Asset Restructuring and Impairment Costs

6 Months Ended

Jun. 30, 2020

Restructuring and Related Activities [Abstract]

Asset Restructuring and Impairment Costs

Restructuring and Impairment Costs 

During the three months ended June 30, 2020, due to the adverse impacts of COVID-19, the Company recorded non-cash asset restructuring and impairment costs of $55.3 million, of which $52.3 million related to a non-cash impairment loss for long-lived assets used primarily in the Technical Products segment. The other charge of $3.0 million arose from accelerated depreciation due to the idling of assets and related employee termination benefits for a workforce reduction in the Fine Paper and Packaging segment.

The pandemic triggered the evaluation of the carrying values of long-lived assets in the Technical Products segment, with the largest impact resulting from changes in the duration of the ramp-up of net sales of the Company's U.S. transportation filtration asset. As a result of the change in forecast of net sales and profitability, the Company determined that indicators of impairment in the carrying value of the property, plant and equipment were present at June 30, 2020. Accordingly, based on the applicable accounting guidance, the Company tested the recoverability of those long-lived assets using undiscounted estimates of the future cash flows from the use of those assets. The recoverability tests indicated that the long-lived assets were impaired at June 30, 2020. As a result, the Company determined the fair value of the long-lived assets principally on a probability-weighting of the discounted cash flows expected under multiple operating scenarios, based in part on the Company's current and future evaluation of economic conditions, as well as current and future plans. The Company used a credit-adjusted risk-free rate of 9.5% based on the expected rate of return from the highest and best use of similar assets by a market participant. An impairment charge of $51.0 million was recorded in the Technical Products segment to reduce the carrying value of the assets to their indicated fair values. These fair value calculations are highly subjective and require management to make assumptions and apply judgments to estimates regarding the timing and amount of future cash flows, probabilities related to various cash flow scenarios, and appropriate discount rates based on the perceived risks, among others. While the Company believes its assumptions and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates do not occur or if events change requiring the Company to significantly revise its estimates. Long-lived assets are measured at fair value on a nonrecurring basis using Level 3 inputs.

The Company also tested its indefinite-lived intangible assets (brand names) for impairment using the applicable accounting guidance and as a result recorded an impairment loss of $0.9 million and $0.4 million in the Fine Paper and Packaging and Technical Products segments, respectively. The Company updated the qualitative review of goodwill and other indefinite-lived intangibles, noting that there were no impairment indicators triggered as of June 30, 2020.

During the three months ended June 30, 2020, the adverse impacts of COVID-19 led to additional actions taken to consolidate the Company's operational footprint with the idling of a fine paper machine and other smaller assets and reallocating their volume, optimizing and eliminating certain product brands and SKUs and restructuring parts of its workforce. During the three months ended June 30, 2020, the Company recorded accelerated depreciation of $2.6 million related to the idling of the manufacturing assets and $0.4 million of employee termination benefit costs.

For the three and six months ended June 30, 2019, the Company recorded $2.0 million of accelerated depreciation and spare parts inventory reserves related to an idled paper machine in the Fine Paper and Packaging segment.

A summary of the asset restructuring and impairment costs incurred during the three and six months ended June 30, 2020 and 2019, is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Impairment losses	$	52.3	$	—	$	52.3	$	—
Restructuring charges from idled assets	2.6		2.0		2.6		2.0
Severance costs	0.4		—		0.4		—
Total	$	55.3	$	2.0	$	55.3	$	2.0