Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Annual Report on Form 10-K contains certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This discussion contains forward-looking statements about our business, operations and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expected future developments, expectations and intentions, and they involve known and unknown risks that are difficult to predict. As a result, our future results and financial condition may differ materially from those we currently anticipate as a result of the factors we describe under “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors.”
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is based on financial data derived from the financial statements prepared in accordance with United States generally accepted accounting principles (“GAAP”) and certain other financial data that is prepared using a non-GAAP measure. For a reconciliation of the non-GAAP measure to its most comparable GAAP component, see “Non-GAAP Financial Measures” in this Item 7.
Our MD&A is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition and cash flows. Our results of operations include reference to our business operations and market conditions, which are further described in Part I of this document.
2023 Overview
Our consolidated results of operations in 2023 were as follows:
Year Ended December 31, 2023
(Dollars in millions)
Net income $ 63.5
Net cash provided by operating activities $ 249.0
Adjusted EBITDA (1)
$ 268.8
(1) See “Non-GAAP Financial Measures” in this Item 7 below for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
Operating results during the year ended December 31, 2023 primarily reflects lower margin on our non-contracted blast coke sales, unfavorable energy pricing at our Haverhill facility and lower transloading volumes in our Logistics segment. These decreases were partially offset by favorable coal-to-coke yields on our long-term, take-or-pay agreements and favorable pricing on our foundry coke sales. Net income for the current year period was further impacted by the establishment of a valuation allowance on deferred tax assets attributable to existing foreign tax credit carryforwards. Operating cash flows during the current period primarily reflect a favorable year-over-year change in primary working capital.
We returned meaningful capital to our shareholders through the declaration and payment of a dividend during each quarter of 2023, increasing from $0.08 per share during the first half of the year to $0.10 per share during the second half of the year, representing a quarterly increase of 25 percent. Additionally, we reduced total debt by approximately $44 million in 2023.
Recent Developments
• 2023 Indiana Harbor Contract Renewal. In April 2023, the Indiana Harbor long-term, take-or-pay agreement with Cliffs Steel was extended to September 30, 2035. Under the extended agreement, Indiana Harbor will continue to supply 1,220 thousand tons to Cliffs Steel annually. Reimbursement of certain operating and maintenance expenses under the contract are fixed subject to annual adjustment based on an inflation index. Other key provisions of the agreement, including the pass-through of coal costs, remain unchanged.
Consolidated Results of Operations
The following section includes year-over-year analysis of consolidated results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022. See “Analysis of Segment Results” later in this Item 7 for further details of these results. Refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K for the year-over-year analysis of consolidated results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
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Years Ended December 31,
2023 2022 Increase (Decrease)
(Dollars in millions)
Revenues
Sales and other operating revenue
$ 2,063.2 $ 1,972.5 $ 90.7
Costs and operating expenses
Cost of products sold and operating expenses
1,724.6 1,604.9 119.7
Selling, general and administrative expenses
70.7 71.4 (0.7)
Depreciation and amortization expense
142.8 142.5 0.3
Total costs and operating expenses 1,938.1 1,818.8 119.3
Operating income 125.1 153.7 (28.6)
Interest expense, net
27.3 32.0 (4.7)
Income before income tax expense 97.8 121.7 (23.9)
Income tax expense 34.3 16.8 17.5
Net income 63.5 104.9 (41.4)
Less: Net income attributable to noncontrolling interests
6.0 4.2 1.8
Net income attributable to SunCoke Energy, Inc. $ 57.5 $ 100.7 $ (43.2)
Sales and Other Operating Revenue and Costs of Products Sold and Operating Expenses. Sales and other operating revenue and costs of products sold and operating expenses increased in 2023 as compared to 2022, primarily driven by the pass-through of higher coal prices in our Domestic Coke segment. Additionally, revenues further benefited from higher volumes on our long-term, take-or-pay agreements. These increases to sales and other operating revenue were partially offset by lower volumes and unfavorable pricing on our non-contracted blast coke sales.
Selling, General and Administrative Expenses. The decrease in selling, general and administrative expense primarily reflects lower employee related expenses, lower cost of professional services and lower transaction costs incurred as part of the granulated pig iron project. These lower costs were partially offset by valuation adjustments primarily as a result of changes in discount rates on certain legacy liabilities, which increased legacy costs by $5.7 million as compared to the prior year.
Depreciation and Amortization Expense. Depreciation and amortization expense was reasonably consistent with the prior year period.
Interest Expense, net. Interest expense, net, benefited in 2023 from lower average debt balances during the current year period and higher interest income of $2.0 million.
Income Tax Expense. Income tax expense during 2023 primarily reflects the establishment of a valuation allowance on deferred tax assets attributable to existing foreign tax credit carryforwards, which was a portion of a valuation allowance released during the third quarter of 2022, resulting in $8.4 million of deferred tax expense. The establishment of the valuation allowance during 2023 was the result of changes in tax regulations. See Note 4 to our consolidated financial statements for further detail.
Noncontrolling Interest. Net i ncome attributable to noncontrolling interests represents a 14.8 percent third-party interest in our Indiana Harbor cokemaking facility and fluctuates with the financial performance of that facility.
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Results of Reportable Business Segments
We report our business results through three reportable segments:
• Domestic Coke consists of our Jewell facility, located in Vansant, Virginia, our Indiana Harbor facility, located in East Chicago, Indiana, our Haverhill facility, located in Franklin Furnace, Ohio, our Granite City facility located in Granite City, Illinois, and our Middletown facility located in Middletown, Ohio.
• Brazil Coke consists of operations in Vitória, Brazil, where we operate the ArcelorMittal Brazil cokemaking facility.
• Logistics consists of CMT, located in Convent, Louisiana, KRT, located in Ceredo and Belle, West Virginia, and Lake Terminal, located in East Chicago, Indiana. Lake Terminal is located adjacent to our Indiana Harbor cokemaking facility.
The operations of each of our reportable segments are described in Part I of this Annual Report on Form 10-K. The Company elected to combine Dismal River Terminal (“DRT”) operations into the Jewell cokemaking operations in the Domestic Coke segment beginning January 1, 2023. The DRT results were included in the Logistics segment in 2022 and are not recast.
Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder is included in Corporate and Other, including activity from our legacy coal mining business, which is not considered a reportable segment and, therefore, not included in our segment information in Note 19. However, we have included Corporate and Other within our operating data below.
Management believes Adjusted EBITDA is an important measure of operating performance, which is used by the chief operating decision maker as one of the measurements to evaluate the performance of each of our reportable segments. Adjusted EBITDA should not be considered a substitute for the reported results prepared in accordance with GAAP. See the “Non-GAAP Financial Measures” section below for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
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Segment Operating Data
The following table sets forth financial and operating data by segment for the years ended December 31, 2023 and 2022:
Years Ended December 31,
2023 2022 Increase (Decrease)
(Dollars in millions, except per ton amounts)
Sales and other operating revenue:
Domestic Coke
$ 1,954.0 $ 1,856.9 $ 97.1
Brazil Coke
35.2 38.0 (2.8)
Logistics
74.0 77.6 (3.6)
Logistics intersegment sales
22.1 28.9 (6.8)
Elimination of intersegment sales
(22.1) (28.9) 6.8
Total sales and other operating revenue
$ 2,063.2 $ 1,972.5 $ 90.7
Adjusted EBITDA (1) :
Domestic Coke
$ 247.8 $ 263.4 $ (15.6)
Brazil Coke
9.1 14.5 (5.4)
Logistics 44.3 49.7 (5.4)
Corporate and Other, net (2)
(32.4) (29.9) (2.5)
Total Adjusted EBITDA $ 268.8 $ 297.7 $ (28.9)
Coke Operating Data:
Domestic Coke capacity utilization (3)
101 % 100 % 1 %
Domestic Coke production volumes (thousands of tons)
4,049 4,023 26
Domestic Coke sales volumes (thousands of tons)
4,046 4,031 15
Domestic Coke Adjusted EBITDA per ton (4)
$ 61.25 $ 65.34 $ (4.09)
Brazilian Coke production—operated facility (thousands of tons) 1,558 1,585 (27)
Logistics Operating Data:
Tons handled (thousands of tons) 20,483 22,291 (1,808)
(1) See the “Non-GAAP Financial Measures” section below for both the definition of Adjusted EBITDA and the reconciliation from GAAP to the non-GAAP measurement.
(2) Corporate and Other, net is not a reportable segment.
(3) The production of foundry coke tons does not replace blast furnace coke tons on a ton for ton basis, as foundry coke requires longer coking time. The Domestic Coke capacity utilization is calculated assuming a single ton of foundry coke replaces approximately two tons of blast furnace coke.
(4) Reflects Domestic Coke Adjusted EBITDA divided by Domestic Coke sales volumes.
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Analysis of Segment Results
Domestic Coke
The following table explains year-over-year changes in our Domestic Coke segment's sales and other operating revenues and Adjusted EBITDA results:
Sales and other operating revenue Adjusted EBITDA
2023 vs 2022 2023 vs 2022
(Dollars in millions)
Beginning $ 1,856.9 $ 263.4
Volume (1)
3.9 0.8
Price (2)
103.3 (8.7)
Operating and maintenance costs N/A (0.1)
Energy and other (3)
(10.1) (7.6)
Ending $ 1,954.0 $ 247.8
(1) Higher volumes on our long-term, take-or-pay agreements increased both revenues and Adjusted EBITDA during 2023. These higher volumes were mostly offset by lower volumes on non-contracted blast coke sales.
(2) Revenues increased primarily as a result of the pass-through of higher coal prices on our long-term, take-or-pay agreements. Adjusted EBITDA decreased primarily due to lower margins on our non-contracted blast coke sales. These decreases to Adjusted EBITDA were partially offset by favorable coal-to-coke yields on our long-term, take-or-pay agreements and favorable pricing on foundry coke sales.
(3) Energy and other decreased primarily as a result of unfavorable energy pricing at our Haverhill facility.
Logistics
The following table explains year-over-year changes in our Logistics segment's sales and other operating revenues, exclusive of intersegment sales, and Adjusted EBITDA results:
Sales and other operating revenue, exclusive of intersegment sales Adjusted EBITDA
2023 vs 2022 2023 vs 2022
(Dollars in millions)
Beginning $ 77.6 $ 49.7
Transloading volumes (1)
(3.3) (13.3)
Price/margin impact of mix in transloading services (2)
2.2 3.0
Other (3)
(2.5) 4.9
Ending $ 74.0 $ 44.3
Intersegment sales and other operating revenue in our Logistics segment were $22.1 million and $28.9 million as of December 31, 2023 and 2022, respectively. Adjusted EBITDA presented above is inclusive of the impact of intersegment transactions.
(1) Volumes decreased as a result of lower demand at CMT driven by weakened thermal coal markets and the short-term idling of a customer mine during the fourth quarter of 2023. Additionally, Adjusted EBITDA in the current year period reflects the absence of DRT volumes.
(2) Revenues and Adjusted EBITDA increased as a result of higher transloading pricing.
(3) Revenues and Adjusted EBITDA decreased as a result of unfavorable ancillary revenue, which was a result of lower volumes at CMT. This decrease in Adjusted EBITDA was more than offset by the absence of costs associated with DRT in the current year period.
Brazil Coke
Sales and other operating revenue decreased $2.8 million, or 7 percent, to $35.2 million in 2023 compared to $38.0 million in 2022. Adjusted EBITDA decreased $5.4 million, or 37 percent, to $9.1 million in 2023 compared to $14.5 million
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in 2022. Decreases in sales and other operating revenue and Adjusted EBITDA were primarily due to the absence of technology fees, which expired at the end of 2022.
Corporate and Other
Corporate and Other Adjusted EBITDA decreased $2.5 million, or 8 percent, to a loss of $32.4 million in 2023 compared to a loss of $29.9 million in 2022. This decrease was primarily driven by valuation adjustments as a result of changes in discount rates on certain legacy liabilities, which increased legacy costs by $5.7 million, partially offset by lower employee related expenses and lower cost of professional services in the current year period.
Non-GAAP Financial Measures
In addition to the GAAP results provided in this Annual Report on Form 10-K, we have provided a non-GAAP financial measure, Adjusted EBITDA. Our management, as well as certain investors, use this non-GAAP measure to analyze our current and expected future financial performance. This measure is not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies.
The Company evaluates the performance of its segments based on segment Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted for any impairments, restructuring costs, gains or losses on extinguishment of debt, and/or transaction costs (“Adjusted EBITDA”). EBITDA and Adjusted EBITDA do not represent and should not be considered alternatives to net income or operating income under GAAP and may not be comparable to other similarly titled measures in other businesses.
Management believes Adjusted EBITDA is an important measure in assessing operating performance. Adjusted EBITDA provides useful information to investors because it highlights trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because it eliminates items that have less bearing on our operating performance. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, and they should not be considered a substitute for net income, or any other measure of financial performance presented in accordance with GAAP. Additionally, other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Reconciliation of Non-GAAP Financial Measures
Below is a reconciliation of Adjusted EBITDA to net income, which is its most directly comparable financial measure calculated and presented in accordance with GAAP:
Years Ended December 31,
2023 2022 2021
(Dollars in millions)
Net income $ 63.5 $ 104.9 $ 48.8
Add:
Depreciation and amortization expense 142.8 142.5 133.9
Interest expense, net 27.3 32.0 42.5
Loss on extinguishment of debt — — 31.9
Income tax expense 34.3 16.8 18.3
Transaction costs (1)
0.9 1.5 —
Adjusted EBITDA $ 268.8 $ 297.7 $ 275.4
(1) Costs incurred as part of the granulated pig iron project with U.S. Steel.
Liquidity and Capital Resources
Our primary liquidity needs are to fund working capital, fund investments, service our debt, maintain cash reserves and replace partially or fully depreciated assets and other capital expenditures. Our sources of liquidity include cash generated from operations, borrowings under our revolving credit facility (“Revolving Facility”) and, from time to time, debt and equity offerings. We believe our current resources are sufficient to meet our working capital requirements for our current business for at least the next 12 months and thereafter for the foreseeable future. As of December 31, 2023, we had $140.1 million of cash and cash equivalents and $350.0 million of borrowing availability under our Revolving Facility.
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We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Refer to further liquidity discussion in “Part II - Item 5 - Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities.”
During the first quarter of 2020, the U.S. Department of Labor's Division of Coal Mine Workers' Compensation (“DCMWC”) requested SunCoke provide additional collateral of approximately $32 million to secure certain of its black lung obligations. SunCoke exercised its right to appeal the DCMWC’s determination and provided additional information supporting the Company’s position in May 2020 and February 2021. If the Company’s appeal is unsuccessful, the Company may be required to provide additional collateral to receive its self-insurance reauthorization from the DCMWC, which could potentially reduce the Company’s liquidity. Additionally, on January 19, 2023, the Department of Labor issued a new proposed rule that would require self-insured companies to post collateral in the amount of 120 percent of the company's total expected lifetime black lung obligations as determined by the DCMWC. While this new proposed rule is not effective, if finalized, it could potentially reduce the Company's liquidity. We submitted comments on this proposed rule and continue to monitor any impact to the Company. See further discussion in Note 12 to our consolidated financial statements.
Cash Flow Summary
The following table sets forth a summary of the net cash provided by (used in) operating, investing and financing activities for the years ended December 31, 2023 and 2022:
Years Ended December 31,
2023 2022
(Dollars in millions)
Net cash provided by operating activities $ 249.0 $ 208.9
Net cash used in investing activities (109.2) (70.2)
Net cash used in financing activities (89.7) (112.5)
Net increase in cash and cash equivalents $ 50.1 $ 26.2
Cash Provided by Operating Activities
Net cash provided by operating activities increased $40.1 million to $249.0 million in 2023 as compared to 2022. The increase primarily reflects a favorable year-over-year change in primary working capital, which is comprised of accounts receivable, inventories, and accounts payable, driven by the timing of receipts from customers and the impact of the changes in coal prices. The current year period was further impacted by an increase in deferred income tax expense relating to new regulations impacting foreign tax credit utilization. See Note 4 to our consolidated financial statements for further detail on the change in deferred income tax expense. These favorable impacts were partially offset by lower operating results and higher payments made for employee related expenses in the current period.
Cash Used in Investing Activities
Net cash used in investing activities increased $39.0 million to $109.2 million in 2023 as compared to 2022 primarily driven by ongoing capital expenditures related to upgrades of our assets in order to improve long-term reliability and operational performance as well as increased spending on the foundry expansion project in the current year period. Refer to Capital Requirements and Expenditures below for further detail.
Cash Used in Financing Activities
Net cash used in financing activities decreased $22.8 million to $89.7 million in 2023 as compared to $112.5 million in 202 2. This decrease in net cash used in financing activities was primarily driven by lower net repayments of $45.0 million on the Revolving Facility in the current year period. This decrease was offset by an increase in dividends paid of $7.1 million as compared to the prior year period, primarily as a result of an increase in the dividend per share amount, as well as higher cash distributions made to noncontrolling interests of $7.4 million in the current year period. The current year period was also impacted by higher repayments on financing obligations of $5.6 million, resulting from the early buyout on a sale leaseback arrangement, discussed further in Note 11 to our consolidated financial statements.
Dividends
In addition to the $30.7 million in dividends paid to our shareholders during 2023, on February 1, 2024, SunCoke's Board of Directors declared a cash dividend of $0.10 per share of the Company's common stock. This dividend will be paid
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on March 1, 2024, to stockholders of record on February 15, 2024. See further discussion in “Item 5. Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities.”
Covenants
As of December 31, 2023, we were in compliance with all applicable debt covenants. We do not anticipate a violation of these covenants nor do we anticipate that any of these covenants will restrict our operations or our ability to obtain additional financing. See Note 11 to our consolidated financial statements for details on debt covenants.
Credit Rating
In May 2023, S&P Global Ratings reaffirmed our corporate credit rating of BB- (stable). In November 2023, Moody’s Investors Service reaffirmed our corporate credit rating of B1 (positive).
Contractual Obligations
As of December 31, 2023, significant contractual obligations related to our metallurgical coal procurement contracts, which are generally based on annual coke production requirements at fixed coal prices, were $928.6 million and extend through 2024. As of December 31, 2023, significant contractual obligations related to debt were $500 m illion of principal borrowings and $134.1 million of related interest, which will be repaid through 2029. See Note 11 to our consolidated financial statements. We also have contractual obligations for leases, including land, office space, equipment, railcars and locomotives. See Note 13 to our consolidated financial statements.
Capital Requirements and Expenditures
Our operations are capital intensive, requiring significant investment to upgrade or enhance existing operations and to meet environmental and operational regulations. The level of future capital expenditures will depend on various factors, including market conditions and customer requirements, and may differ from current or anticipated levels. Material changes in capital expenditure levels may impact financial results, including but not limited to the amount of depreciation, interest expense and repair and maintenance expense.
Our capital requirements have consisted, and are expected to consist, primarily of:
• Ongoing capital expenditures required to maintain equipment reliability, the integrity and safety of our coke ovens and steam generators and to comply with environmental regulations. Ongoing capital expenditures are made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and/or to extend their useful lives and also include new equipment that improves the efficiency, reliability or effectiveness of existing assets. Ongoing capital expenditures do not include normal repairs and maintenance expenses, which are expensed as incurred;
• Expansion capital expenditures to acquire and/or construct complementary assets to grow our business and to expand existing facilities as well as capital expenditures made to enable the renewal of a coke sales agreement and/or logistics service agreement and on which we expect to earn a reasonable return; and
• Environmental remediation project expenditures required to implement design changes to ensure that our existing facilities operate in accordance with existing environmental permits.
The following table summarizes our capital expenditures:
Years Ended December 31,
2023 2022
(Dollars in millions)
Ongoing capital $ 94.5 $ 72.1
Expansion capital (1)
14.7 3.4
Total capital expenditures (2)
$ 109.2 $ 75.5
(1) Includes capital spending in connection with the foundry cokemaking growth project.
(2) Reflects actual cash payments during the periods presented for our capital requirements.
Critical Accounting Policies and Estimates
A summary of our significant accounting policies is included in Note 2 to our consolidated financial statements. Our management believes that the application of these policies on a consistent basis enables us to provide the users of our financial statements with useful and reliable information about our operating results and financial condition. The preparation
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of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. The Company's black lung benefit obligations is an item that is subject to such estimates and assumptions. Although our management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results may differ to some extent from the estimates on which our consolidated financial statements have been prepared at any point in time. Despite these inherent limitations, our management believes the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and consolidated financial statements and footnotes provide a meaningful and fair perspective of our financial condition.
Black Lung Benefit Liabilities
The Company has obligations related to coal workers’ pneumoconiosis, or black lung, to provide benefits to certain of its former coal miners and their dependents further described in Note 12 to our consolidated financial statements.
We adjust our liability each year based upon actuarial calculations of our expected future payments for these benefits. Our independent actuarial consultants calculate the present value of the estimated black lung liability annually based on actuarial models utilizing our population of former coal miners, historical payout patterns of both the Company and the industry, actuarial mortality rates, medical costs, death benefits, dependents, discount rates and the current federally mandated payout rates. The estimated liability may be impacted by future changes in the statutory mechanisms, modifications by court decisions and changes in filing patterns by claimants and their advisors, the impact of which cannot be estimated.
The following table summarizes discount rates utilized, active claims and the total black lung liabilities. Our independent actuarial consultants calculate the present value of the black lung liability annually in the fourth quarter, unless there are changes in facts and circumstances that could materially alter the amount of the liability.
December 31,
2023 2022
(Dollars in millions)
Discount rate (1)
4.5 % 4.9 %
Active claims 311 332
Total black lung liability, discounted (2)
$ 58.2 $ 58.1
Total black lung liability, undiscounted $ 96.0 $ 88.4
(1) The discount rate is determined based on a portfolio of high-quality corporate bonds with maturities that are consistent with the estimated duration of our black lung obligations. A decrease of 25 basis points in the discount rate would have increased black lung expense by $1.4 million in 2023.
(2) The current portion of the black lung liability was $5.0 million and $5.9 million at December 31, 2023 and 2022, respectively, and was included in accrued liabilities on the Consolidated Balance Sheets.
The following table summarizes the annual black lung payments and expense (benefit):
Years Ended December 31,
2023 2022 2021
(Dollars in millions)
Payments $ 5.4 $ 5.0 $ 4.4
Expense (benefit) (1)
$ 5.5 $ (0.2) $ 3.1
(1) Black lung expense (benefit) incurred in excess of annual accretion of the black lung liability reflects the impact of changes in discount rates, current filing and approval rate assumptions and/or other changes in our actuarial assumptions.
Recent Accounting Standards
See Note 2 to our consolidated financial statements.
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