 | | | $ | 4,675 | | | $ | 1,004 | | | $ | 3,671 | |
Estimated amortization expense for the years ending December 31, 2022 through 2026 is presented below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year Ending December 31, |
| | 2022 | | 2023 | | 2024 | | 2025 | | 2026 |
| | (in millions) |
| Estimated amortization expense | $ | 149 | | | $ | 126 | | | $ | 111 | | | $ | 108 | | | $ | 108 | |
A roll-forward of the gross carrying amounts of intangible assets for the years ended December 31, 2021 and 2020 is presented below.
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 2021 | | 2020 |
| | (in millions) |
| Balance at January 1 | $ | 4,675 | | | $ | 4,427 | |
| Acquisitions (1) | 132 | | | 17 | |
| | | | |
| | | | |
| Foreign currency translation and other | (198) | | | 231 | |
| Balance at December 31 | $ | 4,609 | | | $ | 4,675 | |
(1)Primarily attributable to the 2021 acquisitions of El-Com, Krono-Safe and Ulti-Mate and the 2020 acquisition of Dynawave, as further described in Note 20. Acquisitions and Divestitures.A roll-forward of the accumulated amortization for the years ended December 31, 2021 and 2020 is presented below:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 2021 | | 2020 |
| | (in millions) |
| Balance at January 1 | $ | 1,004 | | | $ | 834 | |
| Amortization | 148 | | | 144 | |
| | | | |
| | | | |
| Foreign currency translation and other | (18) | | | 26 | |
| Balance at December 31 | $ | 1,134 | | | $ | 1,004 | |
80
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Options exercisable, Number of Options | 1,788,702 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
A summary of stock option activity for the year ended December 31, 2021 and changes during the year are presented below:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Numberof Options | | Weighted-AverageExercisePrice | | AggregateIntrinsicValue | | Weighted-AverageContractual Life |
| Options outstanding as of January 1, 2021 | 2,399,379 | | | $89.63 | | | | |
| Options granted | 508,704 | | | $95.87 | | | | |
| Options exercised | (72,138) | | | $80.54 | | | | |
| Options forfeited/expired | (16,301) | | | $117.89 | | | | |
| Options outstanding as of December 31, 2021 | 2,819,644 | | | $90.82 | | $71,110,949 | | 6.34 years |
| Options exercisable as of December 31, 2021 | 1,788,702 | | | $81.91 | | $58,164,228 | | 5.16 years |
| Weighted-average grant-date fair value of options granted during 2021 | $12.27 | | | | | | |
The weighted-average grant-date fair value of options granted during the year was $11.45 for 2020 and $8.32 for 2019. The total intrinsic value of stock options exercised was $2 million during 2021, $26 million during 2020, and $29 million during 2019. The intrinsic value, which has no effect on net income, of the outstanding stock options exercised is calculated by the positive difference between the weighted average exercise price of the stock options granted and Entergy Corporation’s common stock price as of December 31, 2021. The aggregate intrinsic value of the stock options outstanding as of December 31, 2021 was $71.1 million. Stock options outstanding as of December 31, 2021 includes 501,316 out of the money options with an intrinsic value of zero. Entergy recognizes compensation cost over the vesting period of the options based on their grant-date fair value. The total fair value of options that vested was approximately $5 million during 2021, $5 million during 2020, and $5 million during 2019. Cash received from option exercises was $6 million for the year ended December 31, 2021. The tax benefits realized from options exercised was $0.5 million for the year ended December 31, 2021.
The following table summarizes information about stock options outstanding as of December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Options Outstanding | | Options Exercisable |
| Range of Exercise Price | | As of December 31, 2021 | | Weighted-Average Remaining Contractual Life-Yrs. | | Weighted Average Exercise Price | | Number Exercisable as of December 31, 2021 | | Weighted Average Exercise Price |
| | | | | | | | | | | | |
| $51 | - | $64.99 | | 240,200 | | | 1.72 | | $63.69 | | 240,200 | | | $63.69 |
| $65 | - | $78.99 | | 915,839 | | | 5.19 | | $73.80 | | 915,839 | | | $73.80 |
| $79 | - | $91.99 | | 653,585 | | | 6.21 | | $89.35 | | 465,577 | | | $89.41 |
| $92 | - | $131.72 | | 1,010,020 | | | 8.58 | | $113.66 | | 167,086 | | | $131.72 |
| $51 | - | $131.72 | | 2,819,644 | | | 6.34 | | $90.82 | | 1,788,702 | | | $81.91 |
Stock-based compensation cost related to non-vested stock options outstanding as of December 31, 2021 not yet recognized is approximately $7 million and is expected to be recognized over a weighted-average period of 1.72 years.
Restricted Stock Awards
Entergy grants restricted stock awards earned under its stock benefit plans in the form of stock units. One-third of the restricted stock awards will vest upon each anniversary of the grant date and are expensed ratably over 191
| string | null | null |
Common stock, shares authorized (in shares) | 1,200,000,000 | SEC-NUM |
2 | The AES Corporation | September 30, 2022 Form 10-QPART I: FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets (Unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | September 30, 2022 | | December 31, 2021 |
| | | | |
| | (in millions, except share and per share amounts) |
| ASSETS | | | |
| CURRENT ASSETS | | | |
| Cash and cash equivalents | $ | 1,553 | | | $ | 943 | |
| Restricted cash | 314 | | | 304 | |
| Short-term investments | 671 | | | 232 | |
| Accounts receivable, net of allowance for doubtful accounts of $5 and $5, respectively | 1,787 | | | 1,418 | |
| Inventory | 998 | | | 604 | |
| Prepaid expenses | 149 | | | 142 | |
| Other current assets | 1,303 | | | 897 | |
| Current held-for-sale assets | 853 | | | 816 | |
| Total current assets | 7,628 | | | 5,356 | |
| NONCURRENT ASSETS | | | |
| Property, Plant and Equipment: | | | |
| Land | 465 | | | 426 | |
| Electric generation, distribution assets and other | 26,003 | | | 25,552 | |
| Accumulated depreciation | (8,532) | | | (8,486) | |
| Construction in progress | 3,661 | | | 2,414 | |
| Property, plant and equipment, net | 21,597 | | | 19,906 | |
| Other Assets: | | | |
| Investments in and advances to affiliates | 1,121 | | | 1,080 | |
| Debt service reserves and other deposits | 167 | | | 237 | |
| Goodwill | 1,179 | | | 1,177 | |
| Other intangible assets, net of accumulated amortization of $415 and $385, respectively | 1,626 | | | 1,450 | |
| Deferred income taxes | 380 | | | 409 | |
| | | | |
| | | | |
| Other noncurrent assets, net of allowance of $57 and $23, respectively | 2,964 | | | 2,188 | |
| Noncurrent held-for-sale assets | 1,113 | | | 1,160 | |
| Total other assets | 8,550 | | | 7,701 | |
| TOTAL ASSETS | $ | 37,775 | | | $ | 32,963 | |
| LIABILITIES AND EQUITY | | | |
| CURRENT LIABILITIES | | | |
| Accounts payable | $ | 1,688 | | | $ | 1,153 | |
| Accrued interest | 210 | | | 182 | |
| Accrued non-income taxes | 244 | | | 266 | |
| Accrued and other liabilities | 1,212 | | | 1,205 | |
| | | | |
| Non-recourse debt, including $321 and $302, respectively, related to variable interest entities | 2,007 | | | 1,367 | |
| | | | |
| Current held-for-sale liabilities | 541 | | | 559 | |
| Total current liabilities | 5,902 | | | 4,732 | |
| NONCURRENT LIABILITIES | | | |
| Recourse debt | 4,668 | | | 3,729 | |
| Non-recourse debt, including $2,167 and $2,223, respectively, related to variable interest entities | 15,530 | | | 13,603 | |
| | | | |
| Deferred income taxes | 1,169 | | | 977 | |
| | | | |
| Other noncurrent liabilities | 3,167 | | | 3,358 | |
| Noncurrent held-for-sale liabilities | 677 | | | 740 | |
| Total noncurrent liabilities | 25,211 | | | 22,407 | |
| Commitments and Contingencies (see Note 8) | | | |
| Redeemable stock of subsidiaries | 1,201 | | | 1,257 | |
| EQUITY | | | |
| THE AES CORPORATION STOCKHOLDERS’ EQUITY | | | |
| Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at September 30, 2022 and December 31, 2021, respectively) | 838 | | | 838 | |
| Common stock ($0.01 par value, 1,200,000,000 shares authorized; 818,790,001 issued and 667,949,778 outstanding at September 30, 2022 and 818,717,043 issued and 666,793,625 outstanding at December 31, 2021) | 8 | | | 8 | |
| Additional paid-in capital | 6,818 | | | 7,106 | |
| Accumulated deficit | (732) | | | (1,089) | |
| Accumulated other comprehensive loss | (1,691) | | | (2,220) | |
| Treasury stock, at cost (150,840,223 and 151,923,418 shares at September 30, 2022 and December 31, 2021, respectively) | (1,832) | | | (1,845) | |
| Total AES Corporation stockholders’ equity | 3,409 | | | 2,798 | |
| NONCONTROLLING INTERESTS | 2,052 | | | 1,769 | |
| Total equity | 5,461 | | | 4,567 | |
| TOTAL LIABILITIES AND EQUITY | $ | 37,775 | | | $ | 32,963 | |
See Notes to Condensed Consolidated Financial Statements.
| string | null | null |
Derivative, Notional Amount | 1 | SEC-NUM |
[Table of Contents](#i11f673a761214399ab28a3a12dfa4686_7)
ADOBE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)NOTE 6. DERIVATIVE FINANCIAL INSTRUMENTSWe may use derivatives to partially offset our business exposure to foreign currency and interest rate risk on expected future cash flows and certain existing assets and liabilities. We do not use any of our derivative instruments for trading purposes.We enter into master netting arrangements to mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. We do not offset fair value amounts recognized for derivative instruments under master netting arrangements. We also enter into collateral security agreements with certain of our counterparties to exchange cash collateral when the net fair value of certain derivative instruments fluctuates from contractually established thresholds. Collateral posted is included in prepaid expenses and other current assets and collateral received is included in accrued expenses on our condensed consolidated balance sheets.Cash Flow HedgesIn countries outside the United States, we transact business in U.S. Dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge a portion of our forecasted foreign currency denominated revenue. These foreign exchange contracts, carried at fair value, have maturities of up to 12 months. In June 2019, we entered into Treasury lock agreements with large financial institutions which fixed benchmark U.S. Treasury rates for an aggregate notional amount of $1 billion of our future debt issuance. These derivative instruments hedged the impact of changes in the benchmark interest rate to future interest payments and were settled upon debt issuance in the first quarter of fiscal 2020. We incurred a loss related to the settlement of the instruments which is amortized to interest expense over the term of our debt due February 1, 2030. [See Note 14 for further details regarding our debt.](#i11f673a761214399ab28a3a12dfa4686_82)As of September 2, 2022, we had net derivative gains on our foreign exchange option contracts expected to be recognized within the next 18 months, of which $165 million of gains are expected to be recognized into revenue within the next 12 months. In addition, we had net derivative losses on our Treasury lock agreements, of which $5 million is expected to be recognized into interest expense within the next 12 months.Non-Designated HedgesOur derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-functional currencies.The fair value of derivative instruments on our condensed consolidated balance sheets as of September 2, 2022 and December 3, 2021 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | 2022 | | 2021 |
| | Fair Value AssetDerivatives | | Fair ValueLiabilityDerivatives | | Fair Value AssetDerivatives | | Fair ValueLiabilityDerivatives |
| Derivatives designated as hedging instruments: | | | | | | | |
| Foreign exchange option contracts(1) | $ | 179 | | | $ | — | | | $ | 91 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| Derivatives not designated as hedging instruments: | | | | | | | |
| Foreign exchange forward contracts(1) | 4 | | | 9 | | | 7 | | | 8 | |
| Total derivatives | $ | 183 | | | $ | 9 | | | $ | 98 | | | $ | 8 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Fair value asset derivatives are included in prepaid expenses and other current assets and fair value liability derivatives are included in accrued expenses on our condensed consolidated balance sheets.18
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Redeemable noncontrolling interest percentage purchased | 21.8 | SEC-NUM |
Table of ContentsNOTE 10—SUBSEQUENT EVENTOn July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo Shopping Center for $23.6 million, bringing our ownership interest to 100%.On July 18, 2022, we acquired a 214,000 square foot office building in Scottsdale, Arizona for $53.6 million. This building is adjacent to, and will be operated as part of our Hilton Village property. The land is controlled under a long-term ground lease that expires on September 30, 2075.On July 27, 2022, we acquired a 182,000 square foot shopping center in Kingstowne, Virginia for $100.0 million. The shopping center is adjacent to, and will be operated as part of our Kingstowne Towne Center property. Additionally, on July 27, 2022, we acquired the fee interest in The Shops at Pembroke, a 392,000 square foot shopping center located in Pembroke Pines, Florida for $180.5 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSForward-Looking StatementsThe following discussion should be read in conjunction with the consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2022.Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:•risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;•risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;•risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, that environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;•risks that our growth will be limited if we cannot obtain additional capital;•risks of financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense;•risks related to the Trust's status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to the Trust's status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT;•risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2021 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.19
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Face value of financial assets | 186 | 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:
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| (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:
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| 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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Expected amortization next year | 345 | SEC-NUM |
Intangible AssetsThe components of intangible assets were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2021 | December 31, 2020 |
| In millions of dollars | Grosscarryingamount | Accumulatedamortization | Netcarryingamount | Grosscarryingamount | Accumulatedamortization | Netcarryingamount |
| Purchased credit card relationships | $ | 5,579 | | $ | 4,348 | | $ | 1,231 | | $ | 5,648 | | $ | 4,229 | | $ | 1,419 | |
| Credit card contract-related intangibles(1) | 3,912 | | 1,372 | | 2,540 | | 3,929 | | 1,276 | | 2,653 | |
| Core deposit intangibles | 39 | | 39 | | — | | 45 | | 44 | | 1 | |
| Other customer relationships | 429 | | 305 | | 124 | | 455 | | 314 | | 141 | |
| Present value of future profits | 31 | | 29 | | 2 | | 32 | | 30 | | 2 | |
| Indefinite-lived intangible assets | 183 | | — | | 183 | | 190 | | — | | 190 | |
| Other | 37 | | 26 | | 11 | | 72 | | 67 | | 5 | |
| Intangible assets (excluding MSRs) | $ | 10,210 | | $ | 6,119 | | $ | 4,091 | | $ | 10,371 | | $ | 5,960 | | $ | 4,411 | |
| Mortgage servicing rights (MSRs)(2) | 404 | | — | | 404 | | 336 | | — | | 336 | |
| Total intangible assets | $ | 10,614 | | $ | 6,119 | | $ | 4,495 | | $ | 10,707 | | $ | 5,960 | | $ | 4,747 | |
(1) Primarily reflects contract-related intangibles associated with the American Airlines, The Home Depot, Costco and AT&T credit card program agreements, which represented 97% of the aggregate net carrying amount as of December 31, 2021.(2) For additional information on Citi’s MSRs, see Note 21 to the Consolidated Financial Statements.
Intangible assets amortization expense was $360 million, $419 million and $564 million for 2021, 2020 and 2019, respectively. Intangible assets amortization expense is estimated to be $345 million in 2022, $347 million in 2023, $367 million in 2024, $371 million in 2025 and $342 million in 2026. The changes in intangible assets were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | Net carryingamount at | Acquisitions/ | | | | Net carryingamount at |
| In millions of dollars | December 31, 2020 | renewals/ divestitures | Amortization | Impairments | FX translation and other | December 31,2021 |
| Purchased credit card relationships(1) | $ | 1,419 | | $ | (15) | | $ | (171) | | $ | — | | $ | (2) | | $ | 1,231 | |
| Credit card contract-related intangibles(2) | 2,653 | | 29 | | (140) | | (1) | | (1) | | 2,540 | |
| Core deposit intangibles | 1 | | — | | (1) | | — | | — | | — | |
| Other customer relationships | 141 | | 20 | | (24) | | — | | (13) | | 124 | |
| Present value of future profits | 2 | | — | | — | | — | | — | | 2 | |
| Indefinite-lived intangible assets | 190 | | — | | — | | — | | (7) | | 183 | |
| Other | 5 | | 29 | | (24) | | — | | 1 | | 11 | |
| Intangible assets (excluding MSRs) | $ | 4,411 | | $ | 63 | | $ | (360) | | $ | (1) | | $ | (22) | | $ | 4,091 | |
| Mortgage servicing rights (MSRs)(3) | 336 | | | | | | 404 | |
| Total intangible assets | $ | 4,747 | | | | | | $ | 4,495 | |
(1)Reflects intangibles for the value of cardholder relationships, which are discrete from partner contract-related intangibles, and includes credit card accounts primarily in the Costco, Macy’s and Sears portfolios.(2)Primarily reflects contract-related intangibles associated with the American Airlines, The Home Depot, Costco and AT&T credit card program agreements, which represent 97% and 96% of the aggregate net carrying amount at December 31, 2021 and 2020, respectively. (3)For additional information on Citi’s MSRs, including the rollforward from 2020 to 2021, see Note 21 to the Consolidated Financial Statements.
225
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Fair value of net assets and liabilities acquired | 106,604 | SEC-NUM |
[Table of Contents](#i988317c7021a4a8fa66f2208a2958f7e_10)On July 5, 2022, the Company acquired 100% of the voting stock of ILT Project Limited which conducts business primarily as Hills Motors (“Hills”), a leading parts recycler in the United Kingdom. Hills predominantly sells recycled parts to the public. The purchase price paid for Hills was $106.6 million.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed for Hills (in thousands).
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | |
| Cash | $ | 8,960 | |
| Accounts receivable and prepaid expenses | 5,348 | |
| Inventory | 4,913 | |
| Property and equipment | 22,259 | |
| | |
| | |
| Intangible assets | 15,931 | |
| Goodwill | 56,051 | |
| Liabilities assumed | (6,858) | |
| | |
| Fair value of net assets and liabilities acquired | $ | 106,604 | |
The Hills acquisition was undertaken for the strategic fit to the Company. This acquisition has been accounted for using the purchase method in accordance with ASC 805, Business Combinations, which resulted in the recognition of goodwill in the Company’s consolidated financial statements. Goodwill arose because the purchase price reflected a number of factors, including future earnings and cash flow potential; the comparable multiples of earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers; and the complementary strategic fit and resulting synergies brought to existing operations. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and is not amortized for financial reporting purposes. The acquisition of Hills is currently undergoing review by the U.K. Competition and Markets Authority. Given the timing of the acquisition the Company has not completed its determination of the fair value of assets acquired and liabilities assumed and the amount shown in the table above are preliminary amounts. The estimates and assumptions used in the preliminary purchase price allocation are subject to change if additional information, which existed as of the acquisition date, becomes known to the Company. However, the Company believes any potential changes to the preliminary purchase price allocation will not have a material impact to the Company’s consolidated financial position and results of operations.
The Company obtained a third party independent valuation to assist in the determination of the fair value of the land and buildings acquired. The valuation utilized the fair value, market value, and market rent to determine the fair value of the land and buildings acquired. The Company performed a valuation of the customer relationships using the income approach to estimate the fair value. The valuation of these assets was performed using Level III inputs, as the calculated fair values are based on valuation models that utilize unobservable inputs that are significant to the overall fair value measurement. The unobservable inputs reflect the Company’s best estimate of what a market participant would use to determine the value of acquired assets based on the best information available in the circumstances. Intangible assets acquired include customer and supplier relationships, with a useful life of three years. See Note - 7 — Intangibles, Net.
The Hills acquisition did not result in a significant change in the Company’s consolidated results of operations; therefore, pro forma financial information has not been presented. The operating results have been included in the Company’s consolidated financial position and results of operations since the acquisition date.
NOTE 3 — Accounts Receivable, Net
Accounts receivable, net consisted of:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | July 31, |
| (In thousands) | | 2022 | | 2021 |
| Advance charges receivable | | $ | 440,650 | | | $ | 385,002 | |
| Trade accounts receivable | | 137,243 | | | 97,249 | |
| Other receivables | | 7,257 | | | 4,013 | |
| | | 585,150 | | | 486,264 | |
| Less: Allowance for credit loss | | (6,577) | | | (5,636) | |
| Accounts receivable, net | | $ | 578,573 | | | $ | 480,628 | |
68
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Repayments of debt | 923 | SEC-NUM |
Approximately $469 million of the Company's total variable-rate notes payable are effectively fixed via interest rate swaps at December 31, 2021, bringing the weighted-average interest rate for the full debt portfolio to 3.3%.
During 2021, the Company's total debt decreased $956 million, the result of payments of $1.3 billion, including $923 million in prepayments. Payments were offset by issuances of $363 million, including $311 million of unsecured loans from the PSP and $54 million in proceeds from issuance of debt.
CARES Act Loan
In 2020, the Company finalized an agreement with the Treasury to obtain up to $1.9 billion via a secured term loan facility. In 2020, the Company drew $135 million under the agreement, which was used for general corporate purposes and certain operating expenses in accordance with the terms and conditions of the loan agreement and the applicable provisions of the CARES Act. The full balance was repaid in the second quarter of 2021. In accordance with the related agreement, the facility terminated at the time of repayment.
Debt Maturity
At December 31, 2021, long-term debt principal payments for the next five years and thereafter are as follows (in millions):
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| | Total |
| 2022 | $ | 371 | |
| 2023 | 334 | |
| 2024 | 240 | |
| 2025 | 261 | |
| 2026 | 176 | |
| Thereafter | 1,177 | |
| Total principal payments | $ | 2,559 | |
Bank Lines of Credit Alaska has three credit facilities totaling $486 million as of December 31, 2021. One of the credit facilities for $150 million expires in March 2025 and is secured by certain accounts receivable, spare engines, spare parts and ground service equipment. A second credit facility for $250 million expires in June 2024 and is secured by aircraft. Both facilities have variable interest rates based on LIBOR plus a specified margin. A third credit facility for $86 million expires in June 2022 and is secured by aircraft.
Alaska has secured letters of credit against the third facility, but has no plans to borrow using either of the two facilities. All credit facilities have a requirement to maintain a minimum unrestricted cash and marketable securities balance of $500 million. Alaska was in compliance with this covenant at December 31, 2021.
NOTE 7. LEASES
The Company leases property and equipment through operating leases and categorizes these leases into five asset classes: aircraft, capacity purchase arrangements for aircraft operated by third-party carriers (CPA aircraft), airport and terminal facilities, corporate real estate and other equipment. All capitalized lease assets have been recorded on the consolidated balance sheet as of December 31, 2021 as Operating lease assets, with the corresponding liabilities recorded as Operating lease liabilities. Operating rent expense is recognized on a straight-line basis over the term of the lease.
The Company has elected the practical expedient under ASC 842 - Leases, allowing a policy election to exclude from recognition short-term lease assets and lease liabilities for leases with an initial term of twelve months or less. Such expense was not material for the twelve months ended December 31, 2021, 2020, and 2019.
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