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 2022
MARCH 2021
Net sales ( Note 3 )
$
3,112
$
2,506
Costs of sales
1,647
1,430
Gross margin
1,465
1,076
Selling expenses
23
20
General and administrative expenses
92
90
Other operating costs, net ( Note 13 )
6
10
Operating income
1,344
956
Non-operating pension and other post-employment benefit costs ( Note 6 )
( 15
)
( 8
)
Interest income and other
( 1
)
1
Interest expense, net of capitalized interest
( 72
)
( 79
)
Loss on debt extinguishment ( Note 8 )
( 276
)
—
Earnings before income taxes
980
870
Income taxes ( Note 14 )
( 209
)
( 189
)
Net earnings
$
771
$
681
Earnings per share, basic and diluted ( Note 4 )
$
1.03
$
0.91
Weighted average shares outstanding (in thousands) ( Note 4 ):
Basic
747,507
748,718
Diluted
748,823
750,024
See accompanying Notes to Consolidated Financial Statements .
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Net earnings
$
771
$
681
Other comprehensive income (loss):
Foreign currency translation adjustments
16
9
Changes in unamortized actuarial loss, net of tax expense of $ 5 and $ 7
13
20
Changes in unamortized net prior service credit, net of tax (expense) benefit of ($ 1 ) and $ 1
—
1
Total other comprehensive income
29
30
Total comprehensive income
$
800
$
711
See accompanying Notes to Consolidated Financial Statements .
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE
MARCH 31,
2022
DECEMBER 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,205
$
1,879
Receivables, net
745
507
Receivables for taxes
8
24
Inventories ( Note 5 )
611
520
Prepaid expenses and other current assets
206
205
Total current assets
2,775
3,135
Property and equipment, less accumulated depreciation of $ 3,654 and $ 3,592
2,026
2,057
Construction in progress
203
175
Timber and timberlands at cost, less depletion
11,469
11,510
Minerals and mineral rights, less depletion
252
255
Deferred tax assets
15
17
Other assets
376
503
Total assets
$
17,116
$
17,652
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
310
$
281
Accrued liabilities ( Note 7 )
674
673
Total current liabilities
984
954
Long-term debt, net ( Note 8 )
5,053
5,099
Deferred tax liabilities
66
46
Deferred pension and other post-employment benefits ( Note 6 )
432
440
Other liabilities
344
346
Total liabilities
6,879
6,885
Commitments and contingencies ( Note 10 )
Equity:
Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 745,442 thousand shares at March 31, 2022 and 747,301 thousand shares at December 31, 2021
932
934
Other capital
8,076
8,181
Retained earnings
1,679
2,131
Accumulated other comprehensive loss ( Note 11 )
( 450
)
( 479
)
Total equity
10,237
10,767
Total liabilities and equity
$
17,116
$
17,652
See accompanying Notes to Consolidated Financial Statements .
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Cash flows from operations:
Net earnings
$
771
$
681
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization
122
118
Basis of real estate sold
31
27
Deferred income taxes, net
14
8
Pension and other post-employment benefits ( Note 6 )
25
19
Share-based compensation expense ( Note 12 )
8
7
Loss on debt extinguishment
276
—
Change in:
Receivables, net
( 238
)
( 139
)
Receivables and payables for taxes
110
120
Inventories
( 87
)
( 60
)
Prepaid expenses and other current assets
( 1
)
( 2
)
Accounts payable and accrued liabilities
( 62
)
( 60
)
Pension and post-employment benefit contributions and payments
( 4
)
( 8
)
Other
( 8
)
( 13
)
Net cash from operations
957
698
Cash flows from investing activities:
Capital expenditures for property and equipment
( 50
)
( 31
)
Capital expenditures for timberlands reforestation
( 20
)
( 22
)
Acquisition of timberlands
( 18
)
—
Other
1
—
Net cash from investing activities
( 87
)
( 53
)
Cash flows from financing activities:
Cash dividends on common shares
( 1,218
)
( 127
)
Net proceeds from issuance of long-term debt ( Note 8 )
881
—
Payments on long-term debt ( Note 8 )
( 1,203
)
—
Proceeds from exercise of stock options
12
17
Repurchases of common shares ( Note 4 )
( 118
)
—
Other
( 18
)
( 14
)
Net cash from financing activities
( 1,664
)
( 124
)
Net change in cash, cash equivalents and restricted cash
( 794
)
521
Cash, cash equivalents and restricted cash at beginning of period
1,999
495
Cash, cash equivalents and restricted cash at end of period
$
1,205
$
1,016
Cash paid (received) during the period for:
Interest, net of amount capitalized of $ 1 and $ 1
$
78
$
75
Income taxes, net of refunds
$
85
$
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 2022
MARCH 2021
Common shares:
Balance at beginning of period
$
934
$
934
Issued for exercise of stock options and vested units
2
2
Repurchases of common shares ( Note 4 )
( 4
)
—
Balance at end of period
932
936
Other capital:
Balance at beginning of period
8,181
8,208
Issued for exercise of stock options
11
16
Repurchases of common shares ( Note 4 )
( 117
)
—
Share-based compensation
8
7
Other transactions, net
( 7
)
( 9
)
Balance at end of period
8,076
8,222
Retained earnings:
Balance at beginning of period
2,131
411
Net earnings
771
681
Dividends on common shares
( 1,223
)
( 130
)
Balance at end of period
1,679
962
Accumulated other comprehensive loss:
Balance at beginning of period
( 479
)
( 822
)
Other comprehensive income
29
30
Balance at end of period ( Note 11 )
( 450
)
( 792
)
Total equity:
Balance at end of period
$
10,237
$
9,328
Dividends paid per common share
$
1.63
$
0.17
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:
RESTRICTED CASH
13
NOTE 16:
TIMBERLAND ACQUISITION
13
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2022 AND 2021
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, 2021. 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 2022
MARCH 2021
Sales to unaffiliated customers:
Timberlands
$
465
$
379
Real Estate & ENR
128
106
Wood Products
2,519
2,021
3,112
2,506
Intersegment sales:
Timberlands
161
134
Total sales
3,273
2,640
Intersegment eliminations
( 161
)
( 134
)
Total
$
3,112
$
2,506
Net contribution (charge) to earnings:
Timberlands
$
182
$
108
Real Estate & ENR
81
66
Wood Products
1,182
840
1,445
1,014
Unallocated items ( 1)
( 117
)
( 65
)
Net contribution to earnings
1,328
949
Interest expense, net of capitalized interest
( 72
)
( 79
)
Loss on debt extinguishment
( 276
)
—
Earnings before income taxes
980
870
Income taxes
( 209
)
( 189
)
Net earnings
$
771
$
681
(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 2022
MARCH 2021
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales
$
113
$
79
Export grade sales
146
122
Subtotal West
259
201
South
154
131
North
15
16
Subtotal delivered logs sales
428
348
Stumpage and pay-as-cut timber
9
6
Recreational and other lease revenue
17
16
Other ( 1)
11
9
Net sales attributable to Timberlands segment
465
379
Real Estate & ENR segment
Real estate
97
84
Energy and natural resources
31
22
Net sales attributable to Real Estate & ENR segment
128
106
Wood Products segment
Structural lumber
1,206
990
Oriented strand board
564
438
Engineered solid section
196
142
Engineered I-joists
137
83
Softwood plywood
58
56
Medium density fiberboard
48
48
Complementary building products
215
171
Other ( 2)
95
93
Net sales attributable to Wood Products segment
2,519
2,021
Total net sales
$
3,112
$
2,506
( 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:
●
$ 1.03 during first quarter 2022 and
●
$ 0.91 during first quarter 2021.
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 2022
MARCH 2021
Weighted average common shares outstanding – basic
747,507
748,718
Dilutive potential common shares:
Stock options
384
217
Restricted stock units
420
738
Performance share units
512
351
Total effect of outstanding dilutive potential common shares
1,316
1,306
Weighted average common shares outstanding – dilutive
748,823
750,024
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 2022
MARCH 2021
Stock options
—
147
Performance share units
693
1,115
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).
During first quarter 2022, we repurchased 3,197,675 common shares for approximately $ 121 million under the 2021 Repurchase Program. As of March 31, 2022, we had remaining authorization of $ 806 million for future share repurchases. We did no t repurchase shares during first quarter 2021.
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 78,380 unsettled shares (approximately $ 3 million) as of March 31, 2022 and no unsettled shares as of December 31, 2021.
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process, finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2022
DECEMBER 31,
2021
LIFO inventories:
Logs
$
30
$
26
Lumber, plywood, panels and fiberboard
80
61
Other products
22
17
Moving average cost or FIFO inventories:
Logs
104
65
Lumber, plywood, panels, fiberboard and engineered wood products
116
106
Other products
140
131
Materials and supplies
119
114
Total
$
611
$
520
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.
9
NOTE 6: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
PENSION
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Service cost
$
10
$
11
Interest cost
27
24
Expected return on plan assets
( 39
)
( 49
)
Amortization of actuarial loss
24
30
Amortization of prior service cost
1
1
Total net periodic benefit cost – pension
$
23
$
17
OTHER POST-EMPLOYMENT BENEFITS
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Interest cost
$
1
$
1
Amortization of actuarial loss
1
2
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 .
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.
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2022
DECEMBER 31,
2021
Compensation and employee benefit costs
$
166
$
225
Current portion of lease liabilities
23
24
Customer rebates, volume discounts and deferred income
119
164
Interest
72
83
Taxes payable
202
106
Other
92
71
Total
$
674
$
673
NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT
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 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, 2022 and December 31, 2021.
10
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
MARCH 31,
2022
DECEMBER 31, 2021
Long-term fixed rate debt (including current maturities):
Carrying value
$
5,053
$
5,099
Fair value (level 2)
$
5,538
$
6,221
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.
NOTE 10: 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, 2022, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 62 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet .
11
NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Pension ( 1)
Balance at beginning of period
$
( 720
)
$
( 1,064
)
Other comprehensive income (loss) before reclassifications
( 8
)
( 4
)
Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)
19
24
Total other comprehensive income
11
20
Balance at end of period
$
( 709
)
$
( 1,044
)
Other post-employment benefits ( 1)
Balance at beginning of period
$
( 2
)
$
( 12
)
Other comprehensive income (loss) before reclassifications
1
—
Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)
1
1
Total other comprehensive income
2
1
Balance at end of period
$
—
$
( 11
)
Translation adjustments and other
Balance at beginning of period
$
243
$
254
Translation adjustments
16
9
Total other comprehensive income
16
9
Balance at end of period
259
263
Accumulated other comprehensive loss, end of period
$
( 450
)
$
( 792
)
(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 6: Pension and Other Post-Employment Benefit Plans .
NOTE 12: SHARE-BASED COMPENSATION
Share-based compensation activity during first quarter 2022 included the following:
SHARES IN THOUSANDS
GRANTED
VESTED
Restricted stock units (RSUs)
615
830
Performance share units (PSUs)
295
419
A total of 1.3 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 2022 was $ 42.13 . The vesting provisions for RSUs granted in 2022 were consistent with prior year grants.
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2022 was $ 49.77 . The final number of shares granted in 2022 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 2022 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 2022
PERFORMANCE SHARE UNITS
Performance period
2/10/2022 – 12/31/2024
Valuation date average stock price ( 1)
$ 42.16
Expected dividends
1.72 %
Risk-free rate
0.34% – 1.84%
Expected volatility
26.27% – 41.01%
(1)
Calculated as an average of the high and low prices on grant date.
12
NOTE 13: OTHER OPERATING COSTS, NET
Other operating costs, net were comprised of the following:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2022
MARCH 2021
Foreign exchange losses (gains), net
$
( 1
)
$
2
Litigation expense, net
4
3
Research and development expenses
1
1
Other, net
2
4
Total other operating costs, net
$
6
$
10
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 2022 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.
NOTE 15: RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on our Consolidated Balance Sheet that sum to the total of the amounts shown in the Consolidated Statement of Cash Flows :
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2022
December 31,
2021
Cash and cash equivalents
$
1,205
$
1,879
Restricted cash included in other assets ( 1)
—
120
Total cash, cash equivalents and restricted cash
$
1,205
$
1,999
(1) Amounts included in restricted cash as of December 31, 2021 were comprised of proceeds held by a qualified intermediary that were intended to be reinvested in timber and timberlands through a like-kind exchange transaction. In first quarter 2022, the proceeds were released as a like-kind property was not identified.
NOTE 16: TIMBERLAND ACQUISITION
On April 14, 2022, we announced an agreement to purchase 81 thousand acres of North and South Carolina timberlands for approximately $ 265 million. The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2022.
13
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.