Note 4. Restructuring, Discontinued Operations, and Other

In May 2013, we announced that our Board of Directors had approved the sale of our specialty paper business. The sale of the specialty paper business and primarily all related assets and selected liabilities, excluding the Brainerd mill, closed on June 26, 2013, resulting in net cash proceeds, subject to certain post-closing adjustments, of approximately $105 million after settlement of transaction-related liabilities, transaction costs, and taxes. The sale generated a pre-tax impairment charge of $63.7 million, which is recorded in loss from discontinued operations in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2013. As there were no quoted market prices available for these or similar assets, we used the actual sales price to determine the fair market value of the assets, which is a level 3, unobservable input. Included in the impairment charge is a net pre-tax credit of approximately $5.9 million related to pension and other postretirement plan settlements, curtailments, and special termination benefits resulting from modifications made to the plans in connection with the transaction.

The agreement to sell the specialty paper business also includes a provision whereby we would receive a contingent payment from the buyer if certain performance thresholds and other events occur. At September 30, 2013, no amounts have been recognized related to this provision, as we are not aware of any such events that have occurred or if any such events will occur in the future.

In February 2013, we announced the planned closure of our Brainerd paper mill. The Brainerd mill permanently closed on March 29, 2013. At March 31, 2013, the Brainerd closure did not meet held-for-sale requirements; however, at September 30, 2013, Brainerd meets the criteria for presentation as discontinued operations.

In December 2011, we announced that our Board of Directors had approved the sale of our premium Print & Color brands, and the closure of our Brokaw, Wisconsin paper mill. The sale of the premium Print & Color brands, select paper inventory, and certain manufacturing equipment closed on January 31, 2012. We permanently ceased papermaking operations at the mill on February 10, 2012. The sale of the premium Print & Color brands, select paper inventory, and certain manufacturing equipment generated a pre-tax gain of $12.5 million, which is recorded in earnings from discontinued operations in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2012. During the third quarter of 2012, we completed the sale and disposal of the remaining long-lived assets of the Brokaw mill, generating proceeds of $4.8 million and a pre-tax gain of approximately $0.2 million.

We determined that as of June 30, 2013, the sale of the specialty paper business and the closure of the Brainerd mill, and as of March 31, 2012, the closure of the Brokaw mill, met the criteria for discontinued operations presentation as established ASC Subtopic 205-20, “Discontinued Operations”. The results of operations of the specialty paper business, Brainerd, and Brokaw mills have been reported as discontinued operations in the Condensed Consolidated Statements of Comprehensive Income (Loss) for all periods presented. The corresponding assets and liabilities of the discontinued operations have been reclassified in accordance with authoritative literature on discontinued operations when the respective component met the criteria for discontinued operations presentation and prior periods were not restated. As such, the December 31, 2012, balance sheet amounts included liabilities of discontinued operations only related to the Brokaw mill. The assets and liabilities of the specialty paper business and the Brainerd mill have not been reclassified in the December 31, 2012 balance sheet. The statements of cash flows for the nine months ended September 30, 2013 and 2012, have not been adjusted to separately disclose cash flows related to discontinued operations.

Assets and liabilities of the discontinued operations consist of the following:

	September 30, 2013		December 31, 2012
Current assets of discontinued operations:
Receivables, net	$	1,900	$	—
Inventories	754		—
Other current assets	7,911		—
Assets of discontinued operations - current	10,565		—
Total assets of discontinued operations	$	10,565	$	—

	September 30, 2013		December 31, 2012
Current liabilities of discontinued operations:
Accounts payable	$	269	$	—
Accrued and other liabilities	1,154		833
Liabilities of discontinued operations - current	1,423		833
Non-current liabilities of discontinued operations:
Other non-current liabilities	1,700		—
Total liabilities of discontinued operations	$	3,123	$	833

The following table summarizes certain Condensed Consolidated Statements of Comprehensive Income (Loss) information for discontinued operations:

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(all amounts in thousands, except per share data)	2013			2012			2013			2012

Net sales	$	1,644		$	115,668		$	209,756		$	419,966

(Loss) earnings from discontinued operations before income taxes	(1,527		)	(7,112		)	(107,971		)	6,310
(Credit) provision for income taxes	(709		)	(3,404		)	(41,049		)	1,381
(Loss) earnings from discontinued operations, net of taxes	$	(818	)	$	(3,708	)	$	(66,922	)	$	4,929

Net (loss) earnings per share — basic and diluted	$	(0.02	)	$	(0.08	)	$	(1.35	)	$	0.10

During the third quarter of 2013, we executed restructuring activities related to the sale of the specialty paper business and closure of the Brainerd mill, and have recognized pre-tax charges of $1.8 million during the three months ended September 30, 2013, and net pre-tax charges of $114.8 million during the nine months ended September 30, 2013. These net charges, which are detailed in the table below, are recorded in loss from discontinued operations in the Condensed Consolidated Statements of Comprehensive Income (Loss).

In addition, during the third quarter of 2012, we recognized pre-tax charges related to the closure of the Brokaw mill of $0.4 million and, exclusive of the gain recorded for the sales transaction, net pre-tax charges of $6.7 million during the nine months ended September 30, 2012. No additional pre-tax closure charges related to the Brokaw mill were incurred during the first nine months of 2013. These net charges, which are also detailed in the following table, are recorded in (loss) earnings from discontinued operations in the Condensed Consolidated Statements of Comprehensive Income (Loss).

	Three Months Ended September 30,				Nine Months Ended September 30,
(all dollar amounts in thousands)	2013		2012		2013		2012

Impairment of long-lived assets	$	—	$	—	$	63,712	$	2,075
Accelerated depreciation on long-lived assets	—		—		35,716		—
Inventory and spare parts write-downs	—		—		6,712		985
Severance and benefit continuation costs	749		89		3,127		1,819
Other associated costs, net	1,079		325		5,573		1,816

Total	$	1,828	$	414	$	114,840	$	6,695

Following is a summary of the liabilities for restructuring expenses through September 30, 2013, related to the closure of the Brokaw mill, the closure of the Brainerd mill and the sale of the specialty paper business all of which were included in liabilities of discontinued operations:

	December 31,		Reserve/		Payments/			September 30,
(all dollar amounts in thousands)	2012		Provisions		Usage			2013

Severance and benefit continuation	$	26	$	3,127	$	(2,238	)	$	915
Contract termination	—		2,665		(372		)	2,293
Other	22		5,314		(5,336		)	—

Total	$	48	$	11,106	$	(7,946	)	$	3,208

Included in selling and administrative expense in the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2013, were net expense of approximately $0.2 million and a net credit of approximately $1.1 million, respectively, related to a natural gas contract for a closed facility. During the first nine months of 2013, we have made payments related to this natural gas contract of approximately $1.0 million. At September 30, 2013, $0.7 million and $9.4 million are included in current liabilities and noncurrent liabilities, respectively, consisting of contract termination costs associated with this natural gas contract. At December 31, 2012, $2.3 million and $9.8 million are included in current liabilities and noncurrent liabilities, respectively, related to these contract termination costs. We will continue to make payments related to the contract over the original contractual term.