IMPAIRMENT AND DIVESTITURE OF RUSSIAN BUSINESS

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

IMPAIRMENT AND DIVESTITURE OF RUSSIAN BUSINESS

In 2022, the Company began the process of the divesting its interests in two packaging facilities in Russia, which met the criteria to be considered a business, through a sale of 100% of the Disposal Group’s outstanding shares. The Company expects the sale to be completed in 2023. The assets and liabilities to be disposed of in connection with this transaction met the held for sale criteria as of September 30, 2023.

The carrying value of the net assets held for sale, inclusive of the cumulative translation adjustment balance attributable to the business, was greater than their fair value, less costs to sell, resulting in a pre-tax cumulative loss of $93 million (including $2 million of impairment charges incurred in Q3 2023), which is included in the Business, Combinations, Shutdown and Other Special Charges, and Exit Activities, Net in the Condensed Consolidated Statement of Operations in 2022 and 2023. The assets related to the sale, inclusive of the valuation allowance, and liabilities related to the sale were classified as Other Current Assets and Other Accrued Liabilities, respectively, within the Condensed Consolidated Balance Sheet as of September 30, 2023. Excluded from the assets classified as held for sale within the Condensed Consolidated Balance Sheet is an intercompany note receivable totaling $32 million from the Company to the Disposal Group. The intercompany note will be sold as part of the transaction and, thus, should be considered when calculating the carrying value of the Disposal Group and the allowance to adjust the carrying value to the fair value less costs to sell. Upon consummation of the sale of the Disposal Group, the Company will reclassify this note from intercompany to the applicable liability line item in the Condensed Consolidated Balance Sheet as it will represent a liability to an external third party. The cumulative translation adjustment attributable to the business of $5 million is included within Accumulated Other Comprehensive Loss within the Condensed Consolidated Balance Sheet as of September 30, 2023. Goodwill totaling $12 million associated with the Disposal Group was determined to be impaired in 2022.

As the sale of the Disposal Group is not considered a strategic shift that will have a major effect on the Company’s operations or financial results, it was not reported as discontinued operations. The Company will continue to evaluate the Disposal Group for future impairments until it is sold. The Disposal Group is reported within the Europe Paperboard Packaging segment.

The following table summarizes the Company’s assets and liabilities held for sale by major class:


In millions	September 30, 2023
Cash and Cash Equivalents	$	16
Receivables, Net	14
Inventories, Net	11
Property, Plant and Equipment, Net	23
Intangible Assets, Net	14
Other Assets	2
Assets Held for Sale	80
Valuation Allowance to Adjust Carrying Value of Russian Operations to Fair Value Less Costs to Sell	(93)
Total Assets Held for Sale, Net Included in Other Current Assets	$	(13)

Accounts Payable	4
Other Accrued Liabilities	2
Deferred Income Tax Liabilities	7

Total Liabilities Held for Sale Included in Other Accrued Liabilities	$	13