Item 1. Financial Statements
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES
MARCH 2021
MARCH 2020
Net sales ( Note 3 )
$
2,506
$
1,728
Costs of sales
1,430
1,382
Gross margin
1,076
346
Selling expenses
20
22
General and administrative expenses
90
74
Other operating costs, net ( Note 15 )
10
10
Operating income
956
240
Non-operating pension and other post-employment benefit costs ( Note 7 )
( 8
)
( 9
)
Interest income and other
1
1
Interest expense, net of capitalized interest
( 79
)
( 85
)
Earnings before income taxes
870
147
Income taxes ( Note 16 )
( 189
)
3
Net earnings
$
681
$
150
Earnings per share, basic and diluted ( Note 4 )
$
0.91
$
0.20
Weighted average shares outstanding (in thousands) ( Note 4 ):
Basic
748,718
746,534
Diluted
750,024
747,155
See accompanying Notes to Consolidated Financial Statements .
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Net earnings
$
681
$
150
Other comprehensive income (loss):
Foreign currency translation adjustments
9
( 42
)
Changes in unamortized actuarial loss, net of tax expense of $ 7 and $ 16
20
44
Changes in unamortized net prior service credit, net of tax benefit of $ 1 and $ 0
1
1
Total other comprehensive income
30
3
Total comprehensive income
$
711
$
153
See accompanying Notes to Consolidated Financial Statements .
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE
MARCH 31,
2021
DECEMBER 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,016
$
495
Receivables, net
589
450
Receivables for taxes
7
82
Inventories ( Note 5 )
505
443
Prepaid expenses and other current assets
141
139
Total current assets
2,258
1,609
Property and equipment, less accumulated depreciation of $ 3,487 and $ 3,432
1,971
2,013
Construction in progress
91
73
Timber and timberlands at cost, less depletion
11,776
11,827
Minerals and mineral rights, less depletion
265
268
Deferred tax assets
106
120
Other assets
407
401
Total assets
$
16,874
$
16,311
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt ( Note 9 )
$
150
$
150
Accounts payable
236
204
Accrued liabilities ( Note 8 )
549
596
Total current liabilities
935
950
Long-term debt, net ( Note 9 )
5,325
5,325
Deferred tax liabilities
26
24
Deferred pension and other post-employment benefits ( Note 7 )
893
911
Other liabilities
367
370
Total liabilities
7,546
7,580
Commitments and contingencies ( Note 11 )
Equity:
Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 748,751 thousand shares at March 31, 2021 and 747,385 thousand shares at
December 31, 2020
936
934
Other capital
8,222
8,208
Retained earnings
962
411
Accumulated other comprehensive loss ( Note 12 )
( 792
)
( 822
)
Total equity
9,328
8,731
Total liabilities and equity
$
16,874
$
16,311
See accompanying Notes to Consolidated Financial Statements .
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Cash flows from operations:
Net earnings
$
681
$
150
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization
118
123
Basis of real estate sold
27
62
Deferred income taxes, net
8
( 82
)
Pension and other post-employment benefits ( Note 7 )
19
19
Share-based compensation expense ( Note 13 )
7
7
Change in:
Receivables, net
( 139
)
( 82
)
Receivables and payables for taxes
120
79
Inventories
( 60
)
( 72
)
Prepaid expenses and other current assets
( 2
)
( 2
)
Accounts payable and accrued liabilities
( 60
)
( 91
)
Pension and post-employment benefit contributions and payments
( 8
)
( 10
)
Other
( 13
)
( 15
)
Net cash from operations
698
86
Cash flows from investing activities:
Capital expenditures for property and equipment
( 31
)
( 47
)
Capital expenditures for timberlands reforestation
( 22
)
( 21
)
Proceeds from note receivable held by variable interest entities ( Note 6 )
—
362
Proceeds from sale of Montana timberlands ( Note 14 )
—
145
Other
—
2
Net cash from investing activities
( 53
)
441
Cash flows from financing activities:
Cash dividends on common shares
( 127
)
( 254
)
Net proceeds from issuance of long-term debt ( Note 9 )
—
732
Proceeds from borrowings on line of credit ( Note 9 )
—
550
Payments on line of credit ( Note 9 )
—
( 230
)
Proceeds from exercise of stock options
17
6
Other
( 14
)
( 12
)
Net cash from financing activities
( 124
)
792
Net change in cash and cash equivalents
521
1,319
Cash and cash equivalents at beginning of period
495
139
Cash and cash equivalents at end of period
$
1,016
$
1,458
Cash paid (received) during the period for:
Interest, net of amount capitalized of $ 1 and $ 1
$
75
$
108
Income taxes, net of refunds
$
66
$
—
See accompanying Notes to Consolidated Financial Statements .
4
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES
MARCH 2021
MARCH 2020
Common shares:
Balance at beginning of period
$
934
$
932
Issued for exercise of stock options and vested restricted stock units
2
1
Balance at end of period
936
933
Other capital:
Balance at beginning of period
8,208
8,152
Issued for exercise of stock options
16
6
Shared-based compensation
7
7
Other transactions, net
( 9
)
( 6
)
Balance at end of period
8,222
8,159
Retained earnings (accumulated deficit):
Balance at beginning of period
411
( 3
)
Net earnings
681
150
Dividends on common shares
( 130
)
( 256
)
Balance at end of period
962
( 109
)
Accumulated other comprehensive loss:
Balance at beginning of period
( 822
)
( 904
)
Other comprehensive income
30
3
Balance at end of period ( Note 12 )
( 792
)
( 901
)
Total equity:
Balance at end of period
$
9,328
$
8,082
Dividends paid per common share
$
0.17
$
0.34
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
8
NOTE 5:
INVENTORIES
9
NOTE 6:
VARIABLE INTEREST ENTITIES
9
NOTE 7:
PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
10
NOTE 8:
ACCRUED LIABILITIES
10
NOTE 9:
LONG-TERM DEBT AND LINE OF CREDIT
10
NOTE 10:
FAIR VALUE OF FINANCIAL INSTRUMENTS
11
NOTE 11:
LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
11
NOTE 12:
ACCUMULATED OTHER COMPREHENSIVE LOSS
12
NOTE 13:
SHARE-BASED COMPENSATION
12
NOTE 14:
TIMBERLAND ACQUISITIONS AND DIVESTITURES
13
NOTE 15:
OTHER OPERATING COSTS, NET
13
NOTE 16:
INCOME TAXES
13
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2021 AND 2020
NOTE 1: BASIS OF 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, 2020. 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: BUSINESS SEGMENTS
We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of every acre we own 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 categorized 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, and wind and solar resources) 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
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Sales to unaffiliated customers:
Timberlands
$
379
$
381
Real Estate & ENR
106
112
Wood Products
2,021
1,235
2,506
1,728
Intersegment sales:
Timberlands
134
122
Total sales
2,640
1,850
Intersegment eliminations
( 134
)
( 122
)
Total
$
2,506
$
1,728
Net contribution (charge) to earnings:
Timberlands
$
108
$
105
Real Estate & ENR
66
36
Wood Products
840
134
1,014
275
Unallocated items (1)
( 65
)
( 43
)
Net contribution to earnings
949
232
Interest expense, net of capitalized interest
( 79
)
( 85
)
Earnings before income taxes
870
147
Income taxes
( 189
)
3
Net earnings
$
681
$
150
(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 as well as legacy obligations.
7
NOTE 3: REVENUE RECOGNITION
A reconciliation of revenue recognized by our major products:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales
$
79
$
87
Export grade sales
122
90
Subtotal West
201
177
South
131
150
North
16
17
Subtotal delivered logs sales
348
344
Stumpage and pay-as-cut timber
6
5
Recreational and other lease revenue
16
15
Other (1)
9
17
Net sales attributable to Timberlands segment
379
381
Real Estate & ENR segment
Real estate
84
95
Energy and natural resources
22
17
Net sales attributable to Real Estate & ENR segment
106
112
Wood Products segment
Structural lumber
990
508
Oriented strand board
438
190
Engineered solid section
142
127
Engineered I-joists
83
78
Softwood plywood
56
39
Medium density fiberboard
48
44
Complementary building products
171
153
Other (2)
93
96
Net sales attributable to Wood Products segment
2,021
1,235
Total net sales
$
2,506
$
1,728
( 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
Our basic and diluted earnings per share were:
●
$ 0.91 during first quarter 2021 and
●
$ 0.20 during first quarter 2020.
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.
8
QUARTER ENDED
SHARES IN THOUSANDS
MARCH 2021
MARCH 2020
Weighted average common shares outstanding – basic
748,718
746,534
Dilutive potential common shares:
Stock options
217
338
Restricted stock units
738
283
Performance share units
351
—
Total effect of outstanding dilutive potential common shares
1,306
621
Weighted average common shares outstanding – dilutive
750,024
747,155
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
SHARES IN THOUSANDS
MARCH 2021
MARCH 2020
Stock options
147
2,292
Performance share units
1,115
1,390
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process, finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2021
DECEMBER 31,
2020
LIFO inventories:
Logs
$
20
$
24
Lumber, plywood, panels and fiberboard
80
59
Other products
8
9
Moving average cost or FIFO inventories:
Logs
92
64
Lumber, plywood, panels, fiberboard and engineered wood products
90
84
Other products
106
100
Materials and supplies
109
103
Total
$
505
$
443
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: VARIABLE INTEREST ENTITIES
From 2002 through 2004, we sold certain nonstrategic timberlands. As a result of these sales, buyer-sponsored and monetization variable interest entities, or special purpose entities (SPEs), were formed. We were the primary beneficiary and consolidated the assets and liabilities of the SPEs involved in these transactions.
The assets of the buyer-sponsored SPEs were financial investments which consisted of bank guarantees. These bank guarantees were in turn backed by bank notes, which were the liabilities of the monetization SPEs. Interest earned from the financial investments within the buyer-sponsored SPEs was used to pay interest accrued on the corresponding monetization SPE’s note.
During first quarter 2020, we received $ 362 million in proceeds from our final buyer-sponsored SPE at maturity. The corresponding $ 302 million in liabilities of this SPE was paid in third quarter 2019.
9
NOTE 7: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
PENSION
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Service cost
$
11
$
10
Interest cost
24
35
Expected return on plan assets
( 49
)
( 59
)
Amortization of actuarial loss
30
30
Amortization of prior service cost
1
1
Total net periodic benefit cost - pension
$
17
$
17
OTHER POST-EMPLOYMENT BENEFITS
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Interest cost
$
1
$
1
Amortization of actuarial loss
2
1
Amortization of prior service credit
( 1
)
—
Total net periodic benefit cost - other post-employment benefits
$
2
$
2
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 .
NOTE 8: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2021
DECEMBER 31,
2020
Compensation and employee benefit costs
$
150
$
204
Current portion of lease liabilities
23
26
Customer rebates, volume discounts and deferred income
84
111
Interest
84
87
Taxes payable
115
75
Other
93
93
Total
$
549
$
596
NOTE 9: LONG-TERM DEBT AND LINE OF CREDIT
In March 2020, we issued $ 750 million of 4.00 percent notes due in April 2030 . The net proceeds after deducting the discount, underwriting fees and issuance costs were $ 732 million.
In January 2020, we refinanced and extended our $ 1.5 billion five-year senior unsecured revolving credit facility, which expires in January 2025 . Borrowings are at LIBOR plus a spread or at other interest rates mutually agreed upon between the borrower and the lending banks. We had no outstanding borrowings on our credit facility as of March 31, 2021 and December 31, 2020.
10
NOTE 10: FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values and carrying values of our long-term debt and line of credit consisted of the following:
MARCH 31,
2021
DECEMBER 31,
2020
DOLLAR AMOUNTS IN MILLIONS
CARRYING
VALUE
FAIR VALUE
(LEVEL 2)
CARRYING
VALUE
FAIR VALUE
(LEVEL 2)
Long-term debt (including current maturities) and line of credit:
Fixed rate
$
5,250
$
6,413
$
5,250
$
6,718
Variable rate
225
225
225
225
Total debt
$
5,475
$
6,638
$
5,475
$
6,943
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 variable rate long-term debt and line of credit instruments have net carrying values that approximate their fair values with only insignificant differences. The inputs to these valuations 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, mutual fund investments held in grantor trusts, and 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.
NOTE 11: LEGAL PROCEEDINGS, COMMITMENTS 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 March 31, 2021, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 58 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet .
11
NOTE 12: ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Pension (1)
Balance at beginning of period
$
( 1,064
)
$
( 1,128
)
Other comprehensive income (loss) before reclassifications
( 4
)
20
Amounts reclassified from accumulated other comprehensive loss to earnings (2)
24
24
Total other comprehensive income
20
44
Balance at end of period
( 1,044
)
( 1,084
)
Other Post-Employment Benefits (1)
Balance at beginning of period
$
( 12
)
$
( 12
)
Amounts reclassified from accumulated other comprehensive loss to earnings (2)
1
1
Total other comprehensive income
1
1
Balance at end of period
( 11
)
( 11
)
Translation Adjustments and Other
Balance at beginning of period
$
254
$
236
Translation adjustments
9
( 42
)
Total other comprehensive income (loss)
9
( 42
)
Balance at end of period
263
194
Accumulated other comprehensive loss, end of period
$
( 792
)
$
( 901
)
(1)
Amounts presented are net of tax.
(2)
Amounts of actuarial loss and prior service (cost) credit are components of net periodic benefit cost (credit). See Note 7: Pension and Other Post-Employment Benefit Plans .
NOTE 13: SHARE-BASED COMPENSATION
Share-based compensation activity during first quarter 2021 included the following:
SHARES IN THOUSANDS
GRANTED
VESTED
Restricted stock units (RSUs)
736
723
Performance share units (PSUs)
354
229
A total of 1.4 million 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 2021 was $ 34.19 . The vesting provisions for RSUs granted in 2021 were consistent with prior year grants.
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2021 was $ 38.50 . The final number of shares granted in 2021 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 2021 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 2021
PERFORMANCE SHARE UNITS
Performance period
2/11/2021 – 12/31/2023
Valuation date average stock price (1)
$ 34.14
Expected dividends
1.99 %
Risk-free rate
0.02% – 0.20%
Expected volatility
32.87% – 52.82%
(1)
Calculated as an average of the high and low prices on grant date.
12
NOTE 14: TIMBERLAND ACQUISITIONS AND DIVESTITURES
Washington Divestiture
On April 30, 2021, we announced an agreement to sell 145,000 acres of timberlands in the North Cascades region of Washington for $ 266 million in cash. This agreement is subject to customary closing conditions and is expected to close in third quarter 2021.
Alabama Acquisition
On February 25, 2021, we announced an agreement to purchase 69,200 acres of southwest Alabama timberlands for approximately $ 149 million. We completed the purchase on April 27, 2021.
Montana Divestiture
On December 17, 2019, we announced an agreement to sell 630,000 acres of Montana timberlands, which was part of our Timberlands business segment. On March 26, 2020, we completed the sale for $ 145 million in cash proceeds, which is net of purchase price adjustments and closing costs. Due to the impairment recorded during fourth quarter 2019, no material gain or loss was recorded as a result of this sale.
The divestiture was not considered a strategic shift that had or will have a major effect on our operations or financial results and therefore did not meet the requirements for presentation as discontinued operations.
NOTE 15: OTHER OPERATING COSTS, NET
Other operating costs, net were comprised of the following:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2021
MARCH 2020
Foreign exchange losses, net
$
2
$
8
Litigation expense (income), net
3
( 4
)
Research and development expenses
1
1
Other, net
4
5
Total other operating costs, net
$
10
$
10
NOTE 16: 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 2021 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of 21 percent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.
13
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