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Pro forma net income | 71 | SEC-NUM |
[Table of Contents](#i1852a2ea91e948d98ea7c44fc3e188ea_7)from the results reflected in the following pro forma information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors.
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| (In millions, except per share amounts) | | Six Months Ended June 30, 2021 |
| Pro forma revenue | | $ | 1,802 | | | |
| Pro forma net income | | 71 | | | |
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| Pro forma basic earnings per share | | $ | 0.09 | | | |
| Pro forma diluted earnings per share | | $ | 0.09 | | | |
3. Properties and Equipment, NetProperties and equipment, net are comprised of the following:
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| (In millions) | | June 30,2022 | | December 31,2021 |
| Proved oil and gas properties | | $ | 16,102 | | | $ | 15,340 | |
| Unproved oil and gas properties | | 5,292 | | | 5,316 | |
| Gathering and pipeline systems | | 423 | | | 395 | |
| Land, buildings and other equipment | | 144 | | | 140 | |
| Finance lease right-of-use asset | | 24 | | | 20 | |
| | | 21,985 | | | 21,211 | |
| Accumulated depreciation, depletion and amortization | | (4,578) | | | (3,836) | |
| | | $ | 17,407 | | | $ | 17,375 | |
Capitalized Exploratory Well CostsAs of June 30, 2022, the Company did not have any projects with exploratory well costs capitalized for a period of greater than one year after drilling.4. Debt and Credit AgreementsThe Company’s debt and credit agreements consisted of the following:
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| (In millions) | | June 30,2022 | | December 31,2021 |
| 6.51% weighted-average private placement senior notes (1) | | $ | 37 | | | $ | 37 | |
| 5.58% weighted-average private placement senior notes (2) | | 87 | | | 87 | |
| 3.65% weighted-average private placement senior notes | | 825 | | | 825 | |
| 4.375% senior notes due June 1, 2024 | | 750 | | | 750 | |
| 3.90% senior notes due May 15, 2027 | | 750 | | | 750 | |
| 4.375% senior notes due March 15, 2029 | | 500 | | | 500 | |
| Revolving credit facility | | — | | | — | |
| Net premium (discount) | | 164 | | | 185 | |
| Unamortized debt issuance costs | | (8) | | | (9) | |
| | | $ | 3,105 | | | $ | 3,125 | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) Includes $37 million of current portion of long-term debt at June 30, 2022.(2) Includes $87 million of current portion of long-term debt at June 30, 2022.At June 30, 2022, the Company was in compliance with all financial and other covenants for both its revolving credit facility and senior notes. 8
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Goodwill impairment analysis, discount rate | 19 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music") for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million, during 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment. On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements. There were no underlying business conditions that provided an indication of the existence of impairment. During the fourth quarter of 2021 the Company performed a quantitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that, other than the Music goodwill impairment loss noted above, there was no other impairment to any of its reporting units. Accordingly, no goodwill impairment was recorded as a result of the quantitative test for the year ended December 26, 2021.During the fourth quarter of 2020 the Company performed a qualitative goodwill assessment with respect to its reporting units, including eOne, and determined that it was not necessary to perform a quantitative assessment for the goodwill of the Company's reporting units. During the fourth quarter of 2019, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business. These modifications included organizational actions and related personnel changes, the extension of launch dates for games currently in or planned for development and the addition of partners for the development of future games releases. The modifications resulted in changes to the long-term projections for the Backflip business. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. Discounted cash flows serve as the primary basis for the Income Approach. The Company utilized forecasted cash flows for the Backflip reporting unit that included assumptions including but not limited to: expected revenues to be realized based on planned future mobile game releases, expected EBITDA margins derived in part based on expected future royalty costs, advertising and marketing costs, development costs, overhead costs, and expected future tax rates. The cash flows beyond the forecast period were estimated using a terminal value growth rate of 3%. To calculate the fair value of the future cash flows under the Income Approach, a discount rate of 19% was utilized, representing the reporting unit’s estimated weighted-average cost of capital. Based on the results of the impairment test, the Company determined that the carrying value of the Backflip reporting unit exceeded its estimated fair value. Based on this assessment, the Company recorded an impairment charge of $86.3 million in the fourth quarter of 2019, in the Company’s Wizards of the Coast & Digital Gaming segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip in 2019, the Company concluded there was no other impairment of goodwill during 2019. Other Intangible Assets, NetThe following table represents a summary of the Company’s other intangible assets, net at December 26, 2021 and December 27, 2020:
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| (In millions) | 2021 | | 2020 |
| Acquired product rights | $ | 2,101.7 | | | 2,374.7 | |
| Licensed rights of entertainment properties | 45.0 | | | 45.0 | |
| Accumulated amortization | (1,050.4) | | | (964.6) | |
| Amortizable intangible assets | 1,096.3 | | | 1,455.1 | |
| Product rights with indefinite lives | 75.7 | | | 75.7 | |
| Total other intangibles assets, net | $ | 1,172.0 | | | 1,530.8 | |
Certain intangible assets relating to rights obtained in the Company’s acquisition of Milton Bradley in 1984 and Tonka in 1991 are not amortized. These rights were determined to have indefinite lives and are included as product rights with indefinite lives in the table above. The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the 95
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Common stock, par value (in dollars per share) | 0.01 | SEC-NUM |
[Table of Contents](#i7c08528f82aa4260b71dd1d8bcc2d1c3_7)
PART I—FINANCIAL INFORMATIONItem 1. Financial Statements
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| CDW CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(dollars in millions, except per share amounts) |
| | September 30, 2022 | | December 31, 2021 |
| Assets | (unaudited) | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 384.6 | | | $ | 258.1 | |
| Accounts receivable, net of allowance for credit losses of $24.0 and $20.4, respectively | 4,549.4 | | | 4,499.4 | |
| Merchandise inventory | 914.5 | | | 927.6 | |
| Miscellaneous receivables | 486.4 | | | 435.5 | |
| Prepaid expenses and other | 560.3 | | | 357.5 | |
| Total current assets | 6,895.2 | | | 6,478.1 | |
| Operating lease right-of-use assets | 153.8 | | | 155.6 | |
| Property and equipment, net | 188.0 | | | 195.8 | |
| Goodwill | 4,327.5 | | | 4,382.9 | |
| Other intangible assets, net | 1,525.5 | | | 1,628.1 | |
| Other assets | 385.6 | | | 358.9 | |
| Total Assets | $ | 13,475.6 | | | $ | 13,199.4 | |
| Liabilities and Stockholders’ Equity | | | |
| Current liabilities: | | | |
| Accounts payable-trade | $ | 3,251.1 | | | $ | 3,114.2 | |
| Accounts payable-inventory financing | 478.7 | | | 448.3 | |
| Current maturities of long-term debt | 57.8 | | | 102.7 | |
| Contract liabilities | 437.7 | | | 402.9 | |
| Accrued expenses and other current liabilities: | | | |
| Compensation | 359.1 | | | 361.7 | |
| Advertising | 169.8 | | | 145.5 | |
| Sales and income taxes | 58.0 | | | 65.9 | |
| Other | 546.6 | | | 454.8 | |
| Total current liabilities | 5,358.8 | | | 5,096.0 | |
| Long-term liabilities: | | | |
| Debt | 6,100.0 | | | 6,755.8 | |
| Deferred income taxes | 208.3 | | | 222.3 | |
| Operating lease liabilities | 180.0 | | | 184.2 | |
| Other liabilities | 302.5 | | | 235.4 | |
| Total long-term liabilities | 6,790.8 | | | 7,397.7 | |
| Commitments and contingencies | | | |
| Stockholders’ equity: | | | |
| Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods | — | | | — | |
| Common stock, $0.01 par value, 1,000.0 shares authorized; 135.3 and 134.8 shares outstanding, respectively | 1.4 | | | 1.3 | |
| Paid-in capital | 3,481.5 | | | 3,369.5 | |
| Accumulated deficit | (1,969.3) | | | (2,570.7) | |
| Accumulated other comprehensive loss | (187.6) | | | (94.4) | |
| Total stockholders’ equity | 1,326.0 | | | 705.7 | |
| Total Liabilities and Stockholders’ Equity | $ | 13,475.6 | | | $ | 13,199.4 | |
The accompanying notes are an integral part of the Consolidated Financial Statements.3
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Operating Lease Liabilities | 935 | SEC-NUM |
As of March 31, 2022 and December 31, 2021, the weighted average remaining lease term of our operating leases was 7 years for each period. The lease liabilities reflect a weighted average discount rate of 2.68% at March 31, 2022 and 2.69% at December 31, 2021.Future lease payments for noncancellable operating leases with initial or remaining terms of one year or more are as follows:
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| 2022 (excluding the three months ended March 31, 2022) | $ | 157 | |
| 2023 | 194 | |
| 2024 | 165 | |
| 2025 | 127 | |
| 2026 | 90 | |
| Thereafter | 307 | |
| Total future minimum payments | 1,040 | |
| Less imputed interest | (105) | |
| Total lease liabilities | $ | 935 | |
As of March 31, 2022, we have additional operating leases for building spaces that have not yet commenced, and some building spaces are being constructed by the lessors and their agents. These leases have terms of up to 10 years and are expected to commence on various dates during 2022 when the construction is complete and we take possession of the buildings. The undiscounted lease payments for these leases, which are not included in the tables above, aggregate to $41.-36-
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Employee stock purchase plan, maximum employee subscription rate percent | 15 | SEC-NUM |
[Table of Contents](#i1d117440a79147f69db4408bc4f22334_10)Part IV
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IRON MOUNTAIN INCORPORATEDNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)DECEMBER 31, 2021(In thousands, except share and per share data)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)EMPLOYEE STOCK PURCHASE PLANWe offer an ESPP in which participation is available to substantially all United States and Canadian employees who meet certain service eligibility requirements. The ESPP provides for the purchase of our common stock by eligible employees through successive offering periods. We have historically had two six-month offering periods per year, the first of which generally runs from June 1 through November 30 and the second of which generally runs from December 1 through May 31. During each offering period, participating employees accumulate after-tax payroll contributions, up to a maximum of 15% of their compensation, to pay the purchase price at the end of the offering. Participating employees may withdraw from an offering before the purchase date and obtain a refund of the amounts withheld as payroll deductions. At the end of the offering period, outstanding options under the ESPP are exercised, and each employee’s accumulated contributions are used to purchase our common stock. The price for shares purchased under the ESPP is 95% of the fair market price at the end of the offering period, without a look-back feature. As a result, we do not recognize compensation expense for the ESPP shares purchased. In May 2021, our stockholders approved an amendment to the ESPP to increase the number of shares of Common Stock authorized for issuance thereunder by 1,000,000 from 1,000,000 to 2,000,000. For the years ended December 31, 2021, 2020 and 2019, there were 112,297, 159,853 and 129,505 shares, respectively, purchased under the ESPP. As of December 31, 2021, we have 1,103,990 shares available under the ESPP.\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_As of December 31, 2021, unrecognized compensation cost related to the unvested portion of our Employee Stock-Based Awards was $42,559 and is expected to be recognized over a weighted-average period of 1.9 years.We issue shares of our common stock for the exercises of stock options, and the vesting of RSUs, PUs and shares of our common stock under our ESPP from unissued reserved shares.T. ACQUISITION AND INTEGRATION COSTSAcquisition and integration costs represent operating expenditures directly associated with the closing and integration activities of our business acquisitions that have closed, or are highly probable of closing, and include (i) advisory, legal and professional fees to complete business acquisitions and (ii) costs to integrate acquired businesses into our existing operations, including move, severance, facility upgrade and system integration costs (collectively, "Acquisition and Integration Costs"). Acquisition and Integration Costs do not include costs associated with the formation of joint ventures or costs associated with the acquisition of customer relationships. Acquisition and integration costs for the year ended December 31, 2021, 2020 and 2019 were $12,764, $0 and $13,293, respectively. U. OTHER (INCOME) EXPENSE, NETConsolidated other (income) expense, net for the years ended December 31, 2021, 2020 and 2019 consists of the following:
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| | YEAR ENDED DECEMBER 31, |
| | 2021 | | 2020 | | 2019 |
| Foreign currency transaction (gains) losses, net(1) | $ | (15,753) | | | $ | 29,830 | | | $ | 24,852 | |
| Debt extinguishment expense | — | | | 68,300 | | | — | |
| Other, net(2) | (177,051) | | | 45,415 | | | 9,046 | |
| Other (Income) Expense, Net | $ | (192,804) | | | $ | 143,545 | | | $ | 33,898 | |
(1)The gain or loss on foreign currency transactions, calculated as the difference between the historical exchange rate and the exchange rate at the applicable measurement date, includes gains or losses primarily related to (i) borrowings in certain foreign currencies under our Revolving Credit Facility (as defined in Note 7), (ii) our previously outstanding 3% Euro Senior Notes due 2025 ("Euro Notes"), (iii) certain foreign currency denominated intercompany obligations of our foreign subsidiaries to us and between our foreign subsidiaries, which are not considered permanently invested and (iv) amounts that are paid or received on the net settlement amount from forward contracts (as more fully discussed in Note 6).(2)Other, net for the year ended December 31, 2021 consists primarily of (a) a gain of approximately $179,000 associated with our IPM Divestment and (b) a gain of approximately $20,300 associated with the loss of control and related deconsolidation, as of May 18, 2021, of one of our wholly owned Netherlands subsidiaries, for which we had value-added tax liability exposure that was recorded in 2019, partially offset by (c) losses on our equity method investments. Other, net for the year ended December 31, 2020 consists primarily of (a) changes in the estimated value of our mandatorily redeemable noncontrolling interests and (b) losses on our equity method investments.
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| | IRON MOUNTAIN 2021 FORM 10-K | 94 |
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Aggregate Intrinsic Value, Options outstanding as of January 1, 2022 | 422,830 | SEC-NUM |
[Table of](#i090043fcb1da400aaac214abf3d3ee98_7) [Contents](#i090043fcb1da400aaac214abf3d3ee98_7)Stock-Based CompensationStock-based compensation expense and the related income tax benefit recognized in connection with stock options, restricted stock and the ESPP during fiscal 2021, 2020 and 2019 were as follows:
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| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Stock options | $ | 9,051 | | | $ | 8,062 | | | $ | 6,806 | |
| Restricted stock | 181,946 | | | 173,193 | | | 164,078 | |
| ESPP | 19,093 | | | 16,013 | | | 10,663 | |
| Total stock-based compensation expense | $ | 210,090 | | | $ | 197,268 | | | $ | 181,547 | |
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| Income tax benefit | $ | 33,958 | | | $ | 31,857 | | | $ | 30,118 | |
Stock-based compensation expense is reflected in Cadence’s consolidated income statements during fiscal 2021, 2020 and 2019 as follows:
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| | 2021 | | 2020 | | 2019 |
| | (In thousands) |
| Cost of product and maintenance | $ | 4,161 | | | $ | 2,922 | | | $ | 2,759 | |
| Cost of services | 3,375 | | | 3,720 | | | 3,510 | |
| Marketing and sales | 43,264 | | | 42,096 | | | 39,088 | |
| Research and development | 131,247 | | | 124,999 | | | 114,656 | |
| General and administrative | 28,043 | | | 23,531 | | | 21,534 | |
| Total stock-based compensation expense | $ | 210,090 | | | $ | 197,268 | | | $ | 181,547 | |
Stock OptionsThe exercise price of each stock option granted under Cadence’s employee equity incentive plans is equal to or greater than the closing price of Cadence’s common stock on the date of grant. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average grant date fair value of options granted and the weighted average assumptions used in the model for fiscal 2021, 2020 and 2019 were as follows:
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| | 2021 | | 2020 | | 2019 |
| Dividend yield | None | | None | | None |
| Expected volatility | 31.7 | % | | 25.1 | % | | 24.4 | % |
| Risk-free interest rate | 1.02 | % | | 1.36 | % | | 2.47 | % |
| Expected term (in years) | 4.8 | | 4.8 | | 4.8 |
| Weighted average fair value of options granted | $ | 46.10 | | | $ | 19.38 | | | $ | 14.58 | |
A summary of the changes in stock options outstanding under Cadence’s equity incentive plans during fiscal 2021 is presented below:
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| | | | Weighted Average | | Weighted AverageRemainingContractualTerms | | AggregateIntrinsic |
| | Shares | | Exercise Price | | (Years) | | Value |
| | (In thousands) | | | | | | (In thousands) |
| Options outstanding as of January 2, 2021 | 3,934 | | | $ | 36.72 | | | | | |
| Granted | 612 | | | 159.25 | | | | | |
| Exercised | (1,066) | | | 22.37 | | | | | |
| Forfeited | (61) | | | 61.38 | | | | | |
| Options outstanding as of January 1, 2022 | 3,419 | | | $ | 62.69 | | | 3.5 | | $ | 422,830 | |
| Options vested as of January 1, 2022 | 2,425 | | | $ | 39.16 | | | 2.7 | | $ | 356,981 | |
71
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Number of healthcare facilities used to secure debt (in facilities) | 18 | SEC-NUM |
[Table of Contents](#ifa3dff468a15495db7b57c65ada0de74_7)During the three months ended March 31, 2022, the Company did not repurchase or redeem any senior unsecured notes. The following table summarizes the Company’s senior unsecured notes repurchases and redemptions during the year ended December 31, 2021 (dollars in thousands):
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| Payoff Date | | Amount | | Coupon Rate | | Maturity Year |
| May 19, 2021(1) | | $ | 251,806 | | | 3.40 | % | | 2025 |
| May 19, 2021(1) | | 298,194 | | | 4.00 | % | | 2025 |
| February 26, 2021(2) | | 188,000 | | | 4.25 | % | | 2023 |
| February 26, 2021(2) | | 149,000 | | | 4.20 | % | | 2024 |
| February 26, 2021(2) | | 331,000 | | | 3.88 | % | | 2024 |
| January 28, 2021(2) | | 112,000 | | | 4.25 | % | | 2023 |
| January 28, 2021(2) | | 201,000 | | | 4.20 | % | | 2024 |
| January 28, 2021(2) | | 469,000 | | | 3.88 | % | | 2024 |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Upon repurchasing a portion of the 3.40% and 4.00% senior unsecured notes due 2025, the Company recognized a $61 million loss on debt extinguishment during the year ended December 31, 2021.(2)Upon completing the repurchases and redemptions of all outstanding 4.25%, 4.20%, and 3.88% senior unsecured notes due 2023 and 2024, the Company recognized a $164 million loss on debt extinguishment during the three months ended March 31, 2021.During the three months ended March 31, 2022, the Company did not issue any senior unsecured notes.In 2021, the Company completed two green bond offerings. The net proceeds from both green bonds are or will be allocated to eligible green projects, and the Company may choose to allocate or re-allocate net proceeds from such offerings to one more other eligible green projects. The following table summarizes these senior unsecured note issuances for the year ended December 31, 2021 (dollars in thousands):
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| Issue Date | | Amount | | Coupon Rate | | Maturity Year |
| November 24, 2021 | | $ | 500,000 | | | 2.13 | % | | 2028 |
| July 12, 2021 | | 450,000 | | | 1.35 | % | | 2027 |
Mortgage DebtAt March 31, 2022 and December 31, 2021, the Company had $349 million and $350 million, respectively, in aggregate principal of mortgage debt outstanding, which was secured by 18 healthcare facilities, with an aggregate carrying value of $803 million and $811 million, respectively. Mortgage debt generally requires monthly principal and interest payments, is collateralized by real estate assets, and is non-recourse. Mortgage debt typically restricts transfer of the encumbered assets, prohibits additional liens, restricts prepayment, requires payment of real estate taxes, requires maintenance of the assets in good condition, requires insurance on the assets, and includes conditions to obtain lender consent to enter into or terminate material leases. Some of the mortgage debt may require tenants or operators to maintain compliance with the applicable leases or operating agreements of such real estate assets.During each of the three months ended March 31, 2022 and March 31, 2021, the Company made aggregate principal repayments of mortgage debt of $1 million (excluding mortgage debt on assets held for sale and discontinued operations). In April 2021, in conjunction with the acquisition of the MOB Portfolio, the Company originated $142 million of secured mortgage debt (see Note 3) that matures in May 2026. In April 2022, the Company terminated its existing interest rate cap agreements associated with this variable rate mortgage debt and entered into two interest rate swap contracts that are designated as cash flow hedges and mature in May 2026 (see Note 17). 19
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Options exercisable at end of period (in dollars per share) | 70.99 | SEC-NUM |
Below is a summary of option information for the year 2021:
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| (Dollars in millions, except exercise price. Shares in thousands) | | Shares | | Weighted-average exercise price | | Aggregateintrinsicvalue | | Weighted-averageremaining contractuallife |
| Outstanding option shares at January 1, 2021 | | 3,601 | | | $ | 72.55 | | | | | |
| Granted | | 464 | | | 96.32 | | | | | |
| Exercised | | (415) | | | 50.51 | | | | | |
| Forfeited or expired | | (98) | | | 62.00 | | | | | |
| Outstanding option shares at December 31, 2021 | | 3,552 | | | 78.52 | | | $ | 126 | | | 5.97 years |
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| Options exercisable at end of period | | 2,599 | | | $ | 70.99 | | | $ | 112 | | | 5.07 years |
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Cash received from the exercise of options was $13 million, $7 million and $11 million for the years ended December 31, 2021, 2020 and 2019, respectively. We acquired 77,947, 50,751 and 103,237 shares totaling $8 million, $5 million and $9 million, respectively, from associates in consideration for option exercises during 2021, 2020 and 2019. The weighted-average remaining contractual life for options expected to vest as of December 31, 2021, was 8.41 years.
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Under all active shareholder approved plans, a total of 17.3 million shares were authorized to be granted. At December 31, 2021, 5.9 million shares remained available for future issuance under the plans. During 2021, we granted 17,018 shares of common stock to our directors for 2020 board service fees. Restricted Stock UnitsService-based restricted stock units granted to associates are valued at fair value of the shares on the date of grant less the present value of the dividends that holders of restricted stock units do not receive on the shares underlying the restricted stock units during the vesting period. Service-based restricted stock units generally cliff vest three years after the date of grant. We also grant restricted stock units which vest on a three year ratable vesting schedule. Service-based restricted stock units vested during the year had an intrinsic value of $26 million, $30 million and $25 million for the years ended December 31, 2021, 2020 and 2019, respectively. We have performance-based awards that vest on the first day of March after a three-calendar-year performance period. These awards vest according to the level of three-year total shareholder return achieved compared with a peer group over a three-year performance period with payouts ranging from 0% to 200% for awards granted in 2021, 2020 and 2019. Three-year total shareholder return is calculated by using annualized total return of a stock to an investor due to capital gain appreciation plus reinvestment of all dividends.
For the three-year performance period ended December 31, 2021, our total shareholder return exceeded six of our nine peers. We expect payout of these shares at the target level to occur in March of 2022. During 2021, we issued 113,648 shares of performance-based restricted stock units at the maximum-level performance hurdle for the three-year performance period ended December 31, 2020, as our total shareholder return exceeded eight of nine peers in our 2018 peer group. We issued 56,722 shares of performance-based restricted stock units during 2020 at the target-level performance hurdle for the three-year performance period ended December 31, 2019, as our total shareholder return exceeded five of nine peers in our 2017 peer group. Performance-based awards vested during the year had an intrinsic value of $11 million, $5 million and $2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
These performance-based awards are valued using a Monte-Carlo valuation on the date of grant, which uses a risk-neutral framework to model future stock price movements based upon the risk-free rate of return, the volatility of each peer and the pairwise correlations of each peer being modeled. Compensation cost is recognized regardless of whether the market-based performance objective has been satisfied. We make assumptions to develop the Monte-Carlo model as follows: •Correlation coefficients are based upon the stock price data used to calculate the historical volatilities. The correlation coefficients are used to model the way the price of each entity's stock tends to move in relation to each other.Cincinnati Financial Corporation - 2021 10-K - Page 170
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Proceeds from issuance of long-term debt | 7 | SEC-NUM |
[Table of Contents](#ib0ff9808fe764fdea19589324372f96b_7)Abbott Laboratories and SubsidiariesCondensed Consolidated Statement of Cash Flows(Unaudited)(dollars in millions)
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| | Nine Months Ended September 30 |
| | 2022 | | 2021 |
| Cash Flow From (Used in) Operating Activities: | | | |
| Net earnings | $ | 5,900 | | | $ | 5,082 | |
| Adjustments to reconcile net earnings to net cash from operating activities — | | | |
| Depreciation | 943 | | | 1,122 | |
| Amortization of intangible assets | 1,517 | | | 1,533 | |
| Share-based compensation | 570 | | | 534 | |
| Trade receivables | (409) | | | (194) | |
| Inventories | (1,224) | | | (471) | |
| Other, net | (42) | | | (140) | |
| Net Cash From Operating Activities | 7,255 | | | 7,466 | |
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| Cash Flow From (Used in) Investing Activities: | | | |
| Acquisitions of property and equipment | (1,167) | | | (1,271) | |
| Acquisitions of businesses and technologies, net of cash acquired | — | | | (187) | |
| Proceeds from business dispositions | 48 | | | 134 | |
| Sales (purchases) of other investment securities, net | (3) | | | (27) | |
| Other | 14 | | | 14 | |
| Net Cash From (Used in) Investing Activities | (1,108) | | | (1,337) | |
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| Cash Flow From (Used in) Financing Activities: | | | |
| Net borrowings (repayments) of short-term debt and other | 37 | | | (7) | |
| Proceeds from issuance of long-term debt | 7 | | | — | |
| Repayments of long-term debt | (753) | | | (45) | |
| Purchases of common shares | (3,110) | | | (1,325) | |
| Proceeds from stock options exercised | 126 | | | 173 | |
| Dividends paid | (2,486) | | | (2,404) | |
| Net Cash From (Used in) Financing Activities | (6,179) | | | (3,608) | |
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| Effect of exchange rate changes on cash and cash equivalents | (173) | | | (57) | |
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| Net Increase (Decrease) in Cash and Cash Equivalents | (205) | | | 2,464 | |
| Cash and Cash Equivalents, Beginning of Year | 9,799 | | | 6,838 | |
| Cash and Cash Equivalents, End of Period | $ | 9,594 | | | $ | 9,302 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.8
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Formula rate plan revenue increase including demand side management costs | 48.2 | SEC-NUM |
[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements
necessary. In the fourth quarter 2018, Entergy Mississippi recorded a provision of $9.3 million that reflected the estimate of the difference between the 2018 expected earned rate of return on rate base and an established performance-adjusted benchmark rate of return under the formula rate plan performance-adjusted bandwidth mechanism. In the first quarter 2019, Entergy Mississippi recorded a $0.8 million increase in the provision to reflect the amount shown in the look-back filing. In June 2019, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the 2019 test year filing showed that a $32.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.93% return on rate base, within the formula rate plan bandwidth. Additionally, pursuant to the joint stipulation, Entergy Mississippi’s 2018 look-back filing reflected an earned return on rate base of 7.81% in calendar year 2018 which is above the look-back benchmark return on rate base of 7.13%, resulting in an $11 million decrease in formula rate plan revenues on an interim basis through May 2020. In the second quarter 2019, Entergy Mississippi recorded an additional $0.9 million increase in the provision to reflect the $11 million shown in the look-back filing. In June 2019 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July 2019.
2020 Formula Rate Plan Filing
In March 2020, Entergy Mississippi submitted its formula rate plan 2020 test year filing and 2019 look-back filing showing Entergy Mississippi’s earned return for the historical 2019 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2020 calendar year to be below the formula rate plan bandwidth. The 2020 test year filing shows a $24.6 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51% return on rate base, within the formula rate plan bandwidth. The 2019 look-back filing compares actual 2019 results to the approved benchmark return on rate base and reflects the need for a $7.3 million interim increase in formula rate plan revenues. In accordance with the MPSC-approved revisions to the formula rate plan, Entergy Mississippi implemented a $24.3 million interim rate increase, reflecting a cap equal to 2% of 2019 retail revenues, effective with the April 2020 billing cycle, subject to refund. In June 2020, Entergy Mississippi and the Mississippi Public Utilities Staff entered into a joint stipulation that confirmed that the 2020 test year filing showed that a $23.8 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.51% return on rate base, within the formula rate plan bandwidth. Pursuant to the joint stipulation, Entergy Mississippi’s 2019 look-back filing reflected an earned return on rate base of 6.75% in calendar year 2019, which is within the look-back bandwidth. As a result, there is no change in formula rate plan revenues in the 2019 look-back filing. In June 2020 the MPSC approved the joint stipulation with rates effective for the first billing cycle of July 2020. In the June 2020 order the MPSC directed Entergy Mississippi to submit revisions to its formula rate plan to realign recovery of costs from its energy efficiency cost recovery rider to its formula rate plan. In November 2020 the MPSC approved Entergy Mississippi’s revisions to its formula rate plan providing for the realignment of energy efficiency costs to its formula rate plan, the deferral of energy efficiency expenditures into a regulatory asset, and the elimination of its energy efficiency cost recovery rider effective with the January 2022 billing cycle.
2021 Formula Rate Plan Filing
In March 2021, Entergy Mississippi submitted its formula rate plan 2021 test year filing and 2020 look-back filing showing Entergy Mississippi’s earned return for the historical 2020 calendar year to be below the formula rate plan bandwidth and projected earned return for the 2021 calendar year to be below the formula rate plan bandwidth. The 2021 test year filing shows a $95.4 million rate increase is necessary to reset Entergy Mississippi’s earned return on common equity to the specified point of adjustment of 6.69% return on rate base, within the formula rate plan bandwidth. The change in formula rate plan revenues, however, is capped at 4% of retail revenues, which equates to a revenue change of $44.3 million. The 2021 evaluation report also includes $3.9 million in demand side management costs for which the MPSC approved realignment of recovery from the energy efficiency rider to the formula rate plan. These costs are not subject to the 4% cap and result in a total change in formula rate plan revenues of $48.2 million. The 2020 look-back filing compares actual 2020 results to the approved benchmark return on rate base and reflects the need for a $16.8 million interim increase in formula rate 82
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Public Utilities, Approved Rate Increase (Decrease), Amount | 49 | SEC-NUM |
May 2022, SWEPCo filed a petition for review with the Texas District Court seeking a judicial review of the several errors challenged in the PUCT’s final order.
2020 Louisiana Base Rate Case
In December 2020, SWEPCo filed a request with the LPSC for a $134 million annual increase in Louisiana base rates based upon a proposed 10.35% ROE. SWEPCo subsequently revised the requested annual increase to $114 million to reflect removing hurricane storm restoration costs from the base case filing. The hurricane costs have been requested in a separate storm filing. See “2021 Louisiana Storm Cost Filing” below for more information. The base case filing would extend the formula rate plan for five years and includes modifications to the formula rate plan to allow for forward-looking transmission costs, reflects the impact of net operating losses associated with the acceleration of certain tax benefits and incorporates future federal corporate income tax changes. The proposed net annual increase requests a $32 million annual depreciation increase to recover Louisiana’s share of the Dolet Hills Power Station, Pirkey Power Plant and Welsh Plant, all of which are expected to be retired early.
In July 2021, the LPSC staff filed testimony supporting a $6 million annual increase in base rates based upon a ROE of 9.1% while other intervenors recommended a ROE ranging from 9.35% to 9.8%. The primary differences between SWEPCo’s requested annual increase in base rates and the LPSC staff’s recommendation include: (a) a reduction in depreciation expense, (b) recovery of Dolet Hills Power Station and Pirkey Power Plant in a separate rider mechanism, (c) the rejection of SWEPCo’s proposed adjustment to include a stand-alone net operating loss carryforward deferred tax asset in rate base and (d) a reduction in the proposed ROE.
In September 2021, SWEPCo filed rebuttal testimony supporting a revised requested annual increase in base rates of $95 million. The primary differences in the rebuttal testimony from the previous revised request of $114 million are modifications to the proposed recovery of the Dolet Hills Power Station and revisions to various proposed amortizations. LPSC staff and intervenor responses to SWEPCo’s rebuttal testimony were filed in October 2021. The procedural schedule for the case is on hold due to ongoing settlement discussions.
If any of these costs are not recoverable, it could reduce future net income and cash flows and impact financial condition.
2021 Arkansas Base Rate Case
In July 2021, SWEPCo filed a request with the APSC for an $85 million annual increase in Arkansas base rates based upon a proposed 10.35% ROE with a capital structure of 48.7% debt and 51.3% common equity. The proposed annual increase includes: (a) a $41 million revenue requirement for the North Central Wind Facilities, (b) a $14 million annual depreciation increase primarily due to recovery of the Dolet Hills Power Station through 2026 and Pirkey Plant and Welsh Plant, Units 1 and 3 through 2037 and (c) a $6 million increase due to SPP costs. In January 2022, SWEPCo filed testimony revising the requested annual increase in Arkansas base rates to $81 million. SWEPCo requested that rates become effective in June 2022.
In May 2022, the APSC issued a final order approving an annual revenue increase of $49 million based upon a 9.5% ROE. The order also includes: (a) a capital structure of 55% debt and 45% common equity, (b) approval to recover the Dolet Hills Power Station as a regulatory asset over five years without a return on this investment resulting in an immaterial disallowance in the second quarter of 2022, (c) the denial of accelerated depreciation for the Pirkey Plant and Welsh Plant, Units 1 and 3 and (d) approval of a rider to recover SPP costs and revenues. The final order also denied the inclusion of the stand-alone NOLC in SWEPCo’s deferred tax assets, but included approval of the deferral of the forgone revenue requirement associated with the NOLC and excess NOLC, with recovery of the deferral contingent upon receipt of a supportive private letter ruling from the IRS. Rates were implemented with the first billing cycle of July 2022. In June 2022, SWEPCo filed a motion for rehearing with the APSC challenging the capital structure that was approved. In July 2022, the APSC denied the motion for rehearing.
165
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Other contractual commitments, Due in 2025 | 36 | SEC-NUM |
[Table of Contents](#i02bedaa3ef9a402693e3fc0f0d740b61_7)
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| | | Fiscal Quarter Ended | | Three Fiscal Quarters Ended |
| | | July 31,2022 | | August 1,2021 | | July 31,2022 | | August 1,2021 |
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| | | (In millions) |
| Net revenue: | | | | | | | | |
| Semiconductor solutions | | $ | 6,624 | | | $ | 5,021 | | | $ | 18,726 | | | $ | 14,749 | |
| Infrastructure software | | 1,840 | | | 1,757 | | | 5,547 | | | 5,294 | |
| Total net revenue | | $ | 8,464 | | | $ | 6,778 | | | $ | 24,273 | | | $ | 20,043 | |
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| Operating income: | | | | | | | | |
| Semiconductor solutions | | $ | 3,916 | | | $ | 2,720 | | | $ | 10,891 | | | $ | 7,828 | |
| Infrastructure software | | 1,283 | | | 1,226 | | | 3,903 | | | 3,700 | |
| Unallocated expenses | | (1,462) | | | (1,820) | | | (4,555) | | | (5,590) | |
| Total operating income | | $ | 3,737 | | | $ | 2,126 | | | $ | 10,239 | | | $ | 5,938 | |
11. Commitments and ContingenciesCommitmentsThe following table summarizes contractual obligations and commitments as of July 31, 2022 that materially changed from the end of fiscal year 2021:
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| Fiscal Year: | | Purchase Commitments | | Other Contractual Commitments |
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| | | (In millions) |
| 2022 (remainder) | | $ | 42 | | | $ | 554 | |
| 2023 | | 178 | | | 185 | |
| 2024 | | 159 | | | 148 | |
| 2025 | | 79 | | | 36 | |
| 2026 | | 9 | | | 50 | |
| Thereafter | | 7 | | | 1 | |
| Total | | $ | 474 | | | $ | 974 | |
Purchase Commitments. Represent unconditional purchase obligations that are enforceable and legally binding on us and specify all significant terms, including fixed or minimum quantities to be purchased, price provisions, and the approximate timing of the transaction. These commitments include agreements to purchase inventory and other goods or services. Purchase obligations exclude agreements that are cancelable without penalty and unconditional purchase obligations with a remaining term of one year or less.Other Contractual Commitments. Represent amounts payable pursuant to agreements related to IT, human resources, and other service agreements.Due to the inherent uncertainty with respect to the timing of future cash outflows associated with our unrecognized tax benefits at July 31, 2022, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities. Therefore, $3,307 million of unrecognized tax benefits and accrued interest and penalties as of July 31, 2022 have been excluded from the table above.21
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Unrecognized Tax Benefits, Decrease Resulting from Current Period Tax Positions | 1 | SEC-NUM |
[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)remeasurement of pension and other postretirement benefit obligations. For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses.As of December 31, 2021 and 2020, the Company has recorded valuation allowances of $2,423 and $3,094 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss and tax credit carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.During 2021, the Company decreased the valuation allowance by $671. This reflects a tax benefit of $1,206 included in OCI primarily due to the net actuarial gains that resulted from the annual remeasurement of pension assets and liabilities. This was partially offset by tax expense of $512 recorded in continuing operations and an increase of $23 related to the associated federal benefit of state impacts.Until the Company generates sustained levels of profitability, additional valuation allowances may have to be recorded with corresponding adverse impacts on earnings and/or OCI.The Tax Cuts and Jobs Act (TCJA) one-time repatriation tax and Global Intangible Low Tax Income liabilities effectively taxed the undistributed earnings previously deferred from U.S. income taxes. We have not provided for deferred income taxes on the undistributed earnings from certain non-U.S. subsidiaries because such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any deferred income taxes would not be significant.As of December 31, 2021 and 2020, the amounts accrued for the payment of income tax-related interest and penalties included in the Consolidated Statements of Financial Position were not significant. The amounts of interest included in the Consolidated Statements of Operations were not significant for the years ended December 31, 2021, 2020 and 2019.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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| | 2021 | | 2020 | | 2019 |
| Unrecognized tax benefits – January 1 | $966 | | | $1,476 | | | $2,412 | |
| Gross increases – tax positions in prior periods | 64 | | | 44 | | | 100 | |
| Gross decreases – tax positions in prior periods | (245) | | | (581) | | | (1,418) | |
| Gross increases – current period tax positions | 73 | | | 136 | | | 344 | |
| Gross decreases – current period tax positions | | | | | (1) | |
| Settlements | | | (109) | | | 39 | |
| Statute Lapse | | | | | |
| Unrecognized tax benefits – December 31 | $858 | | | $966 | | | $1,476 | |
As of December 31, 2021, 2020 and 2019, the total amount of unrecognized tax benefits include $790, $734 and $1,287, respectively, that would affect the effective tax rate, if recognized. As of December 31, 2021, these amounts are primarily associated with the amount of research tax credits claimed and various other matters.83
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Proceeds from issuance of long-term debt | 3,992 | SEC-NUM |
[Table of Contents](#i7f92822ddf844c24912627bf68509b56_7)
COSTCO WHOLESALE CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in millions)
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| | 52 Weeks Ended |
| | August 28,2022 | | August 29,2021 | | August 30,2020 |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| Net income including noncontrolling interests | $ | 5,915 | | | $ | 5,079 | | | $ | 4,059 | |
| Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: | | | | | |
| Depreciation and amortization | 1,900 | | | 1,781 | | | 1,645 | |
| Non-cash lease expense | 377 | | | 286 | | | 194 | |
| Stock-based compensation | 724 | | | 665 | | | 619 | |
| Other non-cash operating activities, net | 76 | | | 85 | | | 42 | |
| Deferred income taxes | (37) | | | 59 | | | 104 | |
| Changes in operating assets and liabilities: | | | | | |
| Merchandise inventories | (4,003) | | | (1,892) | | | (791) | |
| Accounts payable | 1,891 | | | 1,838 | | | 2,261 | |
| Other operating assets and liabilities, net | 549 | | | 1,057 | | | 728 | |
| Net cash provided by operating activities | 7,392 | | | 8,958 | | | 8,861 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
| Purchases of short-term investments | (1,121) | | | (1,331) | | | (1,626) | |
| Maturities and sales of short-term investments | 1,145 | | | 1,446 | | | 1,678 | |
| Additions to property and equipment | (3,891) | | | (3,588) | | | (2,810) | |
| Acquisitions | — | | | — | | | (1,163) | |
| Other investing activities, net | (48) | | | (62) | | | 30 | |
| Net cash used in investing activities | (3,915) | | | (3,535) | | | (3,891) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
| Proceeds from issuance of long-term debt | — | | | — | | | 3,992 | |
| Repayments of long-term debt | (800) | | | (94) | | | (3,200) | |
| Tax withholdings on stock-based awards | (363) | | | (312) | | | (330) | |
| Repurchases of common stock | (439) | | | (496) | | | (196) | |
| Cash dividend payments | (1,498) | | | (5,748) | | | (1,479) | |
| Dividend to noncontrolling interest | (208) | | | — | | | — | |
| Acquisition of noncontrolling interest | (842) | | | — | | | — | |
| Other financing activities, net | (133) | | | 162 | | | 66 | |
| Net cash used in financing activities | (4,283) | | | (6,488) | | | (1,147) | |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (249) | | | 46 | | | 70 | |
| Net change in cash and cash equivalents | (1,055) | | | (1,019) | | | 3,893 | |
| CASH AND CASH EQUIVALENTS BEGINNING OF YEAR | 11,258 | | | 12,277 | | | 8,384 | |
| CASH AND CASH EQUIVALENTS END OF YEAR | $ | 10,203 | | | $ | 11,258 | | | $ | 12,277 | |
| | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | |
| Cash paid during the year for: | | | | | |
| Interest | $ | 145 | | | $ | 149 | | | $ | 124 | |
| Income taxes, net | $ | 1,940 | | | $ | 1,527 | | | $ | 1,052 | |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: | | | | | |
| Capital expenditures included in liabilities | $ | 156 | | | $ | 184 | | | $ | 204 | |
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The accompanying notes are an integral part of these consolidated financial statements.
40
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Noncontrolling interest, decrease from deconsolidation | 692 | SEC-NUM |
[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)NOTE 3. DISCONTINUED OPERATIONS Fortive Corporation SeparationOn July 2, 2016, the Company completed the separation of its former Test & Measurement segment, Industrial Technologies segment (excluding the product identification businesses) and retail/commercial petroleum business by distributing to Danaher stockholders on a pro rata basis all of the issued and outstanding common stock of Fortive Corporation (“Fortive”), the entity the Company incorporated to hold such businesses. For the year ended December 31, 2021, the Company recorded an income tax benefit of $86 million related to the release of previously provided reserves associated with uncertain tax positions on certain of the Company’s tax returns which were jointly filed with Fortive entities. These reserves were released due to the expiration of statutes of limitations for those returns. This income tax benefit is included in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings. Envista Holdings Corporation DispositionOn September 20, 2019, Envista Holdings Corporation (“Envista”), completed an initial public offering (“IPO”) of 30.8 million shares of its common stock, which represented 19.4% of Envista’s outstanding shares at the time of the offering, at a public offering price of $22.00 per share. Envista realized net proceeds of $643 million from the IPO, after deducting underwriting discounts and deal expenses.In connection with the completion of the IPO, through a series of equity and other transactions, the Company transferred its dental businesses to Envista (the “Separation”). In exchange, Envista transferred consideration of approximately $2.0 billion to the Company, which consists primarily of the net proceeds from the IPO and approximately $1.3 billion of proceeds from Envista’s term debt financing. The excess of the net book value of the business transferred to Envista over the net proceeds from the IPO was $60 million and was recorded as a reduction to additional paid-in capital in the accompanying Consolidated Balance Sheet. On December 18, 2019, Danaher completed the disposition of the remaining 80.6% ownership of Envista common stock through a split-off exchange offer, which resulted in Danaher’s repurchase of 22.9 million shares of the Company’s common stock in exchange for the remaining shares of Envista held by Danaher (the “Split-Off”). The IPO, Separation and Split-Off are collectively referred to as the “Envista Disposition”. As a result, the Company recognized a gain on the disposition of $451 million in the fourth quarter of 2019. At the time of the disposition, the Company reclassified $109 million of foreign currency translation adjustment losses related to Envista from accumulated other comprehensive income (loss) to the Company’s results of discontinued operations as a component of the net gain on the Envista Disposition. As a result of the IPO, Danaher recorded an increase to noncontrolling interest of $689 million in 2019 for the sale of the Envista common stock and subsequent earnings and other comprehensive income (loss) attributable to the noncontrolling interest. At the time of the Envista Disposition, Danaher decreased noncontrolling interests by $692 million to record the deconsolidation of Envista and the elimination of the noncontrolling interest.The accounting requirements for reporting Envista as a discontinued operation were met when the Split-Off was completed. Accordingly, the Consolidated Financial Statements for all periods presented reflect this business as a discontinued operation. The Company allocated a portion of the consolidated interest expense to discontinued operations based on the ratio of the discontinued business’ net assets to the Company’s consolidated net assets. Envista had revenues of approximately $2.6 billion in 2019 prior to the exchange offer. As a result of the Envista Disposition, the Company incurred $69 million in IPO and Separation-related costs during the year ended December 31, 2019, which are reflected in earnings from discontinued operations, net of income taxes in the accompanying Consolidated Statements of Earnings. These costs primarily relate to professional fees associated with preparation of regulatory filings and activities within finance, tax, legal and information technology functions as well as certain investment banking fees and tax costs.Danaher used a portion of the consideration received from Envista to redeem $875 million in aggregate principal amount of outstanding indebtedness in the fourth quarter of 2019 (consisting of the Company’s 2.4% senior unsecured notes due 2020 and 5.0% senior unsecured notes due 2020). The Company incurred make-whole premiums in connection with the redemption of $7 million ($5 million after-tax). The Company used the balance of the consideration it received from Envista to redeem commercial paper borrowings as they matured. In connection with the Envista IPO and Separation, Danaher and Envista entered into various agreements to effect the disposition and provide a framework for their relationship after the Envista Separation, including a separation agreement, transition services agreement, employee matters agreement, tax matters agreement, intellectual property matters agreement and DANAHER BUSINESS SYSTEM (“DBS”) license agreement. These agreements provide for the allocation between Danaher and Envista of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-76
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Payment of deferred financing costs | 421 | SEC-NUM |
[Table of](#ia143979d54ef4089bc700f871e6b0e92_7) [Contents](#ia143979d54ef4089bc700f871e6b0e92_7)AVALONBAY COMMUNITIES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)(Dollars in thousands)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the six months ended |
| | 6/30/2022 | | 6/30/2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 400,642 | | | $ | 590,211 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation expense | 401,088 | | | 367,769 | |
| Amortization of deferred financing costs | 3,950 | | | 3,675 | |
| Amortization of debt discount | 1,387 | | | 1,320 | |
| Gain on extinguishment of debt, net | — | | | (122) | |
| Amortization of stock-based compensation | 17,681 | | | 13,185 | |
| Equity in (income) loss of, and return on, unconsolidated entities and noncontrolling interests, net of eliminations | (1) | | | 2,989 | |
| Real estate casualty loss | — | | | 831 | |
| Abandonment of development pursuits | 738 | | | 685 | |
| Unrealized gain on terminated cash flow hedges | — | | | (2,654) | |
| Cash flow hedge losses reclassified to earnings | 2,026 | | | 4,733 | |
| Gain on sale of real estate assets | (149,284) | | | (412,060) | |
| Gain on sale of for-sale condominiums | (1,469) | | | (706) | |
| Decrease in resident security deposits, prepaid expenses and other assets | (31,336) | | | (16,329) | |
| (Decrease) increase in accrued expenses, other liabilities and accrued interest payable | (5,374) | | | 15,102 | |
| Net cash provided by operating activities | 640,048 | | | 568,629 | |
| | | | |
| Cash flows from investing activities: | | | |
| Development/redevelopment of real estate assets including land acquisitions and deferred development costs | (414,107) | | | (325,692) | |
| Acquisition of real estate assets, including partnership interest | (165,117) | | | (118,572) | |
| Capital expenditures - existing real estate assets | (64,356) | | | (57,157) | |
| Capital expenditures - non-real estate assets | (5,665) | | | (2,584) | |
| Decrease in payables for construction | (5,024) | | | (27,294) | |
| Proceeds from sale of real estate, net of selling costs | 230,660 | | | 575,431 | |
| Proceeds from the sale of for-sale condominiums, net of selling costs | 75,182 | | | 48,655 | |
| Note receivable lending | (6,055) | | | (113) | |
| Note receivable payments | 4,021 | | | 1,556 | |
| Distributions from unconsolidated entities | 2,000 | | | 22,331 | |
| Investments in unconsolidated entities | (8,047) | | | (27,356) | |
| Net cash (used in) provided by investing activities | (356,508) | | | 89,205 | |
| | | | |
| Cash flows from financing activities: | | | |
| Issuance of common stock, net | 2,010 | | | 2,372 | |
| Dividends paid | (445,226) | | | (444,572) | |
| Repayments of mortgage notes payable, including prepayment penalties | (6,427) | | | (34,734) | |
| Repayment of unsecured notes | (100,000) | | | — | |
| Payment of deferred financing costs | (421) | | | — | |
| Receipt for termination of forward interest rate swaps | — | | | 6,962 | |
| Payment to noncontrolling interest | (29) | | | (33) | |
| Payments related to tax withholding for share-based compensation | (16,379) | | | (13,228) | |
| Distributions to DownREIT partnership unitholders | (24) | | | (24) | |
| Distributions to joint venture and profit-sharing partners | (181) | | | (164) | |
| Preferred interest obligation redemption and dividends | (460) | | | (840) | |
| Net cash used in financing activities | (567,137) | | | (484,261) | |
| | | | |
| Net (decrease) increase in cash, cash equivalents and cash in escrow | (283,597) | | | 173,573 | |
| | | | |
| Cash, cash equivalents and cash in escrow, beginning of period | 543,788 | | | 313,532 | |
| Cash, cash equivalents and cash in escrow, end of period | $ | 260,191 | | | $ | 487,105 | |
| | | | |
| Cash paid during the period for interest, net of amount capitalized | $ | 106,443 | | | $ | 101,703 | |
See accompanying notes to Condensed Consolidated Financial Statements.3
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Future commitment to fund | 0.9 | SEC-NUM |
The following table summarizes the capitalized costs related to data center agreements as of June 30, 2022:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Amended IT Services Agreement | | Amended EU IT Services Agreement | | Total |
| | | (in millions) |
| Capitalized costs, beginning balance | | $ | 62.8 | | | $ | 9.0 | | | $ | 71.8 | |
| Capitalized costs incurred | | 0.3 | | | — | | | 0.3 | |
| Impact of foreign currency exchange | | — | | | (1.4) | | | (1.4) | |
| Total capitalized costs, ending balance | | 63.0 | | | 7.6 | | | 70.7 | |
| Total accumulated amortization | | (46.6) | | | (5.4) | | | (52.0) | |
| Net Deferred Kyndryl Costs | | $ | 16.4 | | | $ | 2.3 | | | $ | 18.7 | |
Cloud Services Resale AgreementOn December 31, 2021, the Company and Presidio Networked Solutions LLC (“Presidio”), a reseller of services of Amazon Web Services, Inc. and its affiliates (collectively, “AWS”), entered into an Order Form and AWS Private Pricing Addendum, dated December 31, 2021 (the “Order Form”), to the Cloud Services Resale Agreement, dated December 15, 2017, as amended (together with the Order Form, the “AWS Cloud Agreement”), whereby Presidio will resell to the Company certain public cloud infrastructure and related services provided by AWS for the operation, management and support of the Company’s cloud global distributed platforms and products. The AWS Cloud Agreement expires on December 31, 2026. Fixed minimums remaining under the AWS Cloud Agreement at June 30, 2022 are $226.8 million in the aggregate through December 31, 2026.InvestmentsThe Company has an equity method investment that is a variable interest in a variable interest entity. The Company is not the primary beneficiary and therefore does not consolidate the investee. The Company’s potential maximum loss exposure related to its unconsolidated investment in this variable interest entity totaled $42.7 million as of June 30, 2022, which represents the carrying value of the Company's investment. In addition, as of June 30, 2022, the Company also has a future commitment to fund $0.9 million to one of the Company’s other investees. Contractual ObligationsThe Company has obligations under the Amended IT Services Agreement, the Amended EU IT Services Agreement, the Private Cloud Agreement, the AWS Cloud Agreement, software license agreements including hosted software arrangements, and software and hardware maintenance and support agreements. The following table summarizes the total expenses related to these agreements:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| | | Years ended June 30, |
| | | 2022 | | 2021 | | 2020 |
| | | (in millions) |
| Data center expenses | | $ | 248.0 | | | $ | 204.3 | | | $ | 128.9 | |
| Software license agreements | | 81.9 | | | 63.6 | | | 46.9 | |
| Software/hardware maintenance agreements | | 77.3 | | | 77.5 | | | 72.1 | |
| Total expenses | | $ | 407.1 | | | $ | 345.4 | | | $ | 247.9 | |
91
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Liabilities | 1,147 | SEC-NUM |
The following table summarizes the final acquisition accounting for these combined acquisitions (in thousands):
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Trade and other receivables | | $ | 4,975 | |
| Prepaid expenses and other current assets | | 145 | |
| Property, plant and equipment | | 3,178 | |
| Other long term assets | | 1,049 | |
| Goodwill | | 28,038 | |
| Intangibles | | 42,144 | |
| Liabilities | | (1,147) | |
| Other noncurrent liabilities | | (782) | |
| | | |
| Aggregate purchase price | | $ | 77,600 | |
The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | Useful Lives (in Years) | | Value |
| Trade Name and Trademarks | | 5 - Indefinite | | $ | 2,161 | |
| Licensed Software and Technology | | 10 | | 4,400 | |
| Proprietary Technology | | 5 | | 8,400 | |
| Supplier Network | | 10 | | 783 | |
| Customer Relationships | | 9 - 16 | | 26,400 | |
| | | | | |
| | | | | |
| | | | | $ | 42,144 | |
8. Goodwill and Other Intangible AssetsA summary of changes in the Company’s goodwill by reportable segment is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2020 | | Acquisitions | | | | Acquisition AccountingAdjustments | | ForeignCurrency | | December 31, 2021 |
| Segment | | | | | | | | | | | | |
| North America | | $ | 3,400,772 | | | $ | 420,529 | | | | | $ | 398 | | | $ | (7,441) | | | $ | 3,814,258 | |
| Brazil | | 585,861 | | | — | | | | | — | | | (39,713) | | | 546,148 | |
| International | | 732,548 | | | 3,286 | | | | | (1,294) | | | (15,968) | | | 718,572 | |
| | | $ | 4,719,181 | | | $ | 423,815 | | | | | $ | (896) | | | $ | (63,122) | | | $ | 5,078,978 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2019 | | Acquisitions | | | | Acquisition Accounting Adjustments | | ForeignCurrency | | December 31, 2020 |
| Segment | | | | | | | | | | | | |
| North America | | $ | 3,369,173 | | | $ | 24,984 | | | | | $ | (1,908) | | | $ | 8,523 | | | $ | 3,400,772 | |
| Brazil | | 756,975 | | | — | | | | | — | | | (171,114) | | | 585,861 | |
| International | | 706,899 | | | 3,950 | | | | | — | | | 21,699 | | | 732,548 | |
| | | $ | 4,833,047 | | | $ | 28,934 | | | | | $ | (1,908) | | | $ | (140,892) | | | $ | 4,719,181 | |
At December 31, 2021 and 2020, approximately $923.3 million and $793.8 million of the Company’s goodwill is deductible for tax purposes, respectively. Acquisition accounting adjustments recorded in 2021 and 2020 are a result of the Company completing its acquisition accounting and working capital adjustments for certain prior year acquisitions. 76
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Number of shares redeemed (in shares) | 600,000 | SEC-NUM |
THE CHARLES SCHWAB CORPORATIONNotes to Consolidated Financial Statements(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
19. Stockholders’ Equity
Except in connection with the 2020 acquisition of TD Ameritrade as described below, CSC did not issue shares of common stock through external offerings during the years ended December 31, 2021, 2020 or 2019.
On October 6, 2020, the Company completed its acquisition of TD Ameritrade. In conjunction with the acquisition, the Company issued shares of CSC common stock and a new, nonvoting class of CSC common stock. Immediately prior to the acquisition, on October 6, 2020, the Company amended its certificate of incorporation to create the nonvoting class of common stock with 300 million shares authorized for issuance and to increase the number of authorized shares of capital stock by the same amount. Each share of nonvoting common stock has identical rights to common stock, including liquidation and dividend rights, except that holders of nonvoting common stock have no voting rights other than over matters that significantly and adversely affect the rights or preferences of the nonvoting common stock, or as required by applicable law. Holders of nonvoting common stock are restricted from transferring shares except for permitted inside or outside transfers, as defined in the certificate of incorporation. Shares of nonvoting stock transferred in a permitted outside transfer are automatically converted to shares of common stock.
Pursuant to the Merger Agreement, CSC issued approximately 177 million shares of common stock and approximately 77 million shares of nonvoting common stock to TD Bank and its affiliates on October 6, 2020. Those shares of common stock and nonvoting common stock were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act. Following this issuance, TD Bank exchanged an aggregate of approximately 2 million shares of CSC common stock for an equal number of shares of CSC nonvoting common stock and held approximately 79 million shares of nonvoting common stock as of December 31, 2021. TD Bank and its affiliates are not permitted to own more than 9.9% of CSC common stock. This limit is interpreted in accordance with the applicable rules of the Federal Reserve and includes shares of CSC common stock deemed to be beneficially owned directly or indirectly by TD Bank and its affiliates.
On June 1, 2021, the Company redeemed all of the 600,000 outstanding shares of its 6.00% non-cumulative perpetual preferred stock, Series C, and the corresponding 24,000,000 depositary shares, each representing a 1/40th interest in a share of the Series C Preferred Stock. The depositary shares were redeemed at a redemption price of $25 per depositary share for a total of $600 million.
On March 30, 2021, the Company issued and sold 24,000,000 depositary shares, each representing a 1/40th ownership interest in a share of 4.450% fixed-rate non-cumulative perpetual preferred stock, Series J, $.01 par value, with a liquidation preference of $1,000 per share (equivalent of $25 per Depositary Share). The net proceeds of the offering were $584 million, after deducting the underwriting discount and offering expenses.
On March 18, 2021, the Company issued and sold 2,250,000 depositary shares, each representing a 1/100th ownership interest in a share of 4.000% fixed-rate reset non-cumulative perpetual preferred stock, Series I, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were $2.2 billion, after deducting the underwriting discount and offering expenses.
On December 11, 2020, the Company issued and sold 2,500,000 depositary shares, each representing a 1/100th ownership interest in a share of 4.000% fixed-rate reset non-cumulative perpetual preferred stock, Series H, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were approximately $2.47 billion, after deducting the underwriting discount and offering expenses.
On April 30, 2020, the Company issued and sold 2,500,000 depositary shares, each representing a 1/100th ownership interest in a share of 5.375% fixed-rate reset non-cumulative perpetual preferred stock, Series G, $.01 par value per share, with a liquidation preference of $100,000 per share (equivalent of $1,000 per Depositary Share). The net proceeds of the offering were approximately $2.47 billion, after deducting the underwriting discount and offering expenses.
On January 30, 2019, CSC publicly announced that its Board of Directors authorized a share repurchase program to repurchase up to $4.0 billion of common stock. The share repurchase authorization does not have an expiration date. There were no repurchases of CSC’s common stock under this authorization during the years ended December 31, 2021 and 2020. During 2019, CSC repurchased 55 million shares of its common stock under this authorization for $2.2 billion.
- 105 -
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Senior Notes, Fair Value | 3.91 | SEC-NUM |
[Table of Contents](#i11f673a761214399ab28a3a12dfa4686_7)
ADOBE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)The fair value of our financial assets and liabilities at December 3, 2021 was determined using the following inputs:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| (in millions) | Fair Value Measurements at Reporting Date Using |
| | | | Quoted Pricesin ActiveMarkets forIdentical Assets | | SignificantOtherObservableInputs | | SignificantUnobservableInputs |
| | Total | | (Level 1) | | (Level 2) | | (Level 3) |
| Assets: | | | | | | | |
| Cash equivalents: | | | | | | | |
| Corporate debt securities | $ | 5 | | | $ | — | | | $ | 5 | | | $ | — | |
| Money market funds | 2,914 | | | 2,914 | | | — | | | — | |
| | | | | | | | |
| Time deposits | 175 | | | 175 | | | — | | | — | |
| | | | | | | | |
| Short-term investments: | | | | | | | |
| Asset-backed securities | 124 | | | — | | | 124 | | | — | |
| Corporate debt securities | 1,425 | | | — | | | 1,425 | | | — | |
| | | | | | | | |
| | | | | | | | |
| Municipal securities | 28 | | | — | | | 28 | | | — | |
| | | | | | | | |
| U.S. Treasury securities | 377 | | | — | | | 377 | | | — | |
| Prepaid expenses and other current assets: | | | | | | | |
| Foreign currency derivatives | 98 | | | — | | | 98 | | | — | |
| Other assets: | | | | | | | |
| Deferred compensation plan assets | 151 | | | 151 | | | — | | | — | |
| | | | | | | | |
| Total assets | $ | 5,297 | | | $ | 3,240 | | | $ | 2,057 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities: | | | | | | | |
| Accrued expenses: | | | | | | | |
| | | | | | | | |
| Foreign currency derivatives | $ | 8 | | | $ | — | | | $ | 8 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
[See Note 4 for further information regarding the fair value of our financial instruments.](#i11f673a761214399ab28a3a12dfa4686_43) Our fixed income available-for-sale debt securities consist of high quality, investment grade securities from diverse issuers with a weighted average credit rating of AA-. We value these securities based on pricing from independent pricing vendors who use matrix pricing valuation techniques including market approach methodologies that model information generated by market transactions involving identical or comparable assets, as well as discounted cash flow methodologies. Inputs include quoted prices in active markets for identical assets or inputs other than quoted prices that are observable either directly or indirectly in determining fair value, including benchmark yields, issuer spreads off benchmark yields, interest rates and U.S. Treasury or swap curves. We therefore classify all of our fixed income available-for-sale securities as Level 2. We perform routine procedures such as comparing prices obtained from multiple independent sources to ensure that appropriate fair values are recorded. The fair values of our money market funds, time deposits and deferred compensation plan assets, which consist of money market and other mutual funds, are based on quoted prices in active markets at the measurement date.Our over-the-counter foreign currency derivatives are valued using pricing models and discounted cash flow methodologies based on observable foreign exchange and interest rate data at the measurement date.Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.Assets and Liabilities Measured at Fair Value on a Nonrecurring BasisThe fair value of our senior notes was $3.91 billion as of September 2, 2022, based on observable market prices in less active markets and categorized as Level 2. [See Note 14 for further details regarding our debt.](#i11f673a761214399ab28a3a12dfa4686_82)17
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Proceeds from issuance of debt | 54 | SEC-NUM |
[Table of Contents](#i329aa562213e420593df15cade55885b_7) NOTE 5: BORROWINGS AND LINES OF CREDIT Long-term debt consisted of the following:
| | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | |
| (In millions) | | | | September 30,2022 | | December 31,2021 |
| | | | | | | |
| | | | | | | |
| 2.242% Notes due February 15, 2025 | | | | $ | 1,200 | | | $ | 2,000 | |
| 2.493% Notes due February 15, 2027 | | | | 900 | | | 1,250 | |
| 2.722% Notes due February 15, 2030 | | | | 2,000 | | | 2,000 | |
| 2.700% Notes due February 15, 2031 | | | | 750 | | | 750 | |
| 3.377% Notes due April 5, 2040 | | | | 1,500 | | | 1,500 | |
| 3.577% Notes due April 5, 2050 | | | | 2,000 | | | 2,000 | |
| | | | | | | |
| | | | | | | |
| Total long-term Notes | | | | 8,350 | | | 9,500 | |
| Japanese Term Loan Facility | | | | 372 | | | — | |
| Other debt (including project financing obligations and finance leases) | | | | 228 | | | 267 | |
| Discounts and debt issuance costs | | | | (61) | | | (71) | |
| Total debt | | | | 8,889 | | | 9,696 | |
| Less: current portion of long-term debt | | | | 219 | | | 183 | |
| Long-term debt, net of current portion | | | | $ | 8,670 | | | $ | 9,513 | |
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Japanese Term Loan FacilityOn July 15, 2022, the Company entered into a five-year, JPY 54 billion (approximately $400 million) senior unsecured term loan facility with MUFG Bank Ltd., as administrative agent and lender, and certain other lenders (the "Japanese Term Loan Facility"). Borrowings under the Japanese Term Loan Facility bear interest at a rate equal to the Tokyo Term Risk Free Rate plus 0.75%. In addition, the Japanese Term Loan Facility is subject to customary covenants including a covenant to maintain a maximum consolidated leverage ratio. On July 25, 2022, the Company borrowed JPY 54 billion under the Japanese Term Loan Facility and used the proceeds to fund a portion of the TCC acquisition and to pay related fees and expenses.
Revolving Credit FacilityOn February 10, 2020, the Company entered into a revolving credit agreement with various banks permitting aggregate borrowings of up to $2.0 billion pursuant to an unsecured, unsubordinated revolving credit facility that matures on April 3, 2025 (the "Revolving Credit Facility"). The Revolving Credit Facility supports the Company's commercial paper program and cash requirements of the Company. A commitment fee of 0.125% is charged on unused commitments. Borrowings under the Revolving Credit Facility are available in U.S. Dollars, Euros and Pounds Sterling and bear interest at a variable interest rate plus a ratings-based margin, which was 125 basis points as of September 30, 2022. As of September 30, 2022, there were no borrowings outstanding under the Revolving Credit Facility.
Commercial Paper ProgramThe Company has a $2.0 billion unsecured, unsubordinated commercial paper program, which can be used for general corporate purposes, including the funding of working capital and potential acquisitions. As of September 30, 2022, there were no borrowings outstanding under the commercial paper program.
Project Financing ArrangementsThe Company is involved in long-term construction contracts in which it arranges project financing with certain customers. As a result, the Company issued $27 million and $108 million of debt during the nine months ended September 30, 2022 and 2021, respectively. Long-term debt repayments associated with these financing arrangements during the nine months ended September 30, 2022 and 2021 were $70 million and $170 million, respectively.
Debt CovenantsThe Revolving Credit Facility, the indenture for the long-term Notes and the Japanese Term Loan Facility contain affirmative and negative covenants customary for financings of these types, which, among other things, limit the Company's ability to incur additional liens, to make certain fundamental changes and to enter into sale and leaseback transactions. As of September 30, 2022, the Company was in compliance with the covenants under the agreements governing its outstanding indebtedness.
12
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Proceeds from issuance of securitized debt | 1,242 | SEC-NUM |
[Table of Contents](#i6f5a02f7aeae4b00b01c55901eb4a1a5_4)DISCOVER FINANCIAL SERVICESCondensed Consolidated Statements of Cash Flows (unaudited)(dollars in millions)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Three Months Ended March 31, |
| | 2022 | | 2021 |
| Cash flows provided by operating activities | | | |
| Net income | $ | 1,242 | | | $ | 1,593 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Provision for credit losses | 154 | | | (365) | |
| Deferred income taxes | (10) | | | 232 | |
| Depreciation and amortization | 139 | | | 119 | |
| Amortization of deferred revenues | (76) | | | (74) | |
| Net unrealized and realized losses on investments and other assets | 173 | | | 10 | |
| Other, net | 20 | | | 23 | |
| Changes in assets and liabilities: | | | |
| Increase in other assets | (127) | | | (150) | |
| Increase in accrued expenses and other liabilities | 219 | | | 120 | |
| Net cash provided by operating activities | 1,734 | | | 1,508 | |
| | | | |
| Cash flows provided by investing activities | | | |
| Maturities of other short-term investments | — | | | 2,200 | |
| | | | |
| Maturities of available-for-sale investment securities | 769 | | | 404 | |
| | | | |
| Maturities of held-to-maturity investment securities | 12 | | | 20 | |
| Purchases of held-to-maturity investment securities | (14) | | | (16) | |
| Net change in principal on loans originated for investment | (103) | | | 3,642 | |
| | | | |
| Proceeds from the sale of other investments | 71 | | | — | |
| Purchases of other investments | (23) | | | (21) | |
| | | | |
| Purchases of premises and equipment | (51) | | | (41) | |
| Net cash provided by investing activities | 661 | | | 6,188 | |
| | | | |
| Cash flows used for by financing activities | | | |
| Net change in short-term borrowings | (1,750) | | | — | |
| Net change in deposits | 82 | | | (165) | |
| Proceeds from issuance of securitized debt | 1,242 | | | — | |
| Maturities and repayment of securitized debt | (2,556) | | | (7) | |
| | | | |
| Maturities and repayment of other long-term borrowings | — | | | (163) | |
| Proceeds from issuance of common stock | 2 | | | 2 | |
| Purchases of treasury stock | (944) | | | (119) | |
| | | | |
| Dividends paid on common and preferred stock | (160) | | | (159) | |
| Net cash used for financing activities | (4,084) | | | (611) | |
| Net (decrease) increase in cash, cash equivalents and restricted cash | (1,689) | | | 7,085 | |
| Cash, cash equivalents and restricted cash, at the beginning of the period | 11,332 | | | 13,589 | |
| Cash, cash equivalents and restricted cash, at the end of the period | $ | 9,643 | | | $ | 20,674 | |
| | | | |
| Reconciliation of cash, cash equivalents and restricted cash | | | |
| Cash and cash equivalents | $ | 9,625 | | | $ | 20,348 | |
| Restricted cash | 18 | | | 326 | |
| Cash, cash equivalents and restricted cash, at the end of the period | $ | 9,643 | | | $ | 20,674 | |
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See Notes to the Condensed Consolidated Financial Statements.5
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Percent of outstanding amount owned for decision making | 25 | SEC-NUM |
[Table of Contents](#i1c7c95a3a35c4e5dafc8b646de4a8ff7_7)
On May 17, 2021, the Company provided notice of its election to redeem early, on June 16, 2021, the $350.0 million aggregate principal amount outstanding of its 4.20% Senior Notes at a redemption price of $350.0 million plus a make-whole redemption premium of $6.7 million using proceeds from the Company’s 2.625% Senior Notes. In addition, the Company recognized the remaining $1.3 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.20% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.20% Senior Notes as well as $0.4 million of deferred taxes for a total loss on early debt redemption of $8.6 million which was recorded within Other expense - net in the Consolidated Statements of Income.
Issuance of 3.00% Senior Notes in 2020
On April 29, 2020, the Company completed a public offering of $500.0 million in aggregate principal amount of 3.00% Senior Notes due May 2030 (the “3.00% Senior Notes”). The net proceeds from the offering were approximately $494.4 million, after deducting the issuance discount of $0.9 million, the underwriting commission of $3.3 million and offering expenses of $1.4 million. The net proceeds were used to redeem and repay the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes due December 15, 2020 (the “4.50% Senior Notes”) and the related accrued interest and a make-whole redemption premium, with the remaining balance used for general corporate purposes. The 3.00% Senior Notes bear interest at a rate of 3.00% per annum, which is payable semi-annually in arrears on May 1 and November 1 of each year. The 3.00% Senior Notes mature on May 1, 2030.
The Company may redeem all or a portion of the 3.00% Senior Notes at any time prior to maturity at the redemption prices set forth in the Indenture governing the 3.00% Senior Notes. The Indenture and 3.00% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all of the Company’s assets. The terms of the 3.00% Senior Notes also require the Company to make an offer to repurchase the 3.00% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any. The Indenture also provides for customary events of default, which include nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% of the then outstanding 3.00% Senior Notes may declare the principal amount of all of the 3.00% Senior Notes to be due and payable immediately.
On April 27, 2020, the Company provided notice of its election to redeem early, on May 27, 2020, the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes at a redemption price of $300.0 million plus a make-whole redemption premium of $6.8 million and accrued and unpaid interest of $6.1 million using proceeds from the Company’s 3.00% Senior Notes. In addition, the Company recognized the remaining $1.4 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.50% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.50% Senior Notes for a total loss on early debt redemption of $8.4 million which was recorded within Other expense - net in the Consolidated Statements of Income.
Revolving Credit Facility
On May 31, 2019, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, with other agents party thereto. The Credit Agreement consists of a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $800 million with a final maturity date of May 31, 2024. The maturity date may be extended under certain conditions for an additional one-year term. Up to $75 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $50 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis. The Credit Agreement replaced the Company’s prior five-year $700 million credit agreement, dated as of June 23, 2015, which was due to expire in June 2020.
Proceeds of the Revolving Facility are available for use by the Borrowers for acquisitions, working capital and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not exceed $400 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement.
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Number of Manufacturing Facilities | 127 | SEC-NUM |
[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7)
APTIV PLCNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. GENERALGeneral and basis of presentation—“Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC (formerly known as Delphi Automotive PLC), a public limited company formed under the laws of Jersey on May 19, 2011, which completed an initial public offering on November 22, 2011, and its consolidated subsidiaries. On December 4, 2017, following the spin-off of Delphi Technologies, the Company changed its name to Aptiv PLC and its NYSE symbol to “APTV.”The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).Nature of operations—Aptiv is a leading global technology and mobility architecture company primarily serving the automotive sector. We deliver end-to-end mobility solutions enabling our customers' transition to more electrified, software-defined vehicles. We design and manufacture vehicle components and provide electrical, electronic and active safety technology solutions to the global automotive and commercial vehicle markets. Aptiv is one of the largest vehicle technology suppliers and our customers include the 25 largest automotive original equipment manufacturers (“OEMs”) in the world. Aptiv operates 127 major manufacturing facilities and 12 major technical centers utilizing a regional service model that enables the Company to efficiently and effectively serve its global customers from best cost countries. Aptiv has a presence in 46 countries and has approximately 18,900 scientists, engineers and technicians focused on developing market relevant product solutions for its customers.
2. SIGNIFICANT ACCOUNTING POLICIESConsolidation—The consolidated financial statements include the accounts of Aptiv and the subsidiaries in which Aptiv holds a controlling financial or management interest and variable interest entities of which Aptiv has determined that it is the primary beneficiary. Aptiv’s share of the earnings or losses of non-controlled affiliates, over which Aptiv exercises significant influence (generally a 20% to 50% ownership interest), is included in the consolidated operating results using the equity method of accounting. When Aptiv does not have the ability to exercise significant influence (generally when ownership interest is less than 20%), investments in non-consolidated affiliates without readily determinable fair value are measured at cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer, while investments in publicly traded equity securities are measured at fair value based on quoted prices for identical assets on active market exchanges as of each reporting date. The Company monitors its investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis. If the Company determines that such a decline has occurred, an impairment loss is recorded, which is measured as the difference between carrying value and estimated fair value. Estimated fair value is generally determined using an income approach based on discounted cash flows or negotiated transaction values.Intercompany transactions and balances between consolidated Aptiv businesses have been eliminated.During the years ended December 31, 2021, 2020 and 2019, Aptiv received dividends of $6 million, $9 million and $9 million, respectively, from its equity method investments. The dividends were recognized as a reduction to the investment and represented a return on investment included in cash flows from operating activities.Aptiv's equity investments without readily determinable fair value totaled $30 million and $113 million as of December 31, 2021 and 2020, respectively, and are classified within other long-term assets in the consolidated balance sheets. Aptiv's investments in publicly traded equity securities totaled $66 million as of December 31, 2021 and are classified within other long-term assets in the consolidated balance sheet. There were no publicly traded equity securities held as of December 31, 2020. Refer to Note 5. Investments in Affiliates for further information regarding Aptiv's equity investments.Use of estimates—Preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect amounts reported therein. Generally, matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, asset impairments, useful lives of intangible and fixed assets, deferred tax asset valuation allowances, income taxes, pension benefit plan assumptions, accruals related to litigation, warranty costs, environmental remediation costs, contingent consideration arrangements, worker’s compensation accruals and healthcare accruals. Due to the inherent uncertainty involved in making estimates, including the duration and severity of the impacts of the COVID-19 pandemic and the ongoing global supply chain disruptions, actual results reported in future periods may be based upon amounts that differ from those estimates.Revenue recognition—Revenue is measured based on consideration specified in a contract with a customer. Customer contracts generally are represented by a combination of a current purchase order and a current production schedule issued by the customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. From time to time, Aptiv enters into pricing agreements with its customers that provide for 70
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Acquisition of intangible assets | 10,000 | SEC-NUM |
IDEXX LABORATORIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) (Unaudited)
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| | For the Nine Months EndedSeptember 30, |
| | 2022 | | 2021 |
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| Cash Flows from Operating Activities: | | | |
| Net income | $ | 506,882 | | | $ | 582,073 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 83,180 | | | 76,901 | |
| Impairment charges | 2,346 | | | 5,148 | |
| Provision for credit losses | 5,112 | | | 1,719 | |
| Deferred income taxes | (36,890) | | | 4,049 | |
| Share-based compensation expense | 36,491 | | | 28,042 | |
| Other | 2,032 | | | 2,402 | |
| Changes in assets and liabilities: | | | |
| Accounts receivable | (35,061) | | | (49,050) | |
| Inventories | (99,621) | | | (46,891) | |
| Other assets and liabilities | (87,566) | | | (51,961) | |
| Accounts payable | (3,930) | | | 637 | |
| Deferred revenue | (3,419) | | | (7,487) | |
| Net cash provided by operating activities | 369,556 | | | 545,582 | |
| Cash Flows from Investing Activities: | | | |
| Purchases of property and equipment | (99,609) | | | (87,761) | |
| Acquisition of intangible assets | (10,000) | | | — | |
| Equity investment | (25,000) | | | — | |
| Acquisitions of a business, net of cash acquired | (11,512) | | | (161,166) | |
| Net cash used by investing activities | (146,121) | | | (248,927) | |
| Cash Flows from Financing Activities: | | | |
| Borrowings under revolving credit facility, net | 559,500 | | | — | |
| Payment of senior debt | (75,000) | | | (50,000) | |
| Payments of acquisition-related contingent consideration and holdbacks | (5,730) | | | (1,500) | |
| Repurchases of common stock, net | (745,691) | | | (502,021) | |
| Proceeds from exercises of stock options and employee stock purchase plans | 23,257 | | | 37,428 | |
| Shares withheld for statutory tax withholding payments on restricted stock | (10,552) | | | (15,501) | |
| Net cash used by financing activities | (254,216) | | | (531,594) | |
| Net effect of changes in exchange rates on cash | (14,497) | | | (3,786) | |
| Net decrease in cash and cash equivalents | (45,278) | | | (238,725) | |
| Cash and cash equivalents at beginning of period | 144,454 | | | 383,928 | |
| Cash and cash equivalents at end of period | $ | 99,176 | | | $ | 145,203 | |
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| Supplemental Cash Flow Information: | | | |
| Cash paid for income taxes | $ | 179,720 | | | $ | 96,103 | |
| Unpaid property and equipment, reflected in accounts payable and accrued liabilities | $ | 19,661 | | | $ | 14,734 | |
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| The accompanying notes are an integral part of these condensed consolidated financial statements. |
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Loss to AOCI | 3 | SEC-NUM |
[Table of Contents](#iedef37dc53354d4baa10c50c5095e29f_25)The DB SERP note receivable – related party is Consumers’ portion of a demand note payable issued by CMS Energy to the DB SERP rabbi trust. The demand note bears interest at an annual rate of 4.10 percent and has a maturity date of 2028.6: Retirement BenefitsCMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans.In March 2022, CMS Energy and Consumers determined it was probable that 2022 lump-sum payments to participants under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once it is probable such settlements will meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of March 31, 2022 and June 30, 2022. For the six months ended June 30, 2022, CMS Energy, including Consumers, recognized a settlement loss of $8 million; of this amount, $8 million was deferred as a regulatory asset. Consumers recognized a settlement loss of $8 million, all of which was deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years.As a result of the remeasurements, the non-current asset for DB Pension Plan A increased by $113 million from December 31, 2021 at CMS Energy, with an offsetting decrease in the associated regulatory asset of $110 million and a $3 million gain to accumulated other comprehensive loss. At Consumers, the non‑current asset increased by $110 million and the associated regulatory asset decreased by $110 million.75
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Credit facility borrowing capacity | 1.5 | SEC-NUM |
5. DEBT Debt outstanding at September 30, 2022 and December 31, 2021 was as follows:
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| | | September 30, 2022 | | December 31, 2021 |
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| Commercial paper | | $ | 162.4 | | | $ | 321.9 | |
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| Notes, 3.3%, due December 2022 | | 500.0 | | | 500.0 | |
| Notes, 3.95%, due June 2023 | | 400.0 | | | 400.0 | |
| Notes, 2.6%, due December 2024 | | 750.0 | | | 750.0 | |
| Notes, 2.6%, due December 2025 | | 400.0 | | | 400.0 | |
| Notes, 3.25%, due June 2026 | | 275.0 | | | 275.0 | |
| Term loan, due August 2026 | | 700.0 | | | 700.0 | |
| Notes, 5.10%, due December 2027 | | 750.0 | | | — | |
| Debentures, 6.9%, due July 2028 | | 125.0 | | | 125.0 | |
| Notes, 3.1%, due May 2030 | | 600.0 | | | 600.0 | |
| Notes, 2.35%, due September 2031 | | 1,000.0 | | | 1,000.0 | |
| Notes, 7.0%, due July 2037 | | 250.0 | | | 250.0 | |
| Other | | 0.5 | | | 3.2 | |
| Total debt | | 5,912.9 | | | 5,325.1 | |
| Less short-term debt and current maturities | | (1,062.9) | | | (824.8) | |
| Less unamortized discounts and debt issuance costs | | (30.8) | | | (30.2) | |
| Total long-term debt, net | | $ | 4,819.2 | | | $ | 4,470.1 | |
5.1% Senior Notes. In September 2022, we issued $750.0 million aggregate principal amount of 5.1% five-year Senior Notes due 2027 (the "2027 Notes") in an underwritten public offering. Interest on the 2027 Notes accrues at a rate of 5.1% per year and is payable semi-annually in arrears on June 15 and December 15 of each year. The net proceeds of the sale of the 2027 Notes were ultimately used to repay, in October 2022, our then-outstanding $500.0 million 3.30% Senior Notes due December 2022. The remaining proceeds were used for general corporate purposes, including the repayment of borrowings under our commercial paper program. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2027 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
2.35% Senior Notes. In August 2021, we issued $1.0 billion aggregate principal amount of 2.35% ten-year Senior Notes due 2031 (the “2031 Notes”) in an underwritten public offering. Interest on the 2031 Notes accrues at a rate of 2.35% per year and is payable semi-annually in arrears on March 15 and September 15 of each year. The net proceeds of the sale of the 2031 Notes were used to repay our then-outstanding $300.0 million 3.6% Senior Notes due 2021 and $300.0 million Floating Rate Notes due 2021. The remaining proceeds were used for general corporate purposes, including the repayment of borrowings under our commercial paper program and the funding of acquisitions, including our acquisition of Appriss Insights in the fourth quarter of 2021. We must comply with various non-financial covenants, including certain limitations on mortgages, liens and sale-leaseback transactions, as well as mergers and sales of substantially all of our assets. The 2031 Notes are unsecured and rank equally with all of our other unsecured and unsubordinated indebtedness.
Senior Credit Facilities. In August 2021, we refinanced our existing unsecured revolving credit facility of $1.1 billion set to expire September 2023, and entered into a new $1.5 billion five-year unsecured revolving credit facility (the “Revolver”) and a new $700.0 million delayed draw term loan (“Term Loan”), collectively known as the “Senior Credit Facilities,” both of which mature in August 2026. Borrowings under the Senior Credit Facilities may be used for working capital, for capital expenditures, to refinance existing debt, to finance acquisitions and for other general corporate purposes. The Revolver includes an option to request a maximum of three one-year extensions of the maturity date, any time after the first anniversary of the closing date of the Revolver. Availability of the Revolver is reduced by the outstanding principal balance of our commercial paper notes and by any letters of credit issued under the Revolver. As of September 30, 2022, there were $162.4 million of outstanding commercial paper notes, $0.4 million of letters of credit outstanding, no outstanding borrowings under the Revolver and $700.0 million outstanding under the Term Loan. Availability under the Revolver was $1,337.2 million at September 30, 2022. 18
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Shares of common stock settled to put and redemption options (in shares) | 105 | SEC-NUM |
AT&T INC.SEPTEMBER 30, 2022
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ContinuedDollars in millions except per share amounts
Convertible Instruments As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, “Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (ASU 2020-06). ASU 2020-06 requires that instruments which may be settled in cash or stock are presumed settled in stock in calculating diluted earnings per share. While our intent is to settle the Series A Cumulative Perpetual Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period.
The following table presents the impact of the adoption of ASU 2020-06 on our diluted earnings per share from continuing operations:
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| | | | Historical Accounting Method | | Effect of Adoption of ASU 2020-061 | | Under ASU 2020-06 |
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| Diluted earnings per share from continuing operations: | | | | | | | | | |
| Three months ended September 30, 2022 | | | | | $ | 0.82 | | | $ | (0.03) | | | $ | 0.79 | |
| Three months ended September 30, 2021 | | | | | $ | 0.64 | | | $ | (0.01) | | | $ | 0.63 | |
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| Nine months ended September 30, 2022 | | | | | $ | 2.08 | | | $ | (0.05) | | | $ | 2.03 | |
| Nine months ended September 30, 2021 | | | | | $ | 2.40 | | | $ | (0.03) | | | $ | 2.37 | |
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| 1See Note 2 for a discussion of the numerator and denominator adjustments. |
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Government Assistance The Financial Accounting Standards Board (FASB) issued ASU No, 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (ASU 2021-10), which requires annual disclosures, beginning with the 2022 Annual Report on Form 10-K, in the notes to the financial statements, about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other guidance. The annual disclosures include terms and conditions, accounting treatment and impacted financial statement lines reflecting the impact of the transactions. ASU 2021-10 will be effective for annual reporting periods beginning after December 15, 2021, which we plan to adopt under prospective application for all in scope government transactions in the financial statements as of our adoption date or thereafter.
Supplier Finance Obligations In September 2022, the FASB issued ASU No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (ASU 2022-04), which establishes interim and annual reporting disclosure requirements about a company’s supplier finance programs for its purchase of goods and services. Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs. ASU 2022-04 will be effective for interim and annual periods beginning after December 15, 2022, with retrospective application, except for the annual rollforward requirement, which becomes effective for annual periods beginning after December 15, 2023, with prospective application. The standard allows early adoption of all requirements. In the year of adoption, the disclosure of payment and other key terms under the programs and outstanding balances under the obligations will also apply to interim reporting dates. We are in the process of evaluating the impact of our adoption of ASU 2022-04.
Subsequent Event
Mobility II Preferred Interests On October 24, 2022, approximately 105 million Mobility preferred interests of the 319 million outstanding were put to AT&T by a third-party investor. We paid approximately $2,600 cash to redeem the Mobility preferred interest, funded with commercial paper borrowings. As of October 31, 2022, we have approximately 213 million Mobility preferred interests outstanding, which have a redemption value of approximately $5,300 and pay cash distributions of $373 per annum, subject to declaration. Under the terms of the Mobility preferred interests, holders can put no more than 107 million interests in any 12-month period. As a result, future puts can be exercised in the fourth quarter of 2023, at the earliest.
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Total lease payments | 483 | SEC-NUM |
[Table of Contents](#i40ca88ef65884b508d3f9e19d0380e84_7)NOTE 17 - LEASESThe lease cost for operating leases were as follows:
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| | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | Six Months Ended June 30, | |
| In millions | 2022 | 2021 | 2022 | 2021 | | |
| Operating lease costs | $ | 28 | | $ | 26 | | $ | 55 | | $ | 53 | | | |
Operating cash flows from operating leases were $56 million and $52 million for the six months ended June 30, 2022 and 2021, respectively.
New operating lease assets and liabilities entered into during the six months ended June 30, 2022 and 2021 were $59 million and $23 million, respectively. Supplemental balance sheet information related to leases was as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| In millions | June 30, 2022 | December 31, 2021 |
| Operating Leases | | |
| Operating lease right-of-use assets 1 | $ | 430 | | $ | 422 | |
| Current operating lease liabilities 2 | 90 | | 92 | |
| Noncurrent operating lease liabilities 3 | 343 | | 337 | |
| Total operating lease liabilities | $ | 433 | | $ | 429 | |
1.Included in "Deferred charges and other assets" in the Condensed Consolidated Balance Sheet.2.Included in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheet.3.Included in "Other noncurrent obligations" in the Condensed Consolidated Balance Sheet.
Operating lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
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| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| Lease Term and Discount Rate for Operating Leases | June 30, 2022 | December 31, 2021 |
| Weighted-average remaining lease term (years) | 8.32 | 8.50 |
| Weighted average discount rate | 2.14 | % | 2.01 | % |
Maturities of lease liabilities were as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Maturity of Lease Liabilities at June 30, 2022 | Operating Leases |
| In millions |
| Remainder of 2022 | $ | 55 | |
| 2023 | 90 | |
| 2024 | 76 | |
| 2025 | 54 | |
| 2026 | 40 | |
| 2027 and thereafter | 168 | |
| Total lease payments | $ | 483 | |
| Less: Interest | 50 | |
| Present value of lease liabilities | $ | 433 | |
The Company has leases in which it is the lessor, with the largest being a result of the N&B transaction. In connection with the N&B Transaction, DuPont entered into leasing agreements with IFF, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories to IFF. These leases are classified as operating leases and lessor income and related expenses are not significant to the Company's Condensed Consolidated Balance Sheet or interim Consolidated Statement of Operations. Lease agreements where the Company is the lessor have final expirations through 2036.
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Current and other assets | 3,540 | SEC-NUM |
CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)Final Purchase Price AllocationThe fair values are based on management’s analysis including work performed by third party valuation specialists, which were finalized over the one-year measurement period. The following table summarizes the allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed of Former Caesars, with the excess recorded as goodwill as of December 31, 2021:
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| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| (In millions) | Fair Value | | |
| Current and other assets | $ | 3,540 | | | |
| Property and equipment | 13,096 | | | |
| | | | |
| Goodwill | 9,064 | | | |
| Intangible assets (a) | 3,394 | | | |
| Other noncurrent assets | 710 | | | |
| Total assets | $ | 29,804 | | | |
| | | | |
| Current liabilities | $ | 1,771 | | | |
| Financing obligation | 8,149 | | | |
| Long-term debt | 6,591 | | | |
| Noncurrent liabilities | 2,400 | | | |
| Total liabilities | 18,911 | | | |
| Noncontrolling interests | 18 | | | |
| Net assets acquired | $ | 10,875 | | | |
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Intangible assets consist of gaming rights valued at $396 million, trade names valued at $2.1 billion, the Caesars Rewards programs valued at $523 million and customer relationships valued at $425 million.The fair values of the assets acquired and liabilities assumed were determined using the market, income, and cost approaches, or a combination. Valuation methodologies under both a market and income approach used for the identifiable net assets acquired in the Former Caesars acquisition make use of Level 3 inputs, such as expected cash flows and projected financial results. The market approach indicates value for a subject asset based on available market pricing for comparable assets.Trade receivables and payables and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the Former Caesars acquisition date. Assets and liabilities held for sale are recorded at fair value, less costs to sell, based on the agreements reached as of the acquisition date, or an income approach.Certain financial assets acquired were determined to have experienced more than insignificant deterioration of credit quality since origination. A reconciliation of the difference between the purchase price of financial assets, including acquired markers, and the face value of the assets is as follows:
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| Purchase price of financial assets | $ | 95 | |
| Allowance for credit losses at the acquisition date based on the acquirer’s assessment | 89 | |
| Discount attributable to other factors | 2 | |
| Face value of financial assets | $ | 186 | |
The fair value of land was determined using the sales comparable approach. The market data is then adjusted for any significant differences, to the extent known, between the identified comparable sites and the site being valued. The value of building and site improvements was estimated via the income approach. Other personal property assets such as furniture, gaming and computer equipment, fixtures, computer software, and restaurant equipment were valued using the cost approach which is based on replacement or reproduction costs of the asset. The cost approach is an estimation of fair value developed by computing the current cost of replacing a property and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and/or economic obsolescence. Non-amortizing intangible assets acquired primarily include trademarks, Caesars Rewards and gaming rights. The fair value for these intangible assets was determined using either the relief from royalty method and excess earnings method under the income approach or a replacement cost market approach. Trademarks and Caesars Rewards were valued using the relief from royalty method, which presumes that without ownership of such trademarks or loyalty program, the Company would have to make a stream of payments to a brand or franchise owner in [Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)79
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Operating loss carryforwards, not subject to expiration, net of tax | 544 | SEC-NUM |
FirstEnergy's effective tax rate on continuing operations for 2021 and 2020 was 20.5% and 11.2%, respectively. The increase in effective tax rate was primarily due to:
•The non-deductibility of the DPA monetary penalty;•The absence of a $52 million benefit for reduction in valuation allowances in 2020 from the recognition of deferred gains on prior intercompany generation asset transfers triggered by the FES Debtors’ emergence from bankruptcy and deconsolidation from FirstEnergy’s consolidated federal income tax group;•Lower amortization of investment tax credits due to the absence of a $10 million benefit from accelerated amortization of certain investment credits in 2020;•The absence of a $40 million benefit related to reversals of certain tax regulatory liabilities resulting from the transfer of TMI-2 in 2020;•Additional tax expense of $9 million as a result of the West Virginia legislation that changed income tax apportionment rules discussed above;•Partially offset by a net $81 million increase in uncertain tax position benefits primarily related to reserves on the worthless stock deduction, nondeductible interest under Section 163(j), and certain federal tax credits, discussed below; and •A $34 million benefit in federal tax credits claimed on FirstEnergy’s federal income tax return in 2021.Accumulated deferred income taxes as of December 31, 2021 and 2020, are as follows:
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | As of December 31, |
| | | 2021 | | 2020 |
| | | (In millions) |
| | | | | |
| Property basis differences | | $ | 5,670 | | | $ | 5,396 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Pension and OPEB | | (570) | | | (769) | |
| | | | | |
| | | | | |
| | | | | |
| AROs | | (21) | | | (28) | |
| Regulatory asset/liability | | 322 | | | 440 | |
| | | | | |
| Deferred compensation | | (155) | | | (165) | |
| | | | | |
| | | | | |
| | | | | |
| Loss carryforwards and tax credits | | (2,040) | | | (1,995) | |
| Valuation reserve | | 484 | | | 496 | |
| | | | | |
| | | | | |
| All other | | (253) | | | (280) | |
| Net deferred income tax liability | | $ | 3,437 | | | $ | 3,095 | |
FirstEnergy has recorded as deferred income tax assets the effect of Federal NOLs and tax credits that will more likely than not be realized through future operations and through the reversal of existing temporary differences. As of December 31, 2021, FirstEnergy's loss carryforwards primarily consisted of $6.9 billion ($1.5 billion, net of tax) of Federal NOL carryforwards that will begin to expire in 2031.
The table below summarizes pre-tax NOL carryforwards and their respective anticipated expirations for state and local income tax purposes of approximately $11.9 billion ($544 million, net of tax) for FirstEnergy, of which approximately $2.7 billion ($136 million, net of tax) is expected to be utilized based on current estimates and assumptions. The ultimate utilization of these NOLs may be impacted by statutory limitations on the use of NOLs imposed by state and local tax jurisdictions, changes in statutory tax rates, and changes in business which, among other things, impact both future profitability and the manner in which future taxable income is apportioned to various state and local tax jurisdictions.
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| | | | | | | | | | | | | | | |
| Expiration Period | | State | | Local |
| | | (In millions) |
| 2022-2026 | | $ | 2,603 | | | $ | 3,783 | |
| 2027-2031 | | 1,390 | | | — | |
| 2032-2036 | | 992 | | | — | |
| 2037-2041 | | 959 | | | — | |
| Indefinite | | 2,157 | | | — | |
| | | $ | 8,101 | | | $ | 3,783 | |
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Cash and Cash Equivalents | 18.2 | SEC-NUM |
[Table of Contents](#i3d0ebbc4e2a2420f98ed7e6fe698936a_7) HASBRO, INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements — (Continued)
(22) eOne Music SaleOn April 25, 2021, the Company entered into a definitive agreement to sell eOne Music for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. On June 29, 2021, the Company completed the sale of eOne Music for net proceeds of $397.0 million, including the sales price of $385.0 million and $12.0 million of closing adjustments related to working capital and net debt calculations. The final proceeds were subject to further adjustment upon completion of closing working capital, which resulted in a net outflow of $0.9 million. The Company acquired eOne Music through its acquisition of eOne in December 2019. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million within Loss on Disposal of Business on the Consolidated Statements of Operations for the year ended December 26, 2021. The Company also recorded pre-tax cash transaction expenses of $9.5 million within Selling, Distribution and Administration expenses on the Consolidated Statements of Operations during the second quarter of 2021. The impairment charge was recorded within the Entertainment segment and the transaction costs were recorded within the Corporate and Other segment. The operations of eOne Music did not meet the criteria to be presented as discontinued operations in accordance with Accounting Standards Update No. 2014-08 (ASU 2014-08) Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity and eOne Music did not represent an individually significant component of the Company’s business. Income from operations before income taxes, attributable to eOne Music, was recorded to the Company's Consolidated Statements of Operations, within the Entertainment segment through the sale transaction closing date. Assets of $473.5 million and liabilities of $77.3 million, attributable to eOne Music, were de-consolidated as of the closing date and, as of December 26, 2021, there are no remaining carrying amounts in the Company's Consolidated Balance Sheets.The following table presents the carrying amounts of the major classes of eOne Music assets and liabilities sold on June 29, 2021 and reflects final working capital adjustments.
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| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (In millions) | December 26,2021 |
| Cash and Cash Equivalents | $ | 18.2 | |
| Goodwill and Other Intangible Assets | 410.3 | |
| Prepaid Expenses | 31.0 | |
| Other Assets | 14.0 | |
| Total Assets | 473.5 | |
| | |
| Accrued Liabilities | 24.4 |
| Deferred Taxes | 36.9 |
| Other Liabilities | 16.0 |
| Total Liabilities | $ | 77.3 | |
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Maximum annual contributions per employee | 75 | SEC-NUM |
[Table of Contents](#ic5e280ddd1ef46fe9ace2a18e7a582b7_7)
14. Net Income Per Share
Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted average number of shares of common stock outstanding during the period and potentially dilutive common shares, including the effect of restricted stock units, performance share awards, and stock options using the treasury stock method. The following table sets forth the computation of the numerators and denominators used in the basic and diluted net income per share amounts:
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| | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended January 31, |
| | 2022 | | 2021 | | 2020 |
| Numerator: | | | | | |
| Net income | $ | 497.0 | | | $ | 1,208.2 | | | $ | 214.5 | |
| Denominator: | | | | | |
| Weighted average shares for basic net income per share | 219.7 | | | 219.4 | | | 219.7 | |
| Effect of dilutive securities | 2.3 | | | 2.7 | | | 2.8 | |
| Weighted average shares for dilutive net income per share | 222.0 | | | 222.1 | | | 222.5 | |
| Basic net income per share | $ | 2.26 | | | $ | 5.51 | | | $ | 0.98 | |
| Diluted net income per share | $ | 2.24 | | | $ | 5.44 | | | $ | 0.96 | |
The computation of diluted net income per share does not include shares that are anti-dilutive under the treasury stock method because their exercise prices are higher than the average market value of Autodesk’s stock during the fiscal year. The effect of 0.2 million and 0.1 million potentially anti-dilutive shares were excluded from the computation of diluted net income per share for the fiscal years ended January 31, 2022 and 2021, respectively. There were no potentially anti-dilutive shares excluded from the computation of diluted net income per share for the fiscal year ended January 31, 2020.
15. Retirement Benefit Plans
Pretax Savings Plan
Autodesk has a 401(k) plan that covers nearly all U.S. employees. Eligible employees may contribute up to 75% of their pretax salary, subject to limitations mandated by the Internal Revenue Service. Autodesk makes voluntary cash contributions and matches a portion of employee contributions in cash. Autodesk’s contributions were $24.3 million in fiscal 2022, $21.6 million in fiscal 2021, and $21.4 million in fiscal 2020. Autodesk does not allow participants to invest in Autodesk common stock through the 401(k) plan.
Defined Benefit Pension Plans
Autodesk provides certain defined benefit pension plans to employees located in countries outside of the United States, primarily the United Kingdom, Switzerland, and Japan. The Company deposits funds for specific plans, consistent with the requirements of local law, with insurance companies or third-party trustees, or into government-managed accounts, and accrues for the unfunded portion of the obligation, where material.
The projected benefit obligation was $106.7 million and $110.0 million as of January 31, 2022, and January 31, 2021, respectively. The accumulated benefit obligation was $99.5 million and $105.2 million as of January 31, 2022, and January 31, 2021, respectively. The related fair value of plan assets was $112.5 million and $107.2 million as of January 31, 2022, and January 31, 2021, respectively. Our defined pension plan assets are measured at fair value and consist primarily of insurance contracts categorized as level 2 in the fair value hierarchy and an investment fund valued using net asset value. The insurance contracts represent the immediate cash surrender value of assets managed by qualified insurance companies. The assets held in the investment fund are invested in a diversified growth fund actively managed by a third party.
Autodesk recognized an aggregate pension liability for the funded status of $9.3 million and $12.1 million in “Long-term other liabilities” on the Consolidated Balance Sheet as of January 31, 2022, and January 31, 2021, respectively. Our total net periodic pension plan cost was $2.6 million, $2.8 million and $3.7 million for fiscal years 2022, 2021, and 2020, respectively.
Our expected funding for the plans during fiscal 2023 is approximately $4.8 million.
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Foreign remittance taxes provided on repatriation of foreign earnings | 1 | SEC-NUM |
[Table of Conten](#i207805ce14724a60909000a6c8cb9e11_7)[t](#i207805ce14724a60909000a6c8cb9e11_7)[s](#i207805ce14724a60909000a6c8cb9e11_7)A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding amounts accrued for potential interest and penalties, is as follows ($ in millions):
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | 2021 | | 2020 | | 2019 |
| Unrecognized tax benefits, beginning of year | $ | 200.1 | | | $ | 214.9 | | | $ | 133.4 | |
| Additions based on tax positions related to the current year | 7.9 | | | 10.4 | | | 17.8 | |
| Additions for tax positions of prior years | 3.4 | | | 16.1 | | | 79.7 | |
| Reductions for tax positions of prior years | (1.4) | | | (26.5) | | | (13.0) | |
| Lapse of statute of limitations | (15.6) | | | (6.1) | | | (2.3) | |
| Settlements | (0.2) | | | (0.5) | | | (0.3) | |
| Effect of foreign currency translation | (1.2) | | | 1.7 | | | (0.4) | |
| Separation related adjustments (a) | — | | | (9.9) | | | — | |
| Unrecognized tax benefits, end of year | $ | 193.0 | | | $ | 200.1 | | | $ | 214.9 | |
| | | | | | |
| (a) Unrecognized tax benefit reserves decreased in 2020 by $10 million upon separation from Vontier in accordance with the Agreements. |
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| |
Repatriation and Unremitted EarningsThe TCJA eliminated the U.S. tax cost for qualified repatriation beginning in 2018 but foreign cumulative earnings remain subject to foreign remittance taxes. As of December 31, 2021, we recorded estimated incremental foreign remittance taxes of $1 million on the planned 2022 repatriation of $542 million of previously unremitted earnings from 2021 and prior periods.The TCJA imposed a final U.S. tax on cumulative earnings from our foreign operations that we have previously made an assertion regarding the amount of such earnings intended for indefinite reinvestment. As of December 31, 2021, the earnings we plan to reinvest indefinitely outside of the United States for which foreign deferred taxes have not been provided was estimated at $2.0 billion. No provisions for foreign remittance taxes have been made with respect to earnings that are planned to be reinvested indefinitely. The amount of foreign remittance taxes that may be applicable to such earnings is not readily determinable given local law restrictions that may apply to a portion of such earnings, unknown changes in foreign tax law that may occur during the applicable restriction periods caused by applicable local corporate law for cash repatriation, and the various tax planning alternatives we could employ if we repatriated these earnings.NOTE 15. RESTRUCTURING AND OTHER RELATED CHARGES Restructuring and other related charges for the years ended December 31 were as follows ($ in millions):
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| | | | | | | | | | | | | | | | | | |
| | 2021 | | 2020 | | 2019 |
| Employee severance related | $ | 12.8 | | | $ | 21.1 | | | $ | 46.9 | |
| Facility exit and other related | 5.9 | | | 5.7 | | | 3.5 | |
| | | | | | |
| Total restructuring and other related charges | $ | 18.7 | | | $ | 26.8 | | | $ | 50.4 | |
Substantially all restructuring activities initiated in 2021 were completed by December 31, 2021. We expect substantially all cash payments associated with remaining termination benefits recorded in 2021 will be paid in 2022, and all planned restructuring activities related to the 2020 and 2019 plans have been completed.The nature of our restructuring and related activities initiated in 2021, 2020 and 2019 were broadly consistent throughout our segments and focused on improvements in operational efficiency through targeted workforce reductions and facility consolidations and closures. We incurred these costs to position ourselves to provide superior products and services to our customers in a cost-efficient manner, while taking into consideration broad economic uncertainties, including those created by the COVID-19 pandemic.92
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Estimated percentage of total rate increase, step two | 25 | SEC-NUM |
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| FINANCIAL STATEMENTS | REGULATORY MATTERS |
Midwest Propane CavernsDuke Energy Ohio used propane stored in caverns to meet peak demand during winter for several decades. Once the Central Corridor Project was complete and placed in service, the propane peaking facilities were no longer necessary and were retired. On October 7, 2021, Duke Energy Ohio requested deferral treatment of the property, plant and equipment as well as costs related to propane inventory and decommissioning costs. On January 6, 2022, the Staff issued a report recommending deferral authority for costs related to propane inventory and decommissioning costs, but not for the net book value of the remaining plant assets. As a result of the Staff's report, Duke Energy Ohio recorded a $19 million charge to Impairment of assets and other charges on the Condensed Consolidated Statements of Operations and Comprehensive Income in the fourth quarter of 2021. A Stipulation and Recommendation was filed jointly by Duke Energy Ohio and the Staff on April 27, 2022, recommending, among other things, approval of deferral treatment of a portion of the net book value of the property, plant and equipment prior to the 2021 impairment at the time of the next natural gas base rate case, excluding operations and maintenance savings, decommissioning costs not to exceed $7 million and costs related to propane inventory. The Stipulation and Recommendation states that Duke Energy Ohio will seek recovery of the deferral through its next natural gas base rate case proceeding with a proposed amortization period of at least 10 years and include an independent engineering study analyzing the necessity and prudency of the incremental investments made at the facilities since March 31, 2012. Duke Energy Ohio will not seek a return on the deferred amounts. An evidentiary hearing was held on September 8, 2022. On October 5, 2022, the PUCO issued an order approving the Stipulation and Recommendation as filed. As a result of the order, Duke Energy Ohio recorded a reversal of $12 million to Impairment of assets and other charges on the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months and nine months ended September 30, 2022.Duke Energy Indiana2019 Indiana Rate CaseOn July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued an order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction was due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% was due to the approved ROE of 9.7% versus the requested ROE of 10.4% and approximately 20% was related to miscellaneous earnings neutral adjustments. Step one rates were estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates estimated to be the remaining 25% of the total rate increase were approved on July 28, 2021, and implemented in August 2021.Several groups appealed the IURC order to the Indiana Court of Appeals. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court on June 28, 2021. The Indiana Supreme Court issued its opinion on March 10, 2022, finding that the IURC erred in allowing Duke Energy Indiana to recover coal ash costs incurred before the IURC’s rate case order in June 2020. The Indiana Supreme Court found that allowing Duke Energy Indiana to recover coal ash costs incurred between rate cases that exceeded the amount built into base rates violated the prohibition against retroactive ratemaking. The IURC’s order has been remanded to the IURC for additional proceedings consistent with the Indiana Supreme Court’s opinion. As a result of the court's opinion, Duke Energy Indiana recognized pretax charges of approximately $211 million to Impairment of assets and other charges and $46 million to Operating revenues in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022, which the court denied on May 26, 2022. Duke Energy Indiana filed its testimony in the remand proceeding on August 18, 2022. An evidentiary hearing is scheduled to begin January 20, 2023. Duke Energy Indiana cannot predict the outcome of this matter.2020 Indiana Coal Ash Recovery CaseIn Duke Energy Indiana’s 2019 rate case, the IURC also opened a subdocket for post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The OUCC filed a notice of appeal to the Indiana Court of Appeals on December 3, 2021. The OUCC's opening brief was filed on October 12, 2022. Duke Energy Indiana cannot predict the outcome of this matter.TDSIC 2.0On November 23, 2021, Duke Energy Indiana filed for approval of the Transmission, Distribution, Storage Improvement Charge 2.0 investment plan for 2023-2028 (TDSIC 2.0). On June 15, 2022, the IURC approved, without modification, TDSIC 2.0, which includes approximately $2 billion in transmission and distribution investments selected to improve reliability to our customers, harden and improve resiliency of the grid, enable expansion of renewable and distributed energy projects and encourage economic development. In addition, the IURC set up a subdocket to consider the targeted economic development project, which the IURC approved on March 2, 2022. On July 15, 2022, the OUCC filed a notice of appeal to the Indiana Court of Appeals in Duke Energy Indiana’s TDSIC 2.0 proceeding. An appellant brief was filed on October 28, 2022. Duke Energy Indiana cannot predict the outcome of this matter.52
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Property, plant and equipment | 35.9 | SEC-NUM |
THE COOPER COMPANIES, INC. AND SUBSIDIARIESNotes to Consolidated Condensed Financial Statements(Unaudited)
| | | | | | |
| --- | --- | --- | --- | --- | --- |
| | | | | | |
| (In millions) | |
| Current assets: | |
| Cash and cash equivalents | $ | 58.6 | |
| Trade accounts receivable, net | 23.3 | |
| Inventories | 4.0 | |
| Prepaid expense and other current assets | 29.9 | |
| Total current assets | 115.8 | |
| Property, plant and equipment | 35.9 | |
| Operating lease right-of-use assets | 21.4 | |
| Goodwill | 1,230.4 | |
| Customer relationships | 671.9 | |
| Trademarks | 54.9 | |
| Deferred tax assets | 15.7 | |
| Other assets | 0.8 | |
| Total assets acquired | $ | 2,146.8 | |
| | |
| Current liabilities: | |
| Accounts payable | $ | 12.6 | |
| Employee compensation and benefits | 12.3 | |
| Operating lease liabilities | 2.5 | |
| Deferred revenue | 68.4 | |
| Other current liabilities | 15.1 | |
| Total current liabilities | 110.9 | |
| Deferred tax liabilities | 140.3 | |
| Operating lease liabilities | 18.8 | |
| Deferred revenue | 212.5 | |
| Other liabilities | 1.2 | |
| Total liabilities assumed | $ | 483.7 | |
| | |
| Total purchase price | $ | 1,663.1 | |
The purchase accounting is incomplete and subject to change during the measurement period, which may result in material changes to the purchase price allocation. The Company is in the process of finalizing information primarily related to the valuation of intangible assets and property, plant and equipment, the measurement of deferred revenue, the associated deferred tax adjustments and the corresponding impact on goodwill. The Company recorded a measurement period adjustment of $62.2 million to goodwill in the second quarter of fiscal 2022 ended April 30, 2022.
Deferred revenue was recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers, as a result of the adoption of ASU 2021-08. See Note 1. General for additional information.
The Company currently estimates that customer relationships will be amortized over 13 years and trademarks will be amortized over 14 years. Goodwill is primarily attributable to assembled workforce and expected synergies to be achieved. The goodwill recognized is not deductible for tax purposes.
The transaction costs associated with the acquisition consisted primarily of legal, regulatory and financial advisory fees, which were expensed as incurred as selling, general and administrative expense.
Generate's revenue and net income for the period from the acquisition date to April 30, 2022, were $104.8 million and $4.2 million, respectively. The following unaudited pro forma information summarizes the combined results of operations of the Company and Generate as if the acquisition had been completed at the beginning of the Company’s fiscal 2021:
11
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Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months | 115,770 | SEC-NUM |
INVITATION HOMES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollar amounts in thousands)
The table below summarizes our interest rate swap instruments as of December 31, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Agreement Date | | ForwardEffective Date | | MaturityDate | | StrikeRate | | Index | | NotionalAmount |
| April 19, 2018 | | January 31, 2019 | | January 31, 2025 | | 2.86% | | One month LIBOR | | $ | 400,000 | |
| February 15, 2019 | | March 15, 2019 | | March 15, 2022 | | 2.23% | | One month LIBOR | | 800,000 | |
| April 19, 2018 | | March 15, 2019 | | November 30, 2024 | | 2.85% | | One month LIBOR | | 400,000 | |
| April 19, 2018 | | March 15, 2019 | | February 28, 2025 | | 2.86% | | One month LIBOR | | 400,000 | |
| May 8, 2018 | | March 9, 2020 | | June 9, 2025 | | 2.99% | | One month LIBOR | | 325,000 | |
| May 8, 2018 | | June 9, 2020 | | June 9, 2025 | | 2.99% | | One month LIBOR | | 595,000 | |
| June 28, 2018 | | August 7, 2020 | | July 9, 2025 | | 2.90% | | One month LIBOR | | 1,100,000 | |
| December 9, 2019 | | July 15, 2021 | | November 30, 2024 | | 2.90% | | One month LIBOR | | 400,000 | |
| November 7, 2018 | | March 15, 2022 | | July 31, 2025 | | 3.14% | | One month LIBOR | | 400,000 | |
| November 7, 2018 | | March 15, 2022 | | July 31, 2025 | | 3.16% | | One month LIBOR | | 400,000 | |
During the years ended December 31, 2021 and 2020, we terminated interest rate swaps and paid the counterparties $20,798 and $15,249, respectively, in connection with these terminations. During the year ended December 31, 2019, we modified the start date of an interest rate swap and paid the counterparty $8,239 in connection with the modification.During the years ended December 31, 2021, 2020, and 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate interest payments. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next 12 months, we estimate that $115,770 will be reclassified to earnings as an increase in interest expense.During the year ended December 31, 2020, we accelerated the reclassification of certain amounts in other comprehensive income to earnings as a result of a portion of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts represented a loss of $3,111 and were recorded as interest expense in the accompanying consolidated statement of operations for the year ended December 31, 2020. We did not accelerate the reclassification of any amounts in other comprehensive income to earnings during the years ended December 31, 2021 and 2019.Non-Designated HedgesConcurrent with entering into certain of the mortgage loan agreements and in connection with previous mergers, we entered into or acquired and maintain interest rate cap agreements with terms and notional amounts equivalent to the terms and amounts of the mortgage loans made by the third party lenders. Currently, each of our cap agreements is indexed to one month LIBOR, which is set to expire on June 30, 2023. We will work with the counterparties to our cap agreements to adjust each floating rate to a comparable or successor rate. To the extent that the maturity date of one or more of the mortgage loans is extended through an exercise of one or more extension options, replacement or extension interest rate cap agreements must be executed with terms similar to those associated with the initial interest rate cap agreements and strike prices equal to the greater of the interest rate cap strike price and the interest rate at which the debt service coverage ratio (as defined) is not less than 1.2 to 1.0. The interest rate cap agreements, including all of our rights to payments owed by the counterparties and all other rights, have been pledged as additional collateral for the mortgage loans. Additionally, in certain instances, in order to minimize the cash impact of purchasing required interest rate caps, we simultaneously sell interest rate caps (which have identical terms and notional amounts) such that the purchase price and sales proceeds of the related interest rate caps are intended to offset each other. The purchased and sold interest rate caps have strike prices ranging from approximately 3.75% to 7.56%.F-32
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Lessee, Operating Lease, Liability, Payments, Due Year Two | 35 | SEC-NUM |
[Table of Contents](#i43d04c9d26874e33802bdf64c458414a_7)The future minimum payments for leases presented in the consolidated balance sheet at December 31, 2021, follow:
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | |
| | | | |
| 2022 | $ | 46 | | | |
| 2023 | 35 | | | |
| 2024 | 73 | | | |
| 2025 | 27 | | | |
| 2026 | 24 | | | |
| Thereafter | 194 | | | |
| Total payments | 399 | | | |
| Less amount representing interest | (80) | | | |
| Present value of net minimum lease payments | 319 | | | |
| Less current portion | (38) | | | |
| Long-term portion | $ | 281 | | | |
Contractual Obligations. At December 31, 2021, based on applicable prices on that date, FCX has unconditional purchase obligations (including take-or-pay contracts with terms less than one year) of $4.3 billion, primarily comprising the procurement of copper concentrate ($3.1 billion), transportation services ($0.4 billion) and electricity ($0.3 billion). Some of FCX’s unconditional purchase obligations are settled based on the prevailing market rate for the service or commodity purchased. In some cases, the amount of the actual obligation may change over time because of market conditions. Obligations for copper concentrate provide for deliveries of specified volumes to Atlantic Copper at market-based prices. Transportation obligations are primarily for South America contracted ocean freight. Electricity obligations are primarily for long-term power purchase agreements in North America and contractual minimum demand at the South America mines.
FCX’s unconditional purchase obligations by year total $1.6 billion in 2022, $1.5 billion in 2023, $0.5 billion in 2024, $0.2 billion in 2025, $0.2 billion in 2026 and $0.3 billion thereafter. During the three-year period ended December 31, 2021, FCX fulfilled its minimum contractual purchase obligations.
IUPK - Indonesia. On December 21, 2018, FCX completed the transaction with the Indonesia government regarding PT-FI’s long-term mining rights and share ownership. Concurrent with the closing of the transaction, the Indonesia government granted PT-FI an IUPK to replace its former COW, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041, subject to PT-FI completing the development of additional smelting capacity in Indonesia by the end of 2023 (an extension of which has been requested due to COVID-19 mitigation measures subject to the approval of the Indonesia government, refer to Note 12), and fulfilling its defined fiscal obligations to the Indonesia government. The IUPK, and related documentation, contains legal and fiscal terms and is legally enforceable through 2041, assuming the additional extension is received. In addition, FCX, as a foreign investor, has rights to resolve investment disputes with the Indonesia government through international arbitration.
The key fiscal terms set forth in the IUPK include a 25 percent corporate income tax rate, a 10 percent profits tax on net income, and royalty rates of 4 percent for copper, 3.75 percent for gold and 3.25 percent for silver. PT-FI’s royalties totaled $319 million in 2021, $160 million in 2020 and $106 million in 2019.
Dividend distributions from PT-FI to FCX totaled $1.0 billion in 2021 and are subject to a 10 percent withholding tax. There were no dividend distributions from PT-FI to FCX in 2020 or 2019.
The IUPK requires PT-FI to pay export duties of 5 percent, declining to 2.5 percent when smelter development progress exceeds 30 percent and eliminated when development progress for additional smelting capacity in Indonesia exceeds 50 percent. PT-FI had previously agreed to and has been paying export duties since July 2014 (refer to Note 12 for further discussion of disputed export duties). PT-FI’s export duties charged against revenues totaled $218 million in 2021, $92 million in 2020 and $66 million in 2019 (excluding $155 million associated with the historical export duty matter discussed in Note 12).
The IUPK also requires PT-FI to pay surface water taxes of $15 million annually, which began in 2019 and are recognized in production and delivery costs.
157
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Net proceeds from issuance of notes | 982 | SEC-NUM |
[Table](#i433d81903e814837b268e57261b357cb_7) [of Contents](#i433d81903e814837b268e57261b357cb_7)is equal to an initial conversion price of approximately $255.02 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding November 15, 2025, holders may convert their Convertible Notes at their option only under the following circumstances:• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price then in effect on each applicable trading day;• during the five business day period immediately after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the business day immediately prior to the redemption date, but only with respect to the Convertible Notes called for redemption (or deemed called for redemption); or• upon the occurrence of specified corporate events.Irrespective of the foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025 and prior to the close of business on the second scheduled trading day immediately preceding the maturity date. Additionally, upon the occurrence of a corporate event that constitutes a “make-whole fundamental change” per the indenture, or if we call the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in connection with such make-whole fundamental change or during the related redemption period, as the case may be, such holder may be entitled to an increase in the conversion rate in certain circumstances as described in the indenture. Upon conversion, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.We may not redeem the Convertible Notes prior to February 20, 2024. On or after February 20, 2024 and prior to the 41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, we may redeem for cash all or part of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, except as otherwise described in the indenture.The net carrying amount of the Convertible Notes as of December 31, 2021 was $986 million, which reflects the $1 billion in principal less unamortized debt issuance costs of $14 million. Interest expense related to the amortization of the debt issuance costs for the Convertible Notes was $3 million during the year ended December 31, 2021. March 2021 Senior Note Issuance. On March 3, 2021, we privately placed $1 billion of senior unsecured notes that are due in March 2031 that bear interest at 2.95%. In May 2021, we completed an offer to exchange these notes for registered notes having substantially the same financial terms and covenants as the original notes (the unregistered and registered notes collectively, the “2.95% Notes”). The 2.95% Notes were issued at a price of 99.081% of the aggregate principal amount. Interest is payable semi-annually in arrears in March and September of each year, beginning September 15, 2021, and the interest rate is subject to adjustment based on certain ratings events. We may redeem some or all of the 2.95% Notes at any time prior to December 15, 2030 by paying a “make-whole” premium plus accrued and unpaid interest, if any. We may redeem some or all of the 2.95% Notes on or after December 15, 2030 at par plus accrued and unpaid interest, if any. The net proceeds from the issuance of the 2.95% Notes was approximately $982 million after deducting the discount and debt issuance costs. Previous Senior Note Issuances. In prior years, we issued the following senior notes, which are still outstanding as of December 31, 2021:•Euro 650 million of registered senior unsecured notes that are due in June 2022 that bear interest at 2.5% (the “2.5% Notes”). The 2.5% Notes were issued at 99.525% of par resulting in a discount, which is being amortized over their life. Interest is payable annually in arrears in June of each year. We may redeem the 2.5% Notes at our option, at whole or in part, at any time or from time to time. If we elect to redeem the 2.5% Notes prior to March 3, 2022, we may redeem them at a specified “make-whole” premium. If we elect to redeem the 2.5% Notes on or after March 3, 2022, we may redeem them at a redemption price of 100% of the principal plus accrued and unpaid interest. Subject to certain limited exceptions, all payments of interest and principal for the 2.5% Notes will be made in Euros.F- 27
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Long-term debt maturing during year two | 505 | SEC-NUM |
(10) SHORT-TERM BORROWINGS AND LINES OF CREDIT
Short-term borrowings and current maturities of long-term debt are as follows:
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | 2020 | | | 2021 | |
| Current maturities of long-term debt | | $ | 322 | | | 538 | |
| Commercial paper | | 838 | | | 334 | |
| Total | | $ | 1,160 | | | 872 | |
| | | | | |
| Interest rate for weighted-average short-term borrowings at year end | | 0.1% | | 0.1% |
In May 2018, the Company entered into a $3.5 billion five-year revolving backup credit facility with various banks, which replaced the April 2014 $3.5 billion facility. The credit facility is maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings under this or previous facilities. The credit facility contains no financial covenants and is not subject to termination based on a change of credit rating or material adverse changes. The facility is unsecured and may be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facility are immaterial.
(11) LONG-TERM DEBTThe details of long-term debt follow:
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | 2020 | | | 2021 | |
| 4.25% notes due November 2020 | $ | 300 | | | — | |
| 2.625% notes due December 2021 | 500 | | | 500 | |
| 2.625% notes due February 2023 | 500 | | | 500 | |
| 0.375% euro notes due May 2024 | 586 | | | 579 | |
| 3.15% notes due June 2025 | 500 | | | 500 | |
| 1.25% euro notes due October 2025 | 586 | | | 579 | |
| 0.875% notes due October 2026 | 750 | | | 750 | |
| 1.8% notes due October 2027 | 500 | | | 500 | |
| 2.0% euro notes due October 2029 | 586 | | | 579 | |
| 1.95% notes due October 2030 | 500 | | | 500 | |
| 6.0% notes due August 2032 | 250 | | | 250 | |
| 6.125% notes due April 2039 | 250 | | | 250 | |
| 5.25% notes due November 2039 | 300 | | | 300 | |
| 2.75% notes due October 2050 | 500 | | | 500 | |
| Other | 40 | | | 44 | |
| Long-term debt | 6,648 | | | 6,331 | |
| Less: Current maturities | 322 | | | 538 | |
| Total, net | $ | 6,326 | | | 5,793 | |
Long-term debt maturing during each of the four years after 2022 is $505, $592, $497 and $577, respectively. Total interest paid on long-term debt was approximately $156, $163 and $195 in 2021, 2020 and 2019, respectively. During the year, the Company repaid $300 of 4.25% notes that matured in November 2020. In 2020, the Company repaid $500 of 4.875% notes that matured in October 2019. In April 2020, the Company issued $500 of 1.8% notes due October 2027, $500 of 1.95% notes due October 2030 and $500 of 2.75% notes due October 2050. In September 2020, the Company issued $750 of 0.875% notes due October 2026.The Company maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts or share purchase units without a predetermined limit. Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale.45
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Cash paid for business combination | 157,301 | SEC-NUM |
Extra Space Storage Inc.Condensed Consolidated Statements of Cash Flows(amounts in thousands)(unaudited)
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | |
| | For the Six Months Ended June 30, |
| | 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net income | $ | 465,551 | | | $ | 394,080 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 136,973 | | | 118,169 | |
| Amortization of deferred financing costs | 3,933 | | | 4,869 | |
| | | | |
| Non-cash lease expense | 939 | | | 945 | |
| Compensation expense related to stock-based awards | 9,787 | | | 8,635 | |
| Accrual of interest income added to principal of debt securities and notes receivable | (19,235) | | | (17,312) | |
| | | | |
| Gain on real estate transactions | (14,249) | | | (63,883) | |
| Equity in earnings of unconsolidated real estate ventures - gain on sale of real estate assets and purchase of joint venture partner's interest | — | | | (6,251) | |
| Distributions from unconsolidated real estate ventures in excess of earnings | 6,204 | | | 3,026 | |
| Changes in operating assets and liabilities: | | | |
| | | | |
| Other assets | 15,789 | | | 5,519 | |
| Accounts payable and accrued expenses | 28,646 | | | 19,063 | |
| Other liabilities | 6,049 | | | (3,172) | |
| Net cash provided by operating activities | 640,387 | | | 463,688 | |
| Cash flows from investing activities: | | | |
| Acquisition of real estate assets | (438,287) | | | (375,209) | |
| Cash paid for business combination | (157,301) | | | — | |
| Development and redevelopment of real estate assets | (29,256) | | | (25,782) | |
| Proceeds from sale of real estate assets and investments in real estate ventures | 39,367 | | | 194,205 | |
| Investment in unconsolidated real estate entities | (76,339) | | | (7,174) | |
| | | | |
| Return of investment in unconsolidated real estate ventures | 342 | | | 31,534 | |
| Issuance and purchase of notes receivable | (204,930) | | | (68,523) | |
| Principal payments received from notes receivable | 223,773 | | | 20,426 | |
| Proceeds from sale of notes receivable | 82,115 | | | 87,298 | |
| Purchase of equipment and fixtures | (9,512) | | | (2,077) | |
| Net cash used in investing activities | (570,028) | | | (145,302) | |
| Cash flows from financing activities: | | | |
| Proceeds from the sale of common stock, net of offering costs | — | | | 273,509 | |
| Proceeds from notes payable and revolving lines of credit | 1,948,657 | | | 2,372,000 | |
| Principal payments on notes payable and revolving lines of credit | (1,915,531) | | | (3,193,025) | |
| Proceeds from issuance of public bonds, net | 400,000 | | | 446,396 | |
| Deferred financing costs | (6,713) | | | (5,403) | |
| | | | |
| Net proceeds from exercise of stock options | — | | | 4,254 | |
| Repurchase of common stock | (63,008) | | | — | |
| Redemption of Operating Partnership units held by noncontrolling interests | (3,504) | | | (472) | |
| Redemption of Preferred B Units for cash | (4,500) | | | — | |
| Proceeds from principal payments on note receivable collateralized by OP Units | — | | | 411 | |
| | | | |
| Dividends paid on common stock | (403,551) | | | (266,317) | |
| Distributions to noncontrolling interests | (28,237) | | | (17,999) | |
| Net cash used in financing activities | (76,387) | | | (386,646) | |
| Net decrease in cash, cash equivalents, and restricted cash | (6,028) | | | (68,260) | |
| Cash, cash equivalents, and restricted cash, beginning of the period | 76,194 | | | 128,009 | |
| Cash, cash equivalents, and restricted cash, end of the period | $ | 70,166 | | | $ | 59,749 | |
| | | | |
| | | | |
| | | | |
11
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Likelihood of no resolution period | 12 | SEC-NUM |
[Table of Contents](#ica158fb683c247fdb170955b492f9216_7)HEWLETT PACKARD ENTERPRISE COMPANY AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)Uncertain Tax PositionsA reconciliation of unrecognized tax benefits is as follows:
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| | As of October 31, |
| | 2021 | | 2020 | | 2019 |
| | In millions |
| Balance at beginning of year | $ | 2,159 | | | $ | 2,269 | | | $ | 8,826 | |
| Increases: | | | | | |
| For current year's tax positions | 24 | | | 27 | | | 43 | |
| For prior years' tax positions | 64 | | | 40 | | | 37 | |
| Decreases: | | | | | |
| For prior years' tax positions | (31) | | | (71) | | | (17) | |
| Statute of limitations expiration | (44) | | | (17) | | | (38) | |
| Settlements with taxing authorities | (15) | | | (53) | | | (7) | |
| Settlements related to joint and several positions of former Parent | (26) | | | (36) | | | (6,575) | |
| Balance at end of year | $ | 2,131 | | | $ | 2,159 | | | $ | 2,269 | |
Up to $688 million, $731 million and $772 million of Hewlett Packard Enterprise's unrecognized tax benefits at October 31, 2021, 2020 and 2019, respectively, would affect the Company's effective tax rate if realized. Hewlett Packard Enterprise recognizes interest income from favorable settlements and interest expense and penalties accrued on unrecognized tax benefits in (Provision) benefit for taxes in the Consolidated Statements of Earnings. The Company recognized $17 million of interest expense, $10 million of interest income, and $13 million of interest income in fiscal 2021, 2020, and 2019, respectively. As of October 31, 2021 and 2020, the Company had accrued $136 million and $119 million, respectively, for interest and penalties in the Consolidated Balance Sheets.Hewlett Packard Enterprise is subject to income tax in the U.S. and approximately 90 other countries and is subject to routine corporate income tax audits in many of these jurisdictions.With the resolution of the 2013 through 2015 U.S. Internal Revenue Service ("IRS") tax audits of its former parent in fiscal 2019, Hewlett Packard Enterprise is no longer subject to U.S. federal tax audits for years prior to 2016. With respect to major state and foreign tax jurisdictions, HPE is no longer subject to tax authority examinations for years prior to 2005. Hewlett Packard Enterprise is joint and severally liable for certain pre-Separation state tax liabilities of HP Inc. HP Inc. is subject to numerous ongoing audits by state tax authorities.Hewlett Packard Enterprise engages in continuous discussion and negotiation with taxing authorities regarding tax matters in various jurisdictions. Hewlett Packard Enterprise does not expect complete resolution of any IRS audit cycle within the next 12 months. However, it is reasonably possible that certain federal, foreign and state tax issues may be concluded in the next 12 months, including issues involving resolution of certain intercompany transactions, joint and several tax liabilities and other matters. Accordingly, Hewlett Packard Enterprise believes it is reasonably possible that its existing unrecognized tax benefits may be reduced by an amount up to $69 million within the next 12 months.Hewlett Packard Enterprise believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the Company's tax provision. The Company adjusts its uncertain tax positions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular audit. However, income tax audits are inherently unpredictable and there can be no assurance that the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in the (Provision) benefit for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net earnings or cash flows.Hewlett Packard Enterprise has not provided for U.S. federal and state income and foreign withholding taxes on $8.9 billion of undistributed earnings and basis differences from non-U.S. operations as of October 31, 2021 because the Company intends to reinvest such earnings indefinitely outside of the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings and basis differences is not practicable. The Company will remit non-indefinitely 97
| string | null | null |
Income from discontinued operations, net of tax | 4 | SEC-NUM |
3 | The AES CorporationCondensed Consolidated Statements of Operations(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | |
| | (in millions, except share and per share amounts) |
| Revenue: | | | | | | | |
| Regulated | $ | 976 | | | $ | 768 | | | $ | 2,613 | | | $ | 2,147 | |
| Non-Regulated | 2,651 | | | 2,268 | | | 6,944 | | | 6,224 | |
| Total revenue | 3,627 | | | 3,036 | | | 9,557 | | | 8,371 | |
| Cost of Sales: | | | | | | | |
| Regulated | (896) | | | (644) | | | (2,335) | | | (1,806) | |
| Non-Regulated | (1,839) | | | (1,632) | | | (5,237) | | | (4,413) | |
| Total cost of sales | (2,735) | | | (2,276) | | | (7,572) | | | (6,219) | |
| Operating margin | 892 | | | 760 | | | 1,985 | | | 2,152 | |
| General and administrative expenses | (51) | | | (39) | | | (149) | | | (130) | |
| Interest expense | (276) | | | (242) | | | (813) | | | (669) | |
| Interest income | 100 | | | 71 | | | 270 | | | 212 | |
| Loss on extinguishment of debt | (1) | | | (22) | | | (8) | | | (41) | |
| Other expense | (10) | | | (12) | | | (51) | | | (32) | |
| Other income | 4 | | | 48 | | | 80 | | | 274 | |
| Gain on disposal and sale of business interests | 1 | | | 22 | | | — | | | 81 | |
| | | | | | | | |
| Asset impairment expense | (50) | | | (29) | | | (533) | | | (1,374) | |
| Foreign currency transaction gains (losses) | 8 | | | 29 | | | (60) | | | (8) | |
| | | | | | | | |
| INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES | 617 | | | 586 | | | 721 | | | 465 | |
| Income tax expense | (145) | | | (126) | | | (186) | | | (75) | |
| Net equity in earnings (losses) of affiliates | (26) | | | 25 | | | (54) | | | (15) | |
| INCOME FROM CONTINUING OPERATIONS | 446 | | | 485 | | | 481 | | | 375 | |
| | | | | | | | |
| Gain from disposal of discontinued businesses | — | | | — | | | — | | | 4 | |
| NET INCOME | 446 | | | 485 | | | 481 | | | 379 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Less: Net income attributable to noncontrolling interests and redeemable stock of subsidiaries | (25) | | | (142) | | | (124) | | | (156) | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 223 | |
| AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | | | | | | | |
| Income from continuing operations, net of tax | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 219 | |
| Income from discontinued operations, net of tax | — | | | — | | | — | | | 4 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION | $ | 421 | | | $ | 343 | | | $ | 357 | | | $ | 223 | |
| BASIC EARNINGS PER SHARE: | | | | | | | |
| Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.63 | | | $ | 0.52 | | | $ | 0.53 | | | $ | 0.32 | |
| Income from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | | | — | | | — | | | 0.01 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.63 | | | $ | 0.52 | | | $ | 0.53 | | | $ | 0.33 | |
| DILUTED EARNINGS PER SHARE: | | | | | | | |
| Income from continuing operations attributable to The AES Corporation common stockholders, net of tax | $ | 0.59 | | | $ | 0.48 | | | $ | 0.50 | | | $ | 0.31 | |
| Income from discontinued operations attributable to The AES Corporation common stockholders, net of tax | — | | | — | | | — | | | 0.01 | |
| NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS | $ | 0.59 | | | $ | 0.48 | | | $ | 0.50 | | | $ | 0.32 | |
| DILUTED SHARES OUTSTANDING | 711 | | | 711 | | | 711 | | | 701 | |
See Notes to Condensed Consolidated Financial Statements.
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BizBench: A Quantitative Reasoning Benchmark for Business and Finance
Public dataset for BizBench.
Answering questions within business and finance requires reasoning, precision, and a wide-breadth of technical knowledge. Together, these requirements make this domain difficult for large language models (LLMs). We introduce BizBench, a benchmark for evaluating models' ability to reason about realistic financial problems. BizBench comprises eight quantitative reasoning tasks, focusing on question-answering (QA) over financial data via program synthesis. We include three financially-themed code-generation tasks from newly collected and augmented QA data. Additionally, we isolate the reasoning capabilities required for financial QA: reading comprehension of financial text and tables for extracting intermediate values, and understanding financial concepts and formulas needed to calculate complex solutions. Collectively, these tasks evaluate a model's financial background knowledge, ability to parse financial documents, and capacity to solve problems with code. We conducted an in-depth evaluation of open-source and commercial LLMs, comparing and contrasting the behavior of code-focused and language-focused models. We demonstrate that the current bottleneck in performance is due to LLMs' limited business and financial understanding, highlighting the value of a challenging benchmark for quantitative reasoning within this domain.
We have also develop a heavily curated leaderboard with a held-out test set open to submission: https://benchmarks.kensho.com/. This set was manually curated by financial professionals and further cleaned by hand in order to ensure the highest quality. A sample pipeline for using this dataset can be found at https://github.com/kensho-technologies/benchmarks-pipeline.
Dataset Statistics
| Dataset | Train/Few Shot Data | Test Data |
|---|---|---|
| Program Synthesis | ||
| FinCode | 7 | 47 |
| CodeFinQA | 4668 | 795 |
| CodeTATQA | 2856 | 2000 |
| Quantity Extraction | ||
| ConvFinQA (E) | 629 | |
| TAT-QA (E) | 120 | |
| SEC-Num | 6846 | 2000 |
| Domain Knowledge | ||
| FinKnow | 744 | |
| ForumlaEval | 50 |
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