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Kensho 32

Expected reduction in gross unrecognized tax benefits

30

SEC-NUM

Unrecognized Tax BenefitsWe classify interest and penalties associated with income taxes in income tax expense (benefit) within the consolidated statements of income. Net interest and penalties recognized were not significant during 2021, 2020 and 2019. The liability recognized related to interest and penalties was $19 million and $17 million as of December 31, 2021 and 2020, respectively. The total amount of gross unrecognized tax benefits that, if recognized, would impact the effective tax rate are $39 million, $48 million and $70 million as of December 31, 2021, 2020 and 2019, respectively.The following table is a reconciliation of our unrecognized tax benefits, including those related to discontinued operations, for the years ended December 31, 2021, 2020 and 2019. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | as of and for the years ended (in millions) | 2021 | 2020 | 2019 | | Balance at beginning of the year | $ | 90 | | $ | 111 | | $ | 127 | | | Increase due to acquisition | 11 | | — | | — | | | Increase associated with tax positions taken during the current year | 31 | | 8 | | 8 | | | Increase (decrease) associated with tax positions taken during a prior year | (3) | | (1) | | (3) | | | Settlements | (2) | | (18) | | (20) | | | Decrease associated with lapses in statutes of limitations | (16) | | (10) | | (1) | | | Balance at end of the year | $ | 111 | | $ | 90 | | $ | 111 | | Of the gross unrecognized tax benefits, $39 million and $47 million were recognized as liabilities in the consolidated balance sheets as of December 31, 2021 and 2020, respectively. Tax IncentivesWe have received tax incentives in Puerto Rico, Switzerland, Dominican Republic, Costa Rica and Thailand. The financial impact of the reductions as compared to the statutory tax rates is indicated in the income tax expense reconciliation table above. The tax reductions as compared to the local statutory rate favorably impacted earnings per diluted share by $0.38 in 2021, $0.33 in 2020, and $0.27 in 2019. The above grants provide that our manufacturing operations are and will be partially exempt from local taxes with varying expirations from 2023 to 2029.Examinations of Tax ReturnsAs of December 31, 2021, we had ongoing audits in the United States, Germany, United Kingdom, China and other jurisdictions. During 2021, we closed U.S. tax years 2009-2016 with the IRS with no material adjustments to our financial statements. Tax years 2017 and forward remain under examination by the IRS and tax years 2012 and forward remain under examination by various foreign taxing authorities. We believe that it is reasonably possible that our gross unrecognized tax benefits will be reduced within the next 12 months by $30 million. While the final outcome of these matters is inherently uncertain, we believe we have made adequate tax provisions for all years subject to examination.NOTE 14 | | | | | --- | --- | --- | | | | | | EARNINGS PER SHARE | The numerator for both basic and diluted earnings per share (EPS) is net income attributable to Baxter stockholders. The denominator for basic EPS is the weighted-average number of shares outstanding during the period. The dilutive effect of outstanding stock options, RSUs and PSUs is reflected in the denominator for diluted EPS using the treasury stock method.96

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Finance leases, Weighted Average Discount Rate (as a percent)

2.8

SEC-NUM

[Table of Contents](#i988317c7021a4a8fa66f2208a2958f7e_10)Components of lease expense were as follows: | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended July 31, | | (In thousands) | | 2022 | | 2021 | | | | Operating lease expense | | $ | 27,668 | | | $ | 28,302 | | | | | Finance lease expense: | | | | | | | | | Amortization of right-of-use assets | | 520 | | | 612 | | | | | | Interest on finance lease liabilities | | 5 | | | 65 | | | | | Short-term lease expense | | 5,649 | | | 4,472 | | | | | Variable lease expense | | 1,466 | | | 1,586 | | | | | Total lease expense | | $ | 35,308 | | | $ | 35,037 | | | | The components of right-of-use assets and lease liabilities on the consolidated balance sheet are as follows (In thousands): | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | Lease Asset and Liabilities | | Balance Sheet Classification (In thousands) | | July 31, 2022 | | July 31, 2021 | | Operating lease right-of-use assets | | Operating lease right-of-use assets | | $ | 116,303 | | | $ | 119,487 | | | Finance lease right-of-use assets | | Property and equipment, net | | 50 | | | 563 | | | Total lease assets, net | | $ | 116,353 | | | $ | 120,050 | | | | | | | | | | | Operating lease liabilities - current | | Current portion of operating and finance lease liabilities | | $ | 21,771 | | | $ | 21,942 | | | Finance lease liabilities - current | | Current portion of operating and finance lease liabilities | | 23 | | | 530 | | | Operating lease liabilities - non-current | | Operating and finance lease liabilities, net of current portion | | 95,670 | | | 97,925 | | | Finance lease liabilities - non-current | | Operating and finance lease liabilities, net of current portion | | 13 | | | 36 | | | Total lease liabilities | | $ | 117,477 | | | $ | 120,433 | | The weighted-average remaining lease terms and discount rates as of July 31, 2022 were as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Weighted-Average Remaining Lease Term (In years) | | Weighted-Average Discount Rate(1) | | Operating leases | | 9.12 | | 2.77 | % | | Finance leases | | 1.54 | | 2.8 | % | (1)The Company cannot determine the interest rate implicit in the Company’s leases. Therefore, the discount rate represents the Company’s incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to the Company’s corporate credit rating for a secured or collateralized instrument.70

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Guarantees

703

SEC-NUM

[Table of Contents](#ia72a687f7b8a4bb1b43219ab5b663314_7)In addition to environmental compliance costs, the Company from time to time incurs costs related to remedial efforts or alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the current and former owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. The Company has received notification from the U.S. Environmental Protection Agency, and from state and non-U.S. environmental agencies, that conditions at certain sites where the Company and others previously disposed of hazardous wastes and/or are or were property owners require clean-up and other possible remedial action, including sites where the Company has been identified as a potentially responsible party under U.S. federal and state environmental laws. The Company has projects underway at a number of current and former facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations. Remediation activities generally relate to soil and/or groundwater contamination and may include pre-remedial activities such as fact-finding and investigation, risk assessment, feasibility study and/or design, as well as remediation actions such as contaminant removal, monitoring and/or installation, operation and maintenance of longer-term remediation systems. The Company is also from time to time party to personal injury, property damage or other claims brought by private parties alleging injury or damage due to the presence of, or exposure to, hazardous substances. The Company can also become subject to additional remedial, compliance or personal injury costs due to future events such as changes in existing laws or regulations, changes in agency direction or enforcement policies, developments in remediation technologies, changes in the conduct of the Company’s operations and changes in accounting rules.The Company has recorded a provision for environmental investigation and remediation and environmental-related claims with respect to sites owned or formerly owned by the Company and its subsidiaries and third-party sites where the Company has been determined to be a potentially responsible party. The Company generally makes an assessment of the costs involved for its remediation efforts based on environmental studies, as well as its prior experience with similar sites. The ultimate cost of site cleanup is difficult to predict given the uncertainties of the Company’s involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. If the Company determines that potential liability for a particular site or with respect to a personal injury claim is known or considered probable and reasonably estimable, the Company accrues the total estimated loss, including investigation and remediation costs, associated with the site or claim. As of December 31, 2021, the Company had a reserve of $181 million for environmental matters which are known or considered probable and reasonably estimable (of which $143 million are noncurrent), which reflects the Company’s best estimate of the costs to be incurred with respect to such matters.While the Company actively pursues insurance recoveries, as well as recoveries from other potentially responsible parties, it does not recognize any insurance recoveries for environmental liability claims until realized or until such time as a sustained pattern of collections is established related to historical matters of a similar nature and magnitude.The Company’s Restated Certificate of Incorporation requires it to indemnify to the full extent authorized or permitted by law any person made, or threatened to be made a party to any action or proceeding by reason of his or her service as a director or officer of the Company, or by reason of serving at the request of the Company as a director or officer of any other entity, subject to limited exceptions. Danaher’s Amended and Restated By-laws provide for similar indemnification rights. In addition, Danaher has executed with each director and executive officer of Danaher Corporation an indemnification agreement which provides for substantially similar indemnification rights and under which Danaher has agreed to pay expenses in advance of the final disposition of any such indemnifiable proceeding. While the Company maintains insurance for this type of liability, a significant deductible applies to this coverage and any such liability could exceed the amount of the insurance coverage.As of December 31, 2021, the Company had approximately $703 million of guarantees consisting primarily of outstanding standby letters of credit, bank guarantees and performance and bid bonds. These guarantees have been provided in connection with certain arrangements with vendors, customers, insurance providers, financing counterparties and governmental entities to secure the Company’s obligations and/or performance requirements related to specific transactions. The Company believes that if the obligations under these instruments were triggered, it would not have a material effect on its Consolidated Financial Statements. NOTE 19. STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATIONStockholders’ EquityOn July 16, 2013, the Company’s Board of Directors approved a repurchase program (the “Repurchase Program”) authorizing the repurchase of up to 20 million shares of the Company’s common stock from time to time on the open market or in privately negotiated transactions. There is no expiration date for the Repurchase Program, and the timing and amount of any shares 104

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Share price (in dollars per share)

103.34

SEC-NUM

The following table is a summary of the Company’s stock option and SAR activity for the year ended December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | In thousands, except weighted average exercise price and remaining contractual term | Shares | | WeightedAverageExercise Price | | WeightedAverageRemainingContractualTerm | | AggregateIntrinsicValue | | Outstanding at beginning of year | 23,955 | | | $ | 69.62 | | | | | | | Granted | 3,322 | | | $ | 74.66 | | | | | | | Exercised | (6,366) | | | $ | 63.41 | | | | | | | Forfeited | (694) | | | $ | 62.66 | | | | | | | Expired | (1,156) | | | $ | 87.42 | | | | | | | Outstanding at end of year | 19,061 | | | $ | 71.74 | | | 4.75 | | $ | 603,137 | | | Exercisable at end of year | 9,704 | | | $ | 79.99 | | | 2.61 | | 229,034 | | | Vested at end of year and expected to vest in the future | 18,709 | | | $ | 71.82 | | | 4.69 | | 590,514 | | 12.Shareholders’ Equity Share Repurchases The following share repurchase programs have been authorized by the Board: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | In billionsAuthorization Date | Authorized | | Remaining as ofDecember 31, 2021 | | December 9, 2021 (“2021 Repurchase Program”) | $ | 10.0 | | | $ | 10.0 | | | November 2, 2016 (“2016 Repurchase Program”) | 15.0 | | | — | | | | | | | Each of the share Repurchase Programs was effective immediately. The 2016 Repurchase program was terminated effective December 9, 2021. The 2021 Repurchase Program permits the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions. The 2021 Repurchase Program can be modified or terminated by the Board at any time. During the years ended December 31, 2021, 2020 and 2019, the Company did not repurchase any shares of common stock pursuant to the 2016 or 2021 Repurchase Programs. Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $1.5 billion fixed dollar ASR with Barclays Bank PLC (“Barclays”). Upon payment of the $1.5 billion purchase price on January 4, 2022, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $1.5 billion notional amount of the ASR or approximately 11.6 million shares at a price of $103.34 per share, which were placed into treasury stock in January 2022. At the conclusion of the ASR, the Company may receive additional shares equal to the remaining 20% of the $1.5 billion notional amount. The ultimate number of shares the Company may receive will depend on the daily volume-weighted average price of the Company’s stock over an averaging period, less a discount. It is also possible, depending on such weighted average price, that the Company will have an obligation to Barclays which, at the Company’s option, could be settled in additional cash or by issuing shares. Under the terms of the ASR, the maximum number of shares that could be delivered to the Company is 29.0 million. Dividends The quarterly cash dividend declared by the Board was $0.50 per share in 2021 and 2020. In December 2021, the Board authorized a 10% increase in the quarterly cash dividend to $0.55 per share effective in 2022. CVS Health Corporation has paid cash dividends every quarter since becoming a public company. Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board. Regulatory Requirements The Company’s insurance business operations are conducted through subsidiaries that principally consist of health maintenance organizations (“HMOs”) and insurance companies. The Company’s HMO and insurance subsidiaries report their financial 159

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Shares issued (in dollars per share)

25

SEC-NUM

NOTE 17 - STOCKHOLDERS’ EQUITY Preferred Stock The following table summarizes the Company’s preferred stock: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, | | | | | 2021 | | 2020 | | (in millions, except per share and share data) | Liquidation value per share | | Preferred Shares | | Carrying Amount | | Preferred Shares | Carrying Amount | | Authorized ($25 par value per share) | | | 100,000,000 | | | | | 100,000,000 | | | | Issued and outstanding: | | | | | | | | | | Series A | $1,000 | | — | | | $— | | 250,000 | | $247 | | Series B | 1,000 | | | 300,000 | | | 296 | | | 300,000 | | 296 | | | Series C | 1,000 | | | 300,000 | | | 297 | | | 300,000 | | 297 | | | Series D | 1,000 | | (1) | 300,000 | | (2) | 293 | | | 300,000 | | 293 | | | Series E | 1,000 | | (1) | 450,000 | | (3) | 437 | | | 450,000 | | 437 | | | Series F | 1,000 | | | 400,000 | | | 395 | | | 400,000 | | 395 | | | Series G | 1,000 | | | 300,000 | | | 296 | | | — | | — | | | Total | | | 2,050,000 | | | $2,014 | | 2,000,000 | | $1,965 | (1) Equivalent to $25 per depositary share.(2) Represented by 12,000,000 depositary shares each representing a 1/40th interest in the Series D Preferred Stock.(3) Represented by 18,000,000 depositary shares each representing a 1/40th interest in the Series E Preferred Stock.On June 11, 2021, the Company issued $300 million, or 300,000 shares, of 4.000% fixed-rate reset non-cumulative perpetual Series G Preferred Stock, par value of $25.00 per share with a liquidation preference of $1,000 per share (the “Series G Preferred Stock”). As a result of this issuance, the Company received net proceeds of $296 million after the underwriting discount and other expenses. The Series G Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company. The Series G Preferred Stock is redeemable at the Company’s option, in whole or in part, on any dividend payment date on or after October 6, 2026 or, in whole but not in part, at any time within the 90 days following a regulatory capital treatment event at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends. The Company may not redeem shares of the Series G Preferred Stock without obtaining the prior approval of the FRB if then required under applicable capital guidelines. Except in limited circumstances, the Series G Preferred Stock does not have any voting rights.On July 6, 2021, the Company redeemed all outstanding shares of the 5.500% fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | Citizens Financial Group, Inc. | 128 |

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Acquisition activity, common shares

1

SEC-NUM

[Table of Contents](#i3944da1428384b81954c2cd4a4fd88bf_7)ANSYS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common Stock | | AdditionalPaid-InCapital | | RetainedEarnings | | Treasury Stock | | Accumulated Other Comprehensive Loss | | TotalStockholders'Equity | | (in thousands) | Shares | | Amount | | Shares | | Amount | | | Balance, January 1, 2022 | 95,267 | | $ | 953 | | | $ | 1,465,694 | | | $ | 4,259,220 | | | 8,188 | | | $ | (1,185,707) | | | $ | (56,112) | | | $ | 4,484,048 | | | Treasury shares acquired | | | | | | | | | 500 | | | (155,571) | | | | | (155,571) | | | Stock-based compensation activity | | | | | (50,287) | | | | | (403) | | | 36,865 | | | | | (13,422) | | | Other comprehensive loss | | | | | | | | | | | | | (22,092) | | | (22,092) | | | Net income | | | | | | | 70,988 | | | | | | | | | 70,988 | | | Balance, March 31, 2022 | 95,267 | | $ | 953 | | | $ | 1,415,407 | | | $ | 4,330,208 | | | 8,285 | | $ | (1,304,413) | | | $ | (78,204) | | | $ | 4,363,951 | | | Acquisition of Analytical Graphics, Inc. | | | | | 511 | | | | | (3) | | | 300 | | | | | 811 | | | Stock-based compensation activity | | | | | 34,631 | | | | | (33) | | | 3,205 | | | | | 37,836 | | | Other comprehensive loss | | | | | | | | | | | | | (48,643) | | | (48,643) | | | Net income | | | | | | | 98,800 | | | | | | | | | 98,800 | | | Balance, June 30, 2022 | 95,267 | | $ | 953 | | | $ | 1,450,549 | | | $ | 4,429,008 | | | 8,249 | | $ | (1,300,908) | | | $ | (126,847) | | | $ | 4,452,755 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock-based compensation activity | | | | | 49,781 | | | | | (70) | | | 6,810 | | | | | 56,591 | | | Other comprehensive loss | | | | | | | | | | | | | (61,636) | | | (61,636) | | | Net income | | | | | | | 95,975 | | | | | | | | 95,975 | | | Balance, September 30, 2022 | 95,267 | | $ | 953 | | | $ | 1,500,330 | | | $ | 4,524,983 | | | 8,179 | | $ | (1,294,098) | | | $ | (188,483) | | | $ | 4,543,685 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Common Stock | | AdditionalPaid-InCapital | | RetainedEarnings | | Treasury Stock | | AccumulatedOtherComprehensive (Loss) Income | | TotalStockholders'Equity | | (in thousands) | Shares | | Amount | | Shares | | Amount | | | Balance, January 1, 2021 | 95,266 | | $ | 953 | | | $ | 1,434,203 | | | $ | 3,804,593 | | | 8,694 | | | $ | (1,124,102) | | | $ | (17,775) | | | $ | 4,097,872 | | | | | | | | | | | | | | | | | | | | Stock-based compensation activity | | | | | (87,602) | | | | | (565) | | | 48,565 | | | | | (39,037) | | | Other comprehensive loss | | | | | | | | | | | | | (19,264) | | | (19,264) | | | Net income | | | | | | | 72,398 | | | | | | | | | 72,398 | | | Balance, March 31, 2021 | 95,266 | | $ | 953 | | | $ | 1,346,601 | | | $ | 3,876,991 | | | 8,129 | | $ | (1,075,537) | | | $ | (37,039) | | | $ | 4,111,969 | | | Acquisition of Analytical Graphics, Inc. | 1 | | | | | 328 | | | | | | | | | | | 328 | | | Stock-based compensation activity | | | | | 34,661 | | | | | (63) | | | 5,327 | | | | | 39,988 | | | Other comprehensive income | | | | | | | | | | | | | 4,217 | | | 4,217 | | | Net income | | | | | | | 93,716 | | | | | | | | | 93,716 | | | Balance, June 30, 2021 | 95,267 | | $ | 953 | | | $ | 1,381,590 | | | $ | 3,970,707 | | | 8,066 | | $ | (1,070,210) | | | $ | (32,822) | | | $ | 4,250,218 | | | Acquisition of Analytical Graphics, Inc. | | | | | 454 | | | | | (2) | | | 152 | | | | | 606 | | | Treasury shares acquired | | | | | | | | | 97 | | | (35,993) | | | | | (35,993) | | | Stock-based compensation activity | | | | | 46,375 | | | | | (106) | | | 9,000 | | | | | 55,375 | | | Other comprehensive loss | | | | | | | | | | | | | (16,304) | | | (16,304) | | | Net income | | | | | | | 85,342 | | | | | | | | | 85,342 | | | Balance, September 30, 2021 | 95,267 | | $ | 953 | | | $ | 1,428,419 | | | $ | 4,056,049 | | | 8,055 | | $ | (1,097,051) | | | $ | (49,126) | | | $ | 4,339,244 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The accompanying notes are an integral part of the condensed consolidated financial statements. 7

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Loss Contingency Accrual, Provision

5

SEC-NUM

[Table of Contents](#i988dd6b5140d4a1b8c6b4c50f020743f_10)Footnotes to Interim Financial Results (a) Includes the following pre-tax charges (gains): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | In millions | | Q1 | | Q2 | | Q3 | | Q4 | | Debt extinguishment costs | | $ | 18 | | | $ | 170 | | | $ | 35 | | | $ | 238 | | | EMEA Packaging business optimization | | 12 | | | — | | | — | | | — | | | Building a Better IP | | — | | | — | | | — | | | 29 | | | Legal reserve adjustment | | — | | | — | | | — | | | (5) | | | Environmental remediation reserve adjustment | | — | | | 5 | | | 5 | | | — | | | Gain on sale of equity investment in Graphic Packaging | | (74) | | | (130) | | | — | | | — | | | EMEA Packaging impairment - Turkey | | 2 | | | (9) | | | — | | | — | | | Sylvamo investment - fair value adjustment | | — | | | — | | | — | | | 32 | | | Real estate - office impairment | | — | | | 21 | | | — | | | — | | | Other items | | — | | | 11 | | | 9 | | | 1 | | | Non-operating pension expense | | (52) | | | (51) | | | (50) | | | (47) | | | Total | | $ | (94) | | | $ | 17 | | | $ | (1) | | | $ | 248 | | | | | | | | | | | | (b) Includes the operating earnings of the Printing Papers business for the full year. Also includes the following charges (gains): | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | In millions | Q1 | | Q2 | | Q3 | | Q4 | | Printing Papers spin-off expenses | $ | 20 | | | $ | 20 | | | $ | 47 | | | $ | 5 | | | Gain on sale of Kwidzyn, Poland mill | — | | | — | | | (350) | | | 6 | | | Gain on sale of La Mirada, CA distribution center | — | | | — | | | (65) | | | — | | | Foreign value-added tax credit | — | | | (47) | | | 10 | | | — | | | Foreign and state taxes related to spin-off of Printing Papers business | — | | | — | | | 27 | | | (3) | | | Non-operating pension expense | (1) | | | (1) | | | — | | | — | | | Total | $ | 19 | | | $ | (28) | | | $ | (331) | | | $ | 8 | | (c) Includes the following tax expenses (benefits): | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | In millions | Q1 | | Q2 | | Q3 | | Q4 | | Tax impact of other special items | 12 | | | (14) | | | (12) | | | (73) | | | Tax impact of non-operating pension expense | 13 | | | 13 | | | 12 | | | 11 | | | Total | $ | 25 | | | $ | (1) | | | $ | — | | | $ | (62) | | (d) Includes the allocation of income to noncontrolling interest of $1 million for the three months ended June 30, 2021 related to the gain on the sale of our EMEA Packaging business in Turkey. (e) Includes the following pre-tax charges (gains): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | In millions | | Q1 | | Q2 | | Q3 | | Q4 | | Brazil Packaging impairment | | $ | 344 | | | $ | 8 | | | $ | (4) | | | $ | — | | | India investment | | 17 | | | (6) | | | — | | | — | | | Asbestos litigation reserve adjustment | | — | | | 43 | | | — | | | — | | | Environmental remediation reserve adjustment | | 41 | | | — | | | — | | | — | | | Gain on sale of equity investment in Graphic Packaging | | (33) | | | — | | | — | | | — | | | Abandoned property removal | | 9 | | | 5 | | | — | | | — | | | Riverdale mill conversion accelerated depreciation | | 1 | | | — | | | — | | | — | | | Debt extinguishment costs | | 8 | | | 18 | | | 105 | | | 65 | | | EMEA Packaging impairment - Turkey | | — | | | — | | | — | | | 123 | | | Other items | | (3) | | | — | | | 1 | | | — | | | Non-operating pension expense | | (6) | | | (14) | | | (11) | | | (10) | | | Total | | $ | 378 | | | $ | 54 | | | $ | 91 | | | $ | 178 | | (f) Includes the operating earnings of the Printing Papers business for the full year. Also includes the following charges (gains): | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | In millions | Q1 | | Q2 | | Q3 | | | Q4 | | Printing Papers spin-off expenses | $ | — | | | $ | — | | | $ | — | | | | $ | 8 | | | Environmental remediation reserve adjustment | — | | | — | | | 6 | | | | — | | | Tax benefit related to settlement of tax audits | — | | | — | | | — | | | | (9) | | | Other items | — | | | — | | | (1) | | | | 3 | | | Total | $ | — | | | $ | — | | | $ | 5 | | | | $ | 2 | | (g) Includes the following tax expenses (benefits): | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | In millions | Q1 | | Q2 | | Q3 | | | Q4 | | Tax benefit related to settlement of tax audits | $ | — | | | $ | — | | | $ | — | | | | $ | (23) | | | Tax impact of other special items | (12) | | | (18) | | | (24) | | | | (16) | | | Tax impact of non-operating pension expense | 1 | | | 3 | | | 4 | | | | 2 | | | Total | $ | (11) | | | $ | (15) | | | $ | (20) | | | | $ | (37) | | 92

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Shares authorized under SIP plan (in shares)

127,000,000

SEC-NUM

| | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | [Table of Contents](#i4a1c883199354127b0e9b0ddb9e84eb8_7) | | Notes to Consolidated Financial Statements — (continued)(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) | | | ACCENTURE 2022 FORM 10-K | | F-36 | | | | | | 13. Share-Based CompensationShare Incentive Plans The Amended and Restated Accenture plc 2010 Share Incentive Plan, as amended and approved by our shareholders in 2022 (the “Amended 2010 SIP”), is administered by the Compensation, Culture & People Committee of the Board of Directors of Accenture and provides for the grant of nonqualified share options, incentive stock options, restricted share units and other share-based awards. A maximum of 127,000,000 Accenture plc Class A ordinary shares are currently authorized for awards under the Amended 2010 SIP. As of August 31, 2022, there were 27,381,461 shares available for future grants. Accenture plc Class A ordinary shares covered by awards that terminate, lapse or are cancelled may again be used to satisfy awards under the Amended 2010 SIP. We issue new Accenture plc Class A ordinary shares and shares from treasury for shares delivered under the Amended 2010 SIP.A summary of information with respect to share-based compensation is as follows: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Fiscal | | | 2022 | | 2021 | | 2020 | | Total share-based compensation expense included in Net income | $ | 1,679,789 | | | $ | 1,342,951 | | | $ | 1,197,806 | | | Income tax benefit related to share-based compensation included in Net income | 680,335 | | | 486,980 | | | 430,290 | | Restricted Share Units Under the Amended 2010 SIP, participants may be, and previously under the predecessor 2001 Share Incentive Plan were, granted restricted share units, each of which represent an unfunded, unsecured right to receive an Accenture plc Class A ordinary share on the date specified in the participant’s award agreement. The fair value of the awards is based on our stock price on the date of grant. The restricted share units granted under these plans are subject to cliff or graded vesting, generally ranging from two to five years. For awards with graded vesting, compensation expense is recognized over the vesting term of each separately vesting portion. Compensation expense is recognized on a straight-line basis for awards with cliff vesting. Restricted share unit activity during fiscal 2022 is as follows: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Number of RestrictedShare Units | | Weighted AverageGrant-Date Fair Value | | Nonvested balance as of August 31, 2021 | 16,235,385 | | | $ | 207.26 | | | Granted (1) | 6,047,849 | | | 387.73 | | | Vested (2) | (6,701,738) | | | 200.46 | | | Forfeited | (994,604) | | | 237.37 | | | Nonvested balance as of August 31, 2022 | 14,586,892 | | | $ | 283.16 | | (1)The weighted average grant-date fair value for restricted share units granted for fiscal 2022, 2021 and 2020 was $387.73, $263.83 and $206.05, respectively. (2)The total grant-date fair value of restricted share units vested for fiscal 2022, 2021 and 2020 was $1,343,403, $1,156,501 and $1,066,622, respectively. As of August 31, 2022, there was $1,555,736 of total unrecognized restricted share unit compensation expense related to nonvested awards, which is expected to be recognized over a weighted average period of 1.2 years. As of August 31, 2022, there were 255,196 restricted share units vested but not yet delivered as Accenture plc Class A ordinary shares.

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Options vested and expected to vest, Outstanding (in shares)

2.9

SEC-NUM

[Table of Contents](#iedfcb48a3788458f95ee4009debca3d0_7)FORTINET, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The following table summarizes the stock option activity and related information for the periods presented below (in millions, except exercise prices and contractual life): | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Options Outstanding | | | Numberof Shares | | Weighted-AverageExercisePrice | | Weighted-AverageRemainingContractualLife (Years) | | AggregateIntrinsicValue | | Balance—December 31, 2021 | 2.7 | | | $ | 92.87 | | | 4.0 | | $ | 729.9 | | | Granted | 0.3 | | | 310.54 | | | | | | | Forfeited | — | | | 178.88 | | | | | | | Exercised | (0.1) | | | 86.37 | | | | | | | Balance—March 31, 2022 | 2.9 | | | $ | 112.70 | | | | | | | Options vested and expected to vest—March 31, 2022 | 2.9 | | | $ | 112.70 | | | 4.0 | | $ | 655.3 | | | Options exercisable—March 31, 2022 | 1.8 | | | $ | 66.68 | | | 3.0 | | $ | 482.4 | | The aggregate intrinsic value represents the difference between the exercise price of stock options and the quoted market price of our common stock on March 31, 2022 for all in-the-money stock options. Stock compensation expense is recognized on a straight-line basis over the vesting period of each stock option. As of March 31, 2022, total compensation expense related to unvested stock options granted to employees but not yet recognized was $67.0 million, with a weighted-average remaining vesting period of 3.1 years. Additional information related to our stock options is summarized below (in millions, except per share amounts): | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | March 31,2022 | | March 31,2021 | | | | | | Weighted-average fair value per share granted | $ | 111.62 | | | $ | 56.49 | | | | | | | Intrinsic value of options exercised | $ | 29.9 | | | $ | 22.3 | | | | | | | Fair value of options vested | $ | 10.2 | | | $ | 7.0 | | | | | | Stock-Based Compensation Expense Stock-based compensation expense, including stock-based compensation expense related to awards classified as liabilities, is included in costs and expenses as follows (in millions): | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | March 31,2022 | | March 31,2021 | | | | | | Cost of product revenue | $ | 0.4 | | | $ | 0.4 | | | | | | | Cost of service revenue | 4.5 | | | 3.5 | | | | | | | Research and development | 15.1 | | | 13.0 | | | | | | | Sales and marketing | 26.7 | | | 26.8 | | | | | | | General and administrative | 7.2 | | | 6.3 | | | | | | | Total stock-based compensation expense | $ | 53.9 | | | $ | 50.0 | | | | | | 21

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Expected EOY Unemployment Rate

4.9

SEC-NUM

[Table of Contents](#i6f5a02f7aeae4b00b01c55901eb4a1a5_4)Allowance for Credit LossesThe following tables provide changes in the Company's allowance for credit losses (dollars in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended March 31, 2022 | | | Credit Card Loans | | Private Student Loans | | Personal Loans | | Other Loans | | Total Loans | | Balance at December 31, 2021 | $ | 5,273 | | | $ | 843 | | | $ | 662 | | | $ | 44 | | | $ | 6,822 | | | Additions | | | | | | | | | | | Provision for credit losses(1) | 178 | | | 45 | | | (30) | | | — | | | 193 | | | Deductions | | | | | | | | | | | Charge-offs | (541) | | | (24) | | | (38) | | | — | | | (603) | | | Recoveries | 210 | | | 6 | | | 19 | | | — | | | 235 | | | Net charge-offs | (331) | | | (18) | | | (19) | | | — | | | (368) | | | | | | | | | | | | | | Balance at March 31, 2022 | $ | 5,120 | | | $ | 870 | | | $ | 613 | | | $ | 44 | | | $ | 6,647 | | | | | | | | | | | | | | | For the Three Months Ended March 31, 2021 | | | Credit Card Loans | | Private Student Loans | | Personal Loans | | Other Loans | | Total Loans | | Balance at December 31, 2020 | $ | 6,491 | | | $ | 840 | | | $ | 857 | | | $ | 38 | | | $ | 8,226 | | | | | | | | | | | | | | | | | | | | | | | | | Additions | | | | | | | | | | | Provision for credit losses(1) | (377) | | | 36 | | | (4) | | | 3 | | | (342) | | | Deductions | | | | | | | | | | | Charge-offs | (663) | | | (20) | | | (64) | | | — | | | (747) | | | Recoveries | 189 | | | 6 | | | 15 | | | — | | | 210 | | | Net charge-offs | (474) | | | (14) | | | (49) | | | — | | | (537) | | | | | | | | | | | | | | Balance at March 31, 2021 | $ | 5,640 | | | $ | 862 | | | $ | 804 | | | $ | 41 | | | $ | 7,347 | | | | | | | | | | | | | (1)Excludes a $39 million and $23 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended March 31, 2022 and 2021, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.The allowance for credit losses was approximately $6.6 billion at March 31, 2022, which reflects a $175 million release from the amount of the allowance for credit losses at December 31, 2021. The release in the allowance for credit losses between March 31, 2022 and December 31, 2021, was primarily driven by the continued strength of the loan portfolio's credit performance.In estimating the allowance at March 31, 2022, the Company used a macroeconomic forecast that projected (i) a peak unemployment rate of 5.2%, decreasing to 4.9% and 3.5% through the end of 2022 and 2023, respectively; and (ii) 3.1% and 2.2% annualized growth in the real gross domestic product for 2022 and 2023, respectively. Labor market conditions, which historically have been an important determinant of credit loss trends, continued to improve as of March 31, 2022. The unemployment rate and continuing jobless claims returned to pre-pandemic levels during the first quarter of 2022, and the number of job openings reached near-record levels, reflecting robust demand for labor as the U.S. economy continues to expand post pandemic.In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior, payment trends and credit performance subsequent to the expiration of government stimulus programs and disaster relief programs, as well as higher consumer price inflation experienced in the first quarter of 2022 and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its benchmark federal funds rate in March 2022 and signaled additional rate hikes in 2022. In recognition of the evolving macroeconomic environment, the estimation of the allowance for credit losses has required significant management judgment.The forecast period the Company deemed to be reasonable and supportable was 18 months for all periods presented. The 18-month reasonable and supportable forecast period was deemed appropriate based on the observed stability of the economic outlook and relative consistency among the macroeconomic forecasts. For all periods presented, the Company determined that a reversion period of 12 months was appropriate for similar reasons. Due to the uncertainties associated with borrower behavior resulting from government stimulus, disaster relief programs and fiscal and monetary policies, the 12

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Anti-dilutive share repurchases

36

SEC-NUM

[Table of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7)American Water Works Company, Inc. and Subsidiary CompaniesConsolidated Statements of Cash Flows(In millions) | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | For the Years Ended December 31, | | | 2021 | | 2020 | | 2019 | | CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | Net income | $ | 1,263 | | | $ | 709 | | | $ | 621 | | | Adjustments to reconcile to net cash flows provided by operating activities: | | | | | | | Depreciation and amortization | 636 | | | 604 | | | 582 | | | Deferred income taxes and amortization of investment tax credits | 230 | | | 207 | | | 208 | | | Provision for losses on accounts receivable | 37 | | | 34 | | | 28 | | | (Gain) or loss on sale of businesses | (747) | | | — | | | 34 | | | Pension and non-pension postretirement benefits | (41) | | | (14) | | | 17 | | | Other non-cash, net | (23) | | | (20) | | | (41) | | | Changes in assets and liabilities: | | | | | | | Receivables and unbilled revenues | (74) | | | (97) | | | (25) | | | Pension and non-pension postretirement benefit contributions | (40) | | | (39) | | | (31) | | | Accounts payable and accrued liabilities | 66 | | | (2) | | | 66 | | | Other assets and liabilities, net | 134 | | | 44 | | | (76) | | | Net cash provided by operating activities | 1,441 | | | 1,426 | | | 1,383 | | | CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | Capital expenditures | (1,764) | | | (1,822) | | | (1,654) | | | Acquisitions, net of cash acquired | (135) | | | (135) | | | (235) | | | Proceeds from sale of assets, net of cash on hand | 472 | | | 2 | | | 48 | | | Removal costs from property, plant and equipment retirements, net | (109) | | | (106) | | | (104) | | | Net cash used in investing activities | (1,536) | | | (2,061) | | | (1,945) | | | CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | Proceeds from long-term debt | 1,118 | | | 1,334 | | | 1,530 | | | Repayments of long-term debt | (372) | | | (342) | | | (495) | | | (Repayments of) proceeds from term loan | (500) | | | 500 | | | — | | | Net short-term borrowings with maturities less than three months | (198) | | | (5) | | | (178) | | | (Remittances) proceeds from issuances of employee stock plans and direct stock purchase plan, net of taxes paid of $18, $17 and $11 in 2021, 2020 and 2019, respectively | (1) | | | 9 | | | 15 | | | Advances and contributions in aid of construction, net of refunds of $25, $24 and $30 in 2021, 2020 and 2019, respectively | 62 | | | 28 | | | 26 | | | Debt issuance costs and make-whole premium on early debt redemption | (26) | | | (15) | | | (15) | | | Dividends paid | (428) | | | (389) | | | (353) | | | Anti-dilutive share repurchases | — | | | — | | | (36) | | | Net cash (used in) provided by financing activities | (345) | | | 1,120 | | | 494 | | | Net (decrease) increase in cash, cash equivalents and restricted funds | (440) | | | 485 | | | (68) | | | Cash, cash equivalents and restricted funds at beginning of period | 576 | | | 91 | | | 159 | | | Cash, cash equivalents and restricted funds at end of period | $ | 136 | | | $ | 576 | | | $ | 91 | | | Cash paid during the year for: | | | | | | | Interest, net of capitalized amount | $ | 389 | | | $ | 382 | | | $ | 383 | | | Income taxes, net of refunds of $6, $2 and $4 in 2021, 2020 and 2019, respectively | $ | 1 | | | $ | 7 | | | $ | 12 | | | Non-cash investing activity: | | | | | | | Capital expenditures acquired on account but unpaid as of year end | $ | 292 | | | $ | 221 | | | $ | 235 | | | Seller promissory note from the sale of the Homeowner Services Group | $ | 720 | | | $ | — | | | $ | — | | | Contingent cash payment from the sale of the Homeowner Services Group | $ | 75 | | | $ | — | | | $ | — | | The accompanying notes are an integral part of these Consolidated Financial Statements.86

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Apartment communities owned (in communities)

253

SEC-NUM

[Table of Contents](#i4d39113ff6244e288fa572d2c8fbfe75_10)ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIESESSEX PORTFOLIO, L.P. AND SUBSIDIARIESNotes to Condensed Consolidated Financial StatementsSeptember 30, 2022 and 2021 (Unaudited) (1) Organization and Basis of Presentation The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021. All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year's presentation. The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 and 2021 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.6% general partnership interest as of both September 30, 2022 and December 31, 2021. Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding were 2,272,496 and 2,282,464 as of September 30, 2022 and December 31, 2021, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $550.5 million and $804.0 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, the Company owned or had ownership interests in 253 operating apartment communities, comprising 62,397 apartment homes, excluding the Company’s ownership interest in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project. The operating apartment communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas. Accounting Pronouncements Adopted in the Current Year In January 2021, the Financial Accounting Standards Board (the "FASB") issued 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." The amendments in ASU 2020-06 modifies the if-converted method of calculating diluted earnings per share ("EPS"). For instruments that may be settled in cash or shares, and are not classified as a liability, the guidance requires entities to include the effect of potential share settlement in the diluted EPS calculation, if the effect is more dilutive. The Company adopted this guidance on January 1, 2022 on a prospective basis. This adoption did not have a material impact on the Company's consolidated results of operations or financial position. Revenues and Gains on Sale of Real Estate Revenues from tenants renting or leasing apartment homes are recorded when due from tenants and are recognized monthly as they are earned which generally approximates a straight-line basis, else, adjustments are made to conform to a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease. See Note 3, Revenues, for additional information regarding such revenues. The Company also generates other property-related revenue associated with the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned. Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer. For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is 18

string

Exercised (in shares)

5

SEC-NUM

[Table of Contents](#i3b067f3fb23d442cae02253229e3471d_7)Stock Options The following table summarizes stock option activity during the year ended December 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares(in thousands) | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term(in years) | | Aggregate Intrinsic Value (in thousands) | | Outstanding at January 1, 2021 | 6 | | | $ | 11.60 | | | | | | | Exercised | (5) | | | 3.94 | | | | | | | | | | | | | | | | | | | | | | | | | Outstanding at December 31, 2021 | 1 | | | $ | 41.08 | | | 1.55 | | $ | 100 | | | Exercisable at December 31, 2021 | 1 | | | $ | 41.08 | | | 1.55 | | $ | 100 | | | Vested or expected to vest December 31, 2021 | 1 | | | $ | 41.08 | | | 1.55 | | $ | 100 | | The total pre-tax intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $0.6 million, $1.0 million and $3.9 million, respectively. The total fair value of options vested for the years ended December 31, 2021, 2020 and 2019 was insignificant. The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $117.04 on December 31, 2021, that would have been received by the option holders had all option holders exercised their “in-the-money” options as of that date. The total number of shares issuable upon the exercise of “in-the-money” options exercisable as of December 31, 2021 was 1,315. Deferred Stock Units The Company has granted deferred stock units ("DSUs") to non-employee members of its board of directors. Each DSU represents the right to receive one share of the Company’s common stock upon vesting. The holder may elect to defer receipt of the vested shares of stock represented by the DSU for a period of at least one year but not more than ten years from the grant date. DSUs vest 100% on the first anniversary of the grant date. If a director has completed one year of service, vesting of 100% of the DSUs held by such director will accelerate at the time of his or her departure from the Board. The following table summarizes the DSU activity for the year ended December 31, 2021: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Units(in thousands) | | Weighted Average Grant Date Fair Value | | Outstanding at January 1, 2021 | 114 | | | $ | 65.09 | | | Granted | 21 | | | 114.56 | | | Vested and distributed | (37) | | | 72.39 | | | Outstanding at December 31, 2021 | 98 | | | $ | 72.96 | | The total pre-tax intrinsic value of DSUs that were vested and distributed during the years ended December 31, 2021, 2020 and 2019 was $4.1 million, $0.9 million and $7.7 million, respectively. The total fair value of DSUs that were vested and distributed during the years ended December 31, 2021, 2020 and 2019 was $2.7 million, $0.7 million and $4.9 million, respectively. The grant-date fair value is calculated based upon the Company’s closing stock price on the date of grant. For the years ended December 31, 2021, 2020 and 2019, the weighted average fair value of DSU awards granted was $114.56 per share, $100.58 per share and $76.62 per share, respectively. As of December 31, 2021, 20,990 DSUs were unvested, with an aggregate intrinsic value of approximately $2.5 million and a weighted average remaining contractual life of approximately 0.4 years. These units are expected to vest in May 2022. 84

string

Contractually defined redemption value

24.2

SEC-NUM

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Redeemable Noncontrolling InterestsThe Company has a 92% equity interest in Vital River with an 8% redeemable noncontrolling interest. The Company has the right to purchase, and the noncontrolling interest holders have the right to sell, the remaining 8% equity interest at a contractually defined redemption value, subject to a redemption floor, which represents a derivative embedded within the equity instrument. The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value ($24.2 million as of September 24, 2022) and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. As the noncontrolling interest holders have the ability to require the Company to purchase the remaining 8% interest, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. The amount that the Company could be required to pay to purchase the remaining 8% equity interest is not limited.Prior to June 2022, the Company had an 80% equity interest in a subsidiary with a 20% redeemable noncontrolling interest. In June 2022, the Company purchased an additional 10% interest in the subsidiary for $15.0 million. Beginning in 2024, the Company has the right to purchase, and the noncontrolling interest holders have the right to sell (Put/call option), the remaining 10% equity interest at its appraised value ($15.0 million as of September 24, 2022). The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the appraised value and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest or a predetermined floor value. As the noncontrolling interest holders have the ability to require the Company to purchase the remaining 10% interest, the noncontrolling interest is classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. The amount that the Company could be required to pay to purchase the remaining 10% equity interest is not limited.The following table provides a rollforward of the activity related to the Company’s redeemable noncontrolling interests: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Nine Months Ended | | | September 24, 2022 | | September 25, 2021 | | | (in thousands) | | Beginning balance | $ | 53,010 | | | $ | 25,499 | | | Purchase of a 10% redeemable noncontrolling interest | (15,000) | | | — | | | Adjustments of noncontrolling interests to redemption values | 6,681 | | | 3,043 | | | Net income attributable to noncontrolling interests | 2,963 | | | 3,674 | | | Dividend to redeemable noncontrolling interest | (3,525) | | | — | | | Foreign currency translation | (4,923) | | | 340 | | | Ending balance | $ | 39,206 | | | $ | 32,556 | | 11. INCOME TAXESThe Company’s effective tax rates for the three months ended September 24, 2022 and September 25, 2021 were 20.7% and 14.7%, respectively. The Company’s effective tax rates for the nine months ended September 24, 2022 and September 25, 2021 were 19.7% and 18.3%, respectively. The increase in the three month effective tax rates from the prior year period was primarily attributable to a decreased tax benefit from stock-based compensation deductions, as well as lower research and development tax credits due to a discrete benefit in the three months ended September 25, 2021. The increase in the nine month effective tax rates is attributable primarily to the same reasons as above, partially offset with the deferred tax impact of tax law changes enacted during the nine months ended September 25, 2021.For the three months ended September 24, 2022, the Company’s unrecognized tax benefits decreased by $1.2 million to $33.3 million, primarily due to favorable foreign exchange, and the lapse of statutes of limitations, partially offset by increases in research and development tax credit reserves. For the three months ended September 24, 2022, the amount of unrecognized income tax benefits that would impact the effective tax rate decreased by $1.5 million to $29.6 million for the same reasons discussed above. The accrued interest on unrecognized tax benefits was $1.1 million as of September 24, 2022. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $10.6 million over the next twelve-month period, primarily due to audit settlements and expiring statutes of limitations.The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2018.The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, France, and India. The Company does not anticipate resolution of these audits will have a material impact on its consolidated financial statements.25

string

Percentage of fair value of sales receivables

100

SEC-NUM

[Table of Contents](#id353055757fb42afb305a023bc295188_7)The Company's debt balances and amounts available for borrowing under its new senior unsecured revolving credit facility are as follows: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | As of June 30, 2022 | | | | (In $ millions) | | | Revolving Credit Facility | | | | Borrowings outstanding(1) | 245 | | | | | | | | Available for borrowing(2) | 1,505 | | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)The Company borrowed $365 million under its new senior unsecured revolving credit facility to repay and terminate its previous unsecured revolving credit facility and repaid $120 million under its new senior unsecured revolving credit facility during the six months ended June 30, 2022. The Company borrowed $165 million and repaid $365 million under its previous unsecured revolving credit facility during the three months ended March 31, 2022. (2)The margin for borrowings under the senior unsecured revolving credit facility was 1.00% to 2.00% above certain interbank rates at current Company credit ratings.Senior NotesThe Company has outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933 ("Securities Act"), as amended (collectively, the "Senior Notes"). The Senior Notes were issued by Celanese U.S. and are guaranteed on a senior unsecured basis by Celanese and the Subsidiary Guarantors. Celanese U.S. may redeem some or all of each of the Senior Notes, prior to their respective maturity dates, at a redemption price of 100% of the principal amount, plus a "make-whole" premium as specified in the applicable indenture, plus accrued and unpaid interest, if any, to the redemption date. The Company completed offerings of USD- and Euro-denominated notes on July 14, 2022 and July 19, 2022, respectively, reducing the availability of remaining Bridge Facility commitments ([Note 3](#id353055757fb42afb305a023bc295188_46)) to $552 million. See [Note 18](#id353055757fb42afb305a023bc295188_142) for further information.Accounts Receivable Purchasing FacilityIn June 2021, the Company entered into an amendment to the amended and restated receivables purchase agreement (the "Amended Receivables Purchase Agreement") under its U.S. accounts receivable purchasing facility among certain of the Company's subsidiaries, its wholly-owned, "bankruptcy remote" special purpose subsidiary ("SPE") and certain global financial institutions ("Purchasers"). The Amended Receivables Purchase Agreement extends the term of the accounts receivable purchasing facility such that the SPE may sell certain receivables until June 18, 2024. Under the Amended Receivables Purchase Agreement, transfers of U.S. accounts receivable from the SPE are treated as sales and are accounted for as a reduction in accounts receivable because the agreement transfers effective control over and risk related to the U.S. accounts receivable to the SPE. The Company and related subsidiaries have no continuing involvement in the transferred U.S. accounts receivable, other than collection and administrative responsibilities and, once sold, the U.S. accounts receivable are no longer available to satisfy creditors of the Company or the related subsidiaries in the event of bankruptcy. These sales are transacted at 100% of the face value of the relevant U.S. accounts receivable, resulting in derecognition of the U.S. accounts receivables from the Company's unaudited consolidated balance sheet. The Company de-recognized $536 million and $1.1 billion of accounts receivable under this agreement for the six months ended June 30, 2022 and twelve months ended December 31, 2021, respectively, and collected $536 million and $1.1 billion of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $139 million were pledged by the SPE as collateral to the Purchasers as of June 30, 2022.Factoring and Discounting AgreementsThe Company has factoring agreements in Europe and Singapore with financial institutions to sell 100% and 90% of certain accounts receivable, respectively, on a non-recourse basis. These transactions are treated as sales and are accounted for as reductions in accounts receivable because the agreements transfer effective control over and risk related to the receivables to the buyer. The Company has no continuing involvement in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. The Company de-recognized $139 million and $230 million of accounts receivable under these factoring agreements for the six months ended June 30, 2022 and twelve months ended December 31, 2021, respectively, and collected $163 million and $185 million of accounts receivable sold under these factoring agreements during the same periods.15

string

Revolving Credit Facility Increase (Decrease) In Percentage Commitment Fee

0.01

SEC-NUM

[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7) provisions from the May 2020 amendment that had increased the leverage ratio maintenance covenant from 3.5 to 1.0 to 4.5 to 1.0 until July 1, 2021 and restricted dividends and other payments on equity, and (4) included a financial maintenance covenant that requires the Company to maintain total net leverage (as calculated in accordance with the Credit Agreement) of less than 3.5 to 1.0 (or 4.0 to 1.0 for four full fiscal quarters following completion of material acquisitions, as defined in the Credit Agreement). Losses on modification of debt totaled $1 million and $4 million during the years ended December 31, 2021 and 2020, respectively, related to the June 2021 amendment and May 2020 amendment. Aptiv paid amendment fees of $6 million and $18 million during the years ended December 31, 2021 and 2020, respectively, which are reflected as financing activities in the consolidated statements of cash flows.The Tranche A Term Loan and the Revolving Credit Facility mature on June 24, 2026. Beginning on September 30, 2022, Aptiv is obligated to make quarterly principal payments on the Tranche A Term Loan according to the amortization schedule in the Credit Agreement. The Credit Agreement also contains an accordion feature that permits Aptiv to increase, from time to time, the aggregate borrowing capacity under the Credit Agreement by up to an additional $1 billion upon Aptiv’s request, the agreement of the lenders participating in the increase, and the approval of the Administrative Agent.As of December 31, 2021, Aptiv had no amounts outstanding under the Revolving Credit Facility and less than $1 million in letters of credit were issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.Loans under the Credit Agreement bear interest, at Aptiv’s option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as defined in the Credit Agreement) or (b) the London Interbank Offered Rate (the “Adjusted LIBO Rate” as defined in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forth in the table below (the “Applicable Rate”). The June 2021 amendment also contains provisions to facilitate the replacement of the LIBOR-based rate with a Secured Overnight Financing Rate (“SOFR”) based rate upon the discontinuation or unavailability of LIBOR. The Applicable Rates under the Credit Agreement on the specified dates are set forth below: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2021 | | December 31, 2020 | | | LIBOR plus | | ABR plus | | LIBOR plus | | ABR plus | | Revolving Credit Facility | 1.10 | % | | 0.10 | % | | 1.10 | % | | 0.10 | % | | | | | | | | | | | Tranche A Term Loan | 1.125 | % | | 0.125 | % | | 1.25 | % | | 0.25 | % | | | | | | | | | | | | | | | | | | | Under the June 2021 amendment, the Applicable Rate under the Credit Agreement, as well as the facility fee, may increase or decrease from time to time based on changes in the Company’s credit ratings and whether the Company achieves or fails to achieve certain sustainability-linked targets with respect to greenhouse gas emissions and workplace safety. Such adjustments may be up to 0.04% per annum on interest rate margins on the Revolving Credit Facility, 0.02% per annum on interest rate margins on the Tranche A Term Loan and up to 0.01% per annum on the facility fee. Accordingly, the interest rate is subject to fluctuation during the term of the Credit Agreement based on changes in the ABR, LIBOR, changes in the Company’s corporate credit ratings or whether the Company achieves or fails to achieve its sustainability-linked targets. The Credit Agreement also requires that Aptiv pay certain facility fees on the Revolving Credit Facility, which are also subject to adjustment based on the sustainability-linked targets as described above, and certain letter of credit issuance and fronting fees.The interest rate period with respect to LIBOR interest rate options can be set at one-, three-, or six-months as selected by Aptiv in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable lenders). Aptiv may elect to change the selected interest rate option in accordance with the provisions of the Credit Agreement. As of December 31, 2021, Aptiv selected the one-month LIBOR interest rate option on the Tranche A Term Loan, and the rate effective as of December 31, 2021, as detailed in the table below, was based on the Company’s current credit rating and the Applicable Rate for the Credit Agreement: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | Borrowings as of | | | | | | | December 31, 2021 | | Rates effective as of | | | Applicable Rate | | (in millions) | | December 31, 2021 | | | | | | | | | | | | | | | | Tranche A Term Loan | LIBOR plus 1.125% | | $ | 313 | | | 1.25 | % | | | | | | | | | | | | | | | Borrowings under the Credit Agreement are prepayable at Aptiv’s option without premium or penalty.The Credit Agreement contains certain covenants that limit, among other things, the Company’s (and the Company’s subsidiaries’) ability to incur certain additional indebtedness or liens or to dispose of substantially all of its assets. In addition, under the June 2021 amendment, the Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement) of not more than 85

string

Proceeds from issuance of common stock

1

SEC-NUM

Table of ContentsELECTRONIC ARTS INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | (Unaudited) | Three Months Ended June 30, | | (In millions) | 2022 | | 2021 | | OPERATING ACTIVITIES | | | | | Net income | $ | 311 | | | $ | 204 | | | Adjustments to reconcile net income to net cash used in operating activities: | | | | | Depreciation, amortization, accretion and impairment | 114 | | | 105 | | | Stock-based compensation | 125 | | | 125 | | | Change in assets and liabilities: | | | | | Receivables, net | 70 | | | 12 | | | Other assets | (15) | | | (74) | | | Accounts payable | (16) | | | (19) | | | Accrued and other liabilities | (105) | | | (302) | | | Deferred income taxes, net | (86) | | | 28 | | | Deferred net revenue (online-enabled games) | (476) | | | (222) | | | Net cash used in operating activities | (78) | | | (143) | | | INVESTING ACTIVITIES | | | | | Capital expenditures | (59) | | | (44) | | | Proceeds from maturities and sales of short-term investments | 87 | | | 507 | | | Purchase of short-term investments | (93) | | | (285) | | | Acquisitions, net of cash acquired | — | | | (1,989) | | | Net cash used in investing activities | (65) | | | (1,811) | | | FINANCING ACTIVITIES | | | | | Proceeds from issuance of common stock | 1 | | | — | | | Cash dividends paid | (53) | | | (49) | | | Cash paid to taxing authorities for shares withheld from employees | (104) | | | (105) | | | Repurchase and retirement of common stock | (320) | | | (325) | | | Net cash used in financing activities | (476) | | | (479) | | | Effect of foreign exchange on cash and cash equivalents | (31) | | | 11 | | | Increase (decrease) in cash and cash equivalents | (650) | | | (2,422) | | | Beginning cash and cash equivalents | 2,732 | | | 5,260 | | | Ending cash and cash equivalents | $ | 2,082 | | | $ | 2,838 | | | Supplemental cash flow information: | | | | | Cash paid during the period for income taxes, net | $ | 36 | | | $ | 134 | | | | | | | | | | | | | | | | | See accompanying Notes to Condensed Consolidated Financial Statements (unaudited).7

string

Undistributed earnings from non-U.S. operations

5.7

SEC-NUM

[Table of Contents](#i43adbcd383bc4dc48977980bcb999d17_79) HP INC. AND SUBSIDIARIESNotes to Consolidated Financial Statements (Continued)Note 6: Taxes on Earnings (Continued)HP is subject to income tax in the United States and approximately 60 other countries and is subject to routine corporate income tax audits in many of these jurisdictions. In addition, HP is subject to numerous ongoing audits by federal, state and foreign tax authorities. The IRS is conducting an audit of HP’s 2018 and 2019 income tax returns.With respect to major state and foreign tax jurisdictions, HP is no longer subject to tax authority examinations for years prior to 2002. No material tax deficiencies have been assessed in major state or foreign tax jurisdictions related to ongoing audits as of October 31, 2021.HP 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. HP regularly assesses the likely outcomes of these audits in order to determine the appropriateness of HP’s tax provision. HP 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 HP 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 for taxes and therefore the resolution of one or more of these uncertainties in any particular period could have a material impact on net income or cash flows.HP has not provided for U.S. federal income and foreign withholding taxes on $5.7 billion of undistributed earnings from non-U.S. operations as of October 31, 2021 because HP intends to reinvest such earnings indefinitely outside of the United States. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. The TCJA taxed HP’s historic earnings and profits of its non-U.S. subsidiaries. HP will remit these taxed reinvested earnings for which deferred U.S. federal and withholding taxes have been provided where excess cash has accumulated and HP determines that it is advantageous for business operations, tax or cash management reasons. 85

string

Unrecognized compensation costs related to unvested awards, weighted-average period

1.7

SEC-NUM

("options") and performance-vesting RSUs ("performance shares"). As of September 30, 2022, unrecognized compensation costs for unvested awards under the 2017 Plan were approximately $141 million, which are expected to be recognized over a weighted-average period of 1.7 years on a straight-line basis. RSUs During the nine months ended September 30, 2022, we granted 507,000 RSUs with a weighted average grant date fair value per share of $150.58, which vest in equal annual installments over two or three years from the date of grant. Options During the nine months ended September 30, 2022, we granted 318,000 options with an exercise price per share of $150.67, which vest in equal annual installments over three years from the date of grant and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances. The grant date fair value per share of the options granted during the nine months ended September 30, 2022 was $51.15, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | Expected volatility(1) | 33.28 | % | | Dividend yield(2) | 0.41 | % | | Risk-free rate(3) | 1.93 | % | | Expected term (in years)(4) | 6.0 | \_\_\_\_\_\_\_\_\_\_\_\_(1)Estimated using a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a look back period that corresponds to the expected term of the option. (2)Estimated based on the expectation, at the date of grant, of the resumption of a quarterly $0.15 per share dividend, as well as our three-month average stock price. (3)Based on the yields of U.S. Department of Treasury instruments with similar expected terms at the date of grant.(4)Estimated using the midpoint of the vesting period and the contractual term of the options. Performance Shares During the nine months ended September 30, 2022, we granted 216,000 performance shares with a grant date fair value per share of $150.67. We recognize compensation expense based on the total number of performance shares that are expected to vest as determined by the projected achievement of each of the performance measures, which are estimated each reporting period and range from zero percent to 200 percent, with 100 percent being the target. As of September 30, 2022, we determined that all of the performance measures for the outstanding performance shares were probable of achievement, with the average of the achievement factors estimated to be between the target and maximum achievement percentages for the performance shares granted in 2020 and 2021 and at target for the performance shares granted in 2022. 10

string

Sublease Income

17.5

SEC-NUM

[Table of Contents](#i2c45b01857824b67a12ec5acf3b2e95b_7)As of December 31, 2021, the future operating lease payments for each of the next five years and thereafter is as follows (in thousands): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | Fiscal Years Ending September 30: | | Operating LeasePayments | | 2022 (remainder) | | $ | 41,840 | | | 2023 | | 50,162 | | | 2024 | | 41,519 | | | 2025 | | 33,599 | | | 2026 | | 26,583 | | | 2027 | | 26,224 | | | Thereafter | | 164,890 | | | Total lease payments | | 384,817 | | | Less: imputed interest | | (50,332) | | | Total lease liabilities | | $ | 334,485 | | Operating lease liabilities above do not include sublease income. As of December 31, 2021, the Company expects to receive sublease income of approximately $17.5 million, which consists of $5.1 million to be received for the remainder of fiscal 2022 and $12.4 million to be received over the three fiscal years thereafter. In the first quarter of fiscal 2021, the Company recorded an impairment of $6.7 million against the right-of-use asset related to the integration of the former Shape headquarters in Santa Clara, California. There were no impairments against right-of-use assets for the three months ended December 31, 2021. As of December 31, 2021, the Company had no significant operating leases that were executed but not yet commenced. 9. Commitments and ContingenciesGuarantees and Product WarrantiesIn the normal course of business to facilitate sales of its products, the Company indemnifies other parties, including customers, resellers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other party harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made against certain parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. The Company has entered into indemnification agreements with its officers and directors and certain other employees, and the Company's bylaws contain similar indemnification obligations to the Company's agents. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.The Company generally offers warranties of one year for hardware for those customers without service contracts, with the option of purchasing additional warranty coverage in yearly increments. The Company accrues for warranty costs as part of its cost of sales based on associated material product costs and technical support labor costs. Accrued warranty costs as of December 31, 2021 and September 30, 2021 were not material.CommitmentsAs of December 31, 2021, the Company's principal commitments consisted of borrowings under the Term Loan Facility and obligations outstanding under operating leases. Refer to Note 7 for the scheduled principal maturities of the Term Loan Facility as of December 31, 2021.The Company leases its facilities under operating leases that expire at various dates through 2033. There have been no material changes in the Company's lease obligations compared to those discussed in Note 8 to its annual consolidated financial statements.20

string

Unrecognized tax benefits - increase

20.4

SEC-NUM

Note 3. Variable Interest EntityThe Company has substantial governance rights over Profarma Distribuidora de Produtos Farmacêuticos S.A. ("Profarma"), which allow it to direct the activities that significantly impact Profarma’s economic performance. As such, the Company consolidates the operating results of Profarma in its consolidated financial statements. The Company is not obligated to provide future financial support to Profarma. The following assets and liabilities of Profarma are included in the Company's Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | (in thousands) | | June 30,2022 | | September 30,2021 | | Cash and cash equivalents | | $ | 23,069 | | | $ | 33,699 | | | Accounts receivables, net | | 189,121 | | | 148,485 | | | Inventories | | 239,521 | | | 168,229 | | | Prepaid expenses and other | | 67,361 | | | 62,545 | | | Property and equipment, net | | 35,480 | | | 31,920 | | | Goodwill (see Note 5) | | — | | | 75,936 | | | Other intangible assets | | 67,627 | | | 70,840 | | | Other long-term assets | | 88,588 | | | 74,177 | | | Total assets | | $ | 710,767 | | | $ | 665,831 | | | | | | | | | Accounts payable | | $ | 195,346 | | | $ | 162,768 | | | Accrued expenses and other | | 51,263 | | | 38,477 | | | Short-term debt | | 112,916 | | | 64,215 | | | Long-term debt | | 73,736 | | | 52,613 | | | Deferred income taxes | | 23,752 | | | 37,041 | | | Other long-term liabilities | | 56,635 | | | 57,945 | | | Total liabilities | | $ | 513,648 | | | $ | 413,059 | | Profarma's assets can only be used to settle its obligations, and its creditors do not have recourse to the general credit of the Company. Note 4. Income TaxesThe Company files income tax returns in U.S. federal, state, and various foreign jurisdictions. As of June 30, 2022, the Company had unrecognized tax benefits, defined as the aggregate tax effect of differences between tax return positions and the benefits recognized in the Company’s financial statements, of $543.2 million ($473.5 million, net of federal benefit). If recognized, $455.3 million of these tax benefits would have reduced income tax expense and the effective tax rate. Included in this amount is $21.3 million of interest and penalties, which the Company records in Income Tax Expense in the Company's Consolidated Statements of Operations. In the nine months ended June 30, 2022, unrecognized tax benefits increased by $20.4 million. Over the next 12 months, it is reasonably possible that tax authority audit resolutions and the expiration of statutes of limitations could result in a reduction of unrecognized tax benefits of approximately $2.9 million.The Company's effective tax rates were 23.7% and 24.0% for the three and nine months ended June 30, 2022, respectively. The Company's effective tax rates were 48.5% and 33.6% for the three and nine months ended June 30, 2021, respectively. The effective tax rates for the three and nine months ended June 30, 2022 were higher than the U.S. statutory rate primarily due to U.S. state income taxes as well as discrete tax expense associated with foreign valuation allowance adjustments, offset in part by the benefit of non-U.S. income taxed at rates lower than the U.S. statutory rate. The effective tax rates in the three and nine months ended June 30, 2021 were higher than the U.S. statutory rate primarily due to UK Tax Reform. 12

string

Goodwill adjustment

24.9

SEC-NUM

Balance Sheet, Condensed Consolidated Statement of Cash Flows and Condensed Consolidated Statement of Shareholders’ Equity for the three-month period ended January 29, 2022.During the first quarter of 2022, the Company recorded acquisition accounting adjustments of $24.9 million to goodwill comprised of $19.0 million to income tax payable, $7.8 million to other non-current liabilities and $1.6 million to accrued liabilities offset by $3.5 million to deferred income taxes. The Acquisition accounting is not complete and additional information relating to conditions that existed at the Acquisition Date may become known to the Company during the remainder of the measurement period. As of the filing date of this Quarterly Report on Form 10-Q, the Company is still in the process of valuing Maxim's assets, including fixed assets, intangible assets, and liabilities, including related income tax accounting.The following unaudited pro forma consolidated financial information for the three-month period ended January 30, 2021 combines the results of the Company for the three-month period ended January 30, 2021 and the unaudited results of Maxim for the corresponding period. The unaudited pro forma consolidated financial information assumes that the Acquisition, which closed on August 26, 2021, was completed on November 3, 2019 (the first day of fiscal 2020). The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments for amortization expense of acquired intangible assets, fair value adjustments for acquired inventory, property, plant and equipment and long-term debt and compensation expense for ongoing share-based compensation arrangements that were replaced in conjunction with the Acquisition, together with the consequential tax effects. These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the Acquisition actually taken place on November 3, 2019. In addition, these results are not intended to be a projection of future results and do not reflect events that may occur after the Acquisition, including but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the Acquisition. | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Pro Forma Three Months Ended (unaudited) | | | | January 30, 2021 | | | | | | | | | | Revenue | | $ | 2,059,679 | | | | | Net income | | $ | 298,895 | | | | | Basic net income per common share | | $ | 0.56 | | | | | Diluted net income per common share | | $ | 0.55 | | | | Note 15 – Subsequent EventsOn February 15, 2022, the Board of Directors of the Company declared a cash dividend of $0.76 per outstanding share of common stock. The dividend will be paid on March 8, 2022 to all shareholders of record at the close of business on February 25, 2022 and is expected to total approximately $397.7 million. 13

string

Term of credit agreement

364

SEC-NUM

Estimated future amortization expenses of the Company's existing intangible assets are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | Amount | | Nine months ending June 30, 2023 | $ | 329.8 | | | Twelve months ending June 30, 2024 | $ | 309.3 | | | Twelve months ending June 30, 2025 | $ | 216.0 | | | Twelve months ending June 30, 2026 | $ | 148.6 | | | Twelve months ending June 30, 2027 | $ | 123.1 | | | Twelve months ending June 30, 2028 | $ | 79.4 | | Note 9. Short-term Financing The Company has a $3.75 billion, 364-day credit agreement that matures in June 2023 with a one year term-out option. The interest rate applicable to committed borrowings under each agreement is tied to SOFR, the effective funds rate, or the prime rate depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing. The Company also has a $2.75 billion five year credit facility that matures in June 2024 that contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. In addition, the Company has a five year $3.2 billion credit facility maturing in June 2026 that also contains an accordion feature under which the aggregate commitment can be increased by $500 million, subject to the availability of additional commitments. The interest rate applicable to committed borrowings is tied to LIBOR, the effective federal funds rate, or the prime rate, depending on the notification provided by the Company to the syndicated financial institutions prior to borrowing. The Company is also required to pay facility fees on the credit agreements. The primary uses of the credit facilities are to provide liquidity to the commercial paper program and funding for general corporate purposes, if necessary. The Company had no borrowings through September 30, 2022 under the credit agreements. The Company's U.S. short-term funding requirements primarily related to client funds are sometimes obtained on an unsecured basis through the issuance of commercial paper, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. This commercial paper program provides for the issuance of up to $9.7 billion in aggregate maturity value. The Company’s commercial paper program is rated A-1+ by Standard & Poor’s, Prime-1 (“P-1”) by Moody’s and F1+ by Fitch. These ratings denote the highest quality commercial paper securities. Maturities of commercial paper can range from overnight to up to 364 days. At September 30, 2022 and June 30, 2022, the Company had no commercial paper borrowing outstanding. Details of the borrowings under the commercial paper program are as follows: | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | September 30, | | | | | 2022 | | 2021 | | | | | | Average daily borrowings (in billions) | $ | 4.6 | | | $ | 2.0 | | | | | | | Weighted average interest rates | 2.3 | % | | 0.1 | % | | | | | | Weighted average maturity (approximately in days) | 2 days | | 1 day | | | | | The Company’s U.S., Canadian and United Kingdom short-term funding requirements related to client funds obligations are sometimes obtained on a secured basis through the use of reverse repurchase agreements, which are collateralized principally by government and government agency securities, rather than liquidating previously-collected client funds that have already been invested in available-for-sale securities. These agreements generally have terms ranging from overnight to up to five business days. At September 30, 2022 and June 30, 2022, the Company had $167.6 million and $136.4 million, respectively, of outstanding obligations related to reverse repurchase agreements. Details of the reverse repurchase agreements are as follows: | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | September 30, | | | | | 2022 | | 2021 | | | | | | Average outstanding balances | $ | 1,119.4 | | | $ | 195.1 | | | | | | | Weighted average interest rates | 2.4 | % | | 0.2 | % | | | | | 15

string

Number of shares authorized (in shares)

15.6

SEC-NUM

Pre-tax restructuring expenses and asset impairments by segment for the 2019 initiative were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Severance Costs | | Exit Costs | | Asset Impairments | | Total | | | (In millions) | | Fluid & Metering Technologies | $ | 2.9 | | | $ | — | | | $ | — | | | $ | 2.9 | | | Health & Science Technologies | 3.0 | | | 1.0 | | | 10.2 | | | 14.2 | | | Fire & Safety/Diversified Products | 1.3 | | | — | | | — | | | 1.3 | | | Corporate/Other | 2.6 | | | — | | | — | | | 2.6 | | | Total restructuring costs | $ | 9.8 | | | $ | 1.0 | | | $ | 10.2 | | | $ | 21.0 | | Restructuring accruals reflected in Accrued expenses in the Company’s Consolidated Balance Sheets are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | RestructuringInitiatives | | | (In millions) | | Balance at January 1, 2020 | $ | 6.1 | | | Restructuring expenses(1) | 8.8 | | | Payments, utilization and other | (11.0) | | | Balance at December 31, 2020 | 3.9 | | | Restructuring expenses(2) | 8.5 | | | Payments, utilization and other | (9.6) | | | Balance at December 31, 2021 | $ | 2.8 | | (1) Excludes $2.9 million of asset impairments related to property, plant and equipment and right-of-use assets. (2) Excludes $0.8 million of asset impairments related to property, plant and equipment. 16. Share-Based Compensation The Company maintains two share-based compensation plans for executives, non-employee directors and certain key employees that authorize the granting of stock options, restricted stock, performance share units and other types of awards consistent with the purpose of the plans. The number of shares authorized for issuance under the Company’s plans as of December 31, 2021 totaled 15.6 million, of which 2.4 million shares were available for future issuance. The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on the recommendation from the Compensation Committee. Stock Options Stock options granted under the Company’s plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The fair value of each option grant is estimated on the date of the grant using the Binomial lattice option pricing model (for options granted before March 2021) or the Black Scholes valuation model (for options granted after February 2021). The adoption of the Black Scholes model in 2021 was driven by a historical review of option exercise history, which more closely aligned with the methodology of the Black Scholes model. The majority of the options issued to employees vest ratably over four years, with vesting beginning one year from the date of grant, and generally expire 10 years from the date of grant. 71

string

Amount outstanding

16

SEC-NUM

[Table of Contents](#i82eec5aa49a24290a07e4a9f99c1e608_7) 8. Goodwill The following table presents changes in goodwill during 2021 and 2020. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reportable Segments | | | | | | (In millions) | | Acceptance | | Fintech | | Payments | | | | Total | | Goodwill - December 31, 2019 | | $ | 21,189 | | | $ | 2,104 | | | $ | 12,745 | | | | | $ | 36,038 | | | Acquisitions and valuation adjustments | | 332 | | | — | | | 62 | | | | | 394 | | | | | | | | | | | | | | | | | | | | | | | | | | | Foreign currency translation | | (113) | | | 4 | | | (1) | | | | | (110) | | | Goodwill - December 31, 2020 | | 21,408 | | | 2,108 | | | 12,806 | | | | | 36,322 | | | Acquisitions and valuation adjustments | | 321 | | | — | | | 197 | | | | | 518 | | | | | | | | | | | | | | | Transfers(1) | | — | | | (67) | | | 67 | | | | | — | | | Foreign currency translation | | (347) | | | (2) | | | (58) | | | | | (407) | | | Goodwill - December 31, 2021 | | $ | 21,382 | | | $ | 2,039 | | | $ | 13,012 | | | | | $ | 36,433 | | | | | | | | | | | | | | (1)Relates to the migration of a line of business from the Fintech segment to the Payments segment. This migration did not have a material impact on the results of operations of the affected reportable segments. 9. Investments in Unconsolidated AffiliatesThe Company maintains investments in various affiliates that are accounted for as equity method investments, the most significant of which are related to the Company’s merchant alliances. The Company’s share of net income or loss from these investments is reported within income from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income.Merchant AlliancesThe Company maintains ownership interests of significant influence in various merchant alliances. A merchant alliance is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the financial institution. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance primarily based on contractual pricing (see Note 20). The Company’s investment in its merchant alliances was $2.3 billion and $2.4 billion at December 31, 2021 and 2020, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets. Other Equity Method InvestmentsFollowing the sale of a controlling financial interest of the Investment Services business during the first quarter of 2020 (see Note 4), the Company’s remaining ownership interest in the business, subsequently renamed as InvestCloud, was accounted for as an equity method investment prior to the sale of the Company’s entire remaining ownership interest during the second quarter of 2021. The Company also maintains a 45% ownership interest in Sagent M&C, LLC and a 31% ownership interest in defi SOLUTIONS Group, LLC (collectively, the “Lending Joint Ventures”), which are accounted for as equity method investments. The Company’s aggregate investment in these entities was $25 million and $212 million at December 31, 2021 and 2020, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets. In addition, the Company maintains other strategic investments accounted for under the equity method of accounting. The Company's aggregate investment in such entities was $266 million and $192 million at December 31, 2021 and 2020, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets. The Lending Joint Ventures maintain variable-rate term loan facilities with aggregate outstanding borrowings of $365 million in senior unsecured debt and variable-rate revolving credit facilities with an aggregate borrowing capacity of $45 million with a syndicate of banks, which mature in March 2023. Outstanding borrowings on the revolving credit facilities at December 31, 2021 were $16 million. The Company has guaranteed this debt of the Lending Joint Ventures and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations. See Note 10 for additional information regarding the Company’s debt guarantee arrangements with the Lending Joint Ventures. 71

string

Effective income tax rate reconciliation, divestiture of business, amount

344

SEC-NUM

In connection with the spin-off of the Company's former U.S. public sector business (the "USPS Separation"), the Company entered into a tax matters agreement with Perspecta Inc. (including its successors and permitted assigns, "Perspecta"). The Company generally will be responsible for tax liabilities arising prior to the USPS Separation, and Perspecta is liable to the Company for income tax receivables related to pre-spin-off periods. Income tax liabilities transferred to Perspecta primarily relate to pre-HPES Merger periods, for which the Company is indemnified by HPE pursuant to the tax matters agreement between the Company and HPE. The Company remains liable to HPE for tax receivables transferred to Perspecta related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company has recorded a tax indemnification receivable from Perspecta of $72 million related to other tax payables and a tax indemnification payable to Perspecta of $15 million related to income tax and other tax receivables. In connection with the sale of HPS business, the Company entered into a tax matters agreement with Dedalus. Pursuant to the tax matters agreement, the Company generally will be responsible for tax liabilities arising prior to the sale of HPS business.The major elements contributing to the difference between the U.S. federal statutory tax rate and the effective tax rate ("ETR") for continuing operations is below. | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | Fiscal Years Ended | | | | March 31, 2022 | | March 31, 2021 | | March 31, 2020 | | Statutory rate | | 21.0 | % | | 21.0 | % | | (21.0) | % | | State income tax, net of federal tax | | (6.9) | | | 10.8 | | | (1.4) | | | Foreign tax rate differential | | 151.1 | | | (198.4) | | | (11.9) | | | Goodwill impairment | | — | | | — | | | 28.3 | | | Change in valuation allowances | | (140.9) | | | 239.3 | | | 12.1 | | | Income Tax and Foreign Tax Credits | | (15.2) | | | (48.7) | | | (2.6) | | | Arbitration Award | | — | | | — | | | (3.6) | | | Change in uncertain tax positions | | 6.8 | | | 17.2 | | | 1.1 | | | Withholding Taxes | | 6.2 | | | 10.3 | | | 0.9 | | | U.S. Tax on Foreign Income | | 2.5 | | | 17.6 | | | 0.4 | | | Excess tax benefits or expense for stock compensation | | 0.1 | | | 2.2 | | | 0.1 | | | Capitalized transaction costs | | 0.2 | | | 0.5 | | | 0.1 | | | Base Erosion and Transition Taxes | | 6.6 | | | (0.7) | | | (0.7) | | | Impact of Business Divestitures | | 3.0 | | | 52.6 | | | — | | | Granite Trust Capital Loss | | — | | | (5.7) | | | — | | | Other items, net | | 1.0 | | | 4.3 | | | 0.7 | | | Effective tax rate | | 35.5 | % | | 122.3 | % | | 2.5 | % | In fiscal 2022, the ETR was primarily impacted by:•Income Tax and Foreign Tax Credits, which decreased income tax expense and decreased the ETR by $174 million and 15.2%, respectively. •Changes in Luxembourg losses that increased the ETR by $1,609 million and 141.0%, respectively, with an offsetting decrease in the ETR due to a decrease in the valuation allowance of the same amount. •Adjustments to uncertain tax positions that increased the overall income tax expense and the ETR by $78 million and 6.8%, respectively. In fiscal 2021, the ETR was primarily impacted by:•Impact of the HHS and other business divestitures, which increased tax expense and increased the ETR $344 million and 52.6%, respectively. The HHS tax gain increased tax expense and the ETR as the tax basis of assets sold, primarily goodwill, was lower than the book basis.98

string

Number of Days to Comply after Final EPA Determination

135

SEC-NUM

[Table of Co](#i2c056a9f8317485ea6601862f5b0559f_7)[ntents](#i2c056a9f8317485ea6601862f5b0559f_7)handling systems and in 2020 completed construction of wastewater treatment facilities at three of its four coal-fired energy centers. The Meramec Energy Center is scheduled to retire in 2022 and, as a result, does not require new wastewater and dry ash handling systems.CCR ManagementThe EPA’s CCR Rule establishes requirements for the management and disposal of CCR from coal-fired power plants and will result in the closure of surface impoundments at Ameren Missouri’s energy centers. Ameren Missouri completed the closure of all surface impoundments at two of its facilities in 2021, and has made significant progress by closing several impoundments at its other two facilities. Ameren Missouri plans to complete the closures of the remaining surface impoundments in 2023. In January 2022, Ameren Missouri received notice of a proposed determination by the EPA that it has rejected Ameren Missouri’s requests to extend the timeline for operating certain impoundments located at the Sioux and Meramec energy centers. Compliance with the CCR Rule’s requirements for closure of the impoundments would be required 135 days after the EPA issues a final determination, which Ameren Missouri expects to be issued in the spring of 2022. If Ameren Missouri was no longer able to use the surface impoundments at the Sioux or Meramec energy centers, Ameren Missouri would not be able to operate the energy centers unless an alternative for handling the CCR material is in place. Ameren Missouri plans to retire the Meramec Energy Center in 2022, and is accelerating its construction plans to build a CCR Rule-compliant impoundment at the Sioux Energy Center to allow for continued operations. Additionally, Ameren Missouri is seeking a reliability determination from the MISO, which, if granted, would extend the deadline to comply with the requirement to close the impoundments and allow the energy centers to operate. Ameren Missouri does not expect that this matter will have a material adverse effect on its results of operations, financial position, or liquidity.Ameren and Ameren Missouri have AROs of $76 million recorded on their respective balance sheets as of December 31, 2021, associated with CCR storage facilities. Ameren Missouri estimates it will need to make capital expenditures of $60 million to $80 million from 2022 through 2026 to implement its CCR management compliance plan, which includes installation of groundwater monitoring equipment and groundwater treatment facilities.RemediationThe Ameren Companies are involved in a number of remediation actions to clean up sites impacted by the use or disposal of materials containing hazardous substances. Federal and state laws can require responsible parties to fund remediation regardless of their degree of fault, the legality of original disposal, or the ownership of a disposal site.As of December 31, 2021, Ameren Illinois has remediated the majority of the 44 former MGP sites in Illinois and could substantially conclude remediation efforts at the remaining sites by 2023. The ICC allows Ameren Illinois to recover such remediation and related litigation costs from its electric and natural gas utility customers through environmental cost riders that are subject to annual prudence reviews by the ICC. As of December 31, 2021, Ameren Illinois estimated the remaining obligation related to these former MGP sites at $71 million to $125 million. Ameren and Ameren Illinois recorded a liability of $71 million to represent the estimated minimum obligation for these sites, as no other amount within the range was a better estimate.The scope of the remediation activities at these former MGP sites may increase as remediation efforts continue. Considerable uncertainty remains in these estimates because many site-specific factors can influence the actual costs, including unanticipated underground structures, the degree to which groundwater is encountered, regulatory changes, local ordinances, and site accessibility. The actual costs and timing of completion may vary substantially from these estimates.Our operations or those of our predecessor companies involve the use of, disposal of, and, in appropriate circumstances, the cleanup of substances regulated under environmental laws. We are unable to determine whether such historical practices will result in future environmental commitments or will affect our results of operations, financial position, or liquidity.Illinois Emission StandardsThe IETL established emission standards that became effective in September 2021. Ameren Missouri's natural gas-fired energy centers in Illinois will be subject to limits on emissions, including CO2 and NOx, equal to their unit-specific average emissions from 2018 through 2020, for any rolling twelve-month period beginning October 1, 2021, through 2029. Further reductions to emissions limits will become effective between 2030 and 2040, which could limit the operations of Ameren Missouri's five natural gas-fired energy centers located in the state of Illinois, and will result in the closure of one or more energy centers earlier than anticipated. These energy centers are utilized to support peak loads. Subject to conditions in the IETL, these energy centers may be allowed to exceed the emissions limits in order to maintain reliability of electric utility service as necessary. Ameren Missouri is reviewing the emission standards and the effect they may have on its generation strategy, including any increases in capital expenditures or operating costs, and changes to the useful lives of the five natural gas-fired energy centers. Ameren Missouri expects to file an update to the 2020 IRP with the MoPSC in the first half of 2022 to reflect, among other things, the impact of these new emissions standards.150

string

Payments under revolving credit facilities

150.0

SEC-NUM

[Table of Contents](#i1c7c95a3a35c4e5dafc8b646de4a8ff7_7) IDEX CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | For the Year Ended December 31, | | | 2021 | | 2020 | | 2019 | | | (In millions) | | Cash flows from operating activities | | | | | | | Net income | $ | 449.3 | | | $ | 377.8 | | | $ | 425.5 | | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | Asset impairments | 0.8 | | | 3.1 | | | 10.2 | | | Depreciation and amortization | 46.6 | | | 41.7 | | | 39.6 | | | Amortization of intangible assets | 56.4 | | | 41.8 | | | 37.3 | | | Amortization of debt issuance expenses | 1.7 | | | 1.7 | | | 1.4 | | | Share-based compensation expense | 20.4 | | | 14.8 | | | 22.1 | | | Deferred income taxes | (6.1) | | | 8.2 | | | 6.6 | | | Non-cash interest expense associated with forward starting swaps | 3.3 | | | 6.0 | | | 6.3 | | | Termination of the U.S. pension plan, net of curtailment | 8.6 | | | — | | | — | | | Changes in (net of the effect from acquisitions/divestitures and foreign exchange): | | | | | | | Receivables | (49.4) | | | 20.9 | | | 22.3 | | | Inventories | (46.1) | | | 36.5 | | | (3.3) | | | Other current assets | 9.0 | | | (10.3) | | | (2.4) | | | Trade accounts payable | 22.9 | | | 2.7 | | | (9.1) | | | Deferred revenue | 19.8 | | | 39.0 | | | 8.7 | | | Accrued expenses | 25.8 | | | (13.7) | | | (44.0) | | | Other - net | 2.3 | | | (0.9) | | | 6.9 | | | Net cash flows provided by operating activities | 565.3 | | | 569.3 | | | 528.1 | | | Cash flows from investing activities | | | | | | | Purchases of property, plant and equipment | (72.7) | | | (51.6) | | | (50.9) | | | Acquisition of businesses, net of cash acquired | (577.4) | | | (123.1) | | | (87.2) | | | Note receivable from collaborative partner | (4.2) | | | — | | | — | | | Purchase of marketable securities | (45.2) | | | — | | | — | | | Other - net | 1.4 | | | 2.1 | | | 1.1 | | | Net cash flows used in investing activities | (698.1) | | | (172.6) | | | (137.0) | | | Cash flows from financing activities | | | | | | | Borrowings under revolving credit facilities | — | | | 150.0 | | | — | | | Payments under revolving credit facilities | — | | | (150.0) | | | — | | | Proceeds from issuance of long-term borrowings | 499.4 | | | 499.1 | | | — | | | Payment of long-term borrowings | (350.1) | | | (300.4) | | | (50.1) | | | Payment of make-whole redemption premium | (6.7) | | | (6.8) | | | — | | | Debt issuance costs | (4.6) | | | (4.7) | | | — | | | Dividends paid | (161.1) | | | (151.8) | | | (147.2) | | | Proceeds from stock option exercises | 19.7 | | | 44.6 | | | 38.8 | | | Repurchases of common stock | — | | | (110.3) | | | (54.7) | | | Shares surrendered for tax withholding | (6.1) | | | (12.3) | | | (12.6) | | | Other - net | — | | | — | | | (1.8) | | | Net cash flows used in financing activities | (9.5) | | | (42.6) | | | (227.6) | | | Effect of exchange rate changes on cash and cash equivalents | (28.2) | | | 39.2 | | | 2.7 | | | Net (decrease) increase in cash and cash equivalents | (170.5) | | | 393.3 | | | 166.2 | | | Cash and cash equivalents at beginning of year | 1,025.9 | | | 632.6 | | | 466.4 | | | Cash and cash equivalents at end of year | $ | 855.4 | | | $ | 1,025.9 | | | $ | 632.6 | | | Supplemental cash flow information | | | | | | | Cash paid for: | | | | | | | Interest | $ | 36.0 | | | $ | 35.2 | | | $ | 36.7 | | | Income taxes - net | 118.2 | | | 87.2 | | | 109.0 | | | Significant non-cash activities: | | | | | | | Debt acquired with acquisition of business | — | | | — | | | 51.1 | | See Notes to Consolidated Financial Statements.41

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Maximum borrowing capacity

750

SEC-NUM

Note C – Capitalization In June 2022, Con Edison redeemed at maturity $293 million of 8.71 percent senior unsecured notes. The carrying amounts and fair values of long-term debt at June 30, 2022 and December 31, 2021 were: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | (Millions of Dollars) | 2022 | 2021 | | Long-Term Debt (including current portion) (a) | CarryingAmount | FairValue | CarryingAmount | FairValue | | Con Edison | $22,683 | $21,125 | $23,044 | $26,287 | | CECONY | $18,386 | $17,018 | $18,382 | $21,382 | (a)Amounts shown are net of unamortized debt expense and unamortized debt discount of $219 million and $188 million for Con Edison and CECONY, respectively, as of June 30, 2022 and $226 million and $193 million for Con Edison and CECONY, respectively, as of December 31, 2021. The fair values of the Companies' long-term debt have been estimated primarily using available market information and at June 30, 2022 are classified as Level 2 liabilities (see Note O). Note D – Short-Term BorrowingAt June 30, 2022, Con Edison had $2,244 million of commercial paper outstanding of which $2,060 million was outstanding under CECONY’s program. The weighted average interest rate at June 30, 2022 was 2.0 percent for both Con Edison and CECONY. At December 31, 2021, Con Edison had $1,488 million of commercial paper outstanding of which $1,361 million was outstanding under CECONY’s program. The weighted average interest rate at December 31, 2021 was 0.3 percent for both Con Edison and CECONY. At June 30, 2022 and December 31, 2021, no loans were outstanding under the Companies' December 2016 credit agreement (Credit Agreement). An immaterial amount of letters of credit were outstanding under the Credit Agreement as of June 30, 2022 and December 31, 2021. In March 2022, CECONY entered into a 364-Day Revolving Credit Agreement (the CECONY Credit Agreement) under which banks are committed to provide loans up to $750 million on a revolving credit basis. The CECONY Credit Agreement expires on March 30, 2023 and supports CECONY’s commercial paper program. Loans issued under the CECONY Credit Agreement may also be used for other general corporate purposes. The banks’ commitments under the CECONY Credit Agreement are subject to certain conditions, including that there be no event of default and that CECONY shall have received the required regulatory approval. The commitments are not subject to maintenance of credit rating levels or the absence of a material adverse change. Upon a change of control of, or upon an event of default by CECONY, the banks may terminate their commitments and declare the loans, accrued interest and any other amounts due by CECONY immediately due and payable. Events of default include CECONY exceeding at any time a ratio of consolidated debt to consolidated total capital of 0.65 to 1; having liens on its assets in an aggregate amount exceeding five percent of its consolidated total capital, subject to certain exceptions; CECONY failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt); cross default to other financial obligations of $150 million or more of CECONY which would permit the holder to accelerate the obligations; and other customary events of default. In June 2022, Con Edison entered into and borrowed $400 million under a 364-Day Senior Unsecured Term Loan Credit Agreement dated June 30,2022 (the June 2022 Term Loan Credit Agreement) under which a bank is committed, until November 30, 2022, to provide to Con Edison one or more tranches of incremental term loans in an aggregate amount not to exceed $200 million, in addition to the $400 million borrowed on June 30, 2022. The bank’s commitments under the agreement are subject to certain conditions, including that there be no event of default. The commitments are not subject to maintenance of credit rating levels or the absence of a material adverse change. Upon a change of control of, or upon an event of default by Con Edison, the bank may terminate its commitments and declare the loans, accrued interest and any other amounts due by Con Edison immediately due and payable. Events of default include Con Edison exceeding at any time a ratio of consolidated debt to consolidated total capital of 0.65 to 1; Con Edison or its subsidiaries having liens on its or their assets in an aggregate amount exceeding 5 percent of Con Edison’s consolidated total capital, subject to certain exceptions; Con Edison or its material subsidiaries failing to make one or more payments in respect of material financial obligations (in excess of an aggregate $150 million of debt or derivative obligations other than non-recourse debt); the occurrence of an event or condition which results in the acceleration of the maturity of any material debt (in 30

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Asset Impairments

140

SEC-NUM

[Table of Contents](#i0fa971ac9e834218957059819155291f_10)Combined Notes to Consolidated Financial Statements(Dollars in millions, except per share data unless otherwise noted) Note 2 — Mergers, Acquisitions, and DispositionsThe following table summarizes the effects of the changes in Generation's ownership interest in CENG in Exelon's Shareholders' Equity: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | For the Year Ended December 31, 2021 | | Net income attributable to Exelon's common shareholders | | $ | 1,706 | | | Pre-tax increase in Exelon's common stock for purchase of EDF's 49.99% equity interest(a) | | 1,080 | | | Decrease in Exelon's common stock due to deferred tax liabilities resulting from purchase of EDF's 49.99% equity interest(a) | | (290) | | | Change from net income attributable to common stock and transfers from noncontrolling interest | | $ | 2,496 | | | | | | | | | | | | | | | | | | | | | | | | | | \_\_\_\_\_\_\_\_\_(a)Represents non-cash activity in Exelon’s consolidated financial statements. Agreement for Sale of Generation’s Solar BusinessOn December 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable, for the sale of a significant portion of Generation’s solar business, including 360 MW of generation in operation or under construction across more than 600 sites across the United States. Generation will retain certain solar assets not included in this agreement, primarily Antelope Valley. Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions which were satisfied in the first quarter of 2021. The sale was completed on March 31, 2021 for a purchase price of $810 million. Exelon received cash proceeds of $675 million, net of $125 million long-term debt assumed by the buyer and certain working capital and other post-closing adjustments. Exelon recognized a pre-tax gain of $68 million which is included in Gain on sales of assets and businesses in the Consolidated Statements of Operations and Comprehensive Income. See Note 17 — Debt and Credit Agreements for additional information on the SolGen nonrecourse debt included as part of the transaction.Agreement for the Sale of a Generation Biomass FacilityOn April 28, 2021, Generation and ReGenerate entered into a purchase agreement, under which ReGenerate agreed to purchase Generation’s interest in the Albany Green Energy biomass facility. As a result, in the second quarter of 2021, Exelon recorded a pre-tax impairment charge of $140 million in Operating and maintenance expense in the Consolidated Statement of Operations and Comprehensive Income. Completion of the transaction was subject to the satisfaction of various customary closing conditions which were satisfied in the second quarter of 2021. The sale was completed on June 30, 2021 for a net purchase price of $36 million.Disposition of Oyster Creek On July 31, 2018, Generation entered into an agreement with Holtec and its indirect wholly owned subsidiary, OCEP, for the sale and decommissioning of Oyster Creek located in Forked River, New Jersey, which permanently ceased generation operations on September 17, 2018. Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions, including approval of the license transfer from the NRC and other regulatory approvals, and a private letter ruling from the IRS, which were satisfied in the second quarter of 2019. The sale was completed on July 1, 2019. Exelon recognized a loss on the sale in the third quarter of 2019, which was immaterial.Under the terms of the transaction, Generation transferred to OCEP substantially all the assets associated with Oyster Creek, including assets held in NDT funds, along with the assumption of liability for all responsibility for the site, including full decommissioning and ongoing management of the SNF until it is moved offsite. The terms of the transaction also include various forms of performance assurance for the obligations of OCEP to timely complete the required decommissioning, including a parental guaranty from Holtec for all performance and payment obligations of OCEP, and a requirement for Holtec to deliver a letter of credit to Generation upon the occurrence of specified events.201

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Deferred tax assets, tax attributes

48

SEC-NUM

The tax effect of significant temporary differences giving rise to deferred tax assets and liabilities were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | 2021 | | 2020 | | (in millions) | | Deferred Tax Asset | | Deferred TaxLiability | | Deferred Tax Asset | | Deferred TaxLiability | | | | | | | | | | | | Commission and bonus accrual | | $ | 6 | | | $ | — | | | $ | 8 | | | $ | — | | | Employee benefit accruals | | 51 | | | — | | | 58 | | | — | | | Inventory | | 17 | | | — | | | 25 | | | — | | | Identifiable intangible assets | | — | | | 569 | | | — | | | 613 | | | Insurance premium accruals | | 3 | | | — | | | 3 | | | — | | | Miscellaneous accruals | | 11 | | | — | | | 11 | | | — | | | Other | | 17 | | | — | | | 11 | | | — | | | Unrealized losses included in AOCI | | 46 | | | — | | | 98 | | | — | | | Property, plant and equipment | | — | | | 48 | | | — | | | 50 | | | Lease right-of-use asset | | — | | | 47 | | | — | | | 42 | | | Lease right-of-use liability | | 47 | | | — | | | 42 | | | — | | | Product warranty accruals | | 1 | | | — | | | 1 | | | — | | | Foreign tax credit and R&D carryforward | | 49 | | | — | | | 60 | | | — | | | Restructuring and other cost accruals | | 5 | | | — | | | 9 | | | — | | | Sales and marketing accrual | | 13 | | | — | | | 7 | | | — | | | Taxes on unremitted earnings of foreign subsidiaries | | — | | | 5 | | | — | | | 6 | | | Tax loss carryforwards and other tax attributes | | 276 | | | — | | | 280 | | | — | | | Subtotal | | $ | 542 | | | $ | 669 | | | $ | 613 | | | $ | 711 | | | Valuation allowances | | (267) | | | — | | | (287) | | | — | | | Total | | $ | 275 | | | $ | 669 | | | $ | 326 | | | $ | 711 | | Deferred tax assets and liabilities are included in the following Consolidated Balance Sheets line items at December 31 were as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | (in millions) | | 2021 | | 2020 | | | | | | | | Assets | | | | | | Other noncurrent assets | | $ | 14 | | | $ | 8 | | | Liabilities | | | | | | Deferred income taxes | | $ | 408 | | | $ | 393 | | The Company has $45 million of foreign tax credit carryforwards at December 31, 2021, of which $36 million will expire in 2025, $3 million will expire in 2027, and $6 million will expire at various times from 2028 through 2031. The Company has tax loss carryforwards related to certain foreign and domestic subsidiaries of approximately $1,278 million at December 31, 2021, of which $1,017 million expires at various times through 2041 and $261 million may be carried forward indefinitely. Included in deferred income tax assets at December 31, 2021 are tax benefits totaling $228 million, before valuation allowances, for the tax loss carryforwards. In addition the Company has recorded a deferred tax asset of $48 million, related to tax attributes. The Company has recorded $210 million of valuation allowance to offset the tax benefit of net operating losses, $45 million to offset the tax benefit of foreign tax credits, and $12 million of valuation allowance for other deferred tax assets. The Company has recorded these valuation allowances due to the uncertainty that these assets can be realized in the future. The Company has provided $5 million of withholding taxes on certain undistributed earnings of its foreign subsidiaries that the Company anticipates will be repatriated. 100

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Proceeds from Divestiture of Businesses

936

SEC-NUM

16 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2022 and 2021pricing in effect at July 1, 2019, until new lower-cost renewable contracts are incorporated into pricing in 2023. Consequently, costs incurred in excess of the July 1, 2019 price will be accumulated and borne by generators.Argentina — Collection of the principal and interest on these receivables is subject to various business risks and uncertainties, including, but not limited to, the operation of power plants which generate cash for payments of these receivables, regulatory changes that could impact the timing and amount of collections, and economic conditions in Argentina. The Company monitors these risks, including the credit ratings of the Argentine government, on a quarterly basis to assess the collectability of these receivables. The Company accrues interest on these receivables once the recognition criteria have been met. The Company’s collection estimates are based on assumptions that it believes to be reasonable, but are inherently uncertain. Actual future cash flows could differ from these estimates.6. INVESTMENTS IN AND ADVANCES TO AFFILIATESSummarized Financial Information — The following table summarizes financial information of the Company’s 50%-or-less-owned affiliates and majority-owned unconsolidated subsidiaries that are accounted for using the equity method (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | 50%-or-less Owned Affiliates (1) | | Majority-Owned Unconsolidated Subsidiaries | | Nine Months Ended September 30, | 2022 | | 2021 | | 2022 | | 2021 | | Revenue | $ | 1,218 | | | $ | 866 | | | $ | 1 | | | $ | 1 | | | Operating margin (loss) | (322) | | | 45 | | | — | | | — | | | Net loss | (410) | | | (108) | | | — | | | (4) | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1) As of July 1, 2021, AES began to account for its investment in Fluence quarterly, on a three-month lag. This shift in timing is necessary due to the nature of the entity subsequent to its IPO. Alto Maipo — On May 26, 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and therefore will not consolidate the entity. The Company has elected the fair value option to account for its investment in Alto Maipo as management believes this approach will better reflect the economics of its equity interest. As of September 30, 2022, the fair value is insignificant. Alto Maipo is reported in the South America SBU reportable segment.Gas Natural Atlántico II — On September 13, 2021, the Company acquired the remaining equity interest in Gas Natural Atlántico II, S. de. R.L., a partnership whose purpose is to construct transmission lines for Colon. After additional assets were acquired, the Company remeasured the investment at the acquisition-date fair value, resulting in the recognition of a $6 million gain, recorded in Other income on the Condensed Consolidated Statement of Operations. The partnership, previously recorded as an equity method investment, is now consolidated by AES and is reported in the MCAC SBU reportable segment.Uplight — On July 27, 2021, the Company closed on a transaction involving existing and new shareholders of Uplight. As part of the transaction, the Company contributed $37 million to Uplight however AES’s ownership interest in Uplight decreased from 32.3% to 29.6% primarily due to larger contributions from other investors. The transaction was accounted for as a partial disposition in which AES recognized a loss of $11 million in Gain on disposal and sale of business interests, mainly as a result of payments to holders of stock options and income units as well as expenses associated with the transaction. As the Company still does not control Uplight after the transaction, it continues to be accounted for as an equity method investment and is reported as part of Corporate and Other.Fluence — On June 9, 2021, Fluence issued new shares to the Qatar Investment Authority (“QIA”) for $125 million, which following the completion of the transaction, represented a 13.6% ownership interest in Fluence. As a result of the transaction, which AES has accounted for as a partial disposition, AES’ ownership interest in Fluence decreased from 50% to 43.2%. The Company recognized a gain of $60 million in Gain on disposal and sale of business interests. On November 1, 2021, Fluence completed its IPO of 35,650,000 of its Class A common stock at a price of $28 per share, including the exercise of the underwriter’s option. Fluence received approximately $936 million in proceeds, after expenses, and as a result of the transaction, AES’ ownership interest in Fluence decreased to 34.2%. As the Company still does not control Fluence after these transactions, it continues to be accounted for as an equity method investment and is reported as part of Corporate and Other.Grupo Energía Gas Panamá — In April 2021, Grupo Energía Gas Panamá, a joint venture between AES and InterEnergy Power & Gas Limited, completed the acquisition of a combined cycle natural gas development project.

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Number of employees affected

123

SEC-NUM

Stock Options Award ModificationIn the first quarter of 2020, we modified the terms of stock option awards granted to 123 employees. Specifically, we extended the term for certain stock options that were scheduled to expire in the first quarter of 2020 as applicable employees were not permitted to exercise these awards due to our announcement in February 2020 that our previously issued financial statements should no longer be relied upon. The stock options were extended in order to allow impacted employees to exercise their stock option awards for a brief period once we became current with our SEC reporting obligations, which occurred in March 2020. As a result of the modifications, we recognized an additional $8 million of stock compensation expense during the first quarter of 2020.Cash DividendsTotal cash dividends declared per share for 2021, 2020, and 2019 were $1.085, $0.955 and $0.850, respectively.A quarterly dividend of $0.245 per share ($0.98 on an annualized basis) was declared in February 2021 and was paid in April 2021. Quarterly dividends of $0.28 per share ($1.12 on an annualized basis) were declared in May and July of 2021 and were paid in July and October of 2021, respectively. Our Board of Directors declared a quarterly dividend of $0.28 per share in November of 2021, which was paid in January of 2022.Stock Repurchase ProgramsAs authorized by the Board of Directors, we repurchase our stock depending on our cash flows, net debt level and market conditions. In July 2012, the Board of Directors authorized the repurchase of up to $2.0 billion of our common stock. The Board of Directors increased this authority by an additional $1.5 billion in each of November 2016 and February 2018, by an additional $2.0 billion in November 2018 and by an additional $1.5 billion in October 2020. We repurchased 7.3 million shares under this authority pursuant to Rule 10b5-1 plans for $600 million in cash in 2021, 6.3 million shares under this authority pursuant to a Rule 10b5-1 plan for $500 million in cash in 2020 and 16.5 million shares under this authority pursuant to Rule 10b5-1 plans and otherwise for $1.3 billion in cash in 2019. We had $1.3 billion of purchase authority available as of December 31, 2021. Accelerated Share Repurchase Agreement In December 2018, we entered into a $300 million accelerated share repurchase agreement (ASR Agreement) with an investment bank. We funded the ASR Agreement with available cash. The ASR Agreement was executed pursuant to the 2012 Repurchase Authorization described above. Under the ASR Agreement, we received 3.6 million shares upon execution. Based on the volume-weighted average price of our common stock during the term of the ASR Agreement, we received an additional 0.6 million shares from the investment bank at settlement in May 2019.OtherIn addition to common stock, our authorized capital structure includes 100 million shares of preferred stock, no par value. As of December 31, 2021 and 2020, no shares of preferred stock were outstanding.NOTE 9 | | | | | --- | --- | --- | | | | | | ACCUMULATED OTHER COMPREHENSIVE INCOME | Comprehensive income includes all changes in stockholders’ equity that do not arise from transactions with stockholders, and consists of net income, CTA, certain gains and losses from other postretirement employee benefit (OPEB) plans and gains and losses on cash flow hedges. 80

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Future policy benefits classified as liabilities of business held for sale

3.8

SEC-NUM

Note 9 – Insurance and Contractholder LiabilitiesA.Account Balances – Insurance and Contractholder LiabilitiesThe Company's insurance and contractholder liabilities were comprised of the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2022 | | December 31, 2021 | | September 30, 2021 | | (In millions) | Current | | Non-current | | Total | | Current | | Non-current | | Total | | Total | | Contractholder deposit funds | $ | 365 | | | $ | 6,563 | | | $ | 6,928 | | | $ | 352 | | | $ | 6,702 | | | $ | 7,054 | | | $ | 7,079 | | | Future policy benefits | 240 | | | 4,775 | | | 5,015 | | | 312 | | | 9,194 | | | 9,506 | | | 9,490 | | | Unearned premiums | 1,204 | | | 79 | | | 1,283 | | | 558 | | | 418 | | | 976 | | | 902 | | | Unpaid claims and claim expenses | | | | | | | | | | | | | | | Cigna Healthcare | 4,187 | | | 63 | | | 4,250 | | | 4,159 | | | 102 | | | 4,261 | | | 4,325 | | | Other Operations | 99 | | | 175 | | | 274 | | | 548 | | | 180 | | | 728 | | | 697 | | | Total | | | | | | | 5,929 | | | 16,596 | | | 22,525 | | | | | Insurance and contractholder liabilities classified as Liabilities of businesses held for sale (1) | | | | | | | (611) | | | (4,033) | | | (4,644) | | | | | Total insurance and contractholder liabilities per Consolidated Balance Sheets | $ | 6,095 | | | $ | 11,655 | | | $ | 17,750 | | | $ | 5,318 | | | $ | 12,563 | | | $ | 17,881 | | | $ | 22,493 | | (1) Amounts classified as Liabilities of businesses held for sale primarily include $3.8 billion of Future policy benefits, $0.4 billion of Unpaid claims and $0.4 billion of Unearned premiums as of December 31, 2021.Insurance and contractholder liabilities expected to be paid within one year are classified as current. B.Unpaid Claims and Claim Expenses – Cigna HealthcareThis liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, including expected development on reported claims, those that have been reported but not yet paid (reported claims in process) and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities. This liability includes amounts from the International Health businesses now reported in Cigna Healthcare following our change in segment reporting in 2021. The prior year roll forward has been updated to reflect this segment change. The total of incurred but not reported liabilities plus expected development on reported claims, including reported claims in process, was $4.0 billion at September 30, 2022 and $4.1 billion at September 30, 2021. 19

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Number of shares available for grant (in shares)

39.0

SEC-NUM

Stock Option ProgramsAll outstanding stock options are fully vested, with the related expense recognized as a charge to income in prior periods. The following table presents information with respect to stock option activity under Citigroup’s stock option programs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | 2020 | 2019 | | | Options | Weighted-averageexerciseprice | Intrinsicvalueper share | Options | Weighted-averageexerciseprice | Intrinsicvalueper share | Options | Weighted-averageexerciseprice | Intrinsicvalueper share | | Outstanding, beginning of year | 166,650 | | $ | 47.42 | | $ | 14.24 | | 166,650 | | $ | 47.42 | | $ | 32.47 | | 762,225 | | $ | 101.84 | | $ | — | | | | | | | | | | | | | | Canceled | — | | — | | — | | — | | — | | — | | (11,365) | | 40.80 | | — | | | Expired | — | | — | | — | | — | | — | | — | | (449,916) | | 142.30 | | — | | | Exercised | (166,650) | | 52.50 | | 20.49 | | — | | — | | — | | (134,294) | | 39.00 | | 23.50 | | | Outstanding, end of year | — | | $ | — | | $ | — | | 166,650 | | $ | 47.42 | | $ | 14.24 | | 166,650 | | $ | 47.42 | | $ | 32.47 | | | Exercisable, end of year | — | | | | 166,650 | | | | 166,650 | | | | As of December 31, 2021, Citigroup no longer has any stock options outstanding. Other Variable Incentive CompensationCitigroup has various incentive plans globally that are used to motivate and reward performance primarily in the areas of sales, operational excellence and customer satisfaction. Participation in these plans is generally limited to employees who are not eligible for discretionary annual incentive awards. Other forms of variable compensation include monthly commissions paid to financial advisors and mortgage loan officers. SummaryExcept for awards subject to variable accounting, the total expense recognized for stock awards represents the grant date fair value of such awards, which is generally recognized as a charge to income ratably over the vesting period, other than for awards to retirement-eligible employees and immediately vested awards. Whenever awards are made or are expected to be made to retirement-eligible employees, the charge to income is accelerated based on when the applicable conditions to retirement eligibility were or will be met. If the employee is retirement eligible on the grant date, or the award is vested at the grant date, Citi recognizes the expense each year equal to the grant date fair value of the awards that it estimates will be granted in the following year. Recipients of Citigroup stock awards generally do not have any stockholder rights until shares are delivered upon vesting or exercise, or after the expiration of applicable required holding periods. Recipients of deferred stock awards and deferred cash stock unit awards, however, may, except as prohibited by applicable regulatory guidance, be entitled to receive or accrue dividends or dividend-equivalent payments during the vesting period. Recipients of stock payment awards generally are entitled to vote the shares in their award during the sale-restriction period. Once a stock award vests, the shares delivered to the participant are freely transferable, unless they are subject to a restriction on sale or transfer for a specified period. All equity awards granted since April 19, 2005 have been made pursuant to stockholder-approved stock incentive plans that are administered by the P&C Committee, which is composed entirely of independent non-employee directors.At December 31, 2021, approximately 39.0 million shares of Citigroup common stock were authorized and available for grant under Citigroup’s 2019 Stock Incentive Plan, the only plan from which equity awards are currently granted.The 2019 Stock Incentive Plan and predecessor plans permit the use of treasury stock or newly issued shares in connection with awards granted under the plans. Treasury shares were used to settle vestings from 2018 to 2021, and for the first quarter of 2022, except where local laws favor newly issued shares. The use of treasury stock or newly issued shares to settle stock awards does not affect the compensation expense recorded in the Consolidated Statement of Income for equity awards. 169

string

Gain/Loss on fair value of foreign currency forward contracts

72.0

SEC-NUM

[Table of Contents](#ie9658fba2baf4e3799b1175f69eaed46_7)BIOGEN INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited, continued)Strategic InvestmentsAs of March 31, 2022 and December 31, 2021, our strategic investment portfolio was comprised of investments totaling $919.5 million and $1,110.3 million, respectively, which are included in other current assets and investments and other assets in our condensed consolidated balance sheets. Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies, which are reflected within our disclosures included in Note 6, Fair Value Measurements, to these condensed consolidated financial statements, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities. The decrease in our strategic investment portfolio for the three months ended March 31, 2022, was primarily due to decreases in the fair value of our investments in Denali, Sage and Sangamo common stock.For additional information on our investments in Denali, Ionis Pharmaceuticals, Inc. (Ionis), Sage and Sangamo common stock, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.8. DERIVATIVE INSTRUMENTS Foreign Currency Forward Contracts - Hedging InstrumentsDue to the global nature of our operations, portions of our revenue and operating expense are recorded in currencies other than the U.S. dollar. The value of revenue and operating expense measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. In order to mitigate these changes, we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenue and operating expense.Foreign currency forward contracts in effect as of March 31, 2022 and December 31, 2021, had durations of 1 to 18 months and 1 to 15 months, respectively. These contracts have been designated as cash flow hedges and unrealized gains or losses on the portion of these foreign currency forward contracts that are included in the effectiveness test are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the table below). Realized gains and losses of such contracts are recognized in revenue when the sale of product in the currency being hedged is recognized and in operating expense when the expense in the currency being hedged is recorded. We recognize all cash flow hedge reclassifications from accumulated other comprehensive income (loss) and fair value changes of excluded portions in the same line item in our condensed consolidated statements of income that has been impacted by the hedged item.The notional amount of foreign currency forward contracts that were entered into to hedge forecasted revenue and operating expense is summarized as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Notional Amount | | (In millions) | | As of March 31, 2022 | | As of December 31, 2021 | | Euro | | $ | 1,631.2 | | | $ | 1,828.0 | | | British pound | | 126.6 | | | 166.2 | | | Swiss franc | | 128.6 | | | — | | | Japanese yen | | 55.0 | | | 72.7 | | | Canadian dollar | | 44.6 | | | 59.9 | | | Total foreign currency forward contracts | | $ | 1,986.0 | | | $ | 2,126.8 | | The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity is summarized as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | (In millions) | | As of March 31, 2022 | | As of December 31, 2021 | | Unrealized gains | | $ | 76.4 | | | $ | 60.8 | | | Unrealized (losses) | | (4.3) | | | (7.0) | | | Net unrealized gains (losses) | | $ | 72.1 | | | $ | 53.8 | | We expect the net unrealized gains of $72.1 million to be settled over the next 18 months, of which $72.0 million of these net unrealized gains are expected to be settled over the next 12 months, with any amounts in 22

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Target payout percentage, stock

50

SEC-NUM

Based on the total remaining amount of $280 million available under the repurchase program, 1,856,397 shares, or 0.8% of shares outstanding (based on the market price and weighted average shares outstanding as of December 31, 2021) could be repurchased under the program as of December 31, 2021.As of May 7, 2018, the Company has suspended its share repurchases. NOTE 13. STOCK COMPENSATION PLANSThe Company has various equity plans under which its officers, senior management, other key employees and Board of Directors may be granted options to purchase IFF common stock or other forms of stock-based awards. Beginning in 2004, the Company granted Restricted Stock Units (“RSUs”) as the principal element of its equity compensation for all eligible U.S.-based employees and a majority of eligible overseas employees. Vesting of the RSUs is solely time based; the vesting period is primarily three years from date of grant. For a small group of employees, primarily overseas, the Company granted stock options prior to 2008.The cost of all employee stock-based awards are principally recognized on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. Total stock-based compensation expense included in the Consolidated Statements of Income and Comprehensive Income (Loss) was as follows: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | December 31, | | (DOLLARS IN MILLIONS) | 2021 | | 2020 | | 2019 | | Equity-based awards | $ | 54 | | | $ | 36 | | | $ | 34 | | | Liability-based awards | 8 | | | 4 | | | 4 | | | Total stock-based compensation | 62 | | | 40 | | | 38 | | | Less tax benefit | (13) | | | (8) | | | (7) | | | Total stock-based compensation, net of tax | $ | 49 | | | $ | 32 | | | $ | 31 | | The shareholders of the Company approved the Company’s 2021 Stock Award and Incentive Plan (the “2021 Plan”) on May 5, 2021. The 2021 Plan replaced the Company’s 2015 Stock Award and Incentive Plan (the “2015 Plan”) and the Company's 2010 Stock Award and Incentive Plan (the “2010 Plan”), and provides the source for future deferrals of cash into deferred stock under the Company’s Deferred Compensation Plan (with the Deferred Compensation Plan being deemed a subplan under the 2010 Plan for the sole purpose of funding deferrals under the IFF Share Fund).Under the 2021 Plan, a total of 2,290,000 shares are authorized for issuance. At December 31, 2021, 1,601,749 shares were subject to outstanding awards and 2,631,269 shares remained available for future awards under all of the Company’s equity award plans, including the 2015 Plan and 2010 Plan (excluding shares not yet issued under open cycles of the Company’s Long-Term Incentive Plan).The Company offers a Long-Term Incentive Plan (“LTIP”) for senior management. The targeted payout is 50% cash and 50% IFF common stock at the end of the three-year cycle.With regard to the 2019-2021 cycle, the LTIP awards are earned based upon the achievement of: (i) the Company's performance ranking of Total Shareholder Return as a percentile of the S&P 500 ("Relative TSR") (representing one-half of the award value), and (ii) the Company's achievement of a defined Leverage Ratio (representing one-half of the award value). For the 2020-2022 cycle, the LTIP awards are earned based on the achievement of: (i) an annual Leverage Ratio for 2020 (representing one-sixth of the award value), (ii) a 2-year cumulative Leverage Ratio for 2021-2022 (representing one-third of the award value), and (iii) Relative TSR targets (representing one-half of the award value). For the 2021-2023 cycle, the LTIP awards are earned based on the achievement of: (i) 3-year cumulative Leverage Ratio for 2021-2023 (representing one-half of the awards value), and (iii) Relative TSR targets (representing one-half of the award value).The Leverage Ratio measures Net debt as compared to a measure profitability. When the award is granted, 50% of the target dollar value of the award is converted to a number of “notional” shares based on the closing price at the beginning of the cycle. For those shares whose payout is based on Relative TSR, compensation expense is recognized using a graded-vesting attribution method, while compensation expense for the remainder of the performance shares (Leverage Ratio targets for the applicable cycle) is recognized on a straight-line basis over the vesting period based on the probable outcome of the performance condition.The 2017-2019 cycle concluded at the end of 2019 and an aggregate 14,579 shares of common stock were issued in March 2020. The 2018-2020 cycle concluded at the end of 2020 and an aggregate 7,484 shares of common stock were issued in March 2021. The 2019-2021 cycle concluded at the end of 2021 and no shares of common stock will be issued in March 2022. 83

string

Purchase price

777

SEC-NUM

[Table of Contents](#i84fa46872c0e4324b82e25f92cc079f4_7)FIDELITY NATIONAL INFORMATION SERVICES, INC.AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Unless stated otherwise or the context otherwise requires, all references to "FIS," "we," "our," "us," the "Company" or the "registrant" are to Fidelity National Information Services, Inc., a Georgia corporation, and its subsidiaries. (1) Basis of Presentation The unaudited financial information included in this report includes the accounts of FIS and its subsidiaries prepared in accordance with U.S. generally accepted accounting principles and the instructions to Form 10-Q and Article 10 of Regulation S-X. All adjustments considered necessary for a fair presentation have been included. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. The inputs into management's critical and significant accounting estimates consider the economic impact of higher rates of inflation, slower economic growth and the outbreak of the novel coronavirus ("COVID-19") and the subsequently declared COVID-19 pandemic ("the pandemic") by the World Health Organization on March 11, 2020. The extent to which the pandemic further affects our results of operations and financial position will depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the duration and spread of the pandemic and any recurrence or new strain of COVID-19, its severity, the success of vaccines or other actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. Accordingly, our future results could be materially affected by changes in our estimates. Certain reclassifications have been made in the 2021 consolidated financial statements to conform to the classifications used in 2022. Amounts in tables in the financial statements and accompanying footnotes may not sum or calculate due to rounding. (2) Acquisitions Payrix Acquisition On December 23, 2021, FIS acquired 100% of the equity of Payrix Holdings, LLC, and subsidiaries ("Payrix"), previously a privately held fintech company that specializes in embedding and monetizing payments in SaaS platforms to serve the eCommerce needs of small- to medium-sized businesses through a global card-not-present offering. The acquisition was accounted for as a business combination. We recorded an allocation of the $777 million purchase price, primarily paid in cash, to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, consisting primarily of $131 million in software assets and $631 million in total goodwill. (3) Revenue Disaggregation of Revenue In the following tables, revenue is disaggregated by primary geographical market and type of revenue. The tables also include a reconciliation of the disaggregated revenue with the Company's reportable segments. 8

string

Thereafter

89.6

SEC-NUM

[Table of Contents](#i4552998170a04ab690e0e4bebd2d8dfd_7) FMC CORPORATIONNotes to Condensed Consolidated Financial Statements (unaudited) — (Continued)The following table represents our future minimum operating lease payments as of, and subsequent to, September 30, 2022 under ASC 842: | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | (in Millions) | | | | | Operating Leases Total | | Maturity of Lease Liabilities | | | | | | | 2022 (excluding the nine months ending September 30, 2022) | | | | | $ | 7.5 | | | 2023 | | | | | 26.0 | | | 2024 | | | | | 21.0 | | | 2025 | | | | | 19.1 | | | 2026 | | | | | 17.6 | | | Thereafter | | | | | 89.6 | | | Total undiscounted lease payments | | | | | $ | 180.8 | | | Less: Present value adjustment | | | | | (30.8) | | | Present value of lease liabilities | | | | | $ | 150.0 | | Note 16: Pensions and Other Postretirement BenefitsThe following table summarizes the components of net annual benefit cost (income): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in Millions) | Three Months Ended September 30, | | Nine Months Ended September 30, | | Pensions | | Other Benefits | | Pensions | | Other Benefits | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | | | | | | | | | | | | | | | | | | Service cost | $ | 0.4 | | | $ | 0.9 | | | $ | — | | | $ | — | | | $ | 2.7 | | | $ | 3.5 | | | $ | — | | | $ | — | | | Interest cost | 7.5 | | | 6.2 | | | — | | | 0.1 | | | 22.0 | | | 18.4 | | | 0.2 | | | 0.2 | | | Expected return on plan assets | (9.3) | | | (8.0) | | | — | | | — | | | (24.8) | | | (23.9) | | | — | | | — | | | Amortization of prior service cost (credit) | — | | | — | | | — | | | — | | | 0.1 | | | 0.1 | | | — | | | — | | | Recognized net actuarial and other (gain) loss | 0.2 | | | 3.1 | | | (0.2) | | | (0.3) | | | 9.2 | | | 9.5 | | | (0.6) | | | (0.7) | | | | | | | | | | | | | | | | | | | | Recognized loss due to settlement (1) | 0.1 | | | 0.4 | | | — | | | — | | | 0.5 | | | 0.4 | | | — | | | — | | | Net periodic benefit cost (income) | $ | (1.1) | | | $ | 2.6 | | | $ | (0.2) | | | $ | (0.2) | | | $ | 9.7 | | | $ | 8.0 | | | $ | (0.4) | | | $ | (0.5) | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)Settlement charge relates to the U.S. nonqualified defined benefit pension plan. Certain amounts have been adjusted to reflect the change in pension accounting method, as described in Note 1 to our condensed consolidated financial statements. Note 17: Income TaxesOur effective income tax rates from continuing operations for the three and nine months ended September 30, 2022 were 21.1 percent and 20.9 percent, respectively. Our effective income tax rates from continuing operations for the three and nine months ended September 30, 2021 were 5.1 percent and 11.5 percent, respectively. The increase in the effective income tax rate was primarily driven by our decision to cease operations and business in Russia during the second quarter of 2022. As a result, we recorded a pre-tax charge of $76.1 million during the three months ended June 30, 2022 with minimal tax benefit. Refer to Note 9 for additional information. Also increasing the effective tax rate were certain provisions of the Tax Cuts and Jobs Act of 2017 that became effective in 2022, and geographic earnings mix. Our effective income tax rates from continuing operations for the three and nine months ended September 30, 2021 were impacted by a $17.7 million tax reserve release related to our domestic operations.We determine our interim tax provision using an Estimated Annual Effective Tax Rate methodology ("EAETR") in accordance with U.S. GAAP. The EAETR is applied to the year-to-date ordinary income, exclusive of discrete items. The tax effects of discrete items are then included to arrive at the total reported interim tax provision. The determination of the EAETR is based upon a number of estimates, including the estimated annual pretax ordinary income in each tax jurisdiction in which we operate. 38

string

Total liabilities assumed

17,273

SEC-NUM

[Table of Contents](#i82eec5aa49a24290a07e4a9f99c1e608_7) Acquisition of First Data On July 29, 2019, the Company acquired First Data, a global leader in commerce-enabling technology and solutions for merchants, financial institutions and card issuers, by acquiring 100% of the First Data stock that was issued and outstanding as of the date of acquisition. The acquisition, included within the Acceptance and Payments segments, increases the Company’s footprint as a global payments and financial technology provider by expanding the portfolio of services provided to financial institutions, corporate and merchant clients and consumers. As a result of the acquisition, First Data stockholders received 286 million shares of common stock of Fiserv, Inc., at an exchange ratio of 0.303 shares of Fiserv, Inc. for each share of First Data common stock, with cash paid in lieu of fractional shares. The Company also converted 15 million outstanding First Data equity awards into corresponding equity awards relating to common stock of Fiserv, Inc. in accordance with the exchange ratio as described in further detail within Note 16. In addition, concurrent with the closing of the acquisition, the Company made a cash payment of $16.4 billion to repay existing First Data debt. The Company funded the transaction-related expenses and the repayment of First Data debt through a combination of available cash on-hand and proceeds from debt issuances.The total purchase price paid for First Data was as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | (In millions) | | | Fair value of stock exchanged for shares of Fiserv, Inc. (1) | $ | 29,293 | | | Repayment of First Data debt | 16,414 | | | Fair value of vested portion of First Data stock awards exchanged for Fiserv, Inc. awards (2) | 768 | | | Total purchase price | $ | 46,475 | | | | | (1)The fair value of the 286 million shares of the Company’s common stock issued as of the acquisition date was determined based on a per share price of $102.30, which was the closing price of the Company’s common stock on July 26, 2019, the last trading day before the acquisition closed the morning of July 29, 2019. This includes a nominal amount of cash paid in lieu of fractional shares.(2)Represents the portion of the fair value of the replacement awards related to services provided prior to the acquisition. The remaining portion of the fair value is associated with future service and will be recognized as expense over the future service period. See Note 16 for additional information.The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is deductible for tax purposes. Goodwill is primarily attributed to synergies from future expected economic benefits, including enhanced revenue growth from expanded capabilities and geographic presence as well as substantial cost savings from duplicative overhead, streamlined operations and enhanced operational efficiency.The assets acquired and liabilities assumed of First Data have been measured at estimated fair value as of the acquisition date. In 2020, through the measurement period ended July 29, 2020, the Company identified and recorded measurement period adjustments to the preliminary purchase price allocation, which were the result of additional analysis performed and information identified based on facts and circumstances that existed as of the acquisition date. These measurement period adjustments resulted in an increase to goodwill of $304 million. The offsetting amounts to the change in goodwill were primarily related to customer relationship intangible assets, noncontrolling interests, property and equipment, payables and accrued expenses including legal contingency reserves, and deferred income taxes. The Company recorded a measurement period adjustment of $155 million to reduce the fair value of customer relationship intangible assets as a result of refinements to attrition rates. A measurement period adjustment of $126 million was recorded to reduce the fair value of noncontrolling interests based on changes to the fair value of the underlying customer relationship intangible assets and the incorporation of additional facts and circumstances that existed as of the acquisition date. A measurement period adjustment of $25 million was recorded to reduce the fair value of property and equipment to the estimated fair value of certain real property acquired. Measurement period adjustments were recorded to increase payables and accrued expenses by $37 million, reduce investments in unconsolidated affiliates by $23 million, and increase other long-term liabilities by $21 million. The remaining $169 million of adjustments were primarily comprised of deferred tax adjustments related to the measurement period adjustments. Such measurement period adjustments did not have a material impact on the consolidated statements of income. The allocation of purchase price recorded for First Data was finalized in the third quarter of 2020 as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | (In millions) | | | Assets acquired (1) | | | Cash and cash equivalents | $ | 310 | | | Trade accounts receivable | 1,747 | | | Prepaid expenses and other current assets | 1,047 | | | Settlement assets (2) | 10,398 | | | Property and equipment | 1,156 | | | Customer relationships | 13,458 | | | Other intangible assets | 2,814 | | | Goodwill | 30,811 | | | Investments in unconsolidated affiliates | 2,676 | | | Other long-term assets | 1,191 | | | Total assets acquired | $ | 65,608 | | | | | | Liabilities assumed (1) | | | Accounts payable and accrued expenses | $ | 1,613 | | | Short-term and current maturities of long-term debt (3) | 243 | | | Contract liabilities | 71 | | | Settlement obligations | 10,398 | | | Deferred income taxes | 3,671 | | | Long-term contract liabilities | 16 | | | Long-term debt and other long-term liabilities (4) | 1,261 | | | Total liabilities assumed | $ | 17,273 | | | | | | Net assets acquired | $ | 48,335 | | | Redeemable noncontrolling interests | 252 | | | Noncontrolling interests | 1,608 | | | Total purchase price | $ | 46,475 | | | | | (1)In connection with the acquisition of First Data, the Company acquired two businesses which it intended to sell and subsequently sold in October 2019. Therefore, such businesses were classified as held for sale and were included within prepaid expenses and other current assets and accounts payable and accrued expenses in the above allocation of purchase price (see Note 5). (2)Includes $922 million of settlement cash and cash equivalents (see Note 1).(3)Includes foreign lines of credit, current portion of finance lease obligations and other financing obligations (see Note 12).(4)Includes the receivable securitized loan and the long-term portion of finance lease obligations (see Note 12).The fair values of the assets acquired and liabilities assumed were determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, growth and attrition rates, future expected cash flows and other future events that are judgmental. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, Fair Value Measurements. Intangible assets consisting of customer relationships, technology and trade names were valued using the multi-period excess earnings method (“MEEM”), or the relief from royalty (“RFR”) method, both are forms of the income approach. A cost and market approach was applied, as appropriate, for property and equipment, including land.•Customer relationship intangible assets were valued using the MEEM method. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue and profit attributable to the asset, retention rate, applicable tax rate, and contributory asset charges, among other factors), the discount rate, reflecting the risks inherent in the future cash flow stream, an assessment of the asset’s life cycle, and the tax amortization benefit, among other factors.•Technology and trade name intangible assets were valued using the RFR method. The significant assumptions used include the estimated annual net cash flows (including appropriate revenue attributable to the asset, applicable tax rate, 65

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2022 (in shares)

57.7

SEC-NUM

[Table of](#i7d20a63dbc7f4057897188cf4f4b9871_7) [Contents](#i7d20a63dbc7f4057897188cf4f4b9871_7)interest rate, including issuance costs, of 0.08% and 0.99%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.We also have a $10.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which was amended and restated in March 2022 to increase the borrowing capacity from $7.0 billion to $10.0 billion and to extend the term to March 2025. It may be extended for up to three additional one-year terms if approved by the lenders. The interest rate applicable to outstanding balances under the Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45%, with a commitment fee of 0.03% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and June 30, 2022.We also utilize other short-term credit facilities for working capital purposes. There were $318 million and $235 million of borrowings outstanding under these facilities as of December 31, 2021 and June 30, 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $10.0 billion of unused letters of credit as of June 30, 2022. Note 6 — STOCKHOLDERS’ EQUITYStock Repurchase ActivityIn March 2022, the Board of Directors authorized a program to repurchase up to $10.0 billion of our common stock, with no fixed expiration, which replaced the previous $5.0 billion stock repurchase authorization, approved by the Board of Directors in February 2016. We repurchased 46.2 million shares of our common stock for $6.0 billion during the six months ended June 30, 2022 under these programs. As of June 30, 2022, we have $6.1 billion remaining under the repurchase program.Stock Award ActivityCommon shares outstanding plus shares underlying outstanding stock awards totaled 10.5 billion and 10.6 billion as of December 31, 2021 and June 30, 2022. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months EndedJune 30, | | Six Months EndedJune 30, | | | 2021 | | 2022 | | 2021 | | 2022 | | Cost of sales | $ | 145 | | | $ | 213 | | | $ | 235 | | | $ | 359 | | | Fulfillment | 566 | | | 763 | | | 908 | | | 1,261 | | | Technology and content | 1,887 | | | 2,814 | | | 3,115 | | | 4,459 | | | Sales and marketing | 691 | | | 990 | | | 1,147 | | | 1,655 | | | General and administrative | 302 | | | 429 | | | 492 | | | 725 | | | Total stock-based compensation expense | $ | 3,591 | | | $ | 5,209 | | | $ | 5,897 | | | $ | 8,459 | | The following table summarizes our restricted stock unit activity for the six months ended June 30, 2022 (in millions): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Number of Units | | Weighted-AverageGrant-DateFair Value | | Outstanding as of December 31, 2021 | 279.9 | | | $ | 134 | | | Units granted | 166.0 | | | 159 | | | Units vested | (54.2) | | | 108 | | | Units forfeited | (24.2) | | | 140 | | | Outstanding as of June 30, 2022 | 367.5 | | | 149 | | Scheduled vesting for outstanding restricted stock units as of June 30, 2022, is as follows (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended December 31, | | Year Ended December 31, | | | | | | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total | | Scheduled vesting — restricted stock units | 57.7 | | | 134.5 | | | 123.3 | | | 38.0 | | | 9.8 | | | 4.2 | | | 367.5 | | As of June 30, 2022, there was $26.9 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 16

string

Defined benefit plan, annual compensation expense minimum

100,000

SEC-NUM

[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)A summary of the status of our non-vested stock awards is presented in the table below: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Shares/Units | | Weighted AverageMarket ValuePer Share | | Balance at December 31, 2018 | 7,182,360 | | | $ | 41.04 | | | Granted | 2,000,977 | | | 50.07 | | | Performance award achievement adjustments | 166,007 | | | 37.36 | | | Vested | (1,323,351) | | | 37.43 | | | Forfeited | (316,294) | | | 42.09 | | | Balance at December 31, 2019 | 7,709,699 | | | 43.89 | | | Granted | 1,605,934 | | | 56.45 | | | Performance award achievement adjustments | 560,563 | | | 39.89 | | | Vested | (2,780,377) | | | 39.81 | | | Forfeited | (412,407) | | | 48.27 | | | Balance at December 31, 2020 | 6,683,412 | | | 47.99 | | | Granted | 2,531,959 | | | 92.16 | | | Performance award achievement adjustments | (189,930) | | | 49.76 | | | Vested | (1,883,652) | | | 46.34 | | | Forfeited | (292,998) | | | 55.80 | | | Balance at December 31, 2021 | 6,848,791 | | | 64.10 | | Total compensation expense related to non-vested stock awards was $184.9 million, $60.4 million and $127.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, total unrecognized estimated compensation cost related to non-vested stock awards was approximately $269.4 million, which is expected to be recognized over a weighted average period of approximately 3.2 years.BonusesWe have bonus programs covering select employees, including senior management. Awards are based on the position and performance of the employee and the achievement of pre-established financial, operating and strategic objectives. The amounts charged to expense for bonuses were $871.7 million, $557.6 million and $554.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.401(k) PlanOur CBRE 401(k) Plan (401(k) Plan) is a defined contribution savings plan that allows participant deferrals under Section 401(k) of the Internal Revenue Code (IRC). Most of our U.S. employees, other than qualified real estate agents having the status of independent contractors under section 3508 of the IRC of 1986, as amended, and non-plan electing union employees, are eligible to participate in the plan. The 401(k) Plan provides for participant contributions as well as a company match. A participant is allowed to contribute to the 401(k) Plan from 1% to 75% of his or her compensation, subject to limits imposed by applicable law. Effective January 1, 2007, all participants hired post January 1, 2007 vest in company match contributions 20% per year for each plan year they are employed. All participants hired before January 1, 2007 are immediately vested in company match contributions. Effective October 1, 2021, all active participants vest in company match contributions at 33% per year for each plan year they are employed. For 2021, 2020 and 2019, we contributed a 67% match on the first 6% of annual compensation for participants with an annual base salary of less than $100,000 and we contributed a 50% match on the first 6% of annual compensation for participants with an annual base salary of $100,000 or more, or who are commissioned employees (up to $150,000 of compensation). Effective January 1, 2022, we will contribute 67% on the first 6% of eligible compensation contributed to the plan (up to $150,000 of eligible pay) for all employees regardless of base compensation or commissioned status. In connection with the 401(k) Plan, we charged to expense $72.4 million, $83.5 million and $59.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.Participants are entitled to invest up to 25% of their 401(k) account balance in shares of our common stock. As of December 31, 2021, approximately 1.1 million shares of our common stock were held as investments by participants in our 401(k) Plan.103

string

Carrying value of equity securities without readily determinable fair values

1.3

SEC-NUM

[Table of Contents](#ic7e3673361244088a1286bec3e4529bf_7)AMERICAN EXPRESS COMPANYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Nonrecurring Fair Value MeasurementsWe have certain assets that are subject to measurement at fair value on a nonrecurring basis. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if they are determined to be impaired or where there are observable price changes for equity investments without readily determinable fair values. During the three months ended March 31, 2022 and the year ended December 31, 2021, we did not have any material assets that were measured at fair value due to impairment.We estimate the Level 3 fair value of equity investments without readily determinable fair values based on price changes as of the date of new similar equity financing transactions completed by the companies in our portfolio. The carrying value of equity investments without readily determinable fair values totaled $1.3 billion as of both March 31, 2022 and December 31, 2021. These amounts are included within Other assets on the Consolidated Balance Sheets. We recorded unrealized gains of $12 million and $378 million for the three months ended March 31, 2022 and 2021, respectively. Unrealized losses including any impairments were $18 million and $1 million for the three months ended March 31, 2022 and 2021, respectively. Since the adoption of new accounting guidance on the recognition and measurement of financial assets and financial liabilities on January 1, 2018, cumulative unrealized gains for equity investments without readily determinable fair values totaled $1.1 billion as of both March 31, 2022 and December 31, 2021, and cumulative unrealized losses including any impairments were $29 million and $10 million as of March 31, 2022 and December 31, 2021, respectively.In addition, we also have certain equity investments measured at fair value using the net asset value practical expedient. Such investments were immaterial as of both March 31, 2022 and December 31, 2021.60

string

Discount from market price (in percent)

15

SEC-NUM

AMERICAN TOWER CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED AND CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(tabular amounts in millions, unless otherwise noted)when they would have been available under the CoreSite plan, or March 20, 2023, at which time they will no longer be available for grant. In addition, the Company maintains an employee stock purchase plan (the “ESPP”) pursuant to which eligible employees may purchase shares of the Company’s common stock on the last day of each bi-annual offering period at a 15% discount from the lower of the closing market value on the first or last day of such offering period. The offering periods run from June 1 through November 30 and from December 1 through May 31 of each year.During the three and nine months ended September 30, 2022 and 2021, the Company recorded the following stock-based compensation expense in selling, general, administrative and development expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | | 2022 | | 2021 | | 2022 | | 2021 | | Stock-based compensation expense | | $ | 39.2 | | | $ | 28.1 | | | $ | 138.1 | | | $ | 98.0 | | | | | | | | | | | | | | | | | | | | | | Stock Options—As of September 30, 2022, there was no unrecognized compensation expense related to unvested stock options.The Company’s option activity for the nine months ended September 30, 2022 was as follows (shares disclosed in full amounts): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | Number of Options | | Outstanding as of January 1, 2022 | | 1,067,999 | | | | | | | Exercised | | (157,168) | | | Forfeited | | — | | | Expired | | — | | | Outstanding as of September 30, 2022 | | 910,831 | | Restricted Stock Units—As of September 30, 2022, total unrecognized compensation expense related to unvested RSUs granted under the 2007 Plan, including the CoreSite Replacement Awards (as defined below), was $199.7 million and is expected to be recognized over a weighted average period of approximately two years. Vesting of RSUs is subject generally to the employee’s continued employment or death, disability or qualified retirement (each as defined in the applicable RSU award agreement). In December 2021, in connection with the CoreSite Acquisition, the Company assumed and converted certain equity awards previously granted by CoreSite under its equity plan into corresponding equity awards with respect to shares of the Company’s common stock (the “CoreSite Replacement Awards”). As of September 30, 2022, total unrecognized compensation expense related to the CoreSite Replacement Awards was $9.8 million and is expected to be recognized over a weighted average period of approximately one year. Performance-Based Restricted Stock Units—During the nine months ended September 30, 2022, the Company’s Compensation Committee (the “Compensation Committee”) granted an aggregate of 98,542 PSUs (the “2022 PSUs”) to its executive officers and established the performance metrics for these awards. During the years ended December 31, 2021 and 2020, the Compensation Committee granted an aggregate of 98,694 PSUs (the “2021 PSUs”) and 110,925 PSUs (the “2020 PSUs”), respectively, to its executive officers and established the performance metrics for these awards. During the year ended December 31, 2020, in connection with the retirement of the Company’s former Chief Executive Officer, an aggregate of 40,186 shares underlying the 2020 PSUs were forfeited, which included the target number of shares issuable at the end of the three-year performance period for such executive’s 2020 PSUs. Threshold, target and maximum parameters were established for the metrics for a three-year performance period with respect to each of the 2022 PSUs, the 2021 PSUs and the 2020 PSUs and will be used to calculate the number of shares that will be issuable when each award vests, which may range from zero to 200% of the target amounts. At the end of each three-year performance period, the number of shares that vest will depend on the degree of achievement against the pre-established performance goals. PSUs will be paid out in common stock at the end of each performance period, subject generally to the executive’s continued employment or death, disability or qualified retirement (each as defined in the applicable PSU award agreement). PSUs will accrue dividend equivalents prior to vesting, which will be paid out only in respect of shares that actually vest. 19

string

Cash purchase price

100.2

SEC-NUM

[Table of Contents](#i8e6404ebd98d416daa7f88f48159b601_7)EDWARDS LIFESCIENCES CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. INVESTMENTS (Continued) The Investee is a VIE; however, Edwards has determined that it is not the primary beneficiary of the VIE since Edwards does not have the power to direct the activities of the Investee that most significantly impact the Investee's economic performance. Edwards accounts for this investment as a non-marketable equity security under the measurement alternative. During 2021, 2020, and 2019, the gross realized gains or losses from sales of available-for-sale investments were not material. 8. ACQUISITIONS CAS Medical Systems, Inc. On February 11, 2019, the Company entered into an agreement and plan of merger to acquire all the outstanding shares of CAS Medical Systems, Inc. ("CASMED") for an aggregate cash purchase price of $2.45 per share of common stock, or an equity value of approximately $100 million. The transaction closed on April 18, 2019, and the cash purchase price, net of cash acquired, was $100.2 million. The results of operations for CASMED have been included in the accompanying consolidated financial statements from the date of acquisition. Pro forma results have not been presented as the results of CASMED are not material in relation to the consolidated financial statements of Edwards Lifesciences. In-process Research and Development Assets The Company acquired Harpoon Medical, Inc ("Harpoon") on December 1, 2017 and CardiAQ Valve Technologies, Inc. ("CardiAQ") on July 3, 2015. In-process research and development assets acquired as part of these transactions were capitalized at fair value, which was determined using the income approach. This approach determines fair value based on cash flow projections which are discounted to present value using a risk-adjusted rate of return. Completion of successful design developments, bench testing, pre-clinical studies and human clinical studies are required prior to selling any product. The risks and uncertainties associated with completing development within a reasonable period of time include those related to the design, development, and manufacturability of the product, the success of pre-clinical and clinical studies, and the timing of regulatory approvals. The valuation for Harpoon assumed $41.4 million of additional research and development expenditures would be incurred prior to the date of product introduction. In the valuation, net cash inflows were modeled to commence in Europe in 2018, and in the United States and Japan in 2022. The Company does not currently anticipate significant changes to forecasted research and development expenditures, and net cash inflows commenced in Europe in 2020 and are now expected to commence in the United States and Japan in 2023. The valuation for CardiAQ assumed $97.7 million of additional research and development expenditures would be incurred prior to the date of product introduction and that net cash inflows would commence in late 2018. As a result of certain design enhancements to increase the product's commercial life and applicability to a broader group of patients, the Company has incurred incremental research and development expenditures; however, the Company expects an increase in the net cash inflows, commencing in 2023. Upon completion of development, the underlying research and development intangible assets will be amortized over their estimated useful lives. Certain of the Company's business acquisitions involve contingent consideration arrangements. Payment of additional consideration in the future may be required, contingent upon the acquired business reaching certain performance milestones, such as attaining specified revenue levels or obtaining regulatory approvals. See Note 11 for further information. 9. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and in-process research and development assets resulting from purchase business combinations are not subject to amortization. Other acquired intangible assets with finite lives are amortized over their expected useful lives on a straight-line basis, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be used. The Company expenses costs incurred to renew or extend the term of acquired intangible assets. 61

string

Limitation on voting interest that can be held (as a percent)

33

SEC-NUM

[Table of Contents](#id0d7a71b05ce452ea9fdb54f3cb359c7_7)eBay Inc.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)At the initial recognition of the equity investment, we elected the fair value option where subsequent changes in fair value are recognized in earnings. The investment is classified within Level 1 in the fair value hierarchy as the valuation can be obtained from real time quotes in active markets. The fair value of the equity investment is measured based on Adevinta’s closing stock price and prevailing foreign exchange rate at each balance sheet date and the changes in fair value are reflected in gain (loss) on equity investments and warrant, net in the consolidated statement of income. We believe the fair value option election creates more transparency of the current value in the equity investment in Adevinta. Our non-voting shares are convertible to voting shares on a one-to-one basis, subject to a limitation of 33% voting interest. For the year ended December 31, 2021, an unrealized loss of $3,070 million and a realized gain on sale of $9 million were recorded in gain (loss) on equity investments and warrant, net on our consolidated statement of income related to the investment. The realized gain on sale of $9 million included an $88 million gain recognized on the sale of the shares offset by a $79 million loss from the change in fair value of the shares sold through the date of sale. The following tables present Adevinta’s summarized financial information on a one-quarter lag. Adevinta’s financial information is prepared on the basis of International Financial Reporting Standards (“IFRS”). We have made certain adjustments to Adevinta’s summarized financial information to address differences between IFRS and GAAP that materially impact the summarized financial information presented below. Any other differences between IFRS and GAAP did not have a material impact on Adevinta’s summarized financial information. The period presented in the table below commenced on June 24, 2021 when we retained an equity investment in Adevinta upon completion of the transfer of our Classifieds business (in millions): | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | July 1, 2021(1) through September 30, 2021 | | Revenue | $ | 450 | | | Gross profit | $ | 147 | | | Income (loss) from continuing operations | $ | 3 | | | Net income (loss) | $ | 4 | | | Net income (loss) attributable to Adevinta | $ | 3 | | (1)Adevinta’s income statement activity for the stub period of June 24, 2021 to June 30, 2021 was excluded from the summarized financial information as the impact was considered to be immaterial. | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | September 30, 2021 | | Current assets | $ | 613 | | | Noncurrent assets | $ | 16,424 | | | Current liabilities | $ | 679 | | | Noncurrent liabilities | $ | 4,044 | | | | | | Noncontrolling interests | $ | 20 | | Equity investments with readily determinable fair values Equity investments with readily determinable fair values are classified within Level 1 in the fair value hierarchy as the valuation can be obtained from real time quotes in active markets. Subsequent changes in fair value are reflected in gain (loss) on equity investments and warrant, net in the consolidated statement of income. 82

string

Percentage of ultimate copper recovery from leach stockpiles

90

SEC-NUM

[Table of](#i43d04c9d26874e33802bdf64c458414a_7) [C](#i43d04c9d26874e33802bdf64c458414a_7)[ontents](#i43d04c9d26874e33802bdf64c458414a_7)Inventories. Inventories include materials and supplies, mill and leach stockpiles, and product inventories. Inventories are stated at the lower of weighted-average cost or net realizable value (NRV). Mill and Leach Stockpiles. Mill and leach stockpiles are work-in-process inventories for FCX’s mining operations. Mill and leach stockpiles contain ore that has been extracted from an ore body and is available for metal recovery. Mill stockpiles contain sulfide ores, and recovery of metal is through milling, concentrating and smelting and refining or, alternatively, by concentrate leaching. Leach stockpiles contain oxide ores and certain secondary sulfide ores and recovery of metal is through exposure to acidic solutions that dissolve contained copper and deliver it in solution to extraction processing facilities (i.e., solution extraction and electrowinning (SX/EW)). The recorded cost of mill and leach stockpiles includes mining and haulage costs incurred to deliver ore to stockpiles, depreciation, depletion, amortization and site overhead costs. Material is removed from the stockpiles at a weighted-average cost per pound. Because it is impracticable to determine copper contained in mill and leach stockpiles by physical count, reasonable estimation methods are employed. The quantity of material delivered to mill and leach stockpiles is based on surveyed volumes of mined material and daily production records. Sampling and assaying of blasthole cuttings determine the estimated copper grade of the material delivered to mill and leach stockpiles. Expected copper recoveries for mill stockpiles are determined by metallurgical testing. The recoverable copper in mill stockpiles, once entered into the production process, can be produced into copper concentrate almost immediately. Expected copper recoveries for leach stockpiles are determined using small-scale laboratory tests, small- to large-scale column testing (which simulates the production process), historical trends and other factors, including mineralogy of the ore and rock type. Total copper recovery in leach stockpiles can vary significantly from a low percentage to more than 90 percent depending on several variables, including processing methodology, processing variables, mineralogy and particle size of the rock. For newly placed material on active stockpiles, as much as 80 percent of the total copper recovery may occur during the first year, and the remaining copper may be recovered over many years. Process rates and copper recoveries for mill and leach stockpiles are monitored regularly, and recovery estimates are adjusted periodically as additional information becomes available and as related technology changes. Recovery adjustments will typically result in a future impact to the value of the material removed from the stockpiles at a revised weighted-average cost per pound of recoverable copper. Product. Product inventories include raw materials, work-in-process and finished goods. Corporate general and administrative costs are not included in inventory costs. Raw materials are primarily unprocessed concentrate at Atlantic Copper’s smelting and refining operations. Work-in-process inventories are primarily copper concentrate at various stages of conversion into anode and cathode at Atlantic Copper’s operations. Atlantic Copper’s in-process inventories are valued at the weighted-average cost of the material fed to the smelting and refining process plus in-process conversion costs. Finished goods for mining operations represent salable products (e.g., copper and molybdenum concentrate, copper anode, copper cathode, copper rod, molybdenum oxide, and high-purity molybdenum chemicals and other metallurgical products). Finished goods are valued based on the weighted-average cost of source material plus applicable conversion costs relating to associated process facilities. Costs of finished goods and work-in-process (i.e., not raw materials) inventories include labor and benefits, supplies, energy, depreciation, depletion, amortization, site overhead costs and other necessary costs associated with the extraction and processing of ore, such as mining, milling, smelting, leaching, SX/EW, refining, roasting and chemical processing. 119

string

Finite-Lived Intangible Assets, Amortization Expense, Year Two

131

SEC-NUM

Amortization expense was $123 million, $93 million, and $89 million for the fiscal years ended June 30, 2022, 2021, and 2020, respectively. Future amortization expense for the next five fiscal years is estimated to be: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Dollars in millions) | 2023 | | 2024 | | 2025 | | 2026 | | 2027 | | Thereafter | | Total | | Amortization | $ | 132 | | | $ | 131 | | | $ | 129 | | | $ | 121 | | | $ | 105 | | | $ | 442 | | | $ | 1,060 | | 6. RESTRUCTURING COSTSFrom time to time, the Company has implemented plans to restructure certain operations, both domestically and internationally. The restructuring plans focused on various aspects of operations, including closing and consolidating certain manufacturing operations, rationalizing headcount and aligning operations in a strategic and more cost-efficient structure. In addition, the Company may incur restructuring charges in the future in cases where a material change in the scope of operation with its business occurs. Employee-related costs consist primarily of severance costs and also include outplacement services provided to employees who have been involuntarily terminated and duplicate payroll costs during transition periods. Facility exit and other costs consist of accelerated depreciation, equipment relocation costs, and costs associated with planned facility closures to streamline Company operations. During the fiscal year ended June 30, 2022, no material restructuring plan was adopted. During the fiscal year ended June 30, 2021, the Company adopted a plan to reduce costs and optimize its infrastructure in Europe by closing its Clinical Supply Services facility in Bolton, U.K. In connection with this restructuring plan, the Company reduced its headcount by approximately 170 employees and incurred cumulative charges of $10 million, primarily associated with employee severance benefits. For the fiscal year ended June 30, 2022, restructuring charges associated with the Bolton facility closure were $3 million. Restructuring costs for the fiscal years ended June 30, 2022, 2021, and 2020 were recorded in Other Operating Expense in the Consolidated Statement of Operations.The following table summarizes the costs recorded within restructuring costs: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Fiscal Year Ended June 30, | | (Dollars in millions) | 2022 | | 2021 | | 2020 | | Restructuring costs: | | | | | | | Employee-related reorganization | $ | 9 | | | $ | 8 | | | $ | 6 | | | Facility exit and other costs | 1 | | | 2 | | | — | | | Total restructuring costs | $ | 10 | | | $ | 10 | | | $ | 6 | | 86

string

Covenants, material acquisition aggregate consideration minimum

200.0

SEC-NUM

[Table of Contents](#i677b09687fd443618b9c84261c8e0734_7)The 2022 Credit Agreement contains usual and customary affirmative and negative covenants for facilities of this type, including limitations on indebtedness of non-guarantor subsidiaries, liens, sale and leaseback transactions, mergers and certain other fundamental changes and change in nature of business. The 2022 Credit Agreement contains a financial covenant requiring maintenance of a total leverage ratio, permitting netting up to $350.0 million of unrestricted cash and cash equivalents, no greater than (a) 4.00 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on May 31, 2022, (b) 3.75 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on August 31, 2023 and (c) 3.50 to 1.00 as of the last day of each fiscal quarter beginning with the fiscal quarter ending on August 31, 2024, but if we consummate a material acquisition where the aggregate consideration payable is $200.0 million or more, we may, on no more than two occasions, increase the maximum total leverage ratio then applicable under the financial covenant by 0.50 to 1.00 with respect to the fiscal quarter in which such material acquisition is consummated and the subsequent four consecutive fiscal quarters. We were in compliance with all the covenants and requirements of the 2022 Credit Agreement during fiscal 2022.The 2022 Credit Agreement provides that, in the event that we no longer have a senior unsecured non-credit enhanced long-term debt rating or a corporate rating from at least two of the rating agencies where such rating is Baa3, BBB- or BBB-, respectively, or higher, (i) our wholly-owned domestic subsidiaries will be required to guarantee the 2022 Credit Facilities, subject to customary exceptions, (ii) we will be subject to limitations on additional indebtedness, investments, dispositions, restricted payments and burdensome agreements, and (iii) we will be required to maintain an interest coverage ratio of no less than 3.00 to 1.00 for any period of four consecutive fiscal quarters. We were in compliance with the required interest coverage ratio during fiscal 2022.Senior NotesOn March 1, 2022 we completed a public offering of $500.0 million aggregate principal amount of 2.900% Senior Notes due March 1, 2027 (the “2027 Notes”) and $500.0 million aggregate principal amount of 3.450% Senior Notes due March 1, 2032 (the “2032 Notes” and, together with the 2027 Notes, the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of March 1, 2022, by and between us and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), as supplemented by the supplemental indenture, dated as of March 1, 2022, between us and the Trustee (the "Supplemental Indenture"). The Senior Notes were issued at an aggregate discount of $2.8 million, and during the third quarter of 2022 we incurred approximately $9.1 million in debt issuance costs related to the Senior Notes. Debt discounts and debt issuance costs are presented in the Consolidated Balance Sheets as a net direct deduction from the carrying amount of the related debt liability. The debt discounts and debt issuance costs are amortized to Interest expense, net in the Consolidated Statements of Income over the contractual term of the debt, leveraging the effective interest method.The 2027 Notes and the 2032 Notes will mature on March 1, 2027 and March 1, 2032, respectively. Interest on the Senior Notes is payable semiannually in arrears on March 1 and September 1 of each year, beginning September 1, 2022. The Senior Notes are unsecured unsubordinated obligations, and will be effectively subordinated to any of our existing and future secured obligations, to the extent of the value of the assets securing such obligations. We may redeem the Senior Notes, in whole or in part, at any time at specified redemption prices, plus any accrued and unpaid interest. Upon the occurrence of a change of control triggering event (as defined in the Supplemental Indenture), we must offer to repurchase the Senior Notes at 101% of their principal amount, plus any accrued and unpaid interest. Swap AgreementsOn March 5, 2020, we entered into the 2020 Swap Agreement to hedge a portion of our then outstanding floating LIBOR rate debt with a fixed interest rate of 0.7995%. On March 1, 2022, we terminated the 2020 Swap Agreement and concurrently entered into the 2022 Swap Agreement to hedge a portion of our outstanding floating SOFR rate debt with a fixed interest rate of 1.162%. Refer to Note 5, Derivative Instruments for further discussion of the 2020 Swap Agreement and 2022 Swap Agreement.Interest ExpenseOn March 1, 2022, the 2019 Revolving Credit Facility and 2020 Swap Agreement were both terminated and concurrently replaced with the 2022 Credit Facilities, Senior Notes and 2022 Swap Agreement. For the twelve months ended August 31, 2022 and August 31, 2021, we recorded interest expense on our outstanding debt, including the related amortization of debt issuance costs and debt discounts, net of the effects of the interest rate swap agreement, of $35.2 million and $8.1 million, respectively in Interest expense, net in the Consolidated Statements of Income.78

string

Contractual payments received

25

SEC-NUM

| | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | Notes to Consolidated Financial Statements | [Table of Contents](#if18581573a6045f6b6e889320c9d1887_7) | Receivables and Contract LiabilitiesReceivables from Contracts with CustomersAt June 30, 2022, the “Accounts and notes receivable” line on our consolidated balance sheet includes trade receivables of $6,554 million compared with $5,268 million at December 31, 2021, and includes both contracts with customers within the scope of ASC Topic 606 and those that are outside the scope of ASC Topic 606. We typically receive payment within 30 days or less (depending on the terms of the invoice) once delivery is made. Revenues that are outside the scope of ASC Topic 606 relate primarily to physical gas sales contracts at market prices for which we do not elect NPNS and are therefore accounted for as a derivative under ASC Topic 815. There is little distinction in the nature of the customer or credit quality of trade receivables associated with gas sold under contracts for which NPNS has not been elected compared to trade receivables where NPNS has been elected.Contract Liabilities from Contracts with CustomersWe have entered into certain agreements under which we license our proprietary technology, including the Optimized Cascade® process technology, to customers to maximize the efficiency of LNG plants. These agreements typically provide for milestone payments to be made during and after the construction phases of the LNG plant. The payments are not directly related to our performance obligations under the contract and are recorded as deferred revenue to be recognized when the customer is able to benefit from their right to use the applicable licensed technology. | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | Millions of Dollars | | Contract Liabilities | | | At December 31, 2021 | $ | 50 | | | Contractual payments received | 25 | | | Revenue recognized | (56) | | | At June 30, 2022 | $ | 19 | | | | | | Amounts Recognized in the Consolidated Balance Sheet at June 30, 2022 | | | | | | Noncurrent liabilities | $ | 19 | | | | | For the six-month period ended June 30, 2022, we recognized revenue of $56 million in the "Sales and other operating revenues" line on our consolidated income statement. No revenue was recognized during the three-month period ended June 30, 2022. We expect to recognize the contract liabilities as of June 30, 2022, as revenue during 2026. Note 17—Segment Disclosures and Related InformationWe explore for, produce, transport and market crude oil, bitumen, natural gas, LNG and NGLs on a worldwide basis. We manage our operations through six operating segments, which are primarily defined by geographic region: Alaska; Lower 48; Canada; Europe, Middle East and North Africa; Asia Pacific; and Other International.Corporate and Other represents income and costs not directly associated with an operating segment, such as most interest income and expense; premiums on early retirement of debt; corporate overhead and certain technology activities, including licensing revenues; and unrealized holding gains or losses on equity securities. Corporate assets include all cash and cash equivalents and short-term investments.We evaluate performance and allocate resources based on net income (loss). Intersegment sales are at prices that approximate market. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | ConocoPhillips 2022 Q2 10-Q | 28 |

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Increased in the deferred tax assets

63.0

SEC-NUM

New Reporting StructureThe Company undertook a strategic evaluation of its reporting structure to reflect its expanded international presence as a result of the June 2021 acquisition of Alliance Healthcare. As a result of this review, beginning in the first quarter of fiscal 2022, the Company re-aligned its reporting structure under two reportable segments: U.S. Healthcare Solutions and International Healthcare Solutions. U.S. Healthcare Solutions consists of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma), MWI Animal Health, Xcenda, Lash Group, and ICS 3PL. International Healthcare Solutions consists of Alliance Healthcare, World Courier, Innomar, Profarma, and Profarma Specialty (until it was divested in June 2022). Profarma had previously been included in the Pharmaceutical Distribution Services reportable segment. The Company's previously reported segment results have been revised to conform to its re-aligned reporting structure. Refer to Note 13 for the Company's segment results under the new reporting structure.Turkey Highly Inflationary ImpactDuring the quarter ended March 31, 2022, Turkey became a highly inflationary economy, as defined under U.S. GAAP. As a result, effective April 1, 2022, and until such time as the applicable economy is no longer considered highly inflationary, the financial statements of the Company's Alliance Healthcare Turkish subsidiary are remeasured using the Company's reporting currency in accordance with ASC 830, "Foreign Currency Matters." Turkish Lira-denominated monetary assets and liabilities (i.e., cash, accounts receivables, and accounts payables) are remeasured at each balance sheet date using the currency exchange rate then in effect, with currency remeasurement gains and losses recognized in Other (Income) Loss, Net in the Statement of Operations. Turkish Lira-denominated nonmonetary assets and liabilities (i.e., inventories, goodwill, and other intangible assets) are translated at the currency exchange rate in effect prior to highly inflation accounting commencement or at the exchange rate in effect at their date of acquisition if subsequent to April 1, 2022. As such, nonmonetary assets and liabilities retain a higher historical basis when currencies are devalued. This higher historical basis results in incremental expense being recognized when nonmonetary assets are consumed (i.e., sale of inventory). During the three months ended June 30, 2022, the Company recorded an expense of $27.6 million in Cost of Goods Sold related to the consumption of inventory and an expense of $5.8 million in Other (Income) Loss, Net related to the remeasurement of monetary assets and liabilities.Note 2. Acquisition and Assets and Liabilities Held for SaleAcquisitionOn June 1, 2021, the Company acquired a majority of Walgreens Boots Alliance, Inc.'s ("WBA") Alliance Healthcare businesses ("Alliance Healthcare") for $6,662.0 million in cash, $229.1 million of the Company's common stock (2 million shares at the Company's June 1, 2021 opening stock price of $114.54 per share), and $6.1 million of other equity consideration. The net cash payment was $5,596.7 million, as the Company acquired $922.0 million of cash and cash equivalents and $143.3 million of restricted cash. The shares issued were from the Company's treasury stock on a first-in, first-out basis and were originally purchased for $149.1 million. In the nine months ended June 30, 2022, the Company's previous estimate of $96.9 million of accrued consideration was settled for $60.0 million, which resulted in a $36.9 million reduction to Goodwill. The $60.0 million cash payment is included in the total $6,662.0 million cash consideration. The Company funded the cash purchase price through a combination of cash on hand and new debt financing. The acquisition expands the Company's reach and solutions in pharmaceutical distribution and adds to the Company's depth and breadth of global manufacturer services.The Company completed the purchase price allocation as of June 1, 2022 and recorded purchase accounting adjustments that reduced working capital account balances by $102.7 million, increased the corresponding deferred tax assets by $63.0 million, and decreased other assets by $13.3 million, which resulted in a $53.0 million increase to Goodwill. There were no measurement period adjustments recorded to the previously-reported opening balance sheet that would have had a material impact on the Company's previously-reported results of operations had those adjustments been recorded in the previous reporting periods. The final purchase price has been allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition in the table that follows: 9

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Treasury shares held for taxes due upon exercise of stock awards (in shares)

1

SEC-NUM

FIDELITY NATIONAL INFORMATION SERVICES, INC.AND SUBSIDIARIESCondensed Consolidated Statements of EquityThree and nine months ended September 30, 2022(In millions, except per share amounts)(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amount | | | | | | | FIS Stockholders | | | | | | | | | | | | | | | | | Accumulated | | | | | | | | | Number of shares | | | | Additional | | | | other | | | | | | | | | Common | | Treasury | | Common | | paid in | | Retained | | comprehensive | | Treasury | | Noncontrolling | | Total | | | shares | | shares | | stock | | capital | | earnings | | earnings (loss) | | stock | | interest (1) | | equity | | Balances, June 30, 2022 | 628 | | | (20) | | | $ | 6 | | | $ | 46,634 | | | $ | 2,709 | | | $ | (200) | | | $ | (2,643) | | | $ | 9 | | | $ | 46,515 | | | Issuance of restricted stock | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Exercise of stock options | — | | | — | | | — | | | 39 | | | — | | | — | | | — | | | — | | | 39 | | | Purchases of treasury stock | — | | | (11) | | | — | | | — | | | — | | | — | | | (1,021) | | | — | | | (1,021) | | | Treasury shares held for taxes due upon exercise of stock awards | — | | | — | | | — | | | — | | | — | | | — | | | (21) | | | — | | | (21) | | | Stock-based compensation | — | | | — | | | — | | | 53 | | | — | | | — | | | — | | | — | | | 53 | | | Cash dividends declared ($0.47 per share per quarter) and other distributions | — | | | — | | | — | | | — | | | (285) | | | — | | | — | | | (2) | | | (287) | | | Net earnings | — | | | — | | | — | | | — | | | 249 | | | — | | | — | | | 2 | | | 251 | | | Other comprehensive earnings (loss), net of tax | — | | | — | | | — | | | — | | | — | | | (192) | | | — | | | — | | | (192) | | | Balances, September 30, 2022 | 629 | | | (31) | | | $ | 6 | | | $ | 46,726 | | | $ | 2,673 | | | $ | (392) | | | $ | (3,685) | | | $ | 9 | | | $ | 45,337 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Amount | | | | | | | FIS Stockholders | | | | | | | | | | | | | | | | | Accumulated | | | | | | | | | Number of shares | | | | Additional | | | | other | | | | | | | | | Common | | Treasury | | Common | | paid in | | Retained | | comprehensive | | Treasury | | Noncontrolling | | Total | | | shares | | shares | | stock | | capital | | earnings | | earnings (loss) | | stock | | interest (1) | | equity | | Balances, December 31, 2021 | 625 | | | (16) | | | $ | 6 | | | $ | 46,466 | | | $ | 2,889 | | | $ | 252 | | | $ | (2,266) | | | $ | 11 | | | $ | 47,358 | | | Issuance of restricted stock | 4 | | | — | | | — | | | 5 | | | — | | | — | | | — | | | — | | | 5 | | | Exercise of stock options | — | | | — | | | — | | | 57 | | | — | | | — | | | — | | | — | | | 57 | | | Purchases of treasury stock | — | | | (14) | | | — | | | — | | | — | | | — | | | (1,321) | | | — | | | (1,321) | | | Treasury shares held for taxes due upon exercise of stock awards | — | | | (1) | | | — | | | — | | | — | | | — | | | (98) | | | — | | | (98) | | | Stock-based compensation | — | | | — | | | — | | | 198 | | | — | | | — | | | — | | | — | | | 198 | | | Cash dividends declared ($0.47 per share per quarter) and other distributions | — | | | — | | | — | | | — | | | (862) | | | — | | | — | | | (7) | | | (869) | | | Net earnings | — | | | — | | | — | | | — | | | 646 | | | — | | | — | | | 5 | | | 651 | | | Other comprehensive earnings (loss), net of tax | — | | | — | | | — | | | — | | | — | | | (644) | | | — | | | — | | | (644) | | | Balances, September 30, 2022 | 629 | | | (31) | | | 6 | | | 46,726 | | | 2,673 | | | (392) | | | (3,685) | | | 9 | | | 45,337 | | (1)Excludes redeemable noncontrolling interest that is not considered equity. See accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.5

string

Equity method investment, other than temporary impairment

94

SEC-NUM

[Table of Contents](#i40ca88ef65884b508d3f9e19d0380e84_7)NOTE 6 - RESTRUCTURING AND ASSET RELATED CHARGES - NETCharges for restructuring programs and asset related charges, which include asset impairments and other net charges, were zero and $101 million for the three and six months ended June 30, 2022 and $5 million and $7 million for the three and six months ended June 30, 2021. These charges were recorded in "Restructuring and asset related charges - net" in the interim Consolidated Statements of Operations. The total liability related to restructuring programs was $25 million at June 30, 2022 and $43 million at December 31, 2021, recorded in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheets. Restructuring activity consists of the following programs: 2021 Restructuring ActionsIn October 2021, the Company approved targeted restructuring actions to capture near-term cost reductions (the "2021 Restructuring Actions"). The Company recorded pre-tax restructuring charges of $55 million inception-to-date, consisting of severance and related benefit costs of $33 million and asset related charges of $22 million. Total liabilities related to the 2021 Restructuring Actions were $19 million at June 30, 2022 and $25 million at December 31, 2021 and recorded in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheets. Actions related to the 2021 Restructuring Program are substantially complete. 2020 Restructuring ProgramIn the first quarter of 2020, the Company approved restructuring actions designed to capture near-term cost reductions and to further simplify certain organizational structures in anticipation of the N&B Transaction (the "2020 Restructuring Program"). The Company recorded pre-tax restructuring charges of $159 million inception-to-date, consisting of severance and related benefit costs of $107 million and asset related charges of $52 million. Total liabilities related to the 2020 Restructuring Program were $3 million at June 30, 2022 and $11 million at December 31, 2021 and recorded in "Accrued and other current liabilities" in the Condensed Consolidated Balance Sheets. Actions related to the 2020 Restructuring Program are substantially complete. Equity Method Investment Impairment Related ChargesIn connection with the M&M Divestitures described in Note 4, in the first quarter of 2022 a portion of an equity method investment was reclassified to “Assets of discontinued operations” within the Condensed Consolidated Balance Sheet. The reclassification served as a triggering event requiring the Company to perform an impairment analysis on the retained portion of the equity method investment held within “Investments and noncurrent receivables” on the Condensed Consolidated Balance Sheet. The fair value of the retained equity method investment was estimated using a discounted cash flow model (a form of the income approach). The Company's assumptions in estimating fair value utilize Level 3 inputs and include, but are not limited to, projected revenue, gross margins, EBITDA margins, the weighted average costs of capital, and terminal growth rates. The Company determined the fair value of the retained equity method investment was below the carrying value and had no expectation the fair value would recover in the short-term due to the current economic environment. As a result, management concluded the impairment was other-than-temporary and, in March 2022, recorded an impairment charge of $94 million in “Restructuring and asset related charges - net” in the interim Consolidated Statements of Operations for the six months ended June 30, 2022 related to the Electronics & Industrial segment. No impairment was required to be recorded for the portion of the equity method investment included within “Assets of discontinued operations.” 20

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Payments under Guarantee

2.0

SEC-NUM

[Table of Contents](#i8b61521b6679450490d14f6570be754a_7)clearing house. Based on the assessment performed, management estimates the guarantee liability to be nominal and therefore has not recorded any liability at June 30, 2022 and December 31, 2021.Family Farmer and Rancher Protection Fund. In 2012, the company established the Family Farmer and Rancher Protection Fund (the Fund). The Fund is designed to provide payments, up to certain maximum levels, to family farmers, ranchers and other agricultural industry participants who use the company's agricultural commodity products and who suffer losses to their segregated account balances due to their CME clearing member becoming insolvent. Under the terms of the Fund, farmers and ranchers are eligible for up to $25,000 per participant. Farming and ranching cooperatives are eligible for up to $100,000 per cooperative. The Fund was established with a maximum of $100.0 million available for distribution to participants. Since its establishment, the Fund has made payments of approximately $2.0 million, which leaves $98.0 million available for future claims. If, at any time, payments due to participants were to exceed the amount remaining in the Fund, payments would be pro-rated. Clearing members and customers must register with the company in advance and provide certain documentation in order to substantiate their eligibility. The company believes that its guarantee liability is nominal and therefore has not recorded any liability at June 30, 2022 and December 31, 2021.11. Accumulated Other Comprehensive Income (Loss)The following tables present changes in the accumulated balances for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | Investment Securities | | Defined Benefit Plans | | Derivative Investments | | Foreign Currency Translation | | Total | | Balance at December 31, 2021 | $ | 1.1 | | | $ | (34.8) | | | $ | 66.1 | | | $ | 21.1 | | | $ | 53.5 | | | Other comprehensive income (loss) before reclassifications and income tax benefit (expense) | (2.3) | | | (3.7) | | | | | (81.1) | | | (87.1) | | | Amounts reclassified from accumulated other comprehensive income (loss) | — | | | 0.6 | | | (0.1) | | | — | | | 0.5 | | | Income tax benefit (expense) | 0.6 | | | 0.8 | | | — | | | — | | | 1.4 | | | Net current period other comprehensive income (loss) | (1.7) | | | (2.3) | | | (0.1) | | | (81.1) | | | (85.2) | | | Balance at June 30, 2022 | $ | (0.6) | | | $ | (37.1) | | | $ | 66.0 | | | $ | (60.0) | | | $ | (31.7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | Investment Securities | | Defined Benefit Plans | | Derivative Investments | | Foreign Currency Translation | | Total | | Balance at December 31, 2020 | $ | 1.6 | | | $ | (57.1) | | | $ | 67.0 | | | $ | 123.4 | | | $ | 134.9 | | | Other comprehensive income (loss) before reclassifications and income tax benefit (expense) | (0.7) | | | — | | | — | | | (29.6) | | | (30.3) | | | Amounts reclassified from accumulated other comprehensive income (loss) | — | | | 2.2 | | | (0.6) | | | — | | | 1.6 | | | Income tax benefit (expense) | 0.2 | | | (0.6) | | | 0.2 | | | — | | | (0.2) | | | Net current period other comprehensive income (loss) | (0.5) | | | 1.6 | | | (0.4) | | | (29.6) | | | (28.9) | | | | | | | | | | | | | | Balance at June 30, 2021 | $ | 1.1 | | | $ | (55.5) | | | $ | 66.6 | | | $ | 93.8 | | | $ | 106.0 | | 12. Fair Value MeasurementsThe company uses a three-level classification hierarchy of fair value measurements for disclosure purposes: •Level 1 inputs, which are considered the most reliable evidence of fair value, consist of quoted prices (unadjusted) for identical assets or liabilities in active markets. •Level 2 inputs consist of observable market data, such as quoted prices for similar assets and liabilities in active markets, or inputs other than quoted prices that are directly observable. •Level 3 inputs consist of unobservable inputs which are derived and cannot be corroborated by market data or other entity-specific inputs.22

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Accounts Receivable, Asset, Allowance for Credit Loss, Recovery

1

SEC-NUM

[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service (IRS) began the 2018-2019 federal tax audit in the first quarter of 2021 and recently added tax year 2020 to the audit. We are also subject to examination in major state and international jurisdictions for the 2008-2020 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.Note 5 – Accounts Receivable, netAccounts receivable at December 31 consisted of the following: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | 2021 | | 2020 | | U.S. government contracts(1) | $1,180 | | | $811 | | | Commercial Airplanes | 279 | | | 17 | | | Global Services(2) | 1,456 | | | 1,437 | | | Defense, Space, & Security(2) | 111 | | | 120 | | | Other | 5 | | | 14 | | | Less valuation allowance | (390) | | | (444) | | | Total | $2,641 | | | $1,955 | | (1)Includes foreign military sales through the U.S. government(2)Excludes U.S. government contractsNote 6 – Allowances for Losses on Financial AssetsThe change in allowances for expected credit losses for the years ended December 31, 2021 and 2020 consisted of the following: | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | Accounts receivable | Unbilled receivables | Other Current Assets | Customer financing | Other Assets | Total | | Balance at January 1, 2020 | ($138) | | ($81) | | ($38) | | ($5) | | ($75) | | ($337) | | | Changes in estimates | (314) | | (48) | | (34) | | (12) | | (66) | | (474) | | | Write-offs | 8 | | | | | | 8 | | | | | | | | | | | Recoveries | | | | | 1 | | 1 | | | Balance at December 31, 2020 | (444) | | (129) | | (72) | | (17) | | (140) | | (802) | | | | | | | | | | | Balance at January 1, 2021 | (444) | | (129) | | (72) | | (17) | | (140) | | (802) | | | Changes in estimates | (24) | | (11) | | 6 | | (1) | | (59) | | (89) | | | Write-offs | 77 | | 49 | | 4 | | | 13 | | 143 | | | | | | | | | | | Recoveries | 1 | | | | | | 1 | | | Balance at December 31, 2021 | ($390) | | ($91) | | ($62) | | ($18) | | ($186) | | ($747) | | 84

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Restricted stock rights, weighted-average grant date fair value, forfeited (in dollars per share)

85.47

SEC-NUM

[Table of Contents](#i8fbc3dcd16fb4e35b37f64f296545b43_13) 10. Share-Based Payments Stock Option Activity Stock option activity is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of shares (in thousands) | | Weighted-averageexercise price per stock option | | Weighted-averageremainingcontractual term (in years) | | Aggregateintrinsic value (in millions) | | Outstanding stock options at December 31, 2021 | 9,133 | | | $ | 57.77 | | | | | | | Granted | — | | | — | | | | | | | Exercised | (314) | | | 46.45 | | | | | | | Forfeited | (53) | | | 67.06 | | | | | | | Expired | (21) | | | 65.84 | | | | | | | Outstanding stock options at March 31, 2022 | 8,745 | | | $ | 58.10 | | | 6.69 | | $ | 205 | | | Vested and expected to vest at March 31, 2022 | 8,484 | | | $ | 57.39 | | | 6.63 | | $ | 204 | | | Exercisable at March 31, 2022 | 6,041 | | | $ | 50.03 | | | 5.95 | | $ | 183 | | The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between our closing stock price on the last trading day of the period and the exercise price, times the number of shares for options where the closing stock price is greater than the exercise price) that would have been received by the option holders had all option holders exercised their options on that date. This amount changes based on the market value of our stock. At March 31, 2022, $25 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 1.12 years. Restricted Stock Units (“RSUs”) Activity We grant RSUs, which represent the right to receive shares of our common stock. Vesting for RSUs is generally contingent upon the holder’s continued employment with us and may be subject to other conditions (which may include the satisfaction of a performance measure). Also, certain of our performance-based RSUs, including those that are market-based, include a range of shares that may be released at vesting, which are above or below the targeted number of RSUs based on actual performance relative to the performance measure. If the vesting conditions are not met, unvested RSUs will be forfeited. Upon vesting of the RSUs, we may withhold shares otherwise deliverable to satisfy tax withholding requirements. The following table summarizes our RSU activity with performance-based RSUs, including those with market conditions, presented at 100% of the target level shares that may potentially vest (amounts in thousands, except per share data): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Number of shares | | Weighted-average grantdate fair value per RSU | | Unvested RSUs at December 31, 2021 | 13,258 | | | $ | 75.51 | | | Granted | 4,337 | | | 80.55 | | | Vested | (3,891) | | | 76.81 | | | Forfeited | (742) | | | 85.47 | | | Unvested RSUs at March 31, 2022 | 12,962 | | | $ | 76.30 | | 22

string

AOCI, Cash Flow Hedge, Cumulative Gain (Loss), after Tax

22

SEC-NUM

[Table of Contents](#i5ec3aabfaa534f9c8fa2d2a5b7677d19_7) | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | Foreign Currency | | Quantity Hedged | | Unit of Measure | | Notional Amount (Approximate USD Equivalent) | | | | (in millions) | | Mexican Peso | | 21,122 | | | MXN | | $ | 1,030 | | | Chinese Yuan Renminbi | | 2,709 | | | RMB | | 425 | | | Euro | | 107 | | | EUR | | 120 | | | Polish Zloty | | 571 | | | PLN | | 140 | | | | | | | | | | | Hungarian Forint | | 17,594 | | | HUF | | 55 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2021, Aptiv has entered into derivative instruments to hedge cash flows extending out to December 2023.Gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated OCI, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated OCI will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. Net gains on cash flow hedges included in accumulated OCI as of December 31, 2021 were $22 million (approximately $22 million, net of tax). Of this total, approximately $26 million of gains are expected to be included in cost of sales within the next 12 months and approximately $4 million of losses are expected to be included in cost of sales in subsequent periods. Cash flow hedges are discontinued when Aptiv determines it is no longer probable that the originally forecasted transactions will occur. Cash flows from derivatives used to manage commodity and foreign exchange risks designated as cash flow hedges are classified as operating activities within the consolidated statements of cash flows.Net Investment HedgesThe Company is also exposed to the risk that adverse changes in foreign currency exchange rates could impact its net investment in non-U.S. subsidiaries. To manage this risk, the Company designates certain qualifying derivative and non-derivative instruments, including foreign currency forward contracts and foreign currency-denominated debt, as net investment hedges of certain non-U.S. subsidiaries. The gains or losses on instruments designated as net investment hedges are recognized within OCI to offset changes in the value of the net investment in these foreign currency-denominated operations. Gains and losses reported in accumulated OCI are reclassified to earnings only when the related currency translation adjustments are required to be reclassified, usually upon sale or liquidation of the investment. Cash flows from derivatives designated as net investment hedges are classified as investing activities within the consolidated statements of cash flows.The Company has entered into a series of forward contracts, each of which have been designated as net investment hedges of the foreign currency exposure of the Company’s investments in certain Chinese Yuan Renminbi (“RMB”)-denominated subsidiaries. During the years ended December 31, 2021, 2020 and 2019, the Company made net payments of $17 million, $1 million and zero, respectively, at settlement related to these series of forward contracts which matured throughout each respective year. In December 2021, the Company entered into forward contracts with a total notional amount of 1.4 billion RMB (approximately $215 million, using December 31, 2021 foreign currency rates), which mature in March 2022. Refer to the tables below for details of the fair value recorded in the consolidated balance sheets and the effects recorded in the consolidated statements of operations and consolidated statements of comprehensive income related to these derivative instruments.The Company has designated the €700 million 2015 Euro-denominated Senior Notes and the €500 million 2016 Euro-denominated Senior Notes, as more fully described in Note 11. Debt, as net investment hedges of the foreign currency exposure of its investments in certain Euro-denominated subsidiaries. Due to changes in the value of the Euro-denominated debt instruments designated as net investment hedges, during the years ended December 31, 2021 and 2020, $116 million of gains and $132 million of losses, respectively, were recognized within the cumulative translation adjustment component of OCI. Included in accumulated OCI related to these net investment hedges were cumulative losses of $37 million as of December 31, 2021 and $153 million as of December 31, 2020.Derivatives Not Designated as HedgesIn certain occasions the Company enters into certain foreign currency and commodity contracts that are not designated as hedges. When hedge accounting is not applied to derivative contracts, gains and losses are recorded to other income (expense), net and cost of sales in the consolidated statements of operations.104

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After 1 year through 5 years

398.5

SEC-NUM

adjusted cost of investment. I&M records unrealized gains, unrealized losses and other-than-temporary impairments from securities in these trust funds as adjustments to the regulatory liability account for the nuclear decommissioning trust funds and to regulatory assets or liabilities for the SNF disposal trust funds in accordance with their treatment in rates. Consequently, changes in fair value of trust assets do not affect earnings or AOCI. The following is a summary of nuclear trust fund investments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | June 30, 2022 | | December 31, 2021 | | | | | Gross | | Other-Than- | | | | Gross | | Other-Than- | | | Fair | | Unrealized | | Temporary | | Fair | | Unrealized | | Temporary | | | Value | | Gains | | Impairments | | Value | | Gains | | Impairments | | | (in millions) | | Cash and Cash Equivalents | $ | 16.6 | | | $ | — | | | $ | — | | | $ | 84.7 | | | $ | — | | | $ | — | | | Fixed Income Securities: | | | | | | | | | | | | | United States Government | 1,139.5 | | | 5.3 | | | (14.7) | | | 1,156.4 | | | 66.3 | | | (7.9) | | | Corporate Debt | 62.3 | | | (4.2) | | | (6.0) | | | 76.7 | | | 6.7 | | | (2.1) | | | State and Local Government | 7.1 | | | 0.1 | | | (0.1) | | | 7.3 | | | 0.4 | | | (0.1) | | | Subtotal Fixed Income Securities | 1,208.9 | | | 1.2 | | | (20.8) | | | 1,240.4 | | | 73.4 | | | (10.1) | | | Equity Securities - Domestic (a) | 2,055.3 | | | 1,405.0 | | | — | | | 2,541.9 | | | 1,901.3 | | | — | | | Spent Nuclear Fuel and Decommissioning Trusts | $ | 3,280.8 | | | $ | 1,406.2 | | | $ | (20.8) | | | $ | 3,867.0 | | | $ | 1,974.7 | | | $ | (10.1) | | (a)Amount reported as Gross Unrealized Gains includes unrealized gains of $1.4 billion and $1.9 billion and unrealized losses of $11 million and $4 million as of June 30, 2022 and December 31, 2021, respectively. The following table provides the securities activity within the decommissioning and SNF trusts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | | | 2022 | | 2021 | | 2022 | | 2021 | | | | (in millions) | | Proceeds from Investment Sales | | $ | 736.4 | | | $ | 802.7 | | | $ | 1,229.9 | | | $ | 1,122.7 | | | Purchases of Investments | | 745.5 | | | 812.8 | | | 1,253.2 | | | 1,149.7 | | | Gross Realized Gains on Investment Sales | | 10.9 | | | 83.3 | | | 16.7 | | | 88.7 | | | Gross Realized Losses on Investment Sales | | 17.9 | | | 1.3 | | | 25.1 | | | 5.5 | | The base cost of fixed income securities was $1.2 billion and $1.2 billion as of June 30, 2022 and December 31, 2021, respectively. The base cost of equity securities was $650 million and $641 million as of June 30, 2022 and December 31, 2021, respectively. The fair value of fixed income securities held in the nuclear trust funds, summarized by contractual maturities, as of June 30, 2022 was as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | | Fair Value of Fixed | | | Income Securities | | | (in millions) | | Within 1 year | $ | 356.2 | | | After 1 year through 5 years | 398.5 | | | After 5 years through 10 years | 248.0 | | | After 10 years | 206.2 | | | Total | $ | 1,208.9 | | 206

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Remaining authorized repurchase amount under stock repurchase programs

5.7

SEC-NUM

11. STOCKHOLDERS’ EQUITYStock Repurchase ProgramsIn the first quarter of 2016, our Board of Directors authorized a $12.0 billion stock repurchase program (“2016 Program”) under which repurchases may be made in the open market or in privately negotiated transactions. We started repurchases under the 2016 Program in April 2016. In the first quarter of 2020, our Board of Directors authorized a $5.0 billion stock repurchase program (“2020 Program”), which will commence upon the completion of the 2016 Program. Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.As of September 30, 2022, the aggregate remaining authorized repurchase amount under both programs was $5.7 billion.The following table summarizes our stock repurchases through open market transactions under the 2016 Program: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | | September 30, | | September 30, | | (in millions) | | 2022 | | 2021 | | 2022 | | 2021 | | Shares repurchased and retired | | 2.9 | | | 2.1 | | | 9.5 | | | 7.5 | | | Amount | | $ | 180 | | | $ | 145 | | | $ | 604 | | | $ | 497 | | Accumulated Other Comprehensive IncomeThe following table summarizes the changes in AOCI by component, net of tax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | | Foreign Currency Translation, Net of Tax | | Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax | | Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax | | Total | | Balance as of December 31, 2021 | | $ | 13 | | | $ | (4) | | | $ | 74 | | | $ | 83 | | | Net unrealized gain (loss) | | (102) | | | (38) | | | 254 | | | 114 | | | Reclassifications to net income | | — | | | 1 | | | (100) | | | (99) | | | Net current period other comprehensive income (loss) | | (102) | | | (37) | | | 154 | | | 15 | | | Balance as of September 30, 2022 | | $ | (89) | | | $ | (41) | | | $ | 228 | | | $ | 98 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (in millions) | | Foreign Currency Translation, Net of Tax | | Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax | | Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax | | Total | | Balance as of December 31, 2020 | | $ | 51 | | | $ | 2 | | | $ | (113) | | | $ | (60) | | | Net unrealized gain (loss) | | (15) | | | (3) | | | 92 | | | 74 | | | Reclassifications to net income | | — | | | — | | | 60 | | | 60 | | | Net current period other comprehensive income (loss) | | (15) | | | (3) | | | 152 | | | 134 | | | Balance as of September 30, 2021 | | $ | 36 | | | $ | (1) | | | $ | 39 | | | $ | 74 | | The amounts reclassified to Net income for gains and losses on cash flow hedges are recorded as part of Product sales on our Condensed Consolidated Statements of Income. See Note 5. Derivative Financial Instruments for additional information. The amounts reclassified to Net income for gains and losses on available-for-sale debt securities are recorded as part of Other income (expense), net on our Condensed Consolidated Statements of Income.27

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Recall expense

34.1

SEC-NUM

[Table of Contents](#i16ebb68f4bd84ff99a771b20ec27c3fc_7)Dollar Tree Active MattersThe Food and Drug Administration (“FDA”) has alleged that we improperly sold certain topically applied, over the counter (“OTC”) products manufactured by certain Chinese factories that were on an import “alert” restriction issued by the FDA. We believe we have made significant improvements in our processes, and the FDA believes we have certain additional improvements to make, which we are addressing. Actual or threatened California state court lawsuits have been filed against Dollar Tree and Family Dollar for similar employment-related claims brought under the Private Attorney General Act (“PAGA”). These cases may allege violations such as failure to provide employees with compliant rest and meal breaks, suitable seating and overtime pay, reimburse business expenses, pay minimum wages for all time worked, provide accurate wage statements, and timely pay wages as well as other off-the-clock and potential labor code violations.Three personal injury lawsuits are pending against us and our vendors alleging that certain talc products that were sold by the company in the past caused cancer. Although we have been able to resolve previous talc lawsuits against us without material loss to the company, given the inherent uncertainties of litigation there can be no assurances regarding the outcome of pending or future cases. Future costs to litigate these cases are not known but may be significant, and it is uncertain whether our costs will be covered by insurance. In addition, although we have indemnification rights against our vendors in several of these cases, it is uncertain whether the vendors will have the financial ability to carry out their obligations. Dollar Tree Resolved MattersIn December 2020, a former store manager brought a class action in California state court alleging we failed to reimburse employees for business expenses and in so failing, engaged in unfair competition. The case has been resolved.Family Dollar Active MattersOn February 11, 2022, the FDA issued Form 483 observations primarily regarding rodent infestation at our West Memphis, Arkansas distribution center (“DC 202”), as well as other items that require remediation. In connection therewith, we initiated a voluntary retail-level product recall of FDA and U.S. Department of Agriculture-regulated products stored and shipped from DC 202 from January 1, 2021 through February 18, 2022 (the “Recall”), temporarily closed DC 202 for extensive cleaning, temporarily closed the affected stores to permit the removal and destruction of inventory subject to the Recall, ceased sales of relevant inventory subject to the Recall, committed to the FDA to continue to cease the shipment of FDA-regulated products from DC 202 until FDA approval is received, and initiated corrective actions at DC 202 intended to ensure that these issues will not recur when shipment of FDA-regulated products recommences. We are taking this matter extremely seriously, and are responding to all observations made in the Form 483. We are cooperating fully with the FDA, and intend to cooperate fully with any other applicable regulatory body. We recorded total charges of approximately $34.1 million in the fourth quarter of our 2021 fiscal year in connection with the Recall, primarily attributable to inventory markdowns and related costs. The circumstances leading to the Recall (and/or the Recall itself) may have other negative impacts, which could include reputational damage, lost sales, further or additional governmental investigations and/or enforcement actions, and/or private litigation (see below), which could have a material adverse effect, individually or collectively, on our business, results of operations and/or financial condition.We have received the following class action complaints related to issues associated with DC 202 (and anticipate additional lawsuits of a similar nature):On February 22, 2022, a proposed class action complaint was filed in the Circuit Court of Pope County, Arkansas, alleging various causes of action on behalf of the citizens of Arkansas who purchased “contaminated products” covered by the Recall from January 1, 2021 through the date of such Recall. Plaintiffs seek restitution, disgorgement, damages, attorney fees, costs and expenses, punitive damages and such further relief (in each case in unspecified amounts), as the Court deems just and proper.On February 23, 2022, a proposed class action complaint was filed in the U.S. District Court for the Southern District of Mississippi, Northern Division, alleging various causes of action related to the sale of products that may be contaminated by virtue of a rodent infestation and other unsanitary conditions in stores throughout Mississippi, Arkansas, Louisiana, Alabama, Missouri and Tennessee. Plaintiffs seek damages, attorney fees and costs, punitive damages and the replacement of, or refund of money paid to purchase the relevant products, and any other legal relief available for their claims (in each case in unspecified amounts), including equitable and injunctive relief.On February 25, 2022, a proposed class action complaint was filed in the U.S. District Court for the Eastern District of Virginia, on behalf of all persons who purchased products subject to the Recall (with a subclass for all persons residing in the State of Tennessee who purchased products subject to the Recall), alleging breach of the implied warranty of merchantability and unjust enrichment. Plaintiffs seek restitution, damages, interest, punitive damages, attorney fees, costs and expenses, and such further relief (in each case in unspecified amounts), as the Court deems just and equitable.55

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Lessee, operating lease, liability, payments, due year two

97

SEC-NUM

[Table of Contents](#i988dd6b5140d4a1b8c6b4c50f020743f_10)SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | In millions | Classification | 2021 | 2020 | | Assets | | | | | Operating lease assets | Right of use assets | $ | 365 | | $ | 387 | | | Finance lease assets | Plants, properties and equipment, net (a) | 57 | | 62 | | | Total leased assets | | $ | 422 | | $ | 449 | | | Liabilities | | | | | Current | | | | | Operating | Other current liabilities | $ | 132 | | $ | 134 | | | Finance | Notes payable and current maturities of long-term debt | 10 | | 10 | | | Noncurrent | | | | | Operating | Long-term lease obligations | 236 | | 256 | | | Finance | Long-term debt | 56 | | 61 | | | Total lease liabilities | | $ | 434 | | $ | 461 | | (a) Finance leases are recorded net of accumulated amortization of $51 million and $43 million at December 31, 2021 and 2020, respectively. LEASE TERM AND DISCOUNT RATE | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | In millions | 2021 | 2020 | | Weighted average remaining lease term (years) | | | | Operating leases | 4.0 years | 4.0 years | | Finance leases | 9.1 years | 9.3 years | | Weighted average discount rate | | | | Operating leases | 2.12 | % | 2.63 | % | | Finance leases | 4.50 | % | 4.45 | % | SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | In millions | 2021 | 2020 | 2019 | | Cash paid for amounts included in the measurement of lease liabilities | | | | | Operating cash flows related to operating leases | $ | 166 | | $ | 162 | | $ | 147 | | | Operating cash flows related to financing leases | 4 | | 5 | | 5 | | | Financing cash flows related to finance leases | 14 | | 10 | | 9 | | | | | | | | Right of use assets obtained in exchange for lease liabilities | | | | | Operating leases | 156 | | 179 | | 162 | | | Finance leases | 9 | | 11 | | 11 | | MATURITY OF LEASE LIABILITIES | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | In millions | Operating Leases | Financing Leases | Total | | 2022 | $ | 139 | | $ | 13 | | $ | 152 | | | 2023 | 97 | | 12 | | 109 | | | 2024 | 60 | | 10 | | 70 | | | 2025 | 38 | | 9 | | 47 | | | 2026 | 23 | | 8 | | 31 | | | Thereafter | 28 | | 34 | | 62 | | | Total lease payments | 385 | | 86 | | 471 | | | Less imputed interest | 17 | | 20 | | 37 | | | Present value of lease liabilities | $ | 368 | | $ | 66 | | $ | 434 | | NOTE 11 EQUITY METHOD INVESTMENTS The Company accounts for the following investments under the equity method of accounting. ILIM S.A. ("Ilim") The Company holds a 50% equity interest in Ilim, which has subsidiaries whose primary operations are in Russia. The Company recorded equity earnings, net of taxes, of $311 million, $48 million, and $207 million in 2021, 2020, and 2019, respectively, for Ilim. Foreign exchange gains (losses) included in equity earnings in 2021, were not material and JSC Ilim Group had no U.S. dollar-denominated debt outstanding as of December 31, 2021. Equity earnings includes an after-tax foreign exchange (loss) gain of $(50) million, and $32 million in 2020 and 2019, respectively, primarily on the remeasurement of U.S. dollar-denominated net debt. The Company received cash dividends from the joint venture of $154 million, $141 million and $246 million in 2021, 2020 and 2019, respectively. At December 31, 2021 and 2020, the Company's investment in Ilim, which is recorded in Investments in the consolidated balance sheet, was $557 million and $393 million, respectively, which was $121 million and $127 million, respectively, more than the Company's proportionate share of the joint venture's underlying net assets. The differences primarily relate to currency translation adjustments and the basis difference between the fair value of our investment at acquisition and the underlying net assets. Prior to the spin-off of the Printing Papers segment on October 1, 2021, the Company was party to a joint marketing agreement with JSC Ilim Group, a subsidiary of Ilim, under which the Company purchased, marketed and sold paper produced by JSC Ilim Group. Purchases under this agreement were $125 million, $174 million and $215 million for the years ended December 31, 2021, 2020 and 2019, respectively.The joint marketing agreement 65

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Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Purchase Date

15

SEC-NUM

16.Employee Benefit Plans (a)Employee Stock Incentive PlansWe have one stock incentive plan: the 2005 Stock Incentive Plan (the “2005 Plan”). In addition, we have, in connection with our acquisitions of various companies, assumed the share-based awards granted under stock incentive plans of the acquired companies or issued share-based awards in replacement thereof. Share-based awards are designed to reward employees for their long-term contributions to us and provide incentives for them to remain with us. The number and frequency of share-based awards are based on competitive practices, our operating results, government regulations, and other factors. Our primary stock incentive plan is summarized as follows: The 2005 Plan provides for the granting of stock options, stock grants, stock units and stock appreciation rights (SARs), the vesting of which may be time-based or upon satisfaction of performance goals, or both, and/or other conditions. Employees (including employee directors and executive officers) and consultants of Cisco and its subsidiaries and affiliates and non-employee directors of Cisco are eligible to participate in the 2005 Plan. The 2005 Plan may be terminated by our Board of Directors at any time and for any reason, and is currently set to terminate at the 2030 Annual Meeting unless re-adopted or extended by our stockholders prior to or on such date.Under the 2005 Plan’s share reserve feature, a distinction is made between the number of shares in the reserve attributable to (i) stock options and SARs and (ii) “full value” awards (i.e., stock grants and stock units). Shares issued as stock grants, pursuant to stock units or pursuant to the settlement of dividend equivalents are counted against shares available for issuance under the 2005 Plan on a 1.5-to-1 ratio. For each share awarded as restricted stock or a restricted stock unit award under the 2005 Plan, 1.5 shares was deducted from the available share-based award balance. If awards issued under the 2005 Plan are forfeited or terminated for any reason before being exercised or settled, then the shares underlying such awards, plus the number of additional shares, if any, that counted against shares available for issuance under the 2005 Plan at the time of grant as a result of the application of the share ratio described above, will become available again for issuance under the 2005 Plan. As of July 30, 2022, 205 million shares were authorized for future grant under the 2005 Plan.(b)Employee Stock Purchase PlanWe have an Employee Stock Purchase Plan under which eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of our stock at a discount of up to 15% of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. The Employee Stock Purchase Plan is scheduled to terminate on the earlier of (i) January 3, 2030 and (ii) the date on which all shares available for issuance under the Employee Stock Purchase Plan are sold pursuant to exercised purchase rights. We issued 18 million, 17 million, and 18 million shares under the Employee Stock Purchase Plan in fiscal 2022, 2021, and 2020, respectively. As of July 30, 2022, 107 million shares were available for issuance under the Employee Stock Purchase Plan.(c)Summary of Share-Based Compensation ExpenseShare-based compensation expense consists primarily of expenses for RSUs, stock purchase rights, and stock options, granted to employees or assumed from acquisitions. The following table summarizes share-based compensation expense (in millions): | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | Years Ended | July 30, 2022 | | July 31, 2021 | | July 25, 2020 | | Cost of sales—product | $ | 112 | | | $ | 99 | | | $ | 93 | | | Cost of sales—service | 199 | | | 176 | | | 144 | | | Share-based compensation expense in cost of sales | 311 | | | 275 | | | 237 | | | Research and development | 790 | | | 694 | | | 592 | | | Sales and marketing | 572 | | | 540 | | | 500 | | | General and administrative | 212 | | | 226 | | | 215 | | | Restructuring and other charges | 1 | | | 26 | | | 25 | | | Share-based compensation expense in operating expenses | 1,575 | | | 1,486 | | | 1,332 | | | Total share-based compensation expense | $ | 1,886 | | | $ | 1,761 | | | $ | 1,569 | | | Income tax benefit for share-based compensation | $ | 457 | | | $ | 387 | | | $ | 452 | | As of July 30, 2022, the total compensation cost related to unvested share-based awards not yet recognized was $4.3 billion, which is expected to be recognized over approximately 2.6 years on a weighted-average basis. 94

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Antidilutive securities excluded from diluted EPS calculation (in shares)

5

SEC-NUM

Baker Hughes CompanyNotes to Unaudited Condensed Consolidated Financial StatementsAn exchange agreement exists between GE, BHH LLC, and us, ("Exchange Agreement") where GE is entitled to exchange its holding in our Class B common stock, and associated LLC Units, for Class A common stock on a one-for-one basis (subject to adjustment in accordance with the terms of the Exchange Agreement) or, at the option of Baker Hughes, an amount of cash equal to the aggregate value (determined in accordance with the terms of the Exchange Agreement) of the shares of Class A common stock that would have otherwise been received by GE in the exchange. In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) attributable to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests associated with the Class B common stock (including any tax impact). For the three and nine months ended September 30, 2022 and 2021, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive.For the three months ended September 30, 2022 and the nine months ended September 30, 2022 and 2021, we excluded all outstanding equity awards from the computation of diluted net loss per share because their effect is antidilutive. For the three months ended September 30, 2021, Class A diluted shares include the dilutive impact of equity awards except for approximately 5 million options that were excluded because the exercise price exceeded the average market price of the Class A common stock and is therefore antidilutive.NOTE 13. FINANCIAL INSTRUMENTSRECURRING FAIR VALUE MEASUREMENTSOur assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | September 30, 2022 | December 31, 2021 | | | Level 1 | Level 2 | Level 3 | Net Balance | Level 1 | Level 2 | Level 3 | Net Balance | | Assets | | | | | | | | | | Derivatives | $ | — | | $ | 60 | | $ | — | | $ | 60 | | $ | — | | $ | 29 | | $ | — | | $ | 29 | | | Investment securities | 848 | | — | | 1 | | 849 | | 1,033 | | — | | 8 | | 1,041 | | | Total assets | 848 | | 60 | | 1 | | 909 | | 1,033 | | 29 | | 8 | | 1,070 | | | | | | | | | | | | | Liabilities | | | | | | | | | | Derivatives | — | | (119) | | — | | (119) | | — | | (49) | | — | | (49) | | | Total liabilities | $ | — | | $ | (119) | | $ | — | | $ | (119) | | $ | — | | $ | (49) | | $ | — | | $ | (49) | | There were no transfers to, or from, Level 3 during the nine months ended September 30, 2022.The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | 2022 | 2021 | | Balance at January 1 | $ | 8 | | $ | 30 | | | | | | | Proceeds at maturity | (7) | | (21) | | | | | | | Balance at September 30 | $ | 1 | | $ | 9 | | The most significant unobservable input used in the valuation of our Level 3 instruments is the discount rate. Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of our investment securities. There are no unrealized gains or losses recognized in the condensed consolidated statement of income (loss) on account of any Level 3 instrument still held at the reporting date. Baker Hughes Company 2022 Third Quarter Form 10-Q | 16

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Unrealized Gain on Securities

4.45

SEC-NUM

(d) The Loan under the fair value option is included in Other investments in the condensed consolidated balance sheets. (e) Available-for-sale investments are included in Short-term investments in the condensed consolidated balance sheets. (f) Forward foreign exchange contracts in an asset position are included in Other current assets in the condensed consolidated balance sheets. (g) Forward foreign exchange contracts in a liability position are included in Other current liabilities in the condensed consolidated balance sheets. Level 1 Fair Value Measurements As of March 31, 2022, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius AG (Sartorius), of Goettingen, Germany, a process technology supplier to the biotechnology, pharmaceutical, chemical and food and beverage industries. We own approximately 37% of the ordinary outstanding shares (excluding treasury shares) and 28% of the preference shares of Sartorius as of March 31, 2022. The Sartorius family trust (Sartorius family members are beneficiaries of the trust) holds a majority interest of the outstanding ordinary shares of Sartorius. We do not have the ability to exercise significant influence over the operating and financial policies of Sartorius primarily because we do not have any representative or designee on Sartorius' board of directors and have tried and failed to obtain access to operating or financial information necessary to apply the equity method of accounting. The changes in fair market value of our investment in Sartorius for the three months ended March 31, 2022 was $4.45 billion loss and is recorded in our condensed consolidated statements of income (loss). Level 2 Fair Value Measurements To estimate the fair value of Level 2 debt securities as of March 31, 2022, our primary pricing provider uses Refinitiv as the primary pricing source. Our pricing process allows us to select a hierarchy of pricing sources for securities held. If Refinitiv does not price a Level 2 security that we hold, then the pricing provider will utilize our custodian supplied pricing as the secondary pricing source. Available-for-sale investments consist of the following (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | March 31, 2022 | | | AmortizedCost | | UnrealizedGains | | UnrealizedLosses | | Allowances for Credit Losses | FairValue | | Short-term investments: | | | | | | | | | | Corporate debt securities | $ | 579.1 | | | $ | 0.2 | | | $ | (2.6) | | | $ | — | | $ | 576.7 | | | Municipal obligations | 34.8 | | | — | | | (0.1) | | | — | | 34.7 | | | Asset-backed securities | $ | 331.9 | | | $ | 0.1 | | | $ | (1.6) | | | $ | — | | $ | 330.4 | | | U.S. government sponsored agencies | 255.2 | | | — | | | (0.9) | | | — | | 254.3 | | | Foreign government obligations | $ | 1.5 | | | $ | — | | | $ | — | | | $ | — | | $ | 1.5 | | | Certificates of Deposit | 8.0 | | | — | | | — | | | — | | 8.0 | | | | | | | | | | | | | | $ | 1,210.5 | | | $ | 0.3 | | | $ | (5.2) | | | $ | — | | $ | 1,205.6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The following is a summary of the amortized cost and estimated fair value of our debt securities at March 31, 2022 by contractual maturity date (in millions):17

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Consideration received on transaction

1.7

SEC-NUM

COSTAR GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSCommon Stock The Company has 1.2 billion shares of common stock, $0.01 par value, authorized for issuance. Dividends may be declared and paid on the common stock, subject in all cases to the rights and preferences of the holders of preferred stock and authorization by the Board of Directors. In the event of liquidation or winding up of the Company and after the payment of all preferential amounts required to be paid to the holders of any series of preferred stock, any remaining funds shall be distributed among the holders of the issued and outstanding common stock. Common Stock Split At the Company's 2021 Annual Meeting of Stockholders in June 2021, upon the recommendation of the Company's Board of Directors, the Company's stockholders approved the adoption of the Company's Fourth Amended and Restated Certificate of Incorporation, which increased the total number of shares of common stock that the Company is authorized to issue from 60 million to 1.2 billion. The Fourth Amended and Restated Certificate of Incorporation became effective on June 7, 2021. On June 7, 2021, the Board of Directors approved a ten-for-one stock split of the Company's outstanding shares of common stock to be effected in the form of a stock dividend. Each stockholder of record on June 17, 2021 received a dividend of nine additional shares of common stock for each then-held share, distributed after close of trading on June 25, 2021. The par value of the Company's common stock remained $0.01 per share. All applicable share and per-share amounts in the consolidated financial statements and the accompanying notes have been retroactively adjusted to reflect the impact of the stock split. Equity Offering On May 28, 2020, the Company completed a public equity offering of 26.3 million shares of common stock for $65.50 per share. Net proceeds from the public equity offering were approximately $1.7 billion, after deducting approximately $35 million of underwriting fees, commissions and other stock issuance costs. The Company intends to use the net proceeds from the sale of the securities to fund all or a portion of the costs of any strategic acquisitions it pursues in the future, to finance the growth of its business and for working capital and other general corporate purposes. General corporate purposes may include additions to working capital, capital expenditures, repayment of debt, investments in the Company’s subsidiaries and the repurchase, redemption or retirement of securities, including the Company’s common stock. 16. NET INCOME PER SHARE The following table sets forth the calculation of basic and diluted net income per share (in thousands except per share data): | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2021 | | 2020 | | 2019 | | Numerator: | | | | | | | Net income | $ | 292,564 | | | $ | 227,128 | | | $ | 314,963 | | | Denominator: | | | | | | | Denominator for basic net income per share — weighted-average outstanding shares | 392,210 | | | 380,726 | | | 363,096 | | | Effect of dilutive securities: | | | | | | | Stock options, restricted stock awards and restricted stock units | 1,950 | | | 2,540 | | | 3,205 | | | Denominator for diluted net income per share — weighted-average outstanding shares | 394,160 | | | 383,266 | | | 366,301 | | | | | | | | | | Net income per share — basic(1) | $ | 0.75 | | | $ | 0.60 | | | $ | 0.87 | | | Net income per share — diluted(1) | $ | 0.74 | | | $ | 0.59 | | | $ | 0.86 | | (1) Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021. The following table summarizes the shares underlying the unvested performance-based restricted stock and anti-dilutive securities excluded from the basic and diluted earnings per share calculations (in thousands):F-37

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Fair value of William Hill equity awards

30

SEC-NUM

CAESARS ENTERTAINMENT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)continue to leverage the World Series of Poker (“WSOP”) brand, and license the WSOP trademarks for a variety of products and services. Extensive usage of digital platforms, continued legalization in additional states, and growing bettor demand are driving the market for online sports betting platforms in the U.S. and the William Hill Acquisition positioned us to address this growing market. On September 8, 2021, the Company entered into an agreement to sell William Hill International to 888 Holdings Plc for approximately £2.2 billion. The sale is subject to satisfaction of customary conditions, including receipt of the approval of shareholders and regulatory approvals, and is expected to close in the second quarter of 2022. The Company previously held an equity interest in William Hill PLC and William Hill US (see Note 5). Accordingly, the acquisition is accounted for as a business combination achieved in stages, or a “step acquisition.”The estimated purchase consideration in the acquisition was determined with reference to its acquisition date fair value. | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | (In millions) | Consideration | | Cash for outstanding William Hill common stock | $ | 3,909 | | | Fair value of William Hill equity awards | 30 | | | Settlement of preexisting relationships (net of receivable/payable) | 7 | | | Settlement of preexisting relationships (net of previously held equity investment and off-market settlement) | (34) | | | Total purchase consideration | $ | 3,912 | | Preliminary Purchase Price AllocationThe purchase price allocation for William Hill is preliminary as it relates to determining the fair value of certain assets and liabilities, including goodwill, and is subject to change. The fair values are based on management’s analysis including preliminary work performed by third-party valuation specialists, which are subject to finalization over the one-year measurement period. The following table summarizes the preliminary allocation of the purchase consideration to the identifiable assets acquired and liabilities assumed of William Hill, with the excess recorded as goodwill as of December 31, 2021: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | (In millions) | Fair Value | | Other current assets | $ | 164 | | | Assets held for sale | 4,337 | | | Property and equipment, net | 55 | | | Goodwill | 1,148 | | | Intangible assets (a) | 565 | | | Other noncurrent assets | 317 | | | Total assets | $ | 6,586 | | | | | | Other current liabilities | $ | 242 | | | Liabilities related to assets held for sale (b) | 2,142 | | | Deferred income taxes | 245 | | | Other noncurrent liabilities | 35 | | | Total liabilities | 2,664 | | | Noncontrolling interests | 10 | | | Net assets acquired | $ | 3,912 | | \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(a)Intangible assets consist of gaming rights valued at $80 million, trademarks valued at $27 million, developed technology valued at $110 million, reacquired rights valued at $280 million and customer relationships valued at $68 million.(b)Includes debt of $1.1 billion related to William Hill International at the acquisition date.The preliminary purchase price allocation is subject to a measurement period and has since been revised. Assets and liabilities held for sale noted above are substantially all related to William Hill International and during the fourth quarter ended December 31, 2021, management has revised the estimated fair value of the William Hill International operations which has resulted in changes in net assets and the allocation of goodwill. The net impact of these changes was an increase of $4 million to other current assets, a $38 million decrease to assets held for sale, a $46 million increase to goodwill, a $10 million increase to other noncurrent assets, a $7 million decrease to other current liabilities, a $12 million increase to liabilities related to assets held for sale, and a $17 million increase to deferred income taxes. The effect of these revisions during the quarter did not have an impact on our Statements of Operations.[Table of Contents](#i37dfc5eabc12461dbfc5ef573d80947e_7)74

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Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables

16

SEC-NUM

The final purchase price was allocated to assets acquired and liabilities assumed in the acquisition as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | (Dollars in millions) | Purchase Price Allocation | | Cash and cash equivalents | $ | 23 | | | Trade receivables, net | 16 | | | Inventories | 31 | | | Other current assets | 4 | | | Property, plant, and equipment | 72 | | | Other intangibles, net (1) | 361 | | | Other assets | 12 | | | Current liabilities | (22) | | | Other liabilities | (11) | | | Goodwill | 531 | | | Total assets acquired and liabilities assumed | $ | 1,017 | | (1) Other intangibles, net includes core technology of $338 million and customer relationships of $23 million. The carrying value of trade receivables, inventory, and trade payables, as well as certain other current and non-current assets and liabilities, generally represented the fair value at the date of acquisition. Property, plant, and equipment assets were valued using the cost approach, which is based on current replacement and/or reproduction cost of the related asset as new, less depreciation attributable to physical, functional, and economic factors. The Company then determined the remaining useful life based on the anticipated life of the asset and Company policy for similar assets. Core technology intangible assets of $338 million were valued using the multi-period, excess-earnings method, a method that values the intangible asset using the present value of the after-tax cash flows attributable to the intangible asset only. The significant assumptions used in developing the valuation included the estimated annual net cash flows (including application of an appropriate margin to forecasted revenue, revenue obsolescence rate, selling and marketing costs, return on working capital, contributory asset charges, and other factors), the discount rate that appropriately reflects the risk inherent in each future cash flow stream, and an assessment of the asset’s life cycle, as well as other factors. The assumptions used in the financial forecasts were based on historical data, supplemented by current and anticipated growth rates, management plans, and market-comparable information. Fair-value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. The core technology intangible asset has a weighted average useful life of 10 years. Goodwill has been allocated to the Softgel and Oral Technologies segment as shown in Note 4, Goodwill. Goodwill is mainly comprised of growth from expected increases in capacity utilization and new customers. The goodwill resulting from the Bettera Wellness acquisition is deductible for tax purposes. Results of this business were not material to the Company's consolidated statement of operations, financial position, or cash flows for the fiscal year ended June 30, 2022. Vaccine Manufacturing and Innovation Centre UK Limited Asset Acquisition In April 2022, the Company, through its wholly owned subsidiary, Catalent Oxford Limited, acquired a development and manufacturing facility near Oxford, United Kingdom (“U.K.”) and certain related assets and liabilities from The Vaccine Manufacturing and Innovation Centre UK Limited for $134 million in cash, including $9 million of closing costs. The facility and related assets and liabilities became part of the Company’s Biologics segment. The Company accounted for this transaction as an acquisition of assets in accordance with ASC 805. The Company funded this acquisition with cash on hand and allocated the purchase price among the net assets acquired, recognizing $1 million of current assets, $165 million of property, plant, and equipment, $18 million of current liabilities, and $14 million of other liabilities. Results of this business were not material to the Company's statement of operations, financial position, or cash flows for the fiscal year ended June 30, 2022.83

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Carrying costs on issuance of bonds to recover storm damage restoration costs

11.5

SEC-NUM

[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements Entergy Louisiana Debt Issuance In December 2021, Entergy Louisiana entered into a term loan credit agreement providing a $1.2 billion unsecured term loan due June 2023. The term loan bears interest at a variable interest rate based on an adjusted term Secured Overnight Financing Rate plus the applicable margin. Entergy Louisiana received the funds in January 2022 and used the proceeds for general corporate purposes, including storm restoration costs related to Hurricane Ida. Securitization Bonds Entergy Arkansas Securitization Bonds In June 2010 the APSC issued a financing order authorizing the issuance of bonds to recover Entergy Arkansas’s January 2009 ice storm damage restoration costs, including carrying costs of $11.5 million and $4.6 million of up-front financing costs. In August 2010, Entergy Arkansas Restoration Funding, LLC, a company wholly-owned and consolidated by Entergy Arkansas, issued $124.1 million of storm cost recovery bonds, with a coupon of 2.30%. Although the principal amount was not due until August 2021, Entergy Arkansas Restoration Funding made principal payments on the bonds in the amount of $7.3 million in 2020, after which the bonds were fully repaid. Entergy Arkansas Restoration Funding, LLC was then legally dissolved in January 2021. Entergy Louisiana Securitization Bonds – Little Gypsy In August 2011 the LPSC issued a financing order authorizing the issuance of bonds to recover Entergy Louisiana’s investment recovery costs associated with the canceled Little Gypsy repowering project. In September 2011, Entergy Louisiana Investment Recovery Funding I, L.L.C., a company wholly-owned and consolidated by Entergy Louisiana, issued $207.2 million of senior secured investment recovery bonds. The bonds had an interest rate of 2.04%. Although the principal amount was not due until September 2023, Entergy Louisiana Investment Recovery Funding made principal payments on the bonds in the amount of $11 million in 2021, after which the bonds were fully repaid. Entergy New Orleans Securitization Bonds - Hurricane Isaac In May 2015 the City Council issued a financing order authorizing the issuance of securitization bonds to recover Entergy New Orleans’s Hurricane Isaac storm restoration costs of $31.8 million, including carrying costs, the costs of funding and replenishing the storm recovery reserve in the amount of $63.9 million, and approximately $3 million of up-front financing costs associated with the securitization. In July 2015, Entergy New Orleans Storm Recovery Funding I, L.L.C., a company wholly owned and consolidated by Entergy New Orleans, issued $98.7 million of storm cost recovery bonds. The bonds have a coupon of 2.67%. Although the principal amount is not due until June 2027, Entergy New Orleans Storm Recovery Funding expects to make principal payments on the bonds over the next three years in the amounts of $12.3 million for 2022, $12.5 million for 2023, and $6.2 million for 2024, after which the bonds will be fully repaid. With the proceeds, Entergy New Orleans Storm Recovery Funding purchased from Entergy New Orleans the storm recovery property, which is the right to recover from customers through a storm recovery charge amounts sufficient to service the securitization bonds. The storm recovery property is reflected as a regulatory asset on the consolidated Entergy New Orleans balance sheet. The creditors of Entergy New Orleans do not have recourse to the assets or revenues of Entergy New Orleans Storm Recovery Funding, including the storm recovery property, and the creditors of Entergy New Orleans Storm Recovery Funding do not have recourse to the assets or revenues of Entergy New Orleans. Entergy New Orleans has no payment obligations to Entergy New Orleans Storm Recovery Funding except to remit storm recovery charge collections. 134

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Shares authorized to issue grants (in shares)

16.75

SEC-NUM

The Company’s assets that are measured at fair value on a nonrecurring basis and are evaluated with periodic testing for impairment include property, plant and equipment, investments, goodwill and other intangible assets. Estimates of the fair value of assets acquired and liabilities assumed in business combinations are generally developed using key inputs such as management’s projections of cash flows on a held-and-used basis (if applicable), discounted as appropriate, management’s projections of cash flows upon disposition and discount rates. Accordingly, these fair value measurements are in Level 3 of the fair value hierarchy. The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates, commodity rates or other financial indices. The Company's derivatives are over-the-counter instruments with liquid markets.The Company regularly evaluates the carrying value of its investments and during the first quarter of 2019, determined that the fair value of its telematics investment was below cost and recorded an impairment of the investment of $15.7 million based on observable price changes. Since initial date of the telematics investments, the Company has recorded cumulative impairment losses of $136.3 million. The Company sold its remaining investment in the second quarter of 2019. Refer to Note 16. The carrying amount of investments without readily determinable fair values is $52.0 million at December 31, 2021. The fair value of the Company’s cash, accounts receivable, securitized accounts receivable and related facility, prepaid expenses and other current assets, accounts payable, accrued expenses, customer deposits and short-term borrowings approximate their respective carrying values due to the short-term maturities of the instruments. The carrying value of the Company’s debt obligations approximates fair value as the interest rates on the debt are variable market based interest rates that reset on a quarterly basis. These are each Level 2 fair value measurements, except for cash, which is a Level 1 fair value measurement.5. Stockholders' EquityThe Company's Board of Directors (the "Board") has approved a stock repurchase program (as updated from time to time, the "Program") authorizing the Company to repurchase its common stock from time to time until February 1, 2023. On July 27, 2021, the Board increased the aggregate size of the Program by $1.0 billion, to $5.1 billion. Since the beginning of the Program through December 31, 2021, 20,068,498 shares have been repurchased for an aggregate purchase price of $4.4 billion, leaving the Company up to $0.7 billion available under the Program for future repurchases in shares of its common stock. There were 5,451,556 common shares totaling $1.4 billion in 2021; 3,497,285 common shares totaling $940.8 million in 2020 and 2,211,866 common shares totaling $636.8 million in 2019; repurchased under the Program. On January 25, 2022, the Board increased the aggregate size of the Program by $1.0 billion, to $6.1 billion. In January and February 2022, 1,510,027 shares were repurchased for an aggregate purchase price of $360.8 million, of which 1,066,015 shares with an aggregate purchase price of $256.5 million were repurchased pursuant to a 10b5-1 plan. As of March 1, 2022, the Company has up to $1.3 billion available under the Program for future repurchases of its common stock.Any stock repurchases may be made at times and in such amounts as deemed appropriate. The timing and amount of stock repurchases, if any, will depend on a variety of factors including the stock price, market conditions, corporate and regulatory requirements, and any additional constraints related to material inside information the Company may possess. Any repurchases have been and are expected to be funded by a combination of available cash flow from the business, working capital and debt. 6. Stock Based CompensationThe Company accounts for stock based compensation pursuant to relevant authoritative guidance, which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of estimated forfeitures, over the requisite service period for awards expected to vest. The Company has a Stock Incentive Plan (the "Plan"), pursuant to which the Company's board of directors is permitted to grant equity to employees and directors. Under the Plan, a maximum of 16.75 million shares of our common stock is approved to be issued for grants of restricted stock and stock options. At December 31, 2021, there were 1.4 million shares available to be granted under the Plan.The table below summarizes the expense recognized within general and administrative expenses in the Consolidated Statements of Income related to share-based payments recognized for the years ended December 31 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | 2020 | | 2019 | | Stock options | | $ | 30,057 | | | $ | 23,407 | | | $ | 32,736 | | | Restricted stock | | 50,014 | | | 19,977 | | | 28,217 | | | Stock-based compensation | | $ | 80,071 | | | $ | 43,384 | | | $ | 60,953 | | The tax benefits recorded on stock based compensation expense and upon the exercises of options were $32.8 million, $70.6 million and $61.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.70

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Repayments of short-term debt, net

496

SEC-NUM

[Table of](#i12c15483455e42ed90c996cc5e839e92_10) [Contents](#i12c15483455e42ed90c996cc5e839e92_10)THE HOME DEPOT, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Six Months Ended | | in millions | July 31,2022 | | August 1,2021 | | Cash Flows from Operating Activities: | | | | | Net earnings | $ | 9,404 | | | $ | 8,952 | | | Reconciliation of net earnings to net cash provided by operating activities: | | | | | Depreciation and amortization | 1,473 | | | 1,414 | | | Stock-based compensation expense | 196 | | | 226 | | | Changes in receivables, net | (295) | | | (321) | | | Changes in merchandise inventories | (4,009) | | | (2,191) | | | Changes in other current assets | (668) | | | (574) | | | Changes in accounts payable and accrued expenses | 1,079 | | | 1,658 | | | Changes in deferred revenue | (57) | | | 671 | | | Changes in income taxes payable | 61 | | | 154 | | | Changes in deferred income taxes | (95) | | | (116) | | | Other operating activities | 93 | | | 74 | | | Net cash provided by operating activities | 7,182 | | | 9,947 | | | | | | | | Cash Flows from Investing Activities: | | | | | Capital expenditures | (1,447) | | | (1,042) | | | Payments for businesses acquired, net | — | | | (416) | | | Other investing activities | (14) | | | — | | | Net cash used in investing activities | (1,461) | | | (1,458) | | | | | | | | Cash Flows from Financing Activities: | | | | | Repayments of short-term debt, net | (496) | | | — | | | Proceeds from long-term debt, net of discounts | 3,957 | | | — | | | Repayments of long-term debt | (2,366) | | | (1,434) | | | Repurchases of common stock | (3,962) | | | (6,905) | | | Proceeds from sales of common stock | 142 | | | 167 | | | Cash dividends | (3,910) | | | (3,526) | | | Other financing activities | (163) | | | (136) | | | Net cash used in financing activities | (6,798) | | | (11,834) | | | Change in cash and cash equivalents | (1,077) | | | (3,345) | | | Effect of exchange rate changes on cash and cash equivalents | (7) | | | 16 | | | Cash and cash equivalents at beginning of period | 2,343 | | | 7,895 | | | Cash and cash equivalents at end of period | $ | 1,259 | | | $ | 4,566 | | | | | | | | Supplemental Disclosures: | | | | | Cash paid for interest, net of interest capitalized | $ | 665 | | | $ | 626 | | | Cash paid for income taxes | 3,105 | | | 2,913 | | See accompanying notes to consolidated financial statements.5

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Long-term debt maturing during year three

592

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

string

Preferred Stock par value per share (usd per share)

0.01

SEC-NUM

[Table of Contents](#i16ebb68f4bd84ff99a771b20ec27c3fc_7)The aggregate fair values and carrying values of our long-term borrowings were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | January 29, 2022 | | January 30, 2021 | | (in millions) | | Fair Value | | Carrying Value | | Fair Value | | Carrying Value | | Level 1 | | | | | | | | | | Senior Notes | | $ | 3,558.5 | | | $ | 3,423.4 | | | $ | 3,654.4 | | | $ | 3,231.5 | | The fair values of our Senior Notes were determined using Level 1 inputs as quoted prices in active markets for identical assets or liabilities are available. The carrying value of our Revolving Credit Facility approximates its fair value because the interest rates vary with market interest rates.Note 8 - Shareholders’ EquityPreferred StockWe are authorized to issue 10,000,000 shares of Preferred Stock, $0.01 par value per share. No preferred shares are issued and outstanding at January 29, 2022 and January 30, 2021.Net Income Per ShareThe following table sets forth the calculations of basic and diluted net income per share: | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended | | | | January 29, | | January 30, | | February 1, | | (in millions, except per share data) | | 2022 | | 2021 | | 2020 | | Basic net income per share: | | | | | | | | Net income | | $ | 1,327.9 | | | $ | 1,341.9 | | | $ | 827.0 | | | Weighted average number of shares outstanding | | 227.9 | | | 236.4 | | | 237.2 | | | Basic net income per share | | $ | 5.83 | | | $ | 5.68 | | | $ | 3.49 | | | Diluted net income per share: | | | | | | | | Net income | | $ | 1,327.9 | | | $ | 1,341.9 | | | $ | 827.0 | | | Weighted average number of shares outstanding | | 227.9 | | | 236.4 | | | 237.2 | | | Dilutive effect of stock options and restricted stock (as determined by applying the treasury stock method) | | 1.1 | | | 0.9 | | | 1.1 | | | Weighted average number of shares and dilutive potential shares outstanding | | 229.0 | | | 237.3 | | | 238.3 | | | Diluted net income per share | | $ | 5.80 | | | $ | 5.65 | | | $ | 3.47 | | At January 29, 2022, January 30, 2021 and February 1, 2020, substantially all of the stock options outstanding were included in the calculation of the weighted average number of shares and dilutive potential shares outstanding.Share Repurchase ProgramsWe repurchased 9,156,898, 3,982,478 and 1,967,355 shares of common stock on the open market in fiscal 2021, fiscal 2020 and fiscal 2019, respectively, for $950.0 million, $400.0 million and $200.0 million, respectively. At January 29, 2022, we had $2.5 billion remaining under Board repurchase authorization.Note 9 – Employee Benefit PlansDollar Tree Retirement Savings PlanWe maintain a 401(k) plan which is available to all full-time, United States-based employees over 21 years of age. Eligible employees may make elective salary deferrals. We may make contributions, at our discretion, to eligible employees who have completed one year of service in which they have worked at least 1,000 hours. 61

string

Common shares of beneficial interest, shares authorized

100,000,000

SEC-NUM

Table of Contents Federal Realty Investment TrustConsolidated Balance Sheets | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | June 30, | | December 31, | | | 2022 | | 2021 | | | (In thousands, except share and per share data) | | | (Unaudited) | | | | ASSETS | | | | | Real estate, at cost | | | | | Operating (including $2,219,568 and $2,207,648 of consolidated variable interest entities, respectively) | $ | 9,076,274 | | | $ | 8,814,791 | | | Construction-in-progress (including $24,865 and $18,752 of consolidated variable interest entities, respectively) | 630,287 | | | 607,271 | | | | | | | | | 9,706,561 | | | 9,422,062 | | | Less accumulated depreciation and amortization (including $418,633 and $389,950 of consolidated variable interest entities, respectively) | (2,648,474) | | | (2,531,095) | | | Net real estate | 7,058,087 | | | 6,890,967 | | | Cash and cash equivalents | 176,559 | | | 162,132 | | | Accounts and notes receivable, net | 187,370 | | | 169,007 | | | Mortgage notes receivable, net | 9,499 | | | 9,543 | | | Investment in partnerships | 13,515 | | | 13,027 | | | Operating lease right of use assets | 89,613 | | | 90,743 | | | Finance lease right of use assets | 49,190 | | | 49,832 | | | Prepaid expenses and other assets | 226,608 | | | 237,069 | | | | | | | | TOTAL ASSETS | $ | 7,810,441 | | | $ | 7,622,320 | | | LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | Liabilities | | | | | Mortgages payable, net (including $317,619 and $335,301 of consolidated variable interest entities, respectively) | $ | 321,975 | | | $ | 339,993 | | | | | | | | Notes payable, net | 301,480 | | | 301,466 | | | Senior notes and debentures, net | 3,406,895 | | | 3,406,088 | | | Accounts payable and accrued expenses | 226,660 | | | 235,168 | | | Dividends payable | 87,397 | | | 86,538 | | | Security deposits payable | 27,232 | | | 25,331 | | | Operating lease liabilities | 71,827 | | | 72,661 | | | Finance lease liabilities | 72,019 | | | 72,032 | | | Other liabilities and deferred credits | 209,217 | | | 206,187 | | | Total liabilities | 4,724,702 | | | 4,745,464 | | | Commitments and contingencies (Note 6) | | | | | Redeemable noncontrolling interests | 209,312 | | | 213,708 | | | Shareholders’ equity | | | | | Preferred shares, authorized 15,000,000 shares, $.01 par: | | | | | 5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding | 150,000 | | | 150,000 | | | 5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 392,878 and 399,896 shares issued and outstanding, respectively | 9,822 | | | 9,997 | | | Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 80,896,804 and 78,603,305 shares issued and outstanding, respectively | 813 | | | 790 | | | Additional paid-in capital | 3,758,161 | | | 3,488,794 | | | Accumulated dividends in excess of net income | (1,126,463) | | | (1,066,932) | | | Accumulated other comprehensive income (loss) | 3,550 | | | (2,047) | | | Total shareholders’ equity of the Trust | 2,795,883 | | | 2,580,602 | | | Noncontrolling interests | 80,544 | | | 82,546 | | | Total shareholders’ equity | 2,876,427 | | | 2,663,148 | | | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 7,810,441 | | | $ | 7,622,320 | | The accompanying notes are an integral part of these consolidated statements.3

string

Ending balance, exercisable, aggregate intrinsic value

147.1

SEC-NUM

[Table of Contents](#iee2f14225b9a4b108d08cd0fe2886fa0_7)AMETEK, Inc.Notes to Consolidated Financial StatementsMarch 31, 2022(Unaudited)12. Share-Based CompensationThe Company's share-based compensation plans are described in Note 11, Share-Based Compensation, to the consolidated financial statements in Part II, Item 8, filed on the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Share Based Compensation Expense Total share-based compensation expense was as follows: | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Three Months EndedMarch 31, | | | | | 2022 | | 2021 | | | | | | | (In thousands) | | Stock option expense | $ | 3,440 | | | $ | 3,923 | | | | | | | Restricted stock expense | 4,778 | | | 6,227 | | | | | | | Performance restricted stock unit expense | 1,353 | | | 1,290 | | | | | | | Total pre-tax expense | $ | 9,571 | | | $ | 11,440 | | | | | | Pre-tax share-based compensation expense is included in the consolidated statement of income in either Cost of sales or Selling, general and administrative expenses, depending on where the recipient’s cash compensation is reported.Stock Options The fair value of each stock option grant is estimated on the grant date using a Black-Scholes-Merton option pricing model. The following weighted average assumptions were used in the Black-Scholes-Merton model to estimate the fair values of stock options granted during the periods indicated: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Three Months EndedMarch 31, 2022 | | Year Ended December 31,2021 | | Expected volatility | 24.5 | % | | 24.2 | % | | Expected term (years) | 5.0 | | 5.0 | | Risk-free interest rate | 2.33 | % | | 0.85 | % | | Expected dividend yield | 0.65 | % | | 0.66 | % | | Black-Scholes-Merton fair value per stock option granted | $ | 32.54 | | | $ | 25.63 | | The following is a summary of the Company’s stock option activity and related information: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares | | WeightedAverageExercisePrice | | WeightedAverageRemainingContractualLife | | AggregateIntrinsicValue | | | (In thousands) | | | | (Years) | | (In millions) | | Outstanding at December 31, 2021 | 3,352 | | | $ | 76.08 | | | | | | | Granted | 608 | | | 134.69 | | | | | | | Exercised | (142) | | | 62.75 | | | | | | | Forfeited | (24) | | | 91.75 | | | | | | | Outstanding at March 31, 2022 | 3,794 | | | $ | 76.56 | | | 6.7 | | $ | 180.4 | | | Exercisable at March 31, 2022 | 2,361 | | | $ | 70.86 | | | 5.3 | | $ | 147.1 | | The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 was $8.9 million. The total fair value of stock options vested during the three months ended March 31, 2022 was $7.3 million. As of March 31, 2022, there was approximately $28.0 million of expected future pre-tax compensation expense related to the 1.4 15

string

Maximum dividend paid

475.3

SEC-NUM

The combined statutory net income, excluding intercompany dividends and surplus note interest, and capital and surplus of the Company’s U.S. domiciled statutory insurance subsidiaries is as follows: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Years Ended December 31, | | | 2021 | | 2020 | | 2019 | | Property and casualty companies | $ | 468.0 | | | $ | 445.5 | | | $ | 313.3 | | | Life and health companies | 18.6 | | | 98.3 | | | 104.7 | | | Total statutory net income (1) | $ | 486.6 | | | $ | 543.8 | | | $ | 418.0 | | (1)There was no statutory net income for the year ended December 31, 2021 from the insurance entities included in the disposed Global Preneed business due to the August 2021 sale. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | December 31, | | | 2021 | | 2020 | | Property and casualty companies | $ | 1,529.1 | | | $ | 1,567.3 | | | Life and health companies | 120.3 | | | 445.8 | | | Total statutory capital and surplus (1) | $ | 1,649.4 | | | $ | 2,013.1 | | (1)There was no statutory capital and surplus as of December 31, 2021 from the insurance entities included in the disposed Global Preneed business. The Company also has non-insurance subsidiaries and foreign insurance subsidiaries that are not subject to SAP. The statutory net income and statutory capital and surplus amounts presented above do not include non-insurance subsidiaries and foreign insurance subsidiaries in accordance with SAP.Insurance enterprises are required by state insurance departments to adhere to minimum RBC requirements developed by the NAIC. All of the Company’s insurance subsidiaries exceed minimum RBC requirements.The payment of dividends to the Company by any of the Company’s regulated U.S domiciled insurance subsidiaries in excess of a certain amount (i.e., extraordinary dividends) must be approved by the subsidiary’s domiciliary jurisdiction department of insurance. Ordinary dividends, for which no regulatory approval is generally required, are limited to amounts determined by a formula, which varies by jurisdiction. The formula for the majority of the jurisdictions in which the Company’s subsidiaries are domiciled is based on the prior year’s statutory net income or 10% of the statutory surplus as of the end of the prior year. Some jurisdictions limit ordinary dividends to the greater of these two amounts, others limit them to the lesser of these two amounts and some jurisdictions exclude prior year realized capital gains from prior year net income in determining ordinary dividend capacity. Some jurisdictions have an additional stipulation that dividends may only be paid out of earned surplus. If insurance regulators determine that payment of an ordinary dividend or any other payments by the Company’s insurance subsidiaries to the Company (such as payments under a tax sharing agreement or payments for employee or other services) would be adverse to policyholders or creditors, the regulators may block such payments that would otherwise be permitted without prior approval. Based on the dividend restrictions under applicable laws and regulations, the maximum amount of dividends that the Company’s U.S domiciled insurance subsidiaries could pay to the Company in 2022 without regulatory approval is approximately $475.3 million. No assurance can be given that there will not be further regulatory actions restricting the ability of the Company’s insurance subsidiaries to pay dividends.State regulators require insurance companies to meet minimum capitalization standards designed to ensure that they can fulfill obligations to policyholders. Minimum capital requirements are based on the RBC Ratio, which is a ratio of a company’s total adjusted capital (“TAC”) to its RBC. TAC is equal to statutory surplus adjusted to exclude certain statutory liabilities. RBC is calculated by applying specified factors to various asset, premium, expense, liability, and reserve items.Generally, if a company’s RBC Ratio is below 100% (the “Authorized Control Level”), the insurance commissioner of the company’s jurisdiction of domicile is authorized to take control of the company, to protect the interests of policyholders. If the RBC Ratio is greater than 100% but less than 200% (the “Company Action Level”), the company must submit a RBC plan to the commissioner of the jurisdiction of domicile. Corrective actions may also be required if the RBC Ratio is greater than the Company Action Level but the company fails certain trend tests.As of December 31, 2021, the TAC of each of the Company’s insurance subsidiaries exceeded the Company Action Level and no trend tests that would require regulatory action were violated. As of December 31, 2021, the TAC of the Company’s property and casualty companies subject to RBC requirements was $1.53 billion. The corresponding Authorized Control Level was $326.1 million. As of December 31, 2021, the TAC of the Company’s life and health companies subject to RBC requirements was $126.7 million. The corresponding Authorized Control Level was $14.3 million. F-69

string

Common stock, authorized shares

250,000,000

SEC-NUM

[Table of Contents](#i3e760ad3c5f94c5892b7ddc949ade806_7) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | JACK HENRY & ASSOCIATES, INC. AND SUBSIDIARIES | | CONSOLIDATED BALANCE SHEETS | | (In Thousands, Except Share and Per Share Data) | | | | | | | | June 30,2022 | | June 30,2021 | | ASSETS | | | | | CURRENT ASSETS: | | | | | Cash and cash equivalents | $ | 48,787 | | | $ | 50,992 | | | Receivables, net | 348,072 | | | 306,564 | | | Income tax receivable | 13,822 | | | 30,243 | | | Prepaid expenses and other | 125,537 | | | 109,723 | | | Deferred costs | 57,105 | | | 46,215 | | | Assets held for sale | 20,201 | | | — | | | Total current assets | 613,524 | | | 543,737 | | | PROPERTY AND EQUIPMENT, net | 211,709 | | | 252,481 | | | OTHER ASSETS: | | | | | Non-current deferred costs | 143,750 | | | 127,205 | | | Computer software, net of amortization | 410,957 | | | 368,094 | | | Other non-current assets | 293,526 | | | 249,210 | | | Customer relationships, net of amortization | 69,503 | | | 81,842 | | | Other intangible assets, net of amortization | 25,137 | | | 26,129 | | | Goodwill | 687,458 | | | 687,458 | | | Total other assets | 1,630,331 | | | 1,539,938 | | | Total assets | $ | 2,455,564 | | | $ | 2,336,156 | | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | CURRENT LIABILITIES: | | | | | Accounts payable | $ | 21,034 | | | $ | 18,485 | | | Accrued expenses | 192,042 | | | 182,517 | | | Notes payable and current maturities of long-term debt | 67 | | | 110 | | | Deferred revenues | 330,687 | | | 319,748 | | | Total current liabilities | 543,830 | | | 520,860 | | | LONG-TERM LIABILITIES: | | | | | Non-current deferred revenues | 71,485 | | | 75,852 | | | Deferred income tax liability | 292,630 | | | 260,758 | | | Debt, net of current maturities | 115,000 | | | 100,083 | | | Other long-term liabilities | 50,996 | | | 59,311 | | | Total long-term liabilities | 530,111 | | | 496,004 | | | Total liabilities | 1,073,941 | | | 1,016,864 | | | STOCKHOLDERS' EQUITY | | | | | Preferred stock - $1 par value; 500,000 shares authorized, none issued | — | | | — | | | Common stock - $0.01 par value; 250,000,000 shares authorized; 103,921,724 shares issued at June 30, 2022; 103,795,169 shares issued at June 30, 2021 | 1,039 | | | 1,038 | | | Additional paid-in capital | 551,360 | | | 518,960 | | | Retained earnings | 2,636,342 | | | 2,412,496 | | | Less treasury stock at cost 31,042,903 shares at June 30, 2022; 29,792,903 shares at June 30, 2021 | (1,807,118) | | | (1,613,202) | | | Total stockholders' equity | 1,381,623 | | | 1,319,292 | | | Total liabilities and equity | $ | 2,455,564 | | | $ | 2,336,156 | | See notes to consolidated financial statements38

string

Contract liability, net of revenue recognized on contracts during the period

29.9

SEC-NUM

| | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | September 30, | | | | Types of Revenues | 2022 | | 2021 | | | | | | HCM | $ | 1,811.0 | | | $ | 1,666.7 | | | | | | | HRO, excluding PEO zero-margin benefits pass-throughs | 777.3 | | | 679.3 | | | | | | | PEO zero-margin benefits pass-throughs | 945.8 | | | 839.5 | | | | | | | Global | 540.5 | | | 545.7 | | | | | | | Interest on funds held for clients | 141.0 | | | 101.1 | | | | | | | Total Revenues | $ | 4,215.6 | | | $ | 3,832.3 | | | | | | Reconciliation of disaggregated revenue to our reportable segments for the three months ended September 30, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | Types of Revenues | Employer Services | | PEO | | Other | | Total | | HCM | $ | 1,813.2 | | | $ | — | | | $ | (2.2) | | | $ | 1,811.0 | | | HRO, excluding PEO zero-margin benefits pass-throughs | 296.8 | | | 482.3 | | | (1.8) | | | 777.3 | | | PEO zero-margin benefits pass-throughs | — | | | 945.8 | | | — | | | 945.8 | | | Global | 540.5 | | | — | | | — | | | 540.5 | | | Interest on funds held for clients | 139.7 | | | 1.3 | | | — | | | 141.0 | | | Total Segment Revenues | $ | 2,790.2 | | | $ | 1,429.4 | | | $ | (4.0) | | | $ | 4,215.6 | | Reconciliation of disaggregated revenue to our reportable segments for the three months ended September 30, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | Types of Revenues | Employer Services | | PEO | | Other | | Total | | HCM | $ | 1,669.1 | | | $ | — | | | $ | (2.4) | | | $ | 1,666.7 | | | HRO, excluding PEO zero-margin benefits pass-throughs | 256.2 | | | 424.0 | | | (0.9) | | | 679.3 | | | PEO zero-margin benefits pass-throughs | — | | | 839.5 | | | — | | | 839.5 | | | Global | 545.7 | | | — | | | — | | | 545.7 | | | Interest on funds held for clients | 100.5 | | | 0.6 | | | — | | | 101.1 | | | Total Segment Revenues | $ | 2,571.5 | | | $ | 1,264.1 | | | $ | (3.3) | | | $ | 3,832.3 | | Contract Balances The timing of revenue recognition for HCM, HRO and Global Solutions is consistent with the invoicing of clients, as invoicing occurs in the period the services are provided. Therefore, the Company does not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing. Changes in short-term deferred revenues related to set up fees for the three months ended September 30, 2022 were as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | | | | | | | | Contract Liability | | | Contract liability, July 1, 2022 | $ | 468.2 | | | Recognition of revenue included in beginning of year contract liability | (35.6) | | | Contract liability, net of revenue recognized on contracts during the period | 29.9 | | | Currency translation adjustments | (12.1) | | | Contract liability, September 30, 2022 | $ | 450.4 | | 8

string

Outstanding debt redeemed

500

SEC-NUM

CSX CORPORATION PART IIItem 8. Financial Statements and Supplementary DataNOTE 10. Debt and Credit Agreements Debt at December 2021 and December 2020 is shown in the table below. For information regarding the fair value of debt, see Note 13, Fair Value Measurements. | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | Maturity at December | AverageInterestRates atDecember | December | December | | (Dollars in Millions) | 2021 | 2021 | 2021 | 2020 | | Notes | 2022-2068 | 4.2% | $ | 16,166 | | $ | 16,542 | | | Equipment Obligations(a) | 2022-2024 | 6.2% | 153 | | 160 | | | Finance Leases | 2022-2032 | 6.1% | 47 | | 3 | | | | | | | | | Subtotal Long-term Debt (including current portion) | | | $ | 16,366 | | $ | 16,705 | | | Less Debt Due within One Year | | | (181) | | (401) | | | Long-term Debt (excluding current portion) | | | $ | 16,185 | | $ | 16,304 | | (a) Equipment obligations are secured by an interest in certain railroad equipment. Debt Issuance & Early Redemption of Long-term Debt No debt was issued in 2021. CSX issued the following notes in 2020, which are included in the consolidated balance sheets under long-term debt and may be redeemed by the Company at any time, subject to payment of certain make-whole premiums: •On December 1, 2020, issued $500 million of 2.50% notes due 2051. On December 30, 2020, the proceeds of the offering were used to fully redeem CSX’s outstanding $500 million of 3.70% notes that otherwise would have matured on November 1, 2023.•On March 30, 2020, issued $500 million of 3.8% notes due 2050. The net proceeds from debt issuances will be used for general corporate purposes, which may include debt repayments, repurchases of CSX's common stock, capital investment, working capital requirements, improvements in productivity and other cost reductions. For more information regarding a non-cash debt transaction with a related party, see Note 15, Investment in Affiliates and Related-Party Transactions. In July 2021, finance lease obligations and debt totaling $68 million were assumed related to the Company's acquisition of Quality Carriers on July 1, 2021. See Note 17, Business Combinations. CSX 2021 Form 10-K p.91

string

Operating Lease, Liability

200

SEC-NUM

| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | [Table of Contents](#i35a0317244714ddbbfcfc1f7731c8932_7) | emn-20220630_g1.jpg | | NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS9.LEASES AND OTHER COMMITMENTS Leases There are two types of leases: finance and operating. Both types of leases have associated right-to-use assets and lease liabilities that are valued at the present value of the lease payments and recognized on the Unaudited Consolidated Statements of Financial Position. The discount rate used in the measurement of a right-to-use asset and lease liability is the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, the collateralized incremental borrowing rate is used. The Company elected the accounting policy not to apply the recognition and measurement requirements to short-term leases with a term of 12 months or less and do not include a bargain purchase option. The Company has operating leases, as a lessee, with customary terms that do not include: significant variable lease payments; significant reasonably certain extensions or options required to be included in the lease term; restrictions; or other covenants for real property, rolling stock, and machinery and equipment. Real property leases primarily consist of office space and rolling stock leases primarily for railcars and fleet vehicles. At June 30, 2022 and December 31, 2021, operating right-to-use assets of $209 million and $216 million, respectively, are included as part of "Other noncurrent assets" on the Unaudited Consolidated Statements of Financial Position. The operating right-to-use assets include $3 million and $3 million, respectively, of assets previously classified as lease intangibles and $6 million and $5 million, respectively, of prepaid lease assets. Operating lease liabilities are included as part of "Payables and other current liabilities" and "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position. As of June 30, 2022, reconciliation of lease payments and operating lease liabilities is provided below: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | (Dollars in millions) | | Operating Lease Liabilities | | Remainder of 2022 | | $ | 29 | | | 2023 | | 50 | | | 2024 | | 37 | | | 2025 | | 30 | | | 2026 | | 21 | | | 2027 and beyond | | 53 | | | Total lease payments | | 220 | | | Less: amounts of lease payments representing interest | | 20 | | | Present value of future lease payments | | 200 | | | Less: current obligations under leases | | 50 | | | Long-term lease obligations | | $ | 150 | | The Company has operating leases, primarily leases for railcars, with terms that require the Company to guarantee a portion of the residual value of the leased assets upon termination of the lease that will expire beginning third quarter 2023. Residual guarantee payments that become probable and estimable are recognized as rent expense over the remaining life of the applicable lease. Management's current expectation is that the likelihood of material residual guarantee payments is remote. 22

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FERC Percent Equity in Proposed Common Equity Ratio

46.74

SEC-NUM

[Table of Contents](#i6266d2788e5849989ad57be380853c2d_7)Entergy Corporation and SubsidiariesNotes to Financial Statements equity and 63% debt. In the alternative, the LPSC argues that the equity ratio should be no higher than 49%, the composite equity ratio of System Energy and the other Entergy operating companies who purchase under the Unit Power Sales Agreement. The APSC and MPSC recommend that 35.98% be set as the common equity ratio for System Energy. As an alternative, the APSC and MPSC propose that System Energy’s common equity be set at 46.75% based on the median equity ratio of the proxy group for setting the return on equity. In September 2019 the FERC trial staff filed its rebuttal testimony in the return on equity proceeding. For the first refund period, the FERC trial staff calculates an authorized return on equity for System Energy of 9.40% based on the application of the FERC’s proposed methodology and an updated proxy group. For the second refund period, based on the study period ending May 31, 2019, the FERC trial staff rebuttal testimony argues for a return on equity of 9.63%. In September 2019 the FERC trial staff also filed direct and answering testimony relating to System Energy’s capital structure. The FERC trial staff argues that the average capital structure of the proxy group used to develop System Energy’s return on equity should be used to establish the capital structure. Using this approach, the FERC trial staff calculates the average capital structure for its proposed proxy group of 46.74% common equity, and 53.26% debt. In October 2019, System Energy filed answering testimony disputing the FERC trial staff’s, the LPSC’s, and the APSC’s and MPSC’s arguments for the use of a hypothetical capital structure and arguing that the use of System Energy’s actual capital structure is just and reasonable. In November 2019, in a proceeding that did not involve System Energy, the FERC issued an order addressing the methodology for determining the return on equity applicable to transmission owners in MISO. Thereafter, the procedural schedule in the System Energy proceeding was amended to allow the participants to file supplemental testimony addressing the order in the MISO transmission owner proceeding (Opinion No. 569). In February 2020 the LPSC, the MPSC and APSC, and the FERC trial staff filed supplemental testimony addressing Opinion No. 569 and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy. For the first refund period, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of 8.44%; the MPSC and APSC argue for an authorized return on equity of 8.41%; and the FERC trial staff argues for an authorized return on equity of 9.22%. For the second refund period and on a prospective basis, based on their respective interpretations and applications of the Opinion No. 569 methodology, the LPSC argues for an authorized return on equity for System Energy of 7.89%; the MPSC and APSC argue that an authorized return on equity of 8.01% may be appropriate; and the FERC trial staff argues for an authorized return on equity of 8.66%. In April 2020, System Energy filed supplemental answering testimony addressing Opinion No. 569. System Energy argues that the Opinion No. 569 methodology is conceptually and analytically defective for purposes of establishing just and reasonable authorized return on equity determinations and proposes an alternative approach. As its primary recommendation, System Energy continues to support the return on equity determinations in its March 2019 testimony for the first refund period and its June 2019 testimony for the second refund period. Under the Opinion No. 569 methodology, System Energy calculates a “presumptively just and reasonable range” for the authorized return on equity for the first refund period of 8.57% to 9.52%, and for the second refund period of 8.28% to 9.11%. System Energy argues that these ranges are not just and reasonable results. Under its proposed alternative methodology, System Energy calculates an authorized return on equity of 10.26% for the first refund period, which also falls within the presumptively just and reasonable range calculated for the second refund period and prospectively. In May 2020 the FERC issued an order on rehearing of Opinion No. 569 (Opinion No. 569-A). In June 2020 the procedural schedule in the System Energy proceeding was further revised in order to allow parties to address the Opinion No. 569-A methodology. Pursuant to the revised schedule, in June 2020, the LPSC, MPSC and APSC, and the FERC trial staff filed supplemental testimony addressing Opinion No. 569-A and how it would affect the return on equity evaluation for the two complaint periods concerning System Energy. For the first refund 95

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Undistributed earnings

4.4

SEC-NUM

[Table of Contents](#i36695dc5143241f795c32e47bf5f4b3d_7)CBRE GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)Cumulative tax effects of temporary differences are shown below (dollars in thousands): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | December 31, | | | 2021 | | 2020 | | Assets: | | | | | Tax losses and tax credits | $ | 307,507 | | | $ | 334,303 | | | Operating lease liabilities | 269,960 | | | 358,066 | | | Bonus and deferred compensation | 381,408 | | | 295,690 | | | Bad debt and other reserves | 65,188 | | | 73,061 | | | Pension obligation | 5,007 | | | 18,026 | | | All other | 65,710 | | | 24,623 | | | Deferred tax assets, before valuation allowance | $ | 1,094,781 | | | $ | 1,103,769 | | | Less: Valuation allowance | (273,256) | | | (291,096) | | | Deferred tax assets | $ | 821,525 | | | $ | 812,673 | | | | | | | | Liabilities: | | | | | Tax effect on revenue items related to Topic 606 adoption | $ | — | | | $ | (16,784) | | | Property and equipment | (92,166) | | | (88,595) | | | Unconsolidated affiliates and partnerships | (128,170) | | | (59,544) | | | Capitalized costs and intangibles | (583,219) | | | (313,099) | | | Operating lease assets | (240,261) | | | (366,671) | | | All other | (25,935) | | | (936) | | | Deferred tax liabilities | $ | (1,069,751) | | | $ | (845,629) | | | Net deferred tax liabilities | $ | (248,226) | | | $ | (32,956) | | As of December 31, 2021, we had a U.S. federal capital loss carryforward, offset by reserves for uncertain tax position, which will expire after 2024. As of December 31, 2021, there were deferred tax assets before valuation allowances of approximately $299.1 million related to foreign net operating losses (NOLs). The majority of the foreign NOLs carryforward indefinitely. In certain foreign jurisdictions NOLs expire each year beginning in 2021. The utilization of NOLs may be subject to certain limitations under U.S. federal, state and foreign laws. We have recorded a valuation allowance for deferred tax assets where we believe that it is more likely than not that the NOLs will not be utilized.We determined that as of December 31, 2021, $273.3 million of deferred tax assets do not satisfy the realization criteria set forth in Topic 740. Accordingly, a valuation allowance has been recorded for this amount. If released, the entire amount would result in a benefit to continuing operations. During the year ended December 31, 2021, our valuation allowance decreased by approximately $17.8 million. The decrease was attributed to a reversal of the beginning of year valuation allowance of $12.3 million as certain foreign subsidiaries expect to utilize deferred tax assets before expiration as a result of current and forecasted earnings within the applicable jurisdiction, a reduction of $19.5 million due to foreign currency translation and tax rate changes, and an increase in valuation allowance of $14.0 million due to current year activities. We believe it is more likely than not that future operations will generate sufficient taxable income to realize the benefit of our deferred tax assets recorded as of December 31, 2021, net of valuation allowance.At December 31, 2021, we have undistributed earnings of certain foreign subsidiaries of approximately $4.4 billion for which we have indefinitely reinvested and not recognized deferred taxes. Estimating the amount of the unrecognized deferred tax is not practicable due to the complexity and variety of assumptions necessary to estimate the tax. In 2021, following the acquisition of Turner & Townsend, we recorded $20.4 million of deferred tax liability related to book over tax basis difference in Turner & Townsend. The deferred tax liability was offset by an increase to goodwill in purchase accounting and therefore did not impact 2021 income tax expense.The total amount of gross unrecognized tax benefits was approximately $191.9 million and $168.5 million as of December 31, 2021 and 2020, respectively. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $108.5 million as of December 31, 2021. 106

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Liability (refund) from income tax examination

5

SEC-NUM

NOTE 22 - COMMITMENTS AND CONTINGENCIES Contingencies On January 25, 2018, Futuredontics, Inc., a former wholly-owned subsidiary of the Company, received service of a purported class action lawsuit brought by Henry Olivares and other similarly situated individuals in the Superior Court of the State of California for the County of Los Angeles. In January 2019, an amended complaint was filed adding another named plaintiff, Rachael Clarke, and various claims. The plaintiff class alleges several violations of the California wage and hours laws, including, but not limited to, failure to provide rest and meal breaks and the failure to pay overtime. The parties have engaged in written and other discovery. On February 5, 2019, Plaintiff Calethia Holt (represented by the same counsel as Mr. Olivares and Ms. Clarke) filed a separate representative action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. On April 5, 2019, Plaintiff Kendra Cato filed a similar action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. The Company has agreed to resolve all three actions (Olivares, Holt, and Cato). The court in Cato approved the settlement in that case, the settlement payment has been made, and the court dismissed the lawsuit. The parties to Olivares and Holt are in the process of seeking court approval of that settlement. The expected settlement amount, which is immaterial to the financial statements, has been recorded as an accrued liability within the Company's consolidated balance sheet as of December 31, 2021. On June 7, 2018, and August 9, 2018, two putative class action suits were filed, and later consolidated, in the Supreme Court of the State of New York, County of New York claiming that the Company and certain individual defendants, violated U.S. securities laws (the "State Court Action") by making material misrepresentations and omitting required information in the December 4, 2015 registration statement filed with the SEC in connection with the 2016 merger of Sirona Dental Systems Inc. ("Sirona") with DENTSPLY International Inc. (the "Merger"). The amended complaint alleges that the defendants failed to disclose, among other things, that a distributor had purchased excessive inventory of legacy Sirona products and that three distributors of the Company's products had been engaging in anticompetitive conduct. The plaintiffs seek to recover damages on behalf of a class of former Sirona shareholders who exchanged their shares for shares of the Company's stock in the Merger. On September 26, 2019, the Court granted the Company's motion to dismiss all claims and a judgment dismissing the case was subsequently entered. On February 4, 2020, the Court denied plaintiffs' post-judgment motion to vacate or modify the judgment and to grant them leave to amend their complaint. The plaintiffs appealed the dismissal and the denial of the post-judgment motion to the Supreme Court of the State of New York, Appellate Division, First Department, and the Company cross-appealed select rulings in the Court's decision dismissing the action. The plaintiffs' appeals and the Company's cross-appeal were consolidated and argued on January 12, 2021. On February 2, 2021, the Appellate Division issued its decision upholding the dismissal of the State Court Action with prejudice on statute of limitations grounds. The Plaintiffs did not appeal the Appellate Division decision. On December 19, 2018, a related putative class action was filed in the U.S. District Court for the Eastern District of New York against the Company and certain individual defendants (the "Federal Class Action"). The plaintiff makes similar allegations and asserts the same claims as those asserted in the State Court Action. In addition, the plaintiff alleges that the defendants violated U.S. securities laws by making false and misleading statements in quarterly and annual reports and other public statements between February 20, 2014, and August 7, 2018. The plaintiff asserts claims on behalf of a putative class consisting of (a) all purchasers of the Company's stock during the period February 20, 2014 through August 7, 2018 and (b) former shareholders of Sirona who exchanged their shares of Sirona stock for shares of the Company's stock in the Merger. The Company moved to dismiss the amended complaint on August 15, 2019. The plaintiff filed its second amended complaint on January 22, 2021, and the Company filed a motion to dismiss the second amended complaint on March 8, 2021. Briefing on the motion to dismiss was fully submitted on May 21, 2021, and that motion is currently pending before the Court. The Company intends to defend itself vigorously in these actions. As a result of an audit by the IRS for fiscal years 2012 through 2013, on February 11, 2019, the IRS issued to the Company a “30-day letter” and a Revenue Agent’s Report (“RAR”), relating to the Company’s worthless stock deduction in 2013 in the amount of $546 million. The RAR disallows the deduction and, after adjusting the Company’s net operating loss carryforward, asserts that the Company is entitled to a refund of $5 million for 2012, has no tax liability for 2013, and owes a deficiency of $17 million in tax for 2014, excluding interest. In accordance with ASC 740, the Company recorded the tax benefit associated with the worthless stock deduction in the Company’s 2012 financial statements. In March 2019, the Company submitted a formal protest disputing on multiple grounds the proposed taxes. The Company and its advisors discussed its position with the IRS Appeals Office Team on October 28, 2020 and, on November 13, 2020, submitted a supplemental response to questions raised by the Appeals Team. The Company’s position continues to be reviewed by the IRS Appeals Office team. The Company 119

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TotalUnconditionalPurchaseObligationBalanceSheetAmountFourYearsAfterFiscalYearEnd

219

SEC-NUM

Table of Contents(11) COMMITMENTS AND CONTINGENCIESDevelopment, Celebrity, League and Content Licenses: Payments and CommitmentsThe products we produce in our studios are designed and created by our employee designers, artists, software programmers and by non-employee software developers (“independent artists” or “third-party developers”). We typically advance development funds to the independent artists and third-party developers during development of our games, usually in installment payments made upon the completion of specified development milestones. Contractually, these payments are generally considered advances against subsequent royalties on the sales of the products. These terms are set forth in written agreements entered into with the independent artists and third-party developers.In addition, we have certain celebrity, league and content license contracts that contain minimum guarantee payments and marketing commitments to promote the games we publish that may not be dependent on any deliverables. These developer and content license commitments represent the sum of (1) the cash payments due under non-royalty-bearing licenses and services agreements and (2) the minimum guaranteed payments and advances against royalties due under royalty-bearing licenses and services agreements, the majority of which are conditional upon performance by the counterparty. These minimum guarantee payments and any related marketing commitments are included in the table below.The following table summarizes our minimum contractual obligations as of June 30, 2022 (in millions): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fiscal Years Ending March 31, | | | | | 2023 | | | | | | | | | | | | | | | | | (Remaining | | | | | | | | | | | | | | | Total | | nine mos.) | | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Unrecognized commitments | | | | | | | | | | | | | | | | | Developer/licensor commitments | $ | 1,731 | | | $ | 240 | | | $ | 422 | | | $ | 428 | | | $ | 355 | | | $ | 78 | | | $ | 65 | | | $ | 143 | | | Marketing commitments | 810 | | | 172 | | | 234 | | | 199 | | | 123 | | | 53 | | | 8 | | | 21 | | | Senior Notes interest | 822 | | | 35 | | | 55 | | | 55 | | | 54 | | | 36 | | | 36 | | | 551 | | | Operating lease imputed interest | 30 | | | 6 | | | 6 | | | 5 | | | 3 | | | 2 | | | 2 | | | 6 | | | Operating leases not yet commenced (a) | 121 | | | — | | | 4 | | | 8 | | | 13 | | | 11 | | | 9 | | | 76 | | | Other purchase obligations | 189 | | | 55 | | | 94 | | | 20 | | | 12 | | | 8 | | | — | | | — | | | Total unrecognized commitments | 3,703 | | | 508 | | | 815 | | | 715 | | | 560 | | | 188 | | | 120 | | | 797 | | | | | | | | | | | | | | | | | | | | Recognized commitments | | | | | | | | | | | | | | | | | Senior Notes principal and interest | 1,920 | | | 20 | | | — | | | — | | | 400 | | | — | | | — | | | 1,500 | | | Operating leases | 366 | | | 70 | | | 75 | | | 59 | | | 46 | | | 31 | | | 19 | | | 66 | | | Transition Tax and other taxes | 19 | | | 2 | | | 4 | | | 6 | | | 7 | | | — | | | — | | | — | | | | | | | | | | | | | | | | | | | | Total recognized commitments | 2,305 | | | 92 | | | 79 | | | 65 | | | 453 | | | 31 | | | 19 | | | 1,566 | | | | | | | | | | | | | | | | | | | | Total Commitments | $ | 6,008 | | | $ | 600 | | | $ | 894 | | | $ | 780 | | | $ | 1,013 | | | $ | 219 | | | $ | 139 | | | $ | 2,363 | | (a)As of June 30, 2022, we have entered into office and equipment leases that have not yet commenced with aggregate future lease payments of approximately $121 million. These leases are expected to commence between fiscal year 2023 and fiscal year 2024, and will have lease terms ranging from 2 to 12 years.The unrecognized amounts represented in the table above reflect our minimum cash obligations for the respective fiscal years, but do not necessarily represent the periods in which they will be recognized and expensed in our Condensed Consolidated Financial Statements. In addition, the amounts in the table above are presented based on the dates the amounts are contractually due as of June 30, 2022; however, certain payment obligations may be accelerated depending on the performance of our operating results.In addition to what is included in the table above, as of June 30, 2022, we had a net liability for unrecognized tax benefits and an accrual for the payment of related interest totaling $421 million, of which we are unable to make a reasonably reliable estimate of when cash settlement with a taxing authority will occur.Subsequent to June 30, 2022, we entered into licensor and office lease agreements with third parties which are not included in the table above, and contingently commit us to pay an additional $776 million at various dates through fiscal year 2034.19

string

Preferred stock, authorized (in shares)

500

SEC-NUM

[Table of](#i7d20a63dbc7f4057897188cf4f4b9871_7) [Contents](#i7d20a63dbc7f4057897188cf4f4b9871_7)AMAZON.COM, INC.CONSOLIDATED BALANCE SHEETS(in millions, except per share data) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | December 31, 2021 | | June 30, 2022 | | | | | (unaudited) | | ASSETS | | | | | Current assets: | | | | | Cash and cash equivalents | $ | 36,220 | | | $ | 37,478 | | | Marketable securities | 59,829 | | | 23,232 | | | Inventories | 32,640 | | | 38,153 | | | Accounts receivable, net and other | 32,891 | | | 34,804 | | | Total current assets | 161,580 | | | 133,667 | | | Property and equipment, net | 160,281 | | | 173,706 | | | Operating leases | 56,082 | | | 58,430 | | | Goodwill | 15,371 | | | 20,195 | | | Other assets | 27,235 | | | 33,730 | | | Total assets | $ | 420,549 | | | $ | 419,728 | | | LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | Current liabilities: | | | | | Accounts payable | $ | 78,664 | | | $ | 71,219 | | | Accrued expenses and other | 51,775 | | | 56,254 | | | Unearned revenue | 11,827 | | | 12,818 | | | Total current liabilities | 142,266 | | | 140,291 | | | Long-term lease liabilities | 67,651 | | | 66,524 | | | Long-term debt | 48,744 | | | 58,053 | | | Other long-term liabilities | 23,643 | | | 23,458 | | | Commitments and contingencies (Note 4) | | | | | Stockholders’ equity: | | | | | Preferred stock ($0.01 par value; 500 shares authorized; no shares issued or outstanding) | — | | | — | | | Common stock ($0.01 par value; 100,000 shares authorized; 10,644 and 10,699 shares issued; 10,175 and 10,183 shares outstanding) | 106 | | | 107 | | | Treasury stock, at cost | (1,837) | | | (7,837) | | | Additional paid-in capital | 55,437 | | | 63,871 | | | Accumulated other comprehensive income (loss) | (1,376) | | | (4,782) | | | Retained earnings | 85,915 | | | 80,043 | | | Total stockholders’ equity | 138,245 | | | 131,402 | | | Total liabilities and stockholders’ equity | $ | 420,549 | | | $ | 419,728 | | See accompanying notes to consolidated financial statements.6

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Discontinued Operation, Tax Effect of Gain (Loss) from Disposal of Discontinued Operation

39

SEC-NUM

Results of discontinued operations were as follows: | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | (Millions) | | | | 2020 | | | | Net sales | | | | $ | 359 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings before taxes from operations | | | | $ | 53 | | | | | Taxes on earnings from operations | | | | 17 | | | | | Gain on sales of businesses / costs associated with selling the businesses | | | | 1,039 | | | | | Tax expense on sales / costs associated with selling the businesses | | | | 39 | | | | | Earnings from discontinued operations | | | | $ | 1,036 | | | | In addition, in the third quarter of 2021, we recognized a $6 million loss due to tax expense from return-to-provision adjustments related to the sale of Campbell International.The sale of the Arnott's and other international operations resulted in a substantial capital gain for tax purposes. We were able to utilize capital losses in 2020, which were offset with valuation allowances as of July 28, 2019, to offset the capital gain.Under the terms of the sale of the Arnott's and other international operations, we entered into a long-term licensing arrangement for the exclusive rights to certain Campbell brands in certain non-U.S. markets. We provided certain transition services to support the divested businesses.The significant operating non-cash items, capital expenditures and sale proceeds of discontinued operations were as follows: | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | (Millions) | | | | 2020 | | Cash flows from discontinued operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net gain on sales of discontinued operations businesses | | | | $ | (1,039) | | | | | | | | | Cash flows from discontinued investing activities: | | | | | | Capital expenditures | | | | $ | 30 | | | Sales of discontinued operations businesses, net of cash divested | | | | 2,466 | | Other DivestituresOn October 11, 2019, we completed the sale of our European chips business for £63 million, or $77 million. The pre-tax loss recognized in the first quarter of 2020 on the sale was $64 million, which included the impact of allocated goodwill and foreign currency translation adjustments. For tax purposes, we were able to use the capital loss on this sale to offset a portion of the capital gain from the sale of the Arnott's and other international operations. The after-tax loss was $37 million. The European chips business had net sales of $25 million in 2020. Earnings from the business were not material. The results of the European chips business through the date of sale were reflected in continuing operations within the Snacks reportable segment.On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $101 million. The purchase agreement contained customary representations, warranties, indemnifications and other obligations between us and the buyer. In addition, we have agreed to indemnify the buyer for certain claims against the Plum baby food and snacks business alleging the presence of heavy metals in the products manufactured or sold on or prior to May 2, 2021, that were pending at the time of closing of the transaction or are asserted within two years thereafter. We recognized a pre-tax loss of $11 million and an after-tax gain on the sale of $3 million. The business had net sales of $68 million in 2021 and $104 million in 2020. Earnings were not material in the periods. The results of the business through the date of sale were reflected in continuing operations within the Meals & Beverages reportable segment.44

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Extinguishment of finance lease obligation through an assignment agreement

52

SEC-NUM

THE CHARLES SCHWAB CORPORATION Continued from previous page. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | Year Ended December 31, | 2021 | 2020 | 2019 | | Supplemental Cash Flow Information | | | | | Non-cash investing activity: | | | | | Securities transferred from held to maturity to available for sale, at fair value | $ | — | | $ | 136,099 | | $ | 8,771 | | | | | | | | Additions of equipment, office facilities, and property | $ | 125 | | $ | 110 | | $ | 45 | | | Acquisition of TD Ameritrade | $ | — | | $ | 21,758 | | $ | — | | | Non-cash financing activity: | | | | | Extinguishment of finance lease obligation through an assignment agreement | $ | — | | $ | — | | $ | 52 | | | | | | | | Other Supplemental Cash Flow Information | | | | | Cash paid during the period for: | | | | | Interest | $ | 501 | | $ | 434 | | $ | 1,075 | | | Income taxes | $ | 2,053 | | $ | 803 | | $ | 1,199 | | | Amounts included in the measurement of lease liabilities | $ | 212 | | $ | 163 | | $ | 133 | | | Leased assets obtained in exchange for new operating lease liabilities | $ | 89 | | $ | 160 | | $ | 97 | | | Leased assets obtained in exchange for new finance lease liabilities | $ | 109 | | $ | — | | $ | — | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | December 31, | 2021 | 2020 | 2019 | | Reconciliation of cash, cash equivalents and amounts reported within the balance sheet (1) | | | | | Cash and cash equivalents | $ | 62,975 | | $ | 40,348 | | $ | 29,345 | | | Restricted cash and cash equivalents amounts included in cash and investments segregated and on deposit for regulatory purposes | 30,363 | | 30,212 | | 16,232 | | | Total cash and cash equivalents, including amounts restricted shown in the statement of cash flows | $ | 93,338 | | $ | 70,560 | | $ | 45,577 | | (1) For more information on the nature of restrictions on restricted cash and cash equivalents, see Note 23. See Notes to Consolidated Financial Statements. - 66 -

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Change in unrealized gain (loss) on securities

1

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Schedule II (continued) | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | Cincinnati Financial Corporation (parent company only) | | Condensed Statements of Income and Comprehensive Income | | (Dollars in millions) | | Years ended December 31, | | | | 2021 | | 2020 | | 2019 | | Revenues | | | | | | | | Investment income, net of expenses | | $ | 91 | | | $ | 81 | | | $ | 75 | | | Investment gains and losses, net | | 1,058 | | | 556 | | | 728 | | | Other revenue | | 15 | | | 15 | | | 15 | | | Total revenues | | 1,164 | | | 652 | | | 818 | | | Expenses | | | | | | | | Interest expense | | 53 | | | 54 | | | 52 | | | Other expenses | | 32 | | | 34 | | | 37 | | | Total expenses | | 85 | | | 88 | | | 89 | | | Income Before Income Taxes and Earnings of Subsidiaries | | 1,079 | | | 564 | | | 729 | | | Provision for Income Taxes | | 217 | | | 111 | | | 146 | | | Net Income Before Earnings of Subsidiaries | | 862 | | | 453 | | | 583 | | | Increase in equity of subsidiaries | | 2,084 | | | 763 | | | 1,414 | | | Net Income | | $ | 2,946 | | | $ | 1,216 | | | $ | 1,997 | | | Other Comprehensive Income (Loss), Net of Taxes | | | | | | | | Change in unrealized gain on securities | | 1 | | | — | | | — | | | Amortization of pension actuarial gains (losses) and prior service costs | | 54 | | | (25) | | | 5 | | | Other Comprehensive Income (Loss), Net of Taxes Before Other Comprehensive Income of Subsidiaries | | 55 | | | (25) | | | 5 | | | Other comprehensive income (loss) of subsidiaries | | (176) | | | 346 | | | 421 | | | Other comprehensive income (loss) | | (121) | | | 321 | | | 426 | | | Comprehensive Income | | $ | 2,825 | | | $ | 1,537 | | | $ | 2,423 | | | | | | | | | | This condensed financial information should be read in conjunction with the Consolidated Financial Statements and Notes included in Part II, Item 8. Cincinnati Financial Corporation - 2021 10-K - Page 183

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Due in one year or less

185

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[Table of](#i7860c65eab2647ffbae7e3867c1cf525_7) [Contents](#i7860c65eab2647ffbae7e3867c1cf525_7)The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of September 30, 2022 and December 31, 2021 are $997 million and $1,112 million, respectively. The decrease in unrecognized tax benefits includes a decrease associated with the resolution of the 2017 IRS audit. It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months. At this time, the Company is not able to estimate the range by which these potential events could impact 3M’s unrecognized tax benefits in the next 12 months. As of September 30, 2022 and December 31, 2021, the Company had valuation allowances of $114 million and $142 million on its deferred tax assets, respectively.NOTE 9. Marketable SecuritiesThe Company invests in asset-backed securities, certificates of deposit/time deposits, commercial paper, and other securities. The following is a summary of amounts recorded on the Consolidated Balance Sheet for marketable securities (current and non-current). | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | (Millions) | | September 30,2022 | | December 31,2021 | | | | | | | | Commercial paper | | $ | 130 | | | $ | 109 | | | Certificates of deposit/time deposits | | 52 | | | 14 | | | U.S. treasury securities | | — | | | 75 | | | U.S. municipal securities | | 3 | | | 3 | | | Current marketable securities | | 185 | | | 201 | | | | | | | | | U.S. municipal securities | | 27 | | | 27 | | | Non-current marketable securities | | 27 | | | 27 | | | | | | | | | Total marketable securities | | $ | 212 | | | $ | 228 | | At September 30, 2022 and December 31, 2021, gross unrealized, gross realized, and net realized gains and/or losses (pre-tax) were not material. The balances at September 30, 2022 for marketable securities by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | (Millions) | | September 30,2022 | | Due in one year or less | | $ | 185 | | | Due after one year through five years | | 15 | | | Due after five years through ten years | | 12 | | | Total marketable securities | | $ | 212 | | NOTE 10. Long-Term Debt and Short-Term BorrowingsIn February 2022, 3M repaid 500 million euros aggregate principal amount of fixed-rate medium-term notes that matured. In June 2022, 3M repaid $600 million aggregate principal amount of fixed-rate medium-term notes that matured. 2021 issuances, maturities, and extinguishments of short- and long-term debt are described in Note 5 to the Consolidated Financial Statements in 3M's Current Report on Form 8-K dated April 26, 2022 (which updated 3M’s 2021 Annual Report on Form 10-K).The Company had no commercial paper outstanding at September 30, 2022 and December 31, 2021.19

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Definitive agreement for acquisition of assets, value

12

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[Table of Contents](#ic4907372b5a74ad699ec049e915a6266_10)4. DISCONTINUED OPERATIONS In the first quarter of fiscal year 2021, we recorded a tax benefit of $10.3 primarily from the settlement of a state tax appeal related to the gain on the sale of our former Performance Materials Division in fiscal year 2017. The benefit is reflected within "Income from discontinued operations, net of tax" on our consolidated income statement for the three months ended 31 December 2020. The settlement did not have an impact on our statement of cash flows for the first three months of fiscal year 2021. 5. INVENTORIESThe components of inventories are as follows: | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | 31 December | | 30 September | | | | 2021 | | 2021 | | Finished goods | | $158.5 | | | $150.7 | | | Work in process | | 25.7 | | | 24.0 | | | Raw materials, supplies and other | | 303.0 | | | 279.2 | | | Inventories | | $487.2 | | | $453.9 | | | | | | | | | | | | | | 6. EQUITY AFFILIATESEquity Affiliate Investment in Jazan Integrated Gasification and Power Company (“JIGPC”)On 27 October 2021, we made an initial investment of $1.6 billion in Jazan Integrated Gasification and Power Company ("JIGPC"). JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra in the Jazan Economic City, Saudi Arabia. Our investment, which was made primarily in the form of shareholder loans, represents a 55% interest in the joint venture, of which 4% is attributable to the non-controlling partner of Air Products Qudra. Our $1.6 billion investment includes approximately $130 from the non-controlling partner.We expect to make an additional investment in JIGPC of approximately $1 billion in 2023.We determined JIGPC is a variable interest entity for which we are not the primary beneficiary as we do not have the power to direct the activities that are most significant to the economic performance of the joint venture. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Therefore, our investment in JIGPC has been accounted for under the equity method within the Middle East and India segment. Pursuant to the joint venture agreement, cash distributions will include preferred distributions to some shareholders. We record our share of income considering current distributions and projections of cash available to Air Products over the life of the venture.As of 31 December 2021, the carrying value of our investment totaled $1,696.1 and is presented as “Investments in and advances to equity affiliates” on our consolidated balance sheet. Our loss exposure is limited to our investment in the joint venture.JIGPC Joint VentureOn 27 September 2021, JIGPC signed definitive agreements for the acquisition of project assets from Aramco for $12 billion and entered into related project financing for the purchase. JIGPC will complete the acquisition of the project assets, which include power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities, in two phases. The first phase was completed on 27 October 2021 for $7 billion. The second phase is expected to be completed in 2023. JIGPC will commission, operate, and maintain the project assets to supply electricity, steam, hydrogen and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022.JIGPC accounted for the asset transfer as a financing. Accordingly, the joint venture recorded a financing receivable upon acquisition and will recognize financing income over the supply term.13

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Discontinued Operation, Tax Effect of Discontinued Operation

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Results of discontinued operations were as follows: | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | (Millions) | | | | 2020 | | | | Net sales | | | | $ | 359 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Earnings before taxes from operations | | | | $ | 53 | | | | | Taxes on earnings from operations | | | | 17 | | | | | Gain on sales of businesses / costs associated with selling the businesses | | | | 1,039 | | | | | Tax expense on sales / costs associated with selling the businesses | | | | 39 | | | | | Earnings from discontinued operations | | | | $ | 1,036 | | | | In addition, in the third quarter of 2021, we recognized a $6 million loss due to tax expense from return-to-provision adjustments related to the sale of Campbell International.The sale of the Arnott's and other international operations resulted in a substantial capital gain for tax purposes. We were able to utilize capital losses in 2020, which were offset with valuation allowances as of July 28, 2019, to offset the capital gain.Under the terms of the sale of the Arnott's and other international operations, we entered into a long-term licensing arrangement for the exclusive rights to certain Campbell brands in certain non-U.S. markets. We provided certain transition services to support the divested businesses.The significant operating non-cash items, capital expenditures and sale proceeds of discontinued operations were as follows: | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | (Millions) | | | | 2020 | | Cash flows from discontinued operating activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net gain on sales of discontinued operations businesses | | | | $ | (1,039) | | | | | | | | | Cash flows from discontinued investing activities: | | | | | | Capital expenditures | | | | $ | 30 | | | Sales of discontinued operations businesses, net of cash divested | | | | 2,466 | | Other DivestituresOn October 11, 2019, we completed the sale of our European chips business for £63 million, or $77 million. The pre-tax loss recognized in the first quarter of 2020 on the sale was $64 million, which included the impact of allocated goodwill and foreign currency translation adjustments. For tax purposes, we were able to use the capital loss on this sale to offset a portion of the capital gain from the sale of the Arnott's and other international operations. The after-tax loss was $37 million. The European chips business had net sales of $25 million in 2020. Earnings from the business were not material. The results of the European chips business through the date of sale were reflected in continuing operations within the Snacks reportable segment.On May 3, 2021, we completed the sale of our Plum baby food and snacks business for $101 million. The purchase agreement contained customary representations, warranties, indemnifications and other obligations between us and the buyer. In addition, we have agreed to indemnify the buyer for certain claims against the Plum baby food and snacks business alleging the presence of heavy metals in the products manufactured or sold on or prior to May 2, 2021, that were pending at the time of closing of the transaction or are asserted within two years thereafter. We recognized a pre-tax loss of $11 million and an after-tax gain on the sale of $3 million. The business had net sales of $68 million in 2021 and $104 million in 2020. Earnings were not material in the periods. The results of the business through the date of sale were reflected in continuing operations within the Meals & Beverages reportable segment.44

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Sales-type and Direct Financing Leases, Lease Receivable, Payments to be Received, Rolling Year Three

171

SEC-NUM

[Table of Contents](#i96cbbb599c964cb4a125b720672b6568_10)As of December 31, 2021, undiscounted cash flows for notes receivable, sales-type/finance and operating leases over the next five years and thereafter are as follows: | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Notes receivable | | Sales-type/finance leases | | Operating leases | | Year 1 | $194 | | | $201 | | | $66 | | | Year 2 | 34 | | | 180 | | | 55 | | | Year 3 | 18 | | | 171 | | | 39 | | | Year 4 | 19 | | | 141 | | | 18 | | | Year 5 | 21 | | | 127 | | | 15 | | | Thereafter | 126 | | | 279 | | | 37 | | | Total financing receipts | 412 | | | 1,099 | | | 230 | | | Less imputed interest | | | (265) | | | | | Estimated unguaranteed residual values | | | 110 | | | | | Total | $412 | | | $944 | | | $230 | | At December 31, 2021 and December 31, 2020, unguaranteed residual values were $110 and $299. Guaranteed residual values at December 31, 2021 were not significant. Note 10 – Property, Plant and EquipmentProperty, plant and equipment at December 31 consisted of the following: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | 2021 | | 2020 | | Land | $377 | | | $512 | | | Buildings and land improvements | 14,152 | | | 14,415 | | | Machinery and equipment | 15,692 | | | 16,060 | | | Construction in progress | 1,235 | | | 1,340 | | | Gross property, plant and equipment | 31,456 | | | 32,327 | | | Less accumulated depreciation | (20,538) | | | (20,507) | | | Total | $10,918 | | | $11,820 | | Depreciation expense was $1,488, $1,533 and $1,567 for the years ended December 31, 2021, 2020 and 2019, respectively. Interest capitalized during the years ended December 31, 2021, 2020 and 2019 totaled $76, $81 and $83, respectively.During 2021 and 2020, we acquired $46 and $47 of property, plant and equipment through non-cash investing and financing transactions. Accounts payable related to purchases of property, plant and equipment were $295 and $182 for the years ended December 31, 2021 and 2020.89

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Adjustments to carrying value of intangible assets

119

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The estimated fair value of marketing-related rights, which relate to assembled workforce, was determined using a replacement cost approach, which consists of developing an estimate of the current cost of a similar new asset having the nearest equivalent utility to the asset being valued. The assembled workforce is being amortized over a period of 5 years by using the straight-line method.The estimated fair value of the acquired inventory was determined using the comparative sales method, which uses actual or expected selling prices of inventory as the base amount to which adjustments for selling effort and a profit on the buyer’s effort are applied. Inventory fair value adjustments is being amortized as inventory turns over, which we estimate to approximate 2.5 years.Upon closing, we had a difference between the book basis and tax basis of the assets acquired. The Company used the simultaneous equations method to determine the assigned value of the net assets acquired and the related deferred tax assets or liabilities. Use of this methodology resulted in an increase to the carrying value of the intangible assets of $119 million, a net deferred tax liability of $24 million and a deferred credit of $96 million. The tax effects of the acquisition are based on Amgen’s estimated blended statutory tax rate of 20%.Nuevolution ABOn July 15, 2019, we acquired all of the outstanding stock of Nuevolution, a publicly traded, Denmark-based biotechnology company with a leading small molecule drug discovery platform, for total consideration of $183 million in cash. The transaction, which was accounted for as a business combination, expands our ability to discover novel small molecules against difficult-to-drug targets and with greater speed and efficiency. Nuevolution’s operations, which are not material, have been included in our consolidated financial statements commencing on the acquisition date.We allocated the consideration to acquire Nuevolution to finite-lived intangible assets of $150 million, primarily comprised of technology rights for a drug discovery platform with an estimated useful life of 10 years; goodwill of $26 million, which is not tax deductible; deferred tax liabilities of $22 million; and other net assets of $29 million.The estimated fair values of intangible assets were determined primarily by using a probability-weighted-income approach, which discounts expected future cash flows to present value by using a discount rate that represents the estimated rate that market participants would use to value the intangible assets.F-16

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Parent ownership percentage of subsidiary guarantors

100

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Stock award activity for the years ended December 31, 2021, 2020, and 2019, was as follows: | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | Stock Awards(in thousands) | | Weighted-AverageGrant Date FairValue | | WeightedAverageRemainingContractual Term | | Outstanding as of December 31, 2018 | | 399 | | | $ | 174.07 | | | 0.7 years | | Granted | | 132 | | | 210.16 | | | | | Adjustment due to performance | | 114 | | | 135.86 | | | | | Vested | | (265) | | | 135.86 | | | | | Forfeited | | (6) | | | 232.60 | | | | | Outstanding as of December 31, 2019 | | 374 | | | 201.92 | | | 0.9 years | | Granted | | 132 | | | 225.80 | | | | | Adjustment due to performance | | 48 | | | 199.58 | | | | | Vested | | (157) | | | 199.58 | | | | | Forfeited | | (16) | | | 231.06 | | | | | Outstanding as of December 31, 2020 | | 381 | | | 211.77 | | | 1.0 year | | Granted | | 213 | | | 181.66 | | | | | Adjustment due to performance | | 19 | | | 259.03 | | | | | Vested | | (100) | | | 259.03 | | | | | Forfeited | | (28) | | | 202.81 | | | | | Outstanding as of December 31, 2021 | | 485 | | | $ | 190.36 | | | 1.0 year | Vested awards include stock awards that fully vested during the year based on the level of achievement of the relevant performance goals. The performance goals for outstanding RPSRs granted in 2021, 2020, and 2019 were based on three metrics as defined in the grant agreements: earnings before interest, taxes, depreciation, amortization, and pension ("EBITDAP"), weighted at 40%, pension-adjusted return on invested capital ("ROIC"), weighted at 40%, and relative EBITDAP growth, weighted at 20%. The Company's EBITDAP growth will be measured against EBITDAP growth of the S&P Aerospace and Defense Select Index. Compensation Expense The Company recorded $33 million, $23 million, and $30 million of expense related to stock awards for the years ended December 31, 2021, 2020, and 2019, respectively. The Company recorded $8 million, $6 million, and $6 million as tax benefits related to stock awards for the years ended December 31, 2021, 2020, and 2019, respectively. The Company recognized tax benefits for the years ended December 31, 2021, 2020, and 2019, of $4 million, $5 million, and $11 million, respectively, from the issuance of stock in settlement of stock awards. Unrecognized Compensation Expense As of December 31, 2021, the Company had $4 million of unrecognized compensation expense associated with RSRs granted in 2021 and 2020, which will be recognized over a weighted average period of 1.6 years, and $28 million of unrecognized expense associated with RPSRs granted in 2021 and 2020, which will be recognized over a weighted average period of 1.1 years. 19. SUBSIDIARY GUARANTORS As described in Note 13: Debt, the Company issued senior notes through the consolidating parent company, HII. Performance of the Company's obligations under its senior notes outstanding as of December 31, 2021, including any repurchase obligations resulting from a change of control, is fully and unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of HII's existing and future material domestic subsidiaries ("Subsidiary Guarantors"). The Subsidiary Guarantors are 100% owned by HII. Each HII subsidiary that did not provide a guarantee ("Non-Guarantors") is not material and HII, as the parent company issuer, did not have independent assets or operations. There are no significant restrictions on the ability of the parent company and the Subsidiary 103

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Common stock, par value (USD per share)

0.01

SEC-NUM

[Table of Contents](#ifb4765332bfb410ba6ce53d196f7d99d_7) American Water Works Company, Inc. and Subsidiary CompaniesConsolidated Balance Sheets(In millions, except share and per share data) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | December 31, 2021 | | December 31, 2020 | | CAPITALIZATION AND LIABILITIES | | Capitalization: | | | | | Common stock ($0.01 par value; 500,000,000 shares authorized; 186,880,413 and 186,466,707 shares issued, respectively) | $ | 2 | | | $ | 2 | | | Paid-in-capital | 6,781 | | | 6,747 | | | Retained earnings | 925 | | | 102 | | | Accumulated other comprehensive loss | (45) | | | (49) | | | Treasury stock, at cost (5,269,324 and 5,168,215 shares, respectively) | (365) | | | (348) | | | Total common shareholders' equity | 7,298 | | | 6,454 | | | Long-term debt | 10,341 | | | 9,329 | | | Redeemable preferred stock at redemption value | 3 | | | 4 | | | Total long-term debt | 10,344 | | | 9,333 | | | Total capitalization | 17,642 | | | 15,787 | | | Current liabilities: | | | | | Short-term debt | 584 | | | 1,282 | | | Current portion of long-term debt | 57 | | | 329 | | | Accounts payable | 235 | | | 189 | | | Accrued liabilities | 701 | | | 591 | | | Accrued taxes | 176 | | | 50 | | | Accrued interest | 88 | | | 88 | | | Liabilities related to assets held for sale | 83 | | | 137 | | | Other | 217 | | | 215 | | | Total current liabilities | 2,141 | | | 2,881 | | | Regulatory and other long-term liabilities: | | | | | Advances for construction | 284 | | | 270 | | | Deferred income taxes and investment tax credits | 2,421 | | | 2,113 | | | Regulatory liabilities | 1,600 | | | 1,770 | | | Operating lease liabilities | 80 | | | 81 | | | Accrued pension expense | 285 | | | 388 | | | Other | 180 | | | 83 | | | Total regulatory and other long-term liabilities | 4,850 | | | 4,705 | | | Contributions in aid of construction | 1,442 | | | 1,393 | | | Commitments and contingencies (See Note 17) | | | | | Total capitalization and liabilities | $ | 26,075 | | | $ | 24,766 | | The accompanying notes are an integral part of these Consolidated Financial Statements. 83

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Cumulative upward adjustments to non-marketable equity securities

71

SEC-NUM

[Table of Contents](#if58bf2b7da5f49b78db442640b215d13_7)The following table summarizes our cash equivalents and available-for-sale debt securities by balance sheet classification and level in the fair value hierarchy at the dates indicated. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | April 30, 2022 | | July 31, 2021 | | (In millions) | Level 1 | | Level 2 | | | | Total Fair Value | | Level 1 | | Level 2 | | | | Total Fair Value | | Cash equivalents: | | | | | | | | | | | | | | | | | In cash and cash equivalents | $ | 2,610 | | | $ | — | | | | | $ | 2,610 | | | $ | 1,660 | | | $ | — | | | | | $ | 1,660 | | | In funds held for customers | 17 | | | — | | | | | 17 | | | — | | | — | | | | | — | | | Total cash equivalents | $ | 2,627 | | | $ | — | | | | | $ | 2,627 | | | $ | 1,660 | | | $ | — | | | | | $ | 1,660 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Available-for-sale debt securities: | | | | | | | | | | | | | | | | | In investments | $ | — | | | $ | 373 | | | | | $ | 373 | | | $ | — | | | $ | 1,308 | | | | | $ | 1,308 | | | In funds held for customers | — | | | 200 | | | | | 200 | | | — | | | 200 | | | | | 200 | | | | | | | | | | | | | | | | | | | | Total available-for-sale debt securities | $ | — | | | $ | 573 | | | | | $ | 573 | | | $ | — | | | $ | 1,508 | | | | | $ | 1,508 | | We value our Level 1 assets, consisting primarily of money market funds and time deposits, using quoted prices in active markets for identical instruments. Financial assets whose fair values we measure on a recurring basis using Level 2 inputs consist of municipal bonds, corporate notes, and U.S. agency securities. We measure the fair values of these assets with the help of a pricing service that either provides quoted market prices in active markets for identical or similar securities or uses observable inputs for their pricing without applying significant adjustments. Our fair value processes include controls designed to ensure that we record appropriate fair values for our Level 2 investments. These controls include comparison to pricing provided by a secondary pricing service or investment manager, validation of pricing sources and models, review of key model inputs, analysis of period-over-period price fluctuations, and independent recalculation of prices where appropriate.Financial liabilities whose fair values we measure using Level 2 inputs consist of senior unsecured notes. See Note 7, “Long-Term Obligations and Commitments,” for more information. We measure the fair value of our senior unsecured notes based on their trading prices and the interest rates we could obtain for other borrowings with similar terms.There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the nine months ended April 30, 2022. | | | | | --- | --- | --- | | | | | | Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis | Long-term investments represent non-marketable equity securities in privately held companies that do not have a readily determinable fair value. They are accounted for at cost and adjusted based on observable price changes from orderly transactions for identical or similar investments of the same issuer or impairment. These investments are classified as Level 3 in the fair value hierarchy because we estimate the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the investments we hold. We recognized $8 million of upward adjustments during the three months ended April 30, 2022 and $54 million of upward adjustments during the nine months ended April 30, 2022. We recognized no upward adjustments during the three months ended April 30, 2021 and $17 million of upward adjustments during the nine months ended April 30, 2021. Impairments recognized during the three and nine months ended April 30, 2022 and April 30, 2021 were immaterial. Cumulative upward adjustments were $71 million and cumulative impairments were immaterial through April 30, 2022 for measurement alternative investments held as of April 30, 2022. As of April 30, 2022 and July 31, 2021, the carrying value of long-term investments was $98 million and $43 million, respectively. | | | | | --- | --- | --- | | | | | | 3. Cash and Cash Equivalents, Investments, and Funds Held for Customers | We consider highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. In all periods presented, cash equivalents consist primarily of money market funds and time deposits. Investments consist primarily of investment-grade available-for-sale debt securities. Funds held for customers represent cash held on behalf of our customers that is invested in cash and cash equivalents and investment-grade available-for-sale securities, restricted for use solely for the purpose of satisfying amounts we owe on behalf of our customers. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, we diversify our investments in debt securities by limiting our holdings with any individual issuer. | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | Intuit Q3 Fiscal 2022 Form 10-Q | 15 | |

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Exercised in period (in shares)

1,353.5

SEC-NUM

[Table of Contents](#i2ba0bd92bcb14d27a1d59d9667569d45_7)THE ESTÉE LAUDER COMPANIES INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 18 – STOCK PROGRAMS As of June 30, 2022, the Company has two active equity compensation plans which include the Amended and Restated Fiscal 2002 Share Incentive Plan (the “Fiscal 2002 Plan”) and the Amended and Restated Non-Employee Director Share Incentive Plan (collectively, the “Plans”). These Plans currently provide for the issuance of approximately 88.8 million shares of Class A Common Stock, which consist of shares originally provided for and shares transferred to the Fiscal 2002 Plan from other inactive plans and employment agreements, to be granted in the form of stock-based awards to key employees, consultants and non-employee directors of the Company. As of June 30, 2022, approximately 11.5 million shares of Class A Common Stock were reserved and available to be granted pursuant to these Plans. The Company may satisfy the obligation of its stock-based compensation awards with either new or treasury shares. The Company’s equity compensation awards include stock options, restricted stock units (“RSUs”), performance share units (“PSUs”), long-term PSUs, including long-term price-vested units (“PVUs”), and share units. Total net stock-based compensation expense is attributable to the granting of and the remaining requisite service periods of stock options, RSUs, PSUs, long-term PSUs and share units. Compensation expense attributable to net stock-based compensation is as follows: | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended June 30 | | (In millions) | | 2022 | | 2021 | | 2020 | | Compensation expense(1) | | $ | 331 | | | $ | 327 | | | $ | 213 | | | Income tax benefit | | $ | 51 | | | $ | 50 | | | $ | 41 | | | | | | | | | | (1)Excludes compensation expense relating to liability-classified awards, including DECIEM stock options discussed below. As of June 30, 2022, the total unrecognized compensation cost related to unvested stock-based awards was $237 million and the related weighted-average period over which it is expected to be recognized is approximately one year. Stock OptionsThe following is a summary of the Company’s stock option programs as of June 30, 2022 and changes during the fiscal year then ended: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Shares in thousands) | | Shares | | Weighted-AverageExercisePrice Per Share | | AggregateIntrinsicValue(1)(in millions) | | Weighted-AverageContractual LifeRemaining in Years | | Outstanding at June 30, 2021 | | 7,615.2 | | | $ | 136.24 | | | | | | | Granted at fair value | | 1,061.4 | | | 344.09 | | | | | | | Exercised | | (1,353.5) | | | 111.90 | | | | | | | Expired | | (5.8) | | | 146.77 | | | | | | | Forfeited | | (145.5) | | | 253.41 | | | | | | | Outstanding at June 30, 2022 | | 7,171.8 | | | 169.20 | | | $ | 704 | | | 6.0 | | | | | | | | | | | | Vested and expected to vest at June 30, 2022 | | 7,117.3 | | | 168.25 | | | $ | 703 | | | 6.0 | | | | | | | | | | | | Exercisable at June 30, 2022 | | 5,056.6 | | | 125.93 | | | $ | 656 | | | 5.0 | | | | | | | | | | | (1)The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. F-65

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Other assets

6,776

SEC-NUM

AT&T INC.SEPTEMBER 30, 2022 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ContinuedDollars in millions except per share amounts The following is a summary of operating results included in income (loss) from discontinued operations for the third quarter and nine months ended September 30: | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three months ended | | Nine months ended | | | September 30, | | September 30, | | | 20221 | | 2021 | | 2022 | | 2021 | | Revenues | $ | 4 | | | $ | 8,596 | | | $ | 9,454 | | | $ | 24,963 | | | Operating Expenses | | | | | | | | | Cost of revenues | 1 | | | 4,392 | | | 5,481 | | | 13,830 | | | Selling, general and administrative | 10 | | | 2,113 | | | 2,789 | | | 5,649 | | | Asset abandonments and impairments | — | | | 57 | | | — | | | 4,612 | | | Depreciation and amortization | 1 | | | 1,163 | | | 1,173 | | | 3,837 | | | Total operating expenses | 12 | | | 7,725 | | | 9,443 | | | 27,928 | | | Interest expense | — | | | 40 | | | 131 | | | 131 | | | Equity in net income (loss) of affiliates | — | | | (93) | | | (27) | | | 25 | | | Other income (expense) – net2 | 71 | | | 757 | | | (68) | | | 541 | | | Total other income (expense) | 71 | | | 624 | | | (226) | | | 435 | | | Income (Loss) before income taxes | 63 | | | 1,495 | | | (215) | | | (2,530) | | | Income tax expense (benefit) | 10 | | | 241 | | | (69) | | | (45) | | | Net income (loss) from discontinued operations | $ | 53 | | | $ | 1,254 | | | $ | (146) | | | $ | (2,485) | | | 1Includes results from WarnerMedia operations in Mexico that were subject to regulatory approval that transferred in September 2022. | | 2“Other income (expense) - net” includes a gain from post-closing adjustment related to the sale of the marketplace component of Xandr in the three and nine months ended September 30, 2022, and a gain of $766 from the sale of Playdemic for the three months and nine months ended September 30, 2021. | The following is a summary of assets and liabilities attributable to discontinued operations, which were included in our Consolidated Balance Sheet at December 31, 2021: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | December 31, | | | | 2021 | | Assets: | | | | Current assets | | $ | 9,005 | | | Noncurrent Inventories and Theatrical Film and Television Production Costs | | 18,983 | | | Property, plant and equipment, net | | 4,255 | | | Goodwill | | 40,484 | | | Other Intangibles – Net | | 40,273 | | | Other assets | | 6,776 | | | Total assets, discontinued operations | | $ | 119,776 | | | | | | | Liabilities: | | | | Current liabilities | | $ | 12,912 | | | Other liabilities | | 20,643 | | | Total liabilities, discontinued operations | | $ | 33,555 | | | | | | In preparation for close, on April 7, 2022, Spinco drew $10,000 on its $10,000 term loan credit agreement (Spinco Term Loan), which conveyed to WBD. Total debt conveyed was approximately $41,600, which includes $1,600 of existing WarnerMedia debt, $30,000 of Spinco senior notes issued in March 2022 and the $10,000 Spinco Term Loan. WarnerMedia cash transfer to Discovery was approximately $2,660.35

string

Proceeds from issuances of short-term obligations

4,449

SEC-NUM

[Table of Contents](#ie64973d8440d48dda3b140796cb1bc77_7)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)Note 3. Information Relating to the Consolidated Statement of Cash Flows | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | Nine Months EndedSeptember 30 | | | 2022 | | 2021 | | | (Millions of dollars) | | Distributions more (less) than income from equity affiliates includes the following: | | | | Distributions from equity affiliates | $ | 2,194 | | | $ | 1,838 | | | (Income) loss from equity affiliates | (6,962) | | | (4,000) | | | Distributions more (less) than income from equity affiliates | $ | (4,768) | | | $ | (2,162) | | | Net decrease (increase) in operating working capital was composed of the following: | | Decrease (increase) in accounts and notes receivable | $ | (4,428) | | | $ | (5,692) | | | Decrease (increase) in inventories | (2,170) | | | (353) | | | Decrease (increase) in prepaid expenses and other current assets | (479) | | | (94) | | | Increase (decrease) in accounts payable and accrued liabilities | 5,282 | | | 3,842 | | | Increase (decrease) in income and other taxes payable | 2,967 | | | 838 | | | Net decrease (increase) in operating working capital | $ | 1,172 | | | $ | (1,459) | | | Net cash provided by operating activities includes the following cash payments: | | Interest on debt (net of capitalized interest) | $ | 320 | | | $ | 427 | | | Income taxes | 6,750 | | | 2,943 | | | Proceeds and deposits related to asset sales and returns of investment consisted of the following gross amounts: | | | | | Proceeds and deposits related to asset sales | $ | 1,406 | | | $ | 563 | | | Returns of investment from equity affiliates | 1,079 | | | 23 | | | Proceeds and deposits related to asset sales and returns of investment | $ | 2,485 | | | $ | 586 | | | | | | | | | | | | | | | | | | | | Net sales (purchases) of marketable securities consisted of the following gross amounts: | | Marketable securities purchased | $ | (9) | | | $ | (3) | | | Marketable securities sold | 91 | | | 2 | | | Net sales (purchases) of marketable securities | $ | 82 | | | $ | (1) | | | Net repayment (borrowing) of loans by equity affiliates consisted of the following gross amounts: | | | | | Borrowing of loans by equity affiliates | $ | (27) | | | $ | — | | | Repayment of loans by equity affiliates | 65 | | | 389 | | | Net repayment (borrowing) of loans by equity affiliates | $ | 38 | | | $ | 389 | | | Net borrowings (repayments) of short-term obligations consisted of the following gross and net amounts: | | | | | Proceeds from issuances of short-term obligations | $ | — | | | $ | 4,449 | | | Repayments of short-term obligations | — | | | (6,225) | | | Net borrowings (repayments) of short-term obligations with three months or less maturity | 278 | | | (1,851) | | | Net borrowings (repayments) of short-term obligations | $ | 278 | | | $ | (3,627) | | | Net sales (purchases) of treasury shares consists of the following gross and net amounts: | | | | | Shares issued for share-based compensation plans | $ | 5,505 | | | $ | 388 | | | Shares purchased under share repurchase and deferred compensation plans | (7,505) | | | (633) | | | Net sales (purchases) of treasury shares | $ | (2,000) | | | $ | (245) | | | Net contributions from (distributions to) noncontrolling interests consisted of the following gross amounts: | | | | | Distributions to noncontrolling interests | $ | (107) | | | $ | (51) | | | Contributions from noncontrolling interests | 4 | | | 17 | | | Net contributions from (distributions to) noncontrolling interests | $ | (103) | | | $ | (34) | | The Consolidated Statement of Cash Flows excludes changes to the Consolidated Balance Sheet that did not affect cash.9

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Finite-Lived Intangible Asset, Useful Life

20

SEC-NUM

evaluate information required to complete the valuations through the measurement period, which will not exceed one year from the acquisition date. Goodwill is calculated as the excess of the purchase price over the fair value of the net assets acquired. The recognized goodwill is attributable to operational synergies and growth opportunities and was allocated to the Company's Technical Solutions segment. None of the goodwill resulting from this acquisition is expected to be amortizable for tax purposes. Approximately $16 million of one-time acquisition-related costs was included in general and administrative expenses in the consolidated statements of operations and comprehensive income for the year ended December 31, 2021. The Company identified Alion’s contract backlog and customer relationships as finite-lived assets with estimated fair values as of the acquisition date of $240 million and $480 million, respectively. The finite-lived assets are subject to amortization under the pattern of benefits method over six years for backlog and 20 years for customer relationships. Total revenue and operating income for Alion for the period from August 19, 2021, through December 31, 2021, were as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | ($ in millions) | | Period from 8/19/2021-12/31/2021 | | Sales and service revenues | | $ | 506 | | | Operating income | | $ | 10 | | Pro Forma Financial Information The following unaudited consolidated pro forma summary has been prepared by adjusting the Company's historical data to give effect to the acquisition of Alion as if it had occurred on January 1, 2020. | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | Pro Forma (Unaudited) | | | | Year Ended December 31 | | ($ in millions, except per share amounts) | | 2021 | | 2020 | | Sales and service revenues | | $ | 10,364 | | | $ | 10,453 | | | Net earnings | | $ | 539 | | | $ | 648 | | | Basic earnings per share | | $ | 13.37 | | | $ | 15.96 | | | Diluted earnings per share | | $ | 13.37 | | | $ | 15.96 | | These unaudited pro forma results include adjustments, such as the amortization of acquired intangible assets and interest expense on debt financing, in connection with the acquisition. The unaudited consolidated pro forma financial information was prepared in accordance with GAAP and is not necessarily indicative of the results of operations that would have occurred if the acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company. The unaudited pro forma results do not reflect events that either have occurred or may occur after the acquisition date, including, but not limited to, the anticipated realization of operating synergies in subsequent periods. These results also do not give effect to certain charges that the Company expects to incur in connection with the acquisition, including, but not limited to, additional professional fees and employee integration. Other Acquisitions In December 2020, the Company acquired the autonomy business of Spatial Integrated Systems, Inc. ("SIS"), a leading provider of autonomous technology, for approximately $40 million in cash. The acquisition further expanded the Company's unmanned systems capabilities. In connection with this acquisition, the Company preliminarily recorded $40 million of goodwill, which included the value of SIS's workforce, all of which was allocated to the Company's Technical Solutions segment. For the year ended December 31, 2021, the Company recorded a 74

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Proceeds from disposal of business, net of cash and cash equivalents sold

934

SEC-NUM

Ameriprise Financial, Inc.Consolidated Statements of Cash Flows | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | | | | | | | | | | | | | | Years Ended December 31, | | 2021 | | 2020 | | 2019 | | (in millions) | | Cash Flows from Operating Activities | | | | | | | Net income | $ | 2,760 | | | $ | 1,534 | | | $ | 1,893 | | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | Depreciation, amortization and accretion, net | 98 | | | 207 | | | 183 | | | Deferred income tax expense (benefit) | (87) | | | (321) | | | (308) | | | Share-based compensation | 152 | | | 146 | | | 135 | | | Gain on disposal of business before affinity partner payment | — | | | — | | | (313) | | | Net realized investment (gains) losses | (632) | | | (22) | | | (16) | | | Net trading (gains) losses | 5 | | | (10) | | | (10) | | | Loss from equity method investments | 75 | | | 66 | | | 95 | | | Impairments and provision for loan and credit losses | 4 | | | 24 | | | 22 | | | Net (gains) losses of consolidated investment entities | (20) | | | 7 | | | 9 | | | Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | Restricted and segregated investments | 25 | | | (500) | | | 124 | | | Deferred acquisition costs | (156) | | | 49 | | | (112) | | | Policyholder account balances, future policy benefits and claims, net | 2,086 | | | 3,054 | | | 358 | | | Derivatives, net of collateral | (570) | | | (141) | | | 415 | | | Receivables | (520) | | | (648) | | | 324 | | | Brokerage deposits | 26 | | | 346 | | | (519) | | | Accounts payable and accrued expenses | 300 | | | 129 | | | 46 | | | Current income tax, net | (308) | | | 25 | | | 32 | | | Deferred taxes, net | 4 | | | 334 | | | (18) | | | Other operating assets and liabilities of consolidated investment entities, net | 20 | | | (15) | | | (12) | | | Other, net | 63 | | | 359 | | | 13 | | | Net cash provided by (used in) operating activities | 3,325 | | | 4,623 | | | 2,341 | | | | | | | | | | Cash Flows from Investing Activities | | | | | | | Available-for-Sale securities: | | | | | | | Proceeds from sales | 556 | | | 1,708 | | | 242 | | | Maturities, sinking fund payments and calls | 11,501 | | | 9,554 | | | 8,202 | | | Purchases | (14,718) | | | (13,525) | | | (11,911) | | | Proceeds from sales, maturities and repayments of mortgage loans | 299 | | | 217 | | | 272 | | | Funding of mortgage loans | (263) | | | (165) | | | (354) | | | Proceeds from sales, maturities and collections of other investments | 173 | | | 198 | | | 276 | | | Purchase of other investments | (97) | | | (284) | | | (288) | | | Purchase of investments by consolidated investment entities | (1,603) | | | (957) | | | (644) | | | Proceeds from sales, maturities and repayments of investments by consolidated investment entities | 1,047 | | | 606 | | | 684 | | | Purchase of land, buildings, equipment and software | (120) | | | (147) | | | (143) | | | Proceeds from disposal of business, net of cash and cash equivalents sold | — | | | — | | | 934 | | | Cash paid for written options with deferred premiums | (552) | | | (338) | | | (308) | | | Cash received from written options with deferred premiums | 106 | | | 133 | | | 170 | | | Cash paid for acquisition of business, net of cash acquired | (576) | | | — | | | — | | | Cash paid for deposit receivables | (377) | | | (4) | | | (349) | | | Cash received for deposit receivables | 254 | | | 93 | | | 98 | | | Other, net | (10) | | | 17 | | | (115) | | | Net cash provided by (used in) investing activities | $ | (4,380) | | | $ | (2,894) | | | $ | (3,234) | | | See Notes to Consolidated Financial Statements. | 74

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