Discontinued Operations

On January 1, 2018, the Company completed the transfer of its North American Consumer Packaging business, which included its North American Coated Paperboard and Foodservice businesses, to a subsidiary of Graphic Packaging Holding Company in exchange for a 20.5% ownership interest in a subsidiary of Graphic Packaging Holding Company that holds the assets of the combined business. International Paper is accounting for its ownership interest in the combined business under the equity method. The Company determined the fair value of its investment in the combined business and recorded a pre-tax gain of $516 million ($385 million, net of tax) on the transfer in the first quarter of 2018, subject to final working capital settlement. During the second quarter of 2018, the Company recorded a pre-tax charge of $28 million ($21 million after tax) to adjust the previously recorded gain on the transfer. See Note 11 for further discussion on the Company's investment in a subsidiary of Graphic Packaging Holding Company.

All historical operating results for North American Consumer Packaging are included in Discontinued operations, net of tax in the accompanying consolidated statement of operations. The following summarizes the major classes of line items comprising Earnings (Loss) Before Income Taxes and Equity Earnings reconciled to Discontinued operations, net of tax, related to the transfer of the North American Consumer Packaging business for all periods presented in the consolidated statement of operations:



	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2018		2017		2018			2017
Net Sales	$	—	$	397	$	—		$	1,165
Costs and Expenses
Cost of products sold	—		268		—			855
Selling and administrative expenses	—		24		25			69
Depreciation, amortization and cost of timber harvested	—		24		—			72
Distribution expenses	—		32		—			94
Taxes other than payroll and income taxes	—		3		—			8
(Gain) loss on transfer of business	—		—		(488		)	—
Earnings (Loss) Before Income Taxes and Equity Earnings	—		46		463			67
Income tax provision (benefit)	—		17		118			25
Discontinued Operations, Net of Taxes	$	—	$	29	$	345		$	42

Total cash provided by (used for) operations related to the North American Consumer Packaging business of $(25) million and $137 million for the nine months ended September 30, 2018 and September 30, 2017 is included in Cash Provided By (Used For) Operations in the consolidated statement of cash flows. Total cash provided by (used for) investing activities related to the North American Consumer Packaging business of $(40) million and $(77) million for the nine months ended September 30, 2018 and September 30, 2017, is included in Cash Provided By (Used For) Investing Activities in the consolidated statement of cash flows.

Impairments

During the third quarter of 2018, a determination was made that the current carrying value of the long-lived assets of the Brazil Packaging business exceeded their estimated fair value due to a change in the outlook for the business. Management engaged a third party to assist with determining the fair value of the business and the fixed assets. The fair value of the business was calculated using a probability-weighted approach based on discounted future cash flows, market multiples, and transaction multiples and the fair value of the fixed assets was determined using a market approach. As a result, a pre-tax charge of $122 million ($81 million, net of tax) was recorded related to the impairment of an intangible asset and fixed assets. This charge is included in Net (gains) losses on sales and impairments of businesses in the accompanying consolidated statement of operations and is included in the results for the Industrial Packaging segment. On October 25, 2018, the Company announced that it was exploring strategic options for its Brazil Packaging business.