WEYERHAEUSER CO 10-Q

Item 1. FINANCIAL STATEMENTS WEYERHAEUSER COMPANY CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Net sales ( Note 3 ) $ 3,144 $ 1,631 $ 5,650 $ 3,359 Costs of sales 1,583 1,283 3,013 2,665 Gross margin 1,561 348 2,637 694 Selling expenses 24 18 44 40 General and administrative expenses 95 84 185 158 Other operating costs, net ( Note 15 ) 13 3 23 13 Operating income 1,429 243 2,385 483 Non-operating pension and other post-employment benefit costs ( Note 7 ) ( 1 ) ( 10 ) ( 9 ) ( 19 ) Interest income and other 2 2 3 3 Interest expense, net of capitalized interest ( 78 ) ( 103 ) ( 157 ) ( 188 ) Earnings before income taxes 1,352 132 2,222 279 Income taxes ( Note 16 ) ( 324 ) ( 60 ) ( 513 ) ( 57 ) Net earnings $ 1,028 $ 72 $ 1,709 $ 222 Earnings per share, basic and diluted ( Note 4 ) $ 1.37 $ 0.10 $ 2.28 $ 0.30 Weighted average shares outstanding (in thousands) ( Note 4 ): Basic 750,127 746,896 749,429 746,715 Diluted 751,508 746,984 750,773 747,070 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 JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Net earnings $ 1,028 $ 72 $ 1,709 $ 222 Other comprehensive income (loss): Foreign currency translation adjustments 15 17 24 ( 25 ) Changes in unamortized actuarial loss, net of tax expense of $ 38 , $ 8 , $ 45 and $ 24 121 23 141 67 Changes in unamortized net prior service credit, net of tax expense of $ 1 , $ 0 , $ 0 and $ 0 — 1 1 2 Total other comprehensive income 136 41 166 44 Total comprehensive income $ 1,164 $ 113 $ 1,875 $ 266 See accompanying Notes to Consolidated Financial Statements . 2 WEYERHAEUSER COMPANY CONSOLIDATED BALANCE SHEET (UNAUDITED) DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE JUNE 30, 2021 DECEMBER 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,777 $ 495 Receivables, net 702 450 Receivables for taxes 7 82 Inventories ( Note 5 ) 499 443 Assets held for sale ( Note 14 ) 229 — Prepaid expenses and other current assets 141 139 Total current assets 3,355 1,609 Property and equipment, less accumulated depreciation of $ 3,550 and $ 3,432 1,965 2,013 Construction in progress 102 73 Timber and timberlands at cost, less depletion 11,643 11,827 Minerals and mineral rights, less depletion 262 268 Deferred tax assets 71 120 Other assets 432 401 Total assets $ 17,830 $ 16,311 LIABILITIES AND EQUITY Current liabilities: Current maturities of long-term debt ( Note 9 ) $ 150 $ 150 Accounts payable 253 204 Accrued liabilities ( Note 8 ) 775 596 Total current liabilities 1,178 950 Long-term debt, net ( Note 9 ) 5,100 5,325 Deferred tax liabilities 42 24 Deferred pension and other post-employment benefits ( Note 7 ) 747 911 Other liabilities 363 370 Total liabilities 7,430 7,580 Commitments and contingencies ( Note 11 ) Equity: Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 749,782 thousand shares at June 30, 2021 and 747,385 thousand shares at December 31, 2020 937 934 Other capital 8,258 8,208 Retained earnings 1,861 411 Accumulated other comprehensive loss ( Note 12 ) ( 656 ) ( 822 ) Total equity 10,400 8,731 Total liabilities and equity $ 17,830 $ 16,311 See accompanying Notes to Consolidated Financial Statements . 3 WEYERHAEUSER COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 Cash flows from operations: Net earnings $ 1,709 $ 222 Noncash charges (credits) to earnings: Depreciation, depletion and amortization 238 240 Basis of real estate sold 51 96 Deferred income taxes, net 19 ( 2 ) Pension and other post-employment benefits ( Note 7 ) 30 37 Share-based compensation expense ( Note 13 ) 15 15 Change in: Receivables, net ( 252 ) ( 112 ) Receivables and payables for taxes 236 61 Inventories ( 51 ) 2 Prepaid expenses and other current assets ( 1 ) 5 Accounts payable and accrued liabilities 65 ( 61 ) Pension and post-employment benefit contributions and payments ( 33 ) ( 16 ) Other ( 20 ) ( 10 ) Net cash from operations 2,006 477 Cash flows from investing activities: Capital expenditures for property and equipment ( 93 ) ( 102 ) Capital expenditures for timberlands reforestation ( 32 ) ( 32 ) Acquisition of Alabama timberlands ( Note 14 ) ( 149 ) — Proceeds from note receivable held by variable interest entities ( Note 6 ) — 362 Proceeds from sale of Montana timberlands ( Note 14 ) — 145 Other 1 3 Net cash from investing activities ( 273 ) 376 Cash flows from financing activities: Cash dividends on common shares ( 255 ) ( 254 ) Net proceeds from issuance of long-term debt ( Note 9 ) — 732 Payments on long-term debt ( Note 9 ) ( 225 ) ( 588 ) Proceeds from borrowings on line of credit ( Note 9 ) — 550 Payments on line of credit ( Note 9 ) — ( 780 ) Proceeds from exercise of stock options 45 6 Other ( 16 ) ( 15 ) Net cash from financing activities ( 451 ) ( 349 ) Net change in cash and cash equivalents 1,282 504 Cash and cash equivalents at beginning of period 495 139 Cash and cash equivalents at end of period $ 1,777 $ 643 Cash paid (received) during the period for: Interest, net of amount capitalized of $ 2 and $ 3 $ 154 $ 178 Income taxes, net of refunds $ 263 $ 1 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 JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Common shares: Balance at beginning of period $ 936 $ 933 $ 934 $ 932 Issued for exercise of stock options and vested units 1 — 3 1 Balance at end of period 937 933 937 933 Other capital: Balance at beginning of period 8,222 8,159 8,208 8,152 Issued for exercise of stock options 27 — 43 6 Share-based compensation 8 8 15 15 Other transactions, net 1 ( 1 ) ( 8 ) ( 7 ) Balance at end of period 8,258 8,166 8,258 8,166 Retained earnings (accumulated deficit): Balance at beginning of period 962 ( 109 ) 411 ( 3 ) Net earnings 1,028 72 1,709 222 Dividends on common shares ( 129 ) — ( 259 ) ( 256 ) Balance at end of period 1,861 ( 37 ) 1,861 ( 37 ) Accumulated other comprehensive loss: Balance at beginning of period ( 792 ) ( 901 ) ( 822 ) ( 904 ) Other comprehensive income 136 41 166 44 Balance at end of period ( Note 12 ) ( 656 ) ( 860 ) ( 656 ) ( 860 ) Total equity: Balance at end of period $ 10,400 $ 8,202 $ 10,400 $ 8,202 Dividends paid per common share $ 0.17 $ — $ 0.34 $ 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 11 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 AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 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 YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Sales to unaffiliated customers: Timberlands $ 405 $ 359 $ 784 $ 740 Real Estate & ENR 110 65 216 177 Wood Products 2,629 1,207 4,650 2,442 3,144 1,631 5,650 3,359 Intersegment sales: Timberlands 136 121 270 243 Total sales 3,280 1,752 5,920 3,602 Intersegment eliminations ( 136 ) ( 121 ) ( 270 ) ( 243 ) Total $ 3,144 $ 1,631 $ 5,650 $ 3,359 Net contribution (charge) to earnings: Timberlands $ 113 $ 75 $ 221 $ 180 Real Estate & ENR 63 19 129 55 Wood Products 1,338 159 2,178 293 1,514 253 2,528 528 Unallocated items (1) ( 84 ) ( 18 ) ( 149 ) ( 61 ) Net contribution to earnings 1,430 235 2,379 467 Interest expense, net of capitalized interest ( 78 ) ( 103 ) ( 157 ) ( 188 ) Earnings before income taxes 1,352 132 2,222 279 Income taxes ( 324 ) ( 60 ) ( 513 ) ( 57 ) Net earnings $ 1,028 $ 72 $ 1,709 $ 222 (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 YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Net sales to unaffiliated customers: Timberlands segment Delivered logs: West Domestic sales $ 80 $ 71 $ 159 $ 158 Export grade sales 142 108 264 198 Subtotal West 222 179 423 356 South 145 145 276 295 North 9 7 25 24 Subtotal delivered logs sales 376 331 724 675 Stumpage and pay-as-cut timber 7 5 13 10 Recreational and other lease revenue 16 16 32 31 Other (1) 6 7 15 24 Net sales attributable to Timberlands segment 405 359 784 740 Real Estate & ENR segment Real estate 83 48 167 143 Energy and natural resources 27 17 49 34 Net sales attributable to Real Estate & ENR segment 110 65 216 177 Wood Products segment Structural lumber 1,349 538 2,339 1,046 Oriented strand board 605 179 1,043 369 Engineered solid section 166 111 308 238 Engineered I-joists 104 70 187 148 Softwood plywood 69 34 125 73 Medium density fiberboard 43 33 91 77 Complementary building products 213 169 384 322 Other (2) 80 73 173 169 Net sales attributable to Wood Products segment 2,629 1,207 4,650 2,442 Total net sales $ 3,144 $ 1,631 $ 5,650 $ 3,359 ( 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: ● $ 1.37 during second quarter 2021 and $ 2.28 during year-to-date 2021; ● $ 0.10 during second quarter 2020 and $ 0.30 during year-to-date 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 YEAR-TO-DATE ENDED SHARES IN THOUSANDS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Weighted average common shares outstanding – basic 750,127 746,896 749,429 746,715 Dilutive potential common shares: Stock options 443 — 330 169 Restricted stock units 659 38 699 161 Performance share units 279 50 315 25 Total effect of outstanding dilutive potential common shares 1,381 88 1,344 355 Weighted average common shares outstanding – dilutive 751,508 746,984 750,773 747,070 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 JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Stock options — 4,676 — 4,676 Performance share units 1,142 1,139 1,142 1,139 NOTE 5: INVENTORIES Inventories include raw materials, work-in-process, finished goods, as well as materials and supplies. DOLLAR AMOUNTS IN MILLIONS JUNE 30, 2021 DECEMBER 31, 2020 LIFO inventories: Logs $ 17 $ 24 Lumber, plywood, panels and fiberboard 80 59 Other products 10 9 Moving average cost or FIFO inventories: Logs 67 64 Lumber, plywood, panels, fiberboard and engineered wood products 104 84 Other products 109 100 Materials and supplies 112 103 Total $ 499 $ 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 YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Service cost $ 10 $ 8 $ 21 $ 18 Interest cost 25 34 49 69 Expected return on plan assets ( 53 ) ( 57 ) ( 102 ) ( 116 ) Amortization of actuarial loss 27 31 57 61 Amortization of prior service cost — 1 1 2 Total net periodic benefit cost – pension $ 9 $ 17 $ 26 $ 34 OTHER POST-EMPLOYMENT BENEFITS QUARTER ENDED YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Interest cost $ 1 $ 1 $ 2 $ 2 Amortization of actuarial loss — — 2 1 Amortization of prior service credit 1 — — — Total net periodic benefit cost – other post-employment benefits $ 2 $ 1 $ 4 $ 3 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 the 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. During second quarter 2021, we recorded an increase to the beginning of the year fair value of the pension assets of $ 155 million, or 5 percent. We also updated our census data that is used to estimate our beginning of the year projected benefit obligation for our pension plans, which resulted in a projected benefit obligation increase of $ 17 million, or less than 1 percent. The net effect of these updates was a $ 138 million improvement in funded status. This change in funded status was reflected on our Consolidated Balance Sheet as of June 30, 2021. NOTE 8: ACCRUED LIABILITIES Accrued liabilities were comprised of the following: DOLLAR AMOUNTS IN MILLIONS JUNE 30, 2021 DECEMBER 31, 2020 Compensation and employee benefit costs $ 185 $ 204 Current portion of lease liabilities 23 26 Customer rebates, volume discounts and deferred income 160 111 Interest 86 87 Taxes payable 235 75 Other 86 93 Total $ 775 $ 596 10 NOTE 9: LONG-TERM DEBT AND LINE OF CREDIT In May 2021, we repaid our $ 225 million variable-rate term loan that was scheduled to mature in July 2026 . 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 May 2020, a portion of the net proceeds was used to redeem our $ 569 million 4.70 percent notes due in March 2021 . A net pretax charge of $ 11 million was included in “Interest expense, net of capitalized interest” in the Consolidated Statement of Operations in second quarter 2020 for the make-whole premium in connection with the early extinguishment of the $ 569 million notes, partially offset by the write-off of an unamortized fair value step-up adjustment. 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 June 30, 2021 and December 31, 2020. 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: JUNE 30, 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 $ 6,529 $ 5,250 $ 6,718 Variable rate — — 225 225 Total debt $ 5,250 $ 6,529 $ 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, 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 June 30, 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 YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Pension (1) Balance at beginning of period $ ( 1,044 ) $ ( 1,084 ) $ ( 1,064 ) $ ( 1,128 ) Other comprehensive income before reclassifications 100 — 96 20 Amounts reclassified from accumulated other comprehensive loss to earnings (2) 20 24 44 48 Total other comprehensive income 120 24 140 68 Balance at end of period ( 924 ) ( 1,060 ) ( 924 ) ( 1,060 ) Other Post-Employment Benefits (1) Balance at beginning of period $ ( 11 ) $ ( 11 ) $ ( 12 ) $ ( 12 ) Amounts reclassified from accumulated other comprehensive loss to earnings (2) 1 — 2 1 Total other comprehensive income 1 — 2 1 Balance at end of period ( 10 ) ( 11 ) ( 10 ) ( 11 ) Translation Adjustments and Other Balance at beginning of period $ 263 $ 194 $ 254 $ 236 Translation adjustments 15 17 24 ( 25 ) Total other comprehensive income (loss) 15 17 24 ( 25 ) Balance at end of period 278 211 278 211 Accumulated other comprehensive loss, end of period $ ( 656 ) $ ( 860 ) $ ( 656 ) $ ( 860 ) (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 year-to-date 2021 included the following: SHARES IN THOUSANDS GRANTED VESTED Restricted stock units (RSUs) 769 781 Performance share units (PSUs) 354 229 A total of 2.4 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 $ 34.38 . 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. On July 7, 2021, we completed the sale for $ 261 million in cash proceeds, which is net of purchase price adjustments and closing costs. This transaction was structured as a like-kind exchange along with the Alabama acquisition discussed below. As a result of the sale, a gain of approximately $ 30 million will be recorded in the Timberlands segment in our third quarter 2021 Consolidated Statement of Operations . This divestiture is not considered a strategic shift that has, or will have, a major effect on our operations or financial results and therefore does not meet the requirements for presentation as discontinued operations. However, the related assets have met the relevant criteria to be classified as held for sale in the current period Consolidated Balance Sheet . The designation as held for sale requires us to record the related net assets at the lower of their current cost basis or fair value, less an amount of estimated selling costs. This classification does not affect the presentation in the Consolidated Statement of Operations . The held for sale classification did change the presentation of the related assets from long-term to current on our Consolidated Balance Sheet . As of June 30, 2021, “Assets held for sale” had a balance of $ 229 million, which consisted primarily of timberlands and other related assets. 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 and recorded $ 148 million of timberland assets in “Timber and timberlands at cost, less depletion” and $ 1 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet . As discussed above, this transaction was structured as a like-kind exchange, and therefore, the southwest Alabama timberlands were held on our behalf by an intermediary as of June 30, 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 YEAR-TO-DATE ENDED DOLLAR AMOUNTS IN MILLIONS JUNE 2021 JUNE 2020 JUNE 2021 JUNE 2020 Foreign exchange losses (gains), net $ 1 $ ( 3 ) $ 3 $ 5 Litigation expense, net 3 6 6 2 Product remediation recovery — ( 8 ) — ( 8 ) Research and development expenses 1 2 2 3 Other, net 8 6 12 11 Total other operating costs, net $ 13 $ 3 $ 23 $ 13 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