Closure Costs, Impairment and Other Related Charges

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

Closure Costs, Impairment and Other Related Charges

Note 5. Closure Costs, Impairment and Other Related Charges

Closure costs, impairment and other related charges for the year ended December 31, 2021, were comprised of the following:

(In millions)	Impairment of Assets		Severance and Other Costs		Total
Pulp and Paper mill at Calhoun (Tennessee)	$	124	$	18	$	142
Other		—		2		2
	$	124	$	20	$	144

On December 16, 2021, the Company announced the indefinite idling of pulp and paper operations at our Calhoun mill given the continuing accumulation of significant financial losses, even with strong market conditions for both the pulp and uncoated freesheet paper it manufactured. Tissue remains in operation. Following the announcement, new long-lived asset groups were identified at that site, which were tested for impairment as the indefinite idling of pulp and paper operations was considered an impairment indicator for these assets.

As a result, we recognized an impairment charge of $124 million in relation to the pulp and paper long-lived asset group as these assets, consisting of fixed assets, will not generate future cash flows. The impairment charge was calculated as being the difference between the net carrying value of the fixed assets and their fair value. The fair value of the fixed assets was estimated using the market approach, by reference to estimated selling prices for similar assets, less costs to sell. This fair value measurement is considered a Level 3 measurement due to the significance of their unobservable inputs. We also recognized additional provisions for severance and other costs of $13 million as well as write-off of other assets of $5 million. In 2022, we expect to incur additional closure costs of approximately $32 million, mainly related to decommissioning. The pulp and paper operations ceased at the beginning of 2022.

An impairment test was also performed for the other asset groups at Calhoun. As the undiscounted cash flows exceeded the carrying value of the respective asset groups by a substantial margin, no impairment was recognized. The remaining useful life of the assets were reassessed and remained unchanged as the indefinite idling of the pulp and paper operations has no impact on the economic life of our other assets.

Closure costs, impairment and other related charges for the year ended December 31, 2020, were comprised of the following:

(In millions)	Accelerated Depreciation		Severance and Other Costs		Total
Paper mill at Amos (Quebec)	$	12	$	5	$	17
Paper mill at Baie-Comeau (Quebec)		26		12		38
Other		—		(2)		(2)
	$	38	$	15	$	53

Due to the overall decrease in demand for newsprint, accelerated by the economic context surrounding the COVID-19 pandemic, the Amos and Baie-Comeau paper mills had been temporarily idled since April 2020. As a result, we had reassessed the remaining useful lives of the fixed assets and recognized an accelerated depreciation charge of $38 million. We also recognized additional provisions for severance and other costs of $17 million, of which $8 million was paid in 2021. In March 2021, the Company announced their indefinite idling.

Closure costs, impairment and other related charges for the year ended December 31, 2019, were comprised of the following:

(In millions)	Accelerated Depreciation		Severance and Other Costs		Total
Indefinite idling
Paper mill at Augusta (Georgia) (1)	$	8	$	10	$	18

(1)A total amount of $4 million of severance and other costs was paid prior to 2021.