Item 1. Financial Statements
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 2022
JUNE 2021
JUNE 2022
JUNE 2021
Net sales ( Note 3 )
$
2,973
$
3,144
$
6,085
$
5,650
Costs of sales
1,789
1,583
3,436
3,013
Gross margin
1,184
1,561
2,649
2,637
Selling expenses
23
24
46
44
General and administrative expenses
102
95
194
185
Other operating costs, net ( Note 13 )
12
13
18
23
Operating income
1,047
1,429
2,391
2,385
Non-operating pension and other post-employment benefit costs ( Note 6 )
( 11
)
( 1
)
( 26
)
( 9
)
Interest income and other
1
2
—
3
Interest expense, net of capitalized interest
( 65
)
( 78
)
( 137
)
( 157
)
Loss on debt extinguishment ( Note 8 )
—
—
( 276
)
—
Earnings before income taxes
972
1,352
1,952
2,222
Income taxes ( Note 14 )
( 184
)
( 324
)
( 393
)
( 513
)
Net earnings
$
788
$
1,028
$
1,559
$
1,709
Earnings per share, basic and diluted ( Note 4 )
$
1.06
$
1.37
$
2.09
$
2.28
Weighted average shares outstanding (in thousands) ( Note 4 ):
Basic
744,542
750,127
746,017
749,429
Diluted
745,582
751,508
747,194
750,773
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 2022
JUNE 2021
JUNE 2022
JUNE 2021
Net earnings
$
788
$
1,028
$
1,559
$
1,709
Other comprehensive income (loss):
Foreign currency translation adjustments
( 25
)
15
( 9
)
24
Changes in unamortized actuarial loss, net of tax expense of $ 24 , $ 38 , $ 29 and $ 45
77
121
90
141
Changes in unamortized net prior service credit, net of tax expense of $ 0 , $ 1 , $ 1 and $ 0
—
—
—
1
Total other comprehensive income
52
136
81
166
Total comprehensive income
$
840
$
1,164
$
1,640
$
1,875
See accompanying Notes to Consolidated Financial Statements .
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE
JUNE 30,
2022
DECEMBER 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
1,723
$
1,879
Receivables, net
547
507
Receivables for taxes
6
24
Inventories ( Note 5 )
571
520
Prepaid expenses and other current assets
165
205
Total current assets
3,012
3,135
Property and equipment, less accumulated depreciation of $ 3,673 and $ 3,592
2,000
2,057
Construction in progress
233
175
Timber and timberlands at cost, less depletion
11,706
11,510
Minerals and mineral rights, less depletion
248
255
Deferred tax assets
11
17
Other assets
370
503
Total assets
$
17,580
$
17,652
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
283
$
281
Accrued liabilities ( Note 7 )
658
673
Total current liabilities
941
954
Long-term debt, net ( Note 8 )
5,053
5,099
Deferred tax liabilities
83
46
Deferred pension and other post-employment benefits ( Note 6 )
347
440
Other liabilities
340
346
Total liabilities
6,764
6,885
Commitments and contingencies ( Note 10 )
Equity:
Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 741,738 thousand shares at June 30, 2022 and 747,301 thousand shares at December 31, 2021
927
934
Other capital
7,954
8,181
Retained earnings
2,333
2,131
Accumulated other comprehensive loss ( Note 11 )
( 398
)
( 479
)
Total equity
10,816
10,767
Total liabilities and equity
$
17,580
$
17,652
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 2022
JUNE 2021
Cash flows from operations:
Net earnings
$
1,559
$
1,709
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization
241
238
Basis of real estate sold
70
51
Deferred income taxes, net
14
19
Pension and other post-employment benefits ( Note 6 )
44
30
Share-based compensation expense ( Note 12 )
17
15
Loss on debt extinguishment ( Note 8 )
276
—
Change in:
Receivables, net
( 40
)
( 252
)
Receivables and payables for taxes
27
236
Inventories
( 58
)
( 51
)
Prepaid expenses and other current assets
( 3
)
( 1
)
Accounts payable and accrued liabilities
( 15
)
65
Pension and post-employment benefit contributions and payments
( 14
)
( 33
)
Other
( 15
)
( 20
)
Net cash from operations
2,103
2,006
Cash flows from investing activities:
Capital expenditures for property and equipment
( 121
)
( 93
)
Capital expenditures for timberlands reforestation
( 30
)
( 32
)
Acquisition of timberlands ( Note 16 )
( 283
)
( 149
)
Other
1
1
Net cash from investing activities
( 433
)
( 273
)
Cash flows from financing activities:
Cash dividends on common shares
( 1,352
)
( 255
)
Net proceeds from issuance of long-term debt ( Note 8 )
881
—
Payments on long-term debt ( Note 8 )
( 1,203
)
( 225
)
Proceeds from exercise of stock options
14
45
Repurchases of common shares ( Note 4 )
( 259
)
—
Other
( 19
)
( 16
)
Net cash from financing activities
( 1,938
)
( 451
)
Net change in cash, cash equivalents and restricted cash
( 268
)
1,282
Cash, cash equivalents and restricted cash at beginning of period
1,999
495
Cash, cash equivalents and restricted cash at end of period
$
1,731
$
1,777
Cash paid (received) during the period for:
Interest, net of amount capitalized of $ 3 and $ 2
$
149
$
154
Income taxes, net of refunds
$
354
$
263
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 2022
JUNE 2021
JUNE 2022
JUNE 2021
Common shares:
Balance at beginning of period
$
932
$
936
$
934
$
934
Issued for exercise of stock options and vested units
—
1
2
3
Repurchases of common shares ( Note 4 )
( 5
)
—
( 9
)
—
Balance at end of period
927
937
927
937
Other capital:
Balance at beginning of period
8,076
8,222
8,181
8,208
Issued for exercise of stock options
2
27
13
43
Repurchases of common shares ( Note 4 )
( 133
)
—
( 250
)
—
Share-based compensation
9
8
17
15
Other transactions, net
—
1
( 7
)
( 8
)
Balance at end of period
7,954
8,258
7,954
8,258
Retained earnings:
Balance at beginning of period
1,679
962
2,131
411
Net earnings
788
1,028
1,559
1,709
Dividends on common shares
( 134
)
( 129
)
( 1,357
)
( 259
)
Balance at end of period
2,333
1,861
2,333
1,861
Accumulated other comprehensive loss:
Balance at beginning of period
( 450
)
( 792
)
( 479
)
( 822
)
Other comprehensive income
52
136
81
166
Balance at end of period ( Note 11 )
( 398
)
( 656
)
( 398
)
( 656
)
Total equity:
Balance at end of period
$
10,816
$
10,400
$
10,816
$
10,400
Dividends paid per common share
$
0.18
$
0.17
$
1.81
$
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 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 ACQUISITIONS
13
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 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
YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Sales to unaffiliated customers:
Timberlands
$
515
$
405
$
980
$
784
Real Estate & ENR
117
110
245
216
Wood Products
2,341
2,629
4,860
4,650
2,973
3,144
6,085
5,650
Intersegment sales:
Timberlands
156
136
317
270
Total sales
3,129
3,280
6,402
5,920
Intersegment eliminations
( 156
)
( 136
)
( 317
)
( 270
)
Total
$
2,973
$
3,144
$
6,085
$
5,650
Net contribution (charge) to earnings:
Timberlands
$
153
$
113
$
335
$
221
Real Estate & ENR
65
63
146
129
Wood Products
863
1,338
2,045
2,178
1,081
1,514
2,526
2,528
Unallocated items ( 1)
( 44
)
( 84
)
( 161
)
( 149
)
Net contribution to earnings
1,037
1,430
2,365
2,379
Interest expense, net of capitalized interest
( 65
)
( 78
)
( 137
)
( 157
)
Loss on debt extinguishment
—
—
( 276
)
—
Earnings before income taxes
972
1,352
1,952
2,222
Income taxes
( 184
)
( 324
)
( 393
)
( 513
)
Net earnings
$
788
$
1,028
$
1,559
$
1,709
(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 2022
JUNE 2021
JUNE 2022
JUNE 2021
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales
$
103
$
80
$
216
$
159
Export grade sales
205
142
351
264
Subtotal West
308
222
567
423
South
160
145
314
276
North
10
9
25
25
Subtotal delivered logs sales
478
376
906
724
Stumpage and pay-as-cut timber
11
7
20
13
Recreational and other lease revenue
16
16
33
32
Other ( 1)
10
6
21
15
Net sales attributable to Timberlands segment
515
405
980
784
Real Estate & ENR segment
Real estate
90
83
187
167
Energy and natural resources
27
27
58
49
Net sales attributable to Real Estate & ENR segment
117
110
245
216
Wood Products segment
Structural lumber
998
1,349
2,204
2,339
Oriented strand board
497
605
1,061
1,043
Engineered solid section
247
166
443
308
Engineered I-joists
168
104
305
187
Softwood plywood
53
69
111
125
Medium density fiberboard
53
43
101
91
Complementary building products
239
213
454
384
Other ( 2)
86
80
181
173
Net sales attributable to Wood Products segment
2,341
2,629
4,860
4,650
Total net sales
$
2,973
$
3,144
$
6,085
$
5,650
( 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:
●
$ 1.06 during second quarter 2022 and $ 2.09 during year-to-date 2022;
●
$ 1.37 during second quarter 2021 and $ 2.28 during year-to date 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
YEAR-TO-DATE ENDED
SHARES IN THOUSANDS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Weighted average common shares outstanding – basic
744,542
750,127
746,017
749,429
Dilutive potential common shares:
Stock options
308
443
346
330
Restricted stock units
410
659
415
699
Performance share units
322
279
416
315
Total effect of outstanding dilutive potential common shares
1,040
1,381
1,177
1,344
Weighted average common shares outstanding – dilutive
745,582
751,508
747,194
750,773
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 2022
JUNE 2021
JUNE 2022
JUNE 2021
Performance share units
573
1,142
573
1,142
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 3,784,787 common shares for approximately $ 138 million under the 2021 Repurchase Program during second quarter 2022 and 6,982,462 common shares for approximately $ 259 million under the 2021 Repurchase Program during year-to-date 2022. As of June 30, 2022, we had remaining authorization of $ 668 million for future share repurchases. We did no t repurchase shares during year-to-date 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 no unsettled repurchases as of June 30, 2022, or December 31, 2021.
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS
JUNE 30,
2022
DECEMBER 31,
2021
LIFO inventories:
Logs
$
17
$
26
Lumber, plywood, panels and fiberboard
75
61
Other products
25
17
Moving average cost or FIFO inventories:
Logs
53
65
Lumber, plywood, panels, fiberboard and engineered wood products
127
106
Other products
151
131
Materials and supplies
123
114
Total
$
571
$
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
YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Service cost
$
8
$
10
$
18
$
21
Interest cost
26
25
53
49
Expected return on plan assets
( 41
)
( 53
)
( 80
)
( 102
)
Amortization of actuarial loss
23
27
47
57
Amortization of prior service cost
—
—
1
1
Total net periodic benefit cost – pension
$
16
$
9
$
39
$
26
OTHER POST-EMPLOYMENT BENEFITS
QUARTER ENDED
YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Interest cost
$
1
$
1
$
2
$
2
Amortization of actuarial loss
2
—
3
2
Amortization of prior service credit
—
1
—
—
Total net periodic benefit cost – other post-employment benefits
$
3
$
2
$
5
$
4
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 2022, we recorded an increase to the beginning of the year fair value of the pension assets of $ 54 million, or 2 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 decrease of $ 13 million, or less than 1 percent. The net effect of these updates was a $ 67 million improvement in funded status. This change in funded status was reflected on our Consolidated Balance Sheet as of June 30, 2022.
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS
JUNE 30,
2022
DECEMBER 31,
2021
Compensation and employee benefit costs
$
197
$
225
Current portion of lease liabilities
22
24
Customer rebates, volume discounts and deferred income
190
164
Interest
68
83
Taxes payable
119
106
Other
62
71
Total
$
658
$
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
10
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 June 30, 2022 and December 31, 2021.
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
JUNE 30,
2022
DECEMBER 31, 2021
Long-term fixed rate debt (including current maturities):
Carrying value
$
5,053
$
5,099
Fair value (level 2)
$
5,118
$
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 June 30, 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
YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Pension ( 1)
Balance at beginning of period
$
( 709
)
$
( 1,044
)
$
( 720
)
$
( 1,064
)
Other comprehensive income before reclassifications
59
100
51
96
Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)
18
20
37
44
Total other comprehensive income
77
120
88
140
Balance at end of period
$
( 632
)
$
( 924
)
$
( 632
)
$
( 924
)
Other post-employment benefits ( 1)
Balance at beginning of period
$
—
$
( 11
)
$
( 2
)
$
( 12
)
Other comprehensive loss before reclassifications
( 1
)
—
—
—
Amounts reclassified from accumulated other comprehensive loss to earnings ( 2)
1
1
2
2
Total other comprehensive income
—
1
2
2
Balance at end of period
$
—
$
( 10
)
$
—
$
( 10
)
Translation adjustments and other
Balance at beginning of period
$
259
$
263
$
243
$
254
Translation adjustments
( 25
)
15
( 9
)
24
Total other comprehensive income (loss)
( 25
)
15
( 9
)
24
Balance at end of period
234
278
234
278
Accumulated other comprehensive loss, end of period
$
( 398
)
$
( 656
)
$
( 398
)
$
( 656
)
(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 year-to-date 2022 included the following:
SHARES IN THOUSANDS
GRANTED
VESTED
Restricted stock units (RSUs)
626
853
Performance share units (PSUs)
306
419
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 2022 was $ 41.94 . 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
YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS
JUNE 2022
JUNE 2021
JUNE 2022
JUNE 2021
Foreign exchange losses (gains), net
$
( 3
)
$
1
$
( 4
)
$
3
Litigation expense, net
4
3
8
6
Research and development expenses
2
1
3
2
Other, net
9
8
11
12
Total other operating costs, net
$
12
$
13
$
18
$
23
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
JUNE 30,
2022
DECEMBER 31,
2021
Cash and cash equivalents
$
1,723
$
1,879
Restricted cash included in other assets ( 1)
—
120
Restricted cash included in prepaid expenses and other current assets
8
—
Total cash, cash equivalents and restricted cash
$
1,731
$
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 ACQUISITIONS
On April 14, 2022, we announced an agreement to purchase 81 thousand acres of North and South Carolina timberlands for approximately $ 265 million. We completed the purchase on May 18, 2022 and 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 .
On February 25, 2021, we announced an agreement to purchase 69 thousand 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 . This transaction was structured as a like-kind exchange.
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.