Discontinued Operations

6 Months Ended

Jul. 01, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

2. Discontinued Operations

In August 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Canada to GreenFirst for $232 million, which included 28.7 million shares of GreenFirst common stock with a deemed fair value of $42 million. In the second quarter of 2022, the Company sold the GreenFirst common shares for $43 million. Prior to the sale of shares, the GreenFirst common shares were accounted for at fair value, with changes in fair value recorded in the consolidated statements of operations. The shares sale agreement contains a purchase price protection clause whereby the Company is entitled to participate in further share price appreciation under certain circumstances until December 2023.

As part of the sale of the lumber assets, the Company retained all rights and obligations to softwood duties generated or incurred through the closing date of the sale. In total, the Company paid $112 million in softwood lumber duties from 2017 through August 2021, and expects to receive all or the vast majority of these duties upon final resolution of the dispute between the USDOC and Canada. As of July 1, 2023, the Company had a $38 million long-term receivable related to USDOC administrative reviews completed to date.

During the three and six months ended July 1, 2023, the Company incurred $2 million related to the settlement of a claim pursuant to the representations and warranties in the asset purchase agreement.

Income (loss) from discontinued operations was comprised of the following:

	Three Months Ended				Six Months Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Cost of sales	$	—	$	326	$	—	$	153
Gross margin	—		326		—		153
Selling, general and administrative and other operating income (expense)	(1,533)		1,953		(1,533)		1,495
Operating income (loss)	(1,533)		2,279		(1,533)		1,648
Other non-operating expense	—		(4)		—		(9)
Income (loss) from discontinued operations before income taxes	(1,533)		2,275		(1,533)		1,639
Income tax (expense) benefit	405		(599)		405		(434)
Income (loss) from discontinued operations, net of taxes	$	(1,128)	$	1,676	$	(1,128)	$	1,205