WEYERHAEUSER CO 10-Q

Item 1. FINANCIAL STATEMENTS WEYERHAEUSER COMPANY CONSOLIDATED STATEM ENT OF OPERATIONS (UNAUDITED) QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Net sales (Note 3) $ 2,022 $ 2,276 $ 5,900 $ 8,361 Costs of sales 1,520 1,694 4,560 5,130 Gross margin 502 582 1,340 3,231 Selling expenses 22 24 66 70 General and administrative expenses 107 100 316 294 Other operating costs, net (Note 13) 20 1 50 19 Operating income 353 457 908 2,848 Non-operating pension and other post-employment benefit costs (Note 6) ( 12 ) ( 12 ) ( 33 ) ( 38 ) Interest income and other 24 9 54 9 Interest expense, net of capitalized interest ( 72 ) ( 67 ) ( 208 ) ( 204 ) Loss on debt extinguishment (Note 8) — — — ( 276 ) Earnings before income taxes 293 387 721 2,339 Income taxes (Note 14) ( 54 ) ( 77 ) ( 101 ) ( 470 ) Net earnings $ 239 $ 310 $ 620 $ 1,869 Earnings per share, basic and diluted (Note 4) $ 0.33 $ 0.42 $ 0.85 $ 2.51 Weighted average shares outstanding (in thousands) (Note 4): Basic 731,046 740,058 732,069 743,990 Diluted 731,742 740,975 732,542 745,081 See accompanying Notes to Consolidated Financial Statements . 1 WEYERHAEUSER COMPANY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Net earnings $ 239 $ 310 $ 620 $ 1,869 Other comprehensive income (loss): Foreign currency translation adjustments ( 7 ) ( 53 ) — ( 62 ) Changes in unamortized actuarial loss, net of tax expense of $ 3 , $ 11 , $ 7 and $ 40 9 32 23 122 Changes in unamortized net prior service credit, net of tax benefit (expense) of $ 0 , $ 0 , $ 1 and ($ 1 ) — 1 1 1 Total other comprehensive income (loss) 2 ( 20 ) 24 61 Total comprehensive income $ 241 $ 290 $ 644 $ 1,930 See accompanying Notes to Consolidated Financial Statements . 2 WEYERHAEUSER COMPANY CONSOLIDATED BALANCE SHEET (UNAUD ITED) DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE SEPTEMBER 30, 2023 DECEMBER 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,173 $ 1,581 Short-term investments (Note 9) 668 — Receivables, net 443 357 Receivables for taxes 18 42 Inventories (Note 5) 528 550 Prepaid expenses and other current assets 186 216 Total current assets 3,016 2,746 Property and equipment, less accumulated depreciation of $ 3,854 and $ 3,710 2,106 2,171 Construction in progress 311 222 Timber and timberlands at cost, less depletion 11,521 11,604 Minerals and mineral rights, less depletion 203 214 Deferred tax assets 8 8 Other assets 385 375 Total assets $ 17,550 $ 17,340 LIABILITIES AND EQUITY Current liabilities: Current maturities of long-term debt (Note 8) $ 861 $ 982 Accounts payable 288 247 Accrued liabilities (Note 7) 537 511 Total current liabilities 1,686 1,740 Long-term debt, net (Note 8) 4,818 4,071 Deferred tax liabilities 113 96 Deferred pension and other post-employment benefits (Note 6) 349 344 Other liabilities 356 340 Total liabilities 7,322 6,591 Commitments and contingencies (Note 10) Equity: Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 730,128 thousand shares at September 30, 2023 and 732,794 thousand shares at December 31, 2022 913 916 Other capital 7,609 7,691 Retained earnings 1,929 2,389 Accumulated other comprehensive loss (Note 11) ( 223 ) ( 247 ) Total equity 10,228 10,749 Total liabilities and equity $ 17,550 $ 17,340 See accompanying Notes to Consolidated Financial Statements . 3 WEYERHAEUSER COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 Cash flows from operations: Net earnings $ 620 $ 1,869 Noncash charges (credits) to earnings: Depreciation, depletion and amortization 374 360 Basis of real estate sold 80 77 Pension and other post-employment benefits (Note 6) 50 65 Share-based compensation expense (Note 12) 26 25 Loss on debt extinguishment (Note 8) — 276 Other ( 4 ) 17 Change in: Receivables, net ( 77 ) 81 Receivables and payables for taxes 51 15 Inventories 23 ( 30 ) Prepaid expenses and other current assets ( 5 ) ( 7 ) Accounts payable and accrued liabilities 43 ( 23 ) Pension and post-employment benefit contributions and payments ( 16 ) ( 19 ) Other ( 20 ) ( 41 ) Net cash from operations 1,145 2,665 Cash flows from investing activities: Capital expenditures for property and equipment ( 209 ) ( 207 ) Capital expenditures for timberlands reforestation ( 42 ) ( 38 ) Acquisition of timberlands (Note 15) ( 70 ) ( 286 ) Purchase of short-term investments ( 664 ) — Other 3 1 Net cash from investing activities ( 982 ) ( 530 ) Cash flows from financing activities: Cash dividends on common shares ( 1,076 ) ( 1,485 ) Net proceeds from issuance of long-term debt (Note 8) 743 881 Payments on long-term debt (Note 8) ( 118 ) ( 1,203 ) Repurchases of common shares (Note 4) ( 109 ) ( 402 ) Other ( 11 ) ( 5 ) Net cash from financing activities ( 571 ) ( 2,214 ) Net change in cash, cash equivalents and restricted cash ( 408 ) ( 79 ) Cash, cash equivalents and restricted cash at beginning of period 1,581 1,999 Cash, cash equivalents and restricted cash at end of period $ 1,173 $ 1,920 Cash paid during the period for: Interest, net of amount capitalized of $ 5 and $ 5 $ 190 $ 211 Income taxes, net of refunds $ 40 $ 446 See accompanying Notes to Consolidated Financial Statements . 4 WEYERHAEUSER COMPANY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Common shares: Balance at beginning of period $ 914 $ 927 $ 916 $ 934 Issued for exercise of stock options and vested units — — 2 2 Repurchases of common shares (Note 4) ( 1 ) ( 5 ) ( 5 ) ( 14 ) Balance at end of period 913 922 913 922 Other capital: Balance at beginning of period 7,624 7,954 7,691 8,181 Issued for exercise of stock options 1 1 3 14 Repurchases of common shares (Note 4) ( 24 ) ( 140 ) ( 105 ) ( 390 ) Share-based compensation 9 8 26 25 Other transactions, net ( 1 ) 1 ( 6 ) ( 6 ) Balance at end of period 7,609 7,824 7,609 7,824 Retained earnings: Balance at beginning of period 1,828 2,333 2,389 2,131 Net earnings 239 310 620 1,869 Dividends on common shares ( 138 ) ( 133 ) ( 1,080 ) ( 1,490 ) Balance at end of period 1,929 2,510 1,929 2,510 Accumulated other comprehensive loss: Balance at beginning of period ( 225 ) ( 398 ) ( 247 ) ( 479 ) Other comprehensive income (loss) 2 ( 20 ) 24 61 Balance at end of period (Note 11) ( 223 ) ( 418 ) ( 223 ) ( 418 ) Total equity: Balance at end of period $ 10,228 $ 10,838 $ 10,228 $ 10,838 Dividends paid per common share $ 0.19 $ 0.18 $ 1.47 $ 1.99 See accompanying Notes to Consolidated Financial Statements . 5 INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION 7 NOTE 2: BUSINESS SEGMENTS 7 NOTE 3: REVENUE RECOGNITION 8 NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES 8 NOTE 5: INVENTORIES 9 NOTE 6: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS 10 NOTE 7: ACCRUED LIABILITIES 10 NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT 10 NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS 11 NOTE 10: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES 11 NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS 12 NOTE 12: SHARE-BASED COMPENSATION 12 NOTE 13: OTHER OPERATING COSTS, NET 13 NOTE 14: INCOME TAXES 13 NOTE 15: TIMBERLAND ACQUISITIONS 13 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED SEPTEMBER 30, 2023 AND 2022 NOTE 1: BASIS O F PRESENTATION Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “we,” “the company” and “our” refer to the consolidated company. The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022 . Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year. NOTE 2: BUSIN ESS SEGMENTS We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of our acreage through the sale of higher and better use (HBU) properties; and monetizing the value of surface and subsurface assets through leases and royalties. Our business segments are organized based primarily on products and services which include: ● Timberlands – Logs, timber, recreational leases and other products; ● Real Estate, Energy and Natural Resources (Real Estate & ENR) – Real Estate (sales of timberlands) and ENR (rights to explore for and extract hard minerals, construction materials, natural gas production, and wind and solar); and ● Wood Products – Structural lumber, oriented strand board, engineered wood products and building materials distribution. A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows: QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Sales to unaffiliated customers: Timberlands $ 380 $ 441 $ 1,259 $ 1,421 Real Estate & ENR 105 68 286 313 Wood Products 1,537 1,767 4,355 6,627 2,022 2,276 5,900 8,361 Intersegment sales: Timberlands 141 133 433 450 Total sales 2,163 2,409 6,333 8,811 Intersegment eliminations ( 141 ) ( 133 ) ( 433 ) ( 450 ) Total $ 2,022 $ 2,276 $ 5,900 $ 8,361 Net contribution (charge) to earnings: Timberlands $ 78 $ 107 $ 302 $ 442 Real Estate & ENR 56 48 161 194 Wood Products 277 344 590 2,389 411 499 1,053 3,025 Unallocated items (1) ( 46 ) ( 45 ) ( 124 ) ( 206 ) Net contribution to earnings 365 454 929 2,819 Interest expense, net of capitalized interest ( 72 ) ( 67 ) ( 208 ) ( 204 ) Loss on debt extinguishment — — — ( 276 ) Earnings before income taxes 293 387 721 2,339 Income taxes ( 54 ) ( 77 ) ( 101 ) ( 470 ) Net earnings $ 239 $ 310 $ 620 $ 1,869 (1) Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and post-employment costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other. 7 NOTE 3: REVENU E RECOGNITION A reconciliation of revenue recognized by our major products: QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Net sales to unaffiliated customers: Timberlands segment Delivered logs: West Domestic sales $ 96 $ 97 $ 290 $ 313 Export grade sales 80 127 321 478 Subtotal West 176 224 611 791 South 155 166 485 480 North 11 15 35 40 Subtotal delivered logs sales 342 405 1,131 1,311 Stumpage and pay-as-cut timber 12 10 43 30 Recreational and other lease revenue 19 18 54 51 Other (1) 7 8 31 29 Net sales attributable to Timberlands segment 380 441 1,259 1,421 Real Estate & ENR segment Real estate 79 30 198 217 Energy and natural resources 26 38 88 96 Net sales attributable to Real Estate & ENR segment 105 68 286 313 Wood Products segment Structural lumber 570 676 1,658 2,880 Oriented strand board 284 287 707 1,348 Engineered solid section 216 233 600 676 Engineered I-joists 122 166 335 471 Softwood plywood 42 47 127 158 Medium density fiberboard 40 50 120 151 Complementary building products 184 222 551 676 Other (2) 79 86 257 267 Net sales attributable to Wood Products segment 1,537 1,767 4,355 6,627 Total net sales $ 2,022 $ 2,276 $ 5,900 $ 8,361 (1) Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips. (2) Other Wood Products sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations. NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES Our basic and diluted earnings per share were: ● $ 0.33 during third quarter 2023 and $ 0.85 during year-to-date 2023; ● $ 0.42 during third quarter 2022 and $ 2.51 du ring year-to-date 2022. 8 Basic earnings per share is net earnings divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued. Diluted earnings per share is net earnings divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares. QUARTER ENDED YEAR-TO-DATE ENDED SHARES IN THOUSANDS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Weighted average common shares outstanding – basic 731,046 740,058 732,069 743,990 Dilutive potential common shares: Stock options 154 192 134 294 Restricted stock units 304 420 117 417 Performance share units 238 305 222 380 Total effect of outstanding dilutive potential common shares 696 917 473 1,091 Weighted average common shares outstanding – dilutive 731,742 740,975 732,542 745,081 We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units. Potential Shares Not Included in the Computation of Diluted Earnings per Share The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods. QUARTER ENDED YEAR-TO-DATE ENDED SHARES IN THOUSANDS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Stock options 609 620 609 620 Performance share units 612 623 612 623 Share Repurchase Program On September 22, 2021, we announced that our board of directors approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $ 1 billion of outstanding shares. Concurrently, the board terminated the remaining repurchase authorization under the share repurchase program approved by the board in February 2019 (the 2019 Repurchase Program). We repurchased 757,510 common shares for approximately $ 25 million (including transaction fees) under the 2021 Repurchase Program during third quarter 2023 and 3,562,944 common shares for approximately $ 110 million under the 2021 Repurchase Program during year-to-date 2023. As of September 30, 2023, we had remaining authorization of $ 267 million for future share repurchases. During year-to-date 2022 , we repurchased 11,217,300 common shares for approximately $ 404 million (including transaction fees) under the 2021 Repurchase Program. All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions. We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability for repurchases that have not yet been settled as of period end. There were 32,757 unsettled shares (approximately $ 1 million) as of September 30, 2023, and 223,548 unsettled shares (approximately $ 7 million) as of December 31, 2022. NOTE 5: IN VENTORIES Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies. DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 30, 2023 DECEMBER 31, 2022 LIFO inventories: Logs $ 28 $ 32 Lumber, plywood, panels and fiberboard 80 61 Other products 16 9 Moving average cost or FIFO inventories: Logs 31 56 Lumber, plywood, panels, fiberboard and engineered wood products 98 122 Other products 129 140 Materials and supplies 146 130 Total $ 528 $ 550 9 LIFO – the last-in, first-out method – applies to major inventory products held at our U.S. locations. The moving average cost method or FIFO – the first-in, first-out method – applies to the balance of our U.S. raw material and product inventories, all material and supply inventories and all foreign inventories. NOTE 6: PENSION AND OTHER PO ST-EMPLOYMENT BENEFIT PLANS The components of net periodic benefit cost are: PENSION QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Service cost $ 6 $ 9 $ 17 $ 27 Interest cost 30 27 89 80 Expected return on plan assets ( 30 ) ( 40 ) ( 90 ) ( 120 ) Amortization of actuarial loss 10 23 29 70 Amortization of prior service cost — 1 1 2 Total net periodic benefit cost – pension $ 16 $ 20 $ 46 $ 59 OTHER POST-EMPLOYMENT BENEFITS QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Interest cost $ 2 $ — $ 4 $ 2 Amortization of actuarial loss — 1 1 4 Amortization of prior service credit — — ( 1 ) — Total net periodic benefit cost – other post-employment benefits $ 2 $ 1 $ 4 $ 6 For the periods presented, service cost is included in “Costs of sales,” “Selling expenses,” and “General and administrative expenses” with the remaining components included in “Non-operating pension and other post-employment benefit costs” in the Consolidated Statement of Operations . Fair Value of Pension Plan Assets and Obligations In our year-end reporting process, we estimate the fair value of pension plan assets based upon the information available at that time. For certain assets, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events. We update the year-end estimated fair value of pension plan assets in second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K. No adjustments to the fair value of assets or projected benefit obligations were necessary during second quarter 2023. NOTE 7: ACCRU ED LIABILITIES Accrued liabilities were comprised of the following: DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 30, 2023 DECEMBER 31, 2022 Compensation and employee benefit costs $ 173 $ 201 Current portion of lease liabilities 21 22 Customer rebates, volume discounts and deferred income 135 132 Interest 84 69 Taxes payable 66 23 Other 58 64 Total $ 537 $ 511 NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT In July 2023, we repaid $ 118 million of our 7.125 percent notes at maturity. In May 2023, we completed an offering of debt securities by issuing $ 750 million of 4.750 percent notes due in May 2026 . The net proceeds after deducting the discount, underwriting fees and issuance costs were $ 743 million. Of these total net proceeds, $ 664 million was invested in short-term investments classified as held-to-maturity securities. 10 In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $ 900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $ 931 million of principal in higher interest rate notes. We issued $ 450 million of 3.375 percent notes due in March 2033 and $ 450 million of 4.000 percent notes due in March 2052 . The net proceeds after deducting the discount, underwriting fees and issuance costs were $ 444 million and $ 437 million, respectively. The net proceeds were used to retire $ 592 million of our 7.375 percent notes due in March 2032 , $ 161 million of our 8.500 percent notes due in January 2025 , $ 73 million of our 7.125 percent notes due in July 2023 , $ 65 million of our 7.950 percent notes due in March 2025 , and $ 40 million of our 7.850 percent notes due in July 2026 . We paid holders an aggregate $ 1.2 billion in cash reflecting principal, premium to par and tender premium. A net pretax charge of $ 276 million ($ 207 million after-tax) was included in the Consolidated Statement of Operations in first quarter 2022 for premiums to retire $ 931 million of principal plus unamortized debt issuance costs and unamortized debt discounts in connection with the early debt retirement. In March 2023, we entered into a new $ 1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025. Borrowings will bear interest at a floating rate based on either the adjusted term Secured Overnight Financing Rate (SOFR) plus a spread or a mutually agreed upon base rate plus a sprea d. We had no ou tstanding borrowings on our credit facility as of September 30, 2023 and December 31, 2022 . NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value and carrying value of our long-term debt consisted of the following: DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 30, 2023 DECEMBER 31, 2022 Long-term fixed rate debt (including current maturities): Carrying value $ 5,679 $ 5,053 Fair value (level 2) $ 5,434 $ 4,918 To estimate the fair value of fixed rate long-term debt, we used the market approach, which is based on quoted market prices we received for the same types and issues of our debt. We believe that our line of credit has a net carrying value that approximates its fair value within an insignificant difference. The inputs to the valuations of our long-term debt are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date. Fair Value of Other Financial Instruments We believe that our other financial instruments, including cash and cash equivalents, short-term investments, receivables and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts. As of September 30, 2023, we had $ 668 million in short-term investments classified as held-to-maturity debt securities, which consist of a mixture of term deposits and Treasury bills. We did no t have any short-term investments classified as held-to-maturity debt securities as of December 31, 2022. These short-term investments mature within one year and are recorded in "Short-term investments" on our Consolidated Balance Sheet . We record held-to-maturity debt securities at amortized cost, which approximates fair value. NOTE 10: LEGAL PROCEEDINGS, C OMMITMENTS AND CONTINGENCIES Legal Proceedings We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our Consolidated Statement of Operations , Consolidated Balance Sheet or Consolidated Statement of Cash Flows . Environmental Matters Site Remediation Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the “Superfund” – and similar state laws, we: ● are a party to various proceedings related to the cleanup of hazardous waste sites and ● have been notified that we may be a potentially responsible party related to the cleanup of other hazardous waste sites for which proceedings have not yet been initiated. As of September 30, 2023, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 75 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet . 11 NOTE 11: ACCUMULATED OT HER COMPREHENSIVE LOSS Changes in amounts included in our accumulated other comprehensive loss by component are: QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Pension (1) Balance at beginning of period $ ( 444 ) $ ( 632 ) $ ( 458 ) $ ( 720 ) Other comprehensive income (loss) before reclassifications — 14 ( 1 ) 65 Amounts reclassified from accumulated other comprehensive loss to earnings (2) 9 19 24 56 Total other comprehensive income 9 33 23 121 Balance at end of period $ ( 435 ) $ ( 599 ) $ ( 435 ) $ ( 599 ) Other post-employment benefits (1) Balance at beginning of period $ 21 $ — $ 20 $ ( 2 ) Other comprehensive loss before reclassifications ( 1 ) ( 1 ) — ( 1 ) Amounts reclassified from accumulated other comprehensive loss to earnings (2) 1 1 1 3 Total other comprehensive income — — 1 2 Balance at end of period $ 21 $ — $ 21 $ — Translation adjustments and other Balance at beginning of period $ 198 $ 234 $ 191 $ 243 Translation adjustments ( 7 ) ( 53 ) — ( 62 ) Total other comprehensive loss ( 7 ) ( 53 ) — ( 62 ) Balance at end of period 191 181 191 181 Accumulated other comprehensive loss, end of period $ ( 223 ) $ ( 418 ) $ ( 223 ) $ ( 418 ) (1) Amounts presented are net of tax. (2) Amounts of actuarial loss and prior service (cost) credit are components of net periodic benefit cost. See Note 6: Pension and Other Post-Employment Benefit Plans . NOTE 12: SHARE-B ASED COMPENSATION Share-based compensation activity during year-to-date 2023 included the following: SHARES IN THOUSANDS GRANTED VESTED Restricted stock units (RSUs) 844 771 Performance share units (PSUs) 392 228 A total of 897 thousand shares of common stock were issued as a result of RSU vestings, PSU vestings and stock option exercises. Restricted Stock Units The weighted average fair value of the RSUs granted in 2023 was $ 33.76 . The vesting provisions for RSUs granted in 2023 were consistent with prior year grants. Performance Share Units The weighted average grant date fair value of PSUs granted in 2023 was $ 37.58 . The final number of shares granted in 2023 will vest between a range of 0 percent to 150 percent of each grant's target, depending upon actual company performance compared against an industry peer group. PSUs granted in 2023 will vest at a maximum of 100 percent of target value in the event of negative absolute company total shareholder return. Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2023 PERFORMANCE SHARE UNITS Performance period 2/09/2023 – 12/31/2025 Valuation date average stock price (1) $ 33.96 Expected dividends 2.25 % Risk-free rate 4.21 % – 4.66 % Expected volatility 29.26 % – 40.19 % (1) Calculated as an average of the high and low prices on grant date. 12 NOTE 13: OTHER OPERAT ING COSTS, NET Other operating costs, net were comprised of the following: QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Environmental remediation charges $ 1 $ — $ 14 $ 1 Foreign exchange losses (gains), net 1 ( 8 ) ( 1 ) ( 12 ) Litigation expense, net 9 2 11 10 Research and development expenses 2 1 5 4 Other, net 7 6 21 16 Total other operating costs, net $ 20 $ 1 $ 50 $ 19 NOTE 14: INCOME TAXES As a real estate investment trust (REIT), we generally are not subject to federal corporate income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our wholly-owned Taxable REIT Subsidiaries (TRSs), which includes our Wood Products segment earnings and portions of our Timberlands and Real Estate & ENR segments' earnings. The quarterly provision for income taxes is based on our current estimate of the annual effective tax rate and is adjusted for discrete taxable events that have occurred during the year. Our 2023 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of 21 pe rcent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings. NOTE 15: TIMBERLAND ACQUISITIONS On July 19, 2023, we completed the purchase of 22 thousand acres of Mississippi timberlands for ap proximately $ 60 million. We recorded $ 59 million of timberland assets in "Timber and timberlands at cost, less depletion" and $ 1 million o f related assets in "Property and equipment, net" on our Consolidated Balance Sheet . On May 18, 2022, we completed the purchase of 81 thousand acres of North and South Carolina timberlands for approximately $ 265 million. We recorded $ 263 million of timberland assets in “Timber and timberlands at cost, less depletion” and $ 2 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet . 13 Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) NOTE ABOUT FORWARD-LOOKING STATEMENTS This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; our provision for income taxes; expected capital expenditures; expected returns on pension plan assets; market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing activity, repair and remodel activity, inflation trends and interest rates; our expectations about our future opportunities in emerging carbon offset and carbon capture and storage markets; and assumptions used in valuing incentive compensation and related expense. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as “anticipate,” “believe,” “committed,” "continue,” “estimate,” “expect,” “foreseeable,” “maintain,” “may,” “potential,” and “will,” or similar words or terminology. They may use the positive, negative or another variation of those and similar words. These forward-looking statements are based on our current expectations and assumptions and are not guarantees of future events or performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. There is no guarantee that any of the events anticipated by our forward-looking statements will occur. If any of the events occur, there is no guarantee what effect it will have on our operations, cash flows, or financial condition. We undertake no obligation to update our forward-looking statements after the date of this report. The factors listed below, as well as other factors not described herein because they are not currently known to us or we currently judge them to be immaterial, may cause our actual results to differ significantly from our forward-looking statements: ● the effect of general economic conditions, including employment rates, interest rate levels, inflation, housing starts, general availability and cost of financing for home mortgages and the relative strength of the U.S. dollar; ● the effect of COVID-19 and other viral or disease outbreaks, including but not limited to any related regulatory restrictions or requirements, and their potential effects on our business, results of operations, cash flows, financial condition and future prospects; ● market demand for the company's products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions; ● changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Japanese yen, the Chinese yuan, and the Canadian dollar, and the relative value of the euro to the yen; ● restrictions on international trade and tariffs imposed on imports or exports; ● the availability and cost of shipping and transportation; ● economic activity in Asia, especially Japan and China; ● performance of our manufacturing operations, including maintenance and capital requirements; ● potential disruptions in our manufacturing operations; ● the level of competition from domestic and foreign producers; ● the successful execution of our internal plans and strategic initiatives, including restructuring and cost reduction initiatives; ● our ability to hire and retain capable employees; ● the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals or the occurrence of any event, change or other circumstances that could give rise to a termination of any acquisition or divestiture transaction under the terms of the governing transaction agreements; ● raw material availability and prices; ● the effect of weather; ● changes in global or regional climate conditions and governmental response to such changes; ● the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; ● energy prices; ● transportation and labor availability and costs; ● federal tax policies; ● the effect of forestry, land use, environmental and other governmental regulations; ● legal proceedings; ● performance of pension fund investments and related derivatives; ● the effect of timing of employee retirements as it relates to the cost of pension benefits and changes in the market price of our common stock on charges for share-based compensation; ● the accuracy of our estimates of costs and expenses related to contingent liabilities and the accuracy of our estimates of charges related to casualty losses; ● changes in accounting principles; and ● other risks and uncertainties described in this report under Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and in our 2022 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC. It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on the company's business, results of operations, cash flows, financial condition and future prospects. 14 Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. RESULTS OF OPERATIONS In reviewing our results of operations, it is important to understand these terms: ● Sales realizations for Timberlands and Wood Products refer to net selling prices. This includes selling price plus freight, minus normal sales deductions. Real Estate transactions are presented at the contract sales price before commissions and closing costs, net of any credits. ● Net contribution (charge) to earnings does not include interest expense, loss on debt extinguishment or income taxes. ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, particularly new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, specifically the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and oriented strand board (OSB) as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, while Southern log markets have more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets. Over the past year, home sales and building activity slowed due in part to higher mortgage interest rates, reduced affordability and general macroeconomic conditions. During third quarter 2023, market conditions continued to shift towards sales of new homes as existing inventory remained near record-low levels. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for third quarter 2023 averaged 1.36 million units, a 6.2 percent decrease from second quarter 2023. Single-family starts averaged 961 thousand units in third quarter 2023, a 3.4 percent increase from second quarter 2023. Multi-family starts averaged 398 thousand units in third quarter 2023, which was a 23.5 percent decrease from second quarter 2023. Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used. Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 724 thousand units for third quarter 2023, an increase of 4.8 percent from the prior quarter. Over the medium to long-term, we expect a favorable U.S. housing construction market supported by strong demographics in the key homebuying age cohorts, a decade of underbuilding and a historically low housing inventory. Repair and remodeling expenditures were steady from second quarter 2023 to third quarter 2023 according to the Census Bureau Advance Retail Spending report. Do-it-yourself activity has been returning to more normalized levels while professionally contracted activities have benefited from larger projects and increases in home equity levels. Over the longer term, we expect this sector to return to pre-pandemic growth trends with healthy household balance sheets, elevated home equity and an aging U.S. housing stock, with a median age of 43 years. In U.S. wood product markets, demand in third quarter 2023 helped lift prices in mid-summer. By the end of the third quarter, this had been offset by macroeconomic and housing market uncertainty, including an increase in interest and mortgage rates. Temporary and permanent curtailments provided some balance to the market. OSB demand was strong for most of the quarter, as customer inventories were not sufficient to meet current building activity. The Random Lengths Framing Lumber Composite price averaged $438/MBF and the OSB Composite averaged $540/MSF in third quarter 2023. Over the course of the third quarter, prices for lumber decreased from $438/MBF to $422/MBF and prices for OSB increased from $432/MSF to $454/MSF. In Western log markets, Douglas fir sawlog prices decreased by 0.2 percent in third quarter 2023 compared with second quarter 2023, as reported by RISI Log Lines based on Weyerhaeuser’s sales mix. Overall, domestic prices in the West declined due to compressed mill margins, but this was partially offset by continued constraints in log supply. In the South, delivered sawlog prices decreased 0.3 percent in third quarter 2023 compared to second quarter 2023 and declined 2.0 percent from third quarter 2022 as reported by TimberMart-South. Favorable harvest conditions later in the quarter provided sufficient supply to meet mills' needs. Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During third quarter 2023, end use demand softened in export markets, partially offset by continued disruptions in global log and lumber supply. In Japan, total housing starts decreased 3.7 percent year to date through August compared to the same period in 2022, while the key Post and Beam segment saw a 5.7 percent decrease. Lumber imports to Japan from Europe placed downward pressure on market conditions. China demand has improved from low levels late in 2022 but remains subdued due to general economic conditions and steady supply of logs from New Zealand and rough lumber from Russia. Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy and their influence on our capital management activities. Actions by the U.S. Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates. 30-year mortgage rates, which are correlated with long-term interest rates, increased from 6.7 percent at the end of second quarter 2023 to 7.3 percent at the end of third quarter 2023, according to economic data from the St. Louis Federal Reserve. Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also locked-in many existing homeowners from selling, reducing inventories of existing homes for sale which has led to increased demand for available new homes. Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor. The Consumer Price Index increased 3.7 percent year over year in September 2023, which is markedly down from its peak of over 9.0 percent in June 2022. While we can offset some of the impacts of inflation through our sales activities, our operational excellence initiatives and our procurement practices, not all of the costs associated with inflation can be fully mitigated or passed on to the consumer. The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors. The unemployment rate of 3.8 percent in September 2023 remained near historically low levels and increased 0.2 percent from the end of second quarter 15 2023. Labor force participation has increased to 62.8 percent in September 2023, from 62.3 percent in September 2022, approaching pre-pandemic levels. Governments and businesses across the globe are taking action on climate change and are making significant commitments towards decarbonizing operations and reducing greenhouse gas emissions to net zero. Achieving these commitments will require governments and companies to take major steps to modify operations, invest in low-carbon activities and purchase offsets to reduce environmental impacts. We believe we are uniquely positioned to help entities achieve these commitments through natural climate solutions, including forest carbon sequestration, carbon capture and storage and renewable energy activities. CONSOLIDATED RESULTS How We Did Third Quarter 2023 and Year-to-Date 2023 QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Net sales $ 2,022 $ 2,276 $ (254 ) $ 5,900 $ 8,361 $ (2,461 ) Costs of sales $ 1,520 $ 1,694 $ (174 ) $ 4,560 $ 5,130 $ (570 ) Operating income $ 353 $ 457 $ (104 ) $ 908 $ 2,848 $ (1,940 ) Net earnings $ 239 $ 310 $ (71 ) $ 620 $ 1,869 $ (1,249 ) Earnings per share, basic and diluted $ 0.33 $ 0.42 $ (0.09 ) $ 0.85 $ 2.51 $ (1.66 ) Comparing Third Quarter 2023 with Third Quarter 2022 Net sales Net sales decreased $254 million – 11 percent – primarily due to a $230 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales volumes and sales realizations across most product lines. Costs of sales Costs of sales decreased $174 million – 10 percent – primarily due to decreased sales volumes across most product lines within our Wood Products segment, as well as decreased freight costs. Operating income Operating income decreased $104 million – 23 percent – primarily due to an $80 million decrease in consolidated gross margin, as discussed above. Net earnings Net earnings decreased $71 million – 23 percent – primarily due to the $104 million decrease in operating income, as discussed above. This decrease was partially offset by a $23 million decrease in income tax expense (refer to Income Taxes ). Comparing Year-to-Date 2023 with Year-to-Date 2022 Net sales Net sales decreased $2,461 million – 29 percent – primarily due to a $2,272 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $162 million decrease in Timberlands sales to unaffiliated customers attributable to decreased sales realizations in the Western region. Costs of sales Costs of sales decreased $570 million – 11 percent – primarily due to decreased sales volumes across most product lines within our Wood Products segment, as well as decreased freight costs and Western third-party log purchases. Operating income Operating income decreased $1,940 million – 68 percent – primarily due to a $1,891 million decrease in consolidated gross margin, as discussed above. Net earnings Net earnings decreased $1,249 million – 67 percent – primarily due to the $1,940 million decrease in operating income, as discussed above. This decrease was partially offset by a $369 million decrease in income tax expense (refer to Income Taxes ), as well as a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt in first quarter 2022 (refer to Note 8: Long-Term Debt and Line of Credit ). 16 TIMBER LANDS How We Did Third Quarter 2023 and Year-to-Date 2023 QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Net sales to unaffiliated customers: Delivered logs: West $ 176 $ 224 $ (48 ) $ 611 $ 791 $ (180 ) South 155 166 (11 ) 485 480 5 North 11 15 (4 ) 35 40 (5 ) Subtotal delivered logs sales 342 405 (63 ) 1,131 1,311 (180 ) Stumpage and pay-as-cut timber 12 10 2 43 30 13 Recreational and other lease revenue 19 18 1 54 51 3 Other (1) 7 8 (1 ) 31 29 2 Subtotal net sales to unaffiliated customers 380 441 (61 ) 1,259 1,421 (162 ) Intersegment sales 141 133 8 433 450 (17 ) Total sales $ 521 $ 574 $ (53 ) $ 1,692 $ 1,871 $ (179 ) Costs of sales $ 417 $ 442 $ (25 ) $ 1,317 $ 1,360 $ (43 ) Operating income and Net contribution to earnings $ 78 $ 107 $ (29 ) $ 302 $ 442 $ (140 ) (1) Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips. Comparing Third Quarter 2023 with Third Quarter 2022 Net sales to unaffiliated customers Net sales to unaffiliated customers decreased $61 million – 14 percent – primarily due to a $48 million decrease in Western log sales, attributable to a 25 percent decrease in sales realizations, as well as an $11 million decrease in Southern log sales, attributable to a 4 percent decrease in sales realizations and a 3 percent decrease in sales volumes. Intersegment sales Intersegment sales increased $8 million – 6 percent – primarily due to a 14 percent increase in sales volumes, partially offset by a 7 percent decrease in sales realizations. Costs of sales Costs of sales decreased $25 million – 6 percent – primarily due to decreased Western third-party log purchases and decreased Southern log sales volumes, partially offset by increased logging and hauling costs and increased Western log sales volumes. Operating income and Net contribution to earnings Operating income and net contribution to earnings decreased $29 million – 27 percent – primarily due to the change in the components of gross margin, as discussed above. Comparing Year-to-Date 2023 with Year-to-Date 2022 Net sales to unaffiliated customers Net sales to unaffiliated customers decreased $162 million – 11 percent – primarily due to a $180 million decrease in Western log sales, primarily attributable to a 23 percent decrease in sales realizations, partially offset by a $13 million increase in stumpage and pay-as-cut timber sales. Intersegment sales Intersegment sales decreased $17 million – 4 percent – primarily due to a 9 percent decrease in sales realizations, partially offset by a 5 percent increase in sales volumes. 17 Costs of sales Costs of sales decreased $43 million – 3 percent – primarily due to decreased Western third-party log purchases, partially offset by increased logging and hauling costs and increased log sales volumes. Operating income and Net contribution to earnings Operating income and net contribution to earnings decreased $140 million – 32 percent – primarily due to the change in the components of gross margin, as discussed above. Third-Party Log Sales Volumes and Fee Harvest Volumes QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE VOLUMES IN THOUSANDS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Third-party log sales – tons: West (1) 1,479 1,411 68 4,814 4,793 21 South 4,180 4,310 (130 ) 12,907 12,612 295 North 148 177 (29 ) 450 505 (55 ) Total 5,807 5,898 (91 ) 18,171 17,910 261 Fee harvest volumes – tons: West (1) 2,137 1,760 377 6,674 6,085 589 South 6,146 6,112 34 19,008 18,113 895 North 223 245 (22 ) 683 703 (20 ) Total 8,506 8,117 389 26,365 24,901 1,464 (1) Western logs are primarily transacted in thousand board feet (MBF) but are converted to ton equivalents for external reporting purposes. REAL ESTATE, ENERGY A ND NATURAL RESOURCES How We Did Third Quarter 2023 and Year-to-Date 2023 QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Net sales: Real estate $ 79 $ 30 $ 49 $ 198 $ 217 $ (19 ) Energy and natural resources 26 38 (12 ) 88 96 (8 ) Total $ 105 $ 68 $ 37 $ 286 $ 313 $ (27 ) Costs of sales $ 43 $ 14 $ 29 $ 105 $ 100 $ 5 Operating income and Net contribution to earnings $ 56 $ 48 $ 8 $ 161 $ 194 $ (33 ) The volume of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability of buyers to obtain financing, the number of competing properties listed for sale, the seasonal nature of sales, the plans of adjacent landowners, our expectation of future price appreciation, the timing of harvesting activities, and the availability of government and not-for-profit funding. In any period, the average price per acre will vary based on the location and physical characteristics of parcels sold. Comparing Third Quarter 2023 with Third Quarter 2022 Net sales Net sales increased $37 million – 54 percent – primarily due to an increase in acres sold, partially offset by a decrease in the average price per acre sold. Costs of sales Costs of sales increased $29 million – 207 percent – primarily due to an increase in acres sold. 18 Operating income and Net contribution to earnings Operating income and net contribution to earnings increased $8 million – 17 percent – primarily due to the change in the components of gross margin, as discussed above. Comparing Year-to-Date 2023 with Year-to-Date 2022 Net sales Net sales decreased $27 million – 9 percent – primarily due to decreases in average price per acre sold and royalty income from our Energy and Natural Resources business. Costs of sales Costs of sales increased $5 million – 5 percent – primarily due to an increase in basis per acre sold. Operating income and Net contribution to earnings Operating income and net contribution to earnings decreased $33 million – 17 percent – primarily due to the change in the components of gross margin, as discussed above. REAL ESTATE SALES STATISTICS QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Acres sold 25,721 5,014 20,707 55,755 56,046 (291 ) Average price per acre $ 3,033 $ 5,046 $ (2,013 ) $ 3,403 $ 3,624 $ (221 ) WOOD PRODUCTS How We Did Third Quarter 2023 and Year-to-Date 2023 QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Net sales: Structural lumber $ 570 $ 676 $ (106 ) $ 1,658 $ 2,880 $ (1,222 ) Oriented strand board 284 287 (3 ) 707 1,348 (641 ) Engineered solid section 216 233 (17 ) 600 676 (76 ) Engineered I-joists 122 166 (44 ) 335 471 (136 ) Softwood plywood 42 47 (5 ) 127 158 (31 ) Medium density fiberboard 40 50 (10 ) 120 151 (31 ) Complementary building products 184 222 (38 ) 551 676 (125 ) Other products produced (1) 79 86 (7 ) 257 267 (10 ) Total $ 1,537 $ 1,767 $ (230 ) $ 4,355 $ 6,627 $ (2,272 ) Costs of sales $ 1,195 $ 1,360 $ (165 ) $ 3,572 $ 4,050 $ (478 ) Operating income and Net contribution to earnings $ 277 $ 344 $ (67 ) $ 590 $ 2,389 $ (1,799 ) (1) Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations. Comparing Third Quarter 2023 with Third Quarter 2022 Net sales Net sales decreased $230 million – 13 percent – due to: ● a $106 million decrease in structural lumber sales attributable to a 13 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes; ● a $44 million decrease in engineered I-joists sales attributable to a 19 percent decrease in sales realizations, as well as an 11 percent decrease in sales volumes; ● a $38 million decrease in complementary building products sales attributable to decreased sales volumes across most products; 19 ● a $17 million decrease in engineered solid section sales attributable to a 12 percent decrease in sales realizations, partially offset by a 5 percent increase in sales volumes; ● a $10 million decrease in medium density fiberboard sales attributable to an 18 percent decrease in sales volumes, as well as a 3 percent decrease in sales realizations; ● a $7 million decrease in other products produced sales attributable to decreased sales volumes for wood chips; ● a $5 million decrease in softwood plywood sales attributable to a 23 percent decrease in sales realizations, partially offset by a 16 percent increase in sales volumes and ● a $3 million decrease in oriented strand board sales attributable to a 4 percent decrease in sales volumes, partially offset by a 4 percent increase in sales realizations. Costs of sales Costs of sales decreased $165 million – 12 percent – primarily due to decreased sales volumes across most product lines, as well as decreased freight costs. Operating income and Net contribution to earnings Operating income and net contribution to earnings decreased $67 million – 19 percent – primarily due to the change in the components of gross margin, as discussed above. Comparing Year-to-Date 2023 with Year-to-Date 2022 Net sales Net sales decreased $2,272 million – 34 percent – due to: ● a $1,222 million decrease in structural lumber sales attributable to a 40 percent decrease in sales realizations, as well as a 4 percent decrease in sales volumes; ● a $641 million decrease in oriented strand board sales attributable to a 48 percent decrease in sales realizations; ● a $136 million decrease in engineered I-joist sales attributable to a 20 percent decrease in sales volumes, as well as an 11 percent decrease in sales realizations; ● a $125 million decrease in complementary building products sales attributable to decreased sales volumes and sales realizations across most products; ● a $76 million decrease in engineered solid section sales attributable to a 6 percent decrease in sales volumes, as well as a 5 percent decrease in sales realizations; ● a $31 million decrease in medium density fiberboard sales attributable to a 28 percent decrease in sales volumes, partially offset by an 11 percent increase in sales realizations; ● a $31 million decrease in softwood plywood sales attributable to a 33 percent decrease in sales realizations, partially offset by a 20 percent increase in sales volumes and ● a $10 million decrease in other products produced attributable to decreased sales volumes. Costs of sales Costs of sales decreased $478 million – 12 percent – primarily due to decreased sales volumes across most product lines, as well as decreased freight costs. Operating income and Net contribution to earnings Operating income and net contribution to earnings decreased $1,799 million – 75 percent – primarily due to the change in the components of gross margin, as discussed above. Third-Party Sales Volumes QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE VOLUMES IN MILLIONS (1) SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Structural lumber – board feet 1,184 1,216 (32 ) 3,524 3,662 (138 ) Oriented strand board – square feet (3/8”) 683 715 (32 ) 2,176 2,167 9 Engineered solid section – cubic feet 6.2 5.9 0.3 16.9 18.0 (1.1 ) Engineered I-joists – lineal feet 42 47 (5 ) 113 142 (29 ) Softwood plywood – square feet (3/8”) 86 74 12 263 219 44 Medium density fiberboard – square feet (3/4”) 33 40 (7 ) 93 129 (36 ) (1) Sales volumes include sales of internally produced products and products purchased for resale primarily through our distribution business. 20 PRODUCTION AND OUTSIDE PURCHASE VOLUMES Outside purchase volumes are primarily purchased for resale through our distribution business. Production volumes are produced for sale through our own sales organizations and through our distribution business. Production of oriented strand board and engineered solid section are also used to manufacture engineered I-joists. QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE VOLUMES IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Structural lumber – board feet: Production 1,174 1,140 34 3,481 3,575 (94 ) Outside purchase 38 35 3 113 120 (7 ) Total 1,212 1,175 37 3,594 3,695 (101 ) Oriented strand board – square feet (3/8”): Production 724 735 (11 ) 2,212 2,232 (20 ) Outside purchase 19 18 1 55 154 (99 ) Total 743 753 (10 ) 2,267 2,386 (119 ) Engineered solid section – cubic feet: Production 5.6 6.0 (0.4 ) 16.1 18.1 (2.0 ) Outside purchase 3.7 3.6 0.1 9.7 4.1 5.6 Total 9.3 9.6 (0.3 ) 25.8 22.2 3.6 Engineered I-joists – lineal feet: Production 42 47 (5 ) 105 141 (36 ) Outside purchase 2 1 1 2 6 (4 ) Total 44 48 (4 ) 107 147 (40 ) Softwood plywood – square feet (3/8”): Production 77 64 13 235 197 38 Outside purchase 10 9 1 33 27 6 Total 87 73 14 268 224 44 Medium density fiberboard – square feet (3/4"): Production 34 38 (4 ) 101 130 (29 ) Total 34 38 (4 ) 101 130 (29 ) 21 UNALLOCAT ED ITEMS Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and post-employment costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other. Net Charge to Earnings – Unallocated Items QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Unallocated corporate function and variable compensation expense $ (33 ) $ (36 ) $ 3 $ (92 ) $ (103 ) $ 11 Liability classified share-based compensation 2 2 — — 5 (5 ) Foreign exchange gain — 9 (9 ) 1 12 (11 ) Elimination of intersegment profit in inventory and LIFO (4 ) 2 (6 ) 8 (39 ) 47 Other (23 ) (19 ) (4 ) (62 ) (52 ) (10 ) Operating loss (58 ) (42 ) (16 ) (145 ) (177 ) 32 Non-operating pension and other post-employment benefit costs (12 ) (12 ) — (33 ) (38 ) 5 Interest income and other 24 9 15 54 9 45 Net charge to earnings $ (46 ) $ (45 ) $ (1 ) $ (124 ) $ (206 ) $ 82 Comparing Third Quarter 2023 with Third Quarter 2022 Net charge to earnings remained consistent primarily due to a $15 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts, offset by a $9 million decrease in foreign exchange gain and a $6 million increase in elimination of intersegment profit in inventory and LIFO. Comparing Year-to-Date 2023 with Year-to-Date 2022 Net charge to earnings decreased $82 million – 40 percent – primarily due to: ● a $47 million decrease in elimination of intersegment profit in inventory and LIFO; ● a $45 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts and ● an $11 million decrease in unallocated corporate function and variable compensation expense. These changes were partially offset by an $11 million decrease in foreign exchange gain, as well as a $10 million increase in other primarily due to an increase in environmental remediation charges. INTEREST EXPENSE Our interest expense, net of capitalized interest, was: ● $72 million for third quarter 2023 and $208 million year-to-date 2023; ● $67 million for third quarter 2022 and $204 million year-to-date 2022. Interest expense increased by $5 million compared to third quarter 2022 and increased by $4 million compared to year-to-date 2022 primarily due to the May 2023 issuance of debt securities that increased our weighted average outstanding debt. Refer to Note 8: Long-Term Debt and Line of Credit for further information. INCOME TAXES Our provision for income taxes was: ● a $54 million expense for third quarter 2023 and $101 million year-to-date 2023; ● a $77 million expense for third quarter 2022 and $470 million year-to-date 2022. Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $369 million compared to year-to-date 2022 primarily due to a decrease in our TRS earnings in 2023, as well as a decrease in our estimated annual effective tax rate. Refer to Note 14: Income Taxes for further information. 22 LIQUIDITY AND CAPITAL RESOURCES We are committed to maintaining an appropriate capital structure that provides flexibility and enables us to protect the interests of our shareholders and meet our obligations to our lenders, while also maintaining access to all major financial markets. As of September 30, 2023, we had approximately $1.2 billion in cash and cash equivalents, $668 million in short-term investments and $1.5 billion of availability on our line of credit, which expires in March 2028. We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future. CASH FROM OPERATIONS Consolidated net cash from operations was: ● $1,145 million for year-to-date 2023 and ● $2,665 million for year-to-date 2022. Net cash from operations decreased $1,520 million primarily due to decreased cash inflows from our business operations. This change was partially offset by a $406 million decrease in cash paid for income taxes, as well as a $21 million decrease in cash paid for interest. CASH FROM INVESTING ACTIVITIES Consolidated net cash from investing activities was: ● $(982) million for year-to-date 2023 and ● $(530) million for year-to-date 2022. Net cash from investing activities decreased $452 million primarily due to a $664 million increase in cash paid for short-term investments. This change was partially offset by a $216 million decrease in cash paid for acquisition of timberlands. Summary of Capital Spending by Business Segment YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 Timberlands $ 74 $ 75 Wood Products 168 163 Unallocated Items 9 7 Total $ 251 $ 245 We anticipate our capital expenditures for 2023 to be approximately $440 million. The amount we spend on capital expenditures could change. CASH FROM FINANCING ACTIVITIES Consolidated net cash from financing activities was: ● $(571) million for year-to-date 2023 and ● $(2,214) million for year-to-date 2022. Net cash from financing activities increased $1,643 million, primarily due to: ● a $947 million decrease in net cash used for payments on long-term debt; ● a $409 million decrease in cash used for payments of dividends and ● a $293 million decrease in cash used for repurchases of common stock. Line of Credit In March 2023, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025. Borrowings will bear interest at a floating rate based on either the adjusted term SOFR plus a spread or a mutually agreed upon base rate plus a spread. We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of September 30, 2023 or December 31, 2022. Refer to Note 8: Long-Term Debt and Line of Credit for further information. Long-Term Debt In May 2023, we completed an offering of debt securities by issuing $750 million of 4.750 percent notes due in May 2026. The net proceeds after deducting the discount, underwriting fees and issuance costs were $743 million. Of these total net proceeds, $664 million was invested in short-term investments classified as held-to-maturity securities, which consist of a mixture of term deposits and Treasury bills. In July 2023, we repaid $118 million of our 7.125 percent notes at maturity. We have $860 million of long-term debt scheduled to mature during fourth quarter 2023, and we anticipate the majority will be funded through cash on hand, including the proceeds from our short-term investments which also mature in the fourth quarter. 23 In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $931 million of principal in higher interest rate notes. We issued $450 million of 3.375 percent notes due in March 2033 and $450 million of 4.000 percent notes due in March 2052. The net proceeds after deducting the discount, underwriting fees and issuance costs were $444 million and $437 million, respectively. The net proceeds were used to retire $592 million of our 7.375 percent notes due in March 2032, $161 million of our 8.500 percent notes due in January 2025, $73 million of our 7.125 percent notes due in July 2023, $65 million of our 7.950 percent notes due in March 2025, and $40 million of our 7.850 percent notes due in July 2026. We paid holders an aggregate $1.2 billion in cash reflecting principal, premium to par and tender premium. Refer to Note 8: Long-Term Debt and Line of Credit for further information. Debt Covenants As of September 30, 2023, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes to the debt covenants presented in our 2022 Annual Report on Form 10-K for our long-term debt instruments, and we expect to remain in compliance with our debt covenants for the foreseeable future. Dividend Payments We paid cash dividends on common shares of: ● $1,076 million for year-to-date 2023 and ● $1,485 million for year-to-date 2022. The decrease in dividends paid is primarily due to a supplemental dividend of $0.90 per share based on 2022 financial results for a total of $660 million paid in first quarter 2023 in comparison to a supplemental dividend of $1.45 per share based on 2021 financial results for a total of $1,084 million paid in first quarter 2022. Share Repurchases We repurchased 757,510 common shares for approximately $25 million (including transaction fees) during third quarter 2023 and 3,562,944 common shares for approximately $110 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program. During third quarter 2022, we repurchased 4,234,838 common shares for approximately $145 million (including transaction fees) and we repurchased 11,217,300 common shares for approximately $404 million (including transaction fees) during year-to-date 2022 under the 2021 Repurchase Program. There were 32,757 unsettled shares (approximately $1 million) as of September 30, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022. Refer to Note 4: Net Earnings Per Share and Share Repurchases for further information. PERFORMANCE MEASURES Adjusted EBITDA by Segment We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items. QUARTER ENDED AMOUNT OF CHANGE YEAR-TO-DATE ENDED AMOUNT OF CHANGE DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 SEPTEMBER 2023 SEPTEMBER 2022 2023 VS. 2022 Adjusted EBITDA by Segment: Timberlands $ 143 $ 168 $ (25 ) $ 503 $ 634 $ (131 ) Real Estate & ENR 94 60 34 253 283 (30 ) Wood Products 328 395 (67 ) 746 2,540 (1,794 ) 565 623 (58 ) 1,502 3,457 (1,955 ) Unallocated Items (56 ) (40 ) (16 ) (129 ) (172 ) 43 Adjusted EBITDA $ 509 $ 583 $ (74 ) $ 1,373 $ 3,285 $ (1,912 ) We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each. 24 The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2023: DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total Adjusted EBITDA by Segment: Net earnings $ 239 Interest expense, net of capitalized interest 72 Income taxes 54 Net contribution (charge) to earnings $ 78 $ 56 $ 277 $ (46 ) $ 365 Non-operating pension and other post-employment benefit costs — — — 12 12 Interest income and other — — — (24 ) (24 ) Operating income (loss) 78 56 277 (58 ) 353 Depreciation, depletion and amortization 65 4 51 2 122 Basis of real estate sold — 34 — — 34 Adjusted EBITDA $ 143 $ 94 $ 328 $ (56 ) $ 509 The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2022: DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total Adjusted EBITDA by Segment: Net earnings $ 310 Interest expense, net of capitalized interest 67 Income taxes 77 Net contribution (charge) to earnings $ 107 $ 48 $ 344 $ (45 ) $ 454 Non-operating pension and other post-employment benefit costs — — — 12 12 Interest income and other — — — (9 ) (9 ) Operating income (loss) 107 48 344 (42 ) 457 Depreciation, depletion and amortization 61 5 51 2 119 Basis of real estate sold — 7 — — 7 Adjusted EBITDA $ 168 $ 60 $ 395 $ (40 ) $ 583 The table below reconciles Adjusted EBITDA for the year-to-date period ended September 30, 2023: DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total Adjusted EBITDA by Segment: Net earnings $ 620 Interest expense, net of capitalized interest 208 Income taxes 101 Net contribution (charge) to earnings $ 302 $ 161 $ 590 $ (124 ) $ 929 Non-operating pension and other post-employment benefit costs — — — 33 33 Interest income and other — — — (54 ) (54 ) Operating income (loss) 302 161 590 (145 ) 908 Depreciation, depletion and amortization 201 12 156 5 374 Basis of real estate sold — 80 — — 80 Special items included in operating income (loss) (1) — — — 11 11 Adjusted EBITDA $ 503 $ 253 $ 746 $ (129 ) $ 1,373 (1) Operating income (loss) for Unallocated Items includes a pretax special item consisting of an $11 million noncash environmental remediation charge. 25 The table below reconciles Adjusted EBITDA for the year-to-date period ended September 30, 2022: DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate & ENR Wood Products Unallocated Items Total Adjusted EBITDA by Segment: Net earnings $ 1,869 Interest expense, net of capitalized interest 204 Loss on debt extinguishment (1) 276 Income taxes 470 Net contribution (charge) to earnings $ 442 $ 194 $ 2,389 $ (206 ) $ 2,819 Non-operating pension and other post-employment benefit costs — — — 38 38 Interest income and other — — — (9 ) (9 ) Operating income (loss) 442 194 2,389 (177 ) 2,848 Depreciation, depletion and amortization 192 12 151 5 360 Basis of real estate sold — 77 — — 77 Adjusted EBITDA $ 634 $ 283 $ 2,540 $ (172 ) $ 3,285 (1) Loss on debt extinguishment is a special item consisting of a pretax charge of $276 million ($207 million after-tax) related to early debt retirement. Net Earnings and Net Earnings per Diluted Share Before Special Items We use net earnings before special items and net earnings per diluted share before special items as key performance measures to evaluate the performance of the consolidated company. These measures should not be considered in isolation from, and are not intended to represent an alternative to, our results reported in accordance with U.S. GAAP. However, we believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons and are widely used by analysts, lenders, rating agencies and other interested parties. Net Earnings Before Special Items QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Net earnings $ 239 $ 310 $ 620 $ 1,869 Environmental remediation charge — — 8 — Loss on debt extinguishment — — — 207 Net earnings before special items $ 239 $ 310 $ 628 $ 2,076 Net Earnings per Diluted Share Before Special Items QUARTER ENDED YEAR-TO-DATE ENDED SEPTEMBER 2023 SEPTEMBER 2022 SEPTEMBER 2023 SEPTEMBER 2022 Net earnings per diluted share $ 0.33 $ 0.42 $ 0.85 $ 2.51 Environmental remediation charge — — 0.01 — Loss on debt extinguishment — — — 0.28 Net earnings per diluted share before special items $ 0.33 $ 0.42 $ 0.86 $ 2.79 CRITICAL ACCOUNTING POLICIES There have been no significant changes during year-to-date 2023 to the critical accounting policies presented in our 2022 Annual Report on Form 10-K.