Restructuring, Asset Impairment and Other Related Charges

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

Restructuring, Asset Impairment and Other Related Charges

Note 3. Restructuring, Asset Impairment and Other Related Charges

On March 6, 2023, we announced the Beverage Merchandising Restructuring, a plan approved by our Board of Directors to take significant restructuring actions related to our Beverage Merchandising operations. The Beverage Merchandising Restructuring includes, among other things:

•Closure of our Canton, North Carolina mill, including the cessation of mill operations, during the second quarter of 2023;

•Closure of our Olmsted Falls, Ohio converting facility and concurrent reallocation of production to our remaining converting facilities during the second quarter of 2023; and

•Reorganizing our operating and reporting structure to achieve increased efficiencies and related cost savings.

The Beverage Merchandising Restructuring resulted in a workforce reduction of approximately 1,300 employees. We also continue to explore strategic alternatives for our Pine Bluff, Arkansas mill and our Waynesville, North Carolina facility. We have not set a timetable in relation to this process.

As a result of the Beverage Merchandising Restructuring, we incurred charges during the three and six months ended June 30, 2023, and we estimate we will incur further charges in future periods, as follows:

	For the Three Months Ended June 30, 2023		For the Six Months Ended June 30, 2023		Total Expected Charges(1)
Non-cash:
Accelerated property, plant and equipment depreciation	$	177	$	267	$	280
Other non-cash charges(2)		10		43	45 - 50
Total non-cash charges		187		310	325 - 330
Cash:
Severance, termination and related costs		7		39		45
Exit, disposal and other transition costs(3)		22		54	85 - 115
Total cash charges		29		93	130 - 160
Total Beverage Merchandising Restructuring charges	$	216	$	403	$ 455 - 490

(1)We expect to incur these charges primarily during 2023. These estimates are provisional and include significant management judgments and assumptions that could change materially as we execute our plans. Actual results may differ from these estimates, and the execution of our plan could result in additional restructuring charges or impairments not reflected above.

(2)Other non-cash charges include the write-down of certain spare parts classified as inventories on our condensed consolidated balance sheet, the write-off of scrapped raw materials and certain construction in-progress balances and accelerated amortization expense for certain operating lease right-of-use assets.

(3)Exit, disposal and other transition costs are primarily related to equipment decommissioning and dismantlement, transition labor associated with the facility closures and management restructuring, site remediation, contract terminations, system conversion and other related costs.

The Beverage Merchandising Restructuring charges and other restructuring and asset impairment charges (net of reversals) were classified on our condensed consolidated statements of (loss) income as follows by segment:

	Food and Beverage Merchandising		Other		Total
For the Three Months Ended June 30, 2023
Cost of sales	$	182	$	—	$	182
Selling, general and administrative expenses		3		—		3
Restructuring, asset impairment and other related charges		29		3		32
Total	$	214	$	3	$	217
For the Six Months Ended June 30, 2023
Cost of sales	$	294	$	—	$	294
Selling, general and administrative expenses		4		—		4
Restructuring, asset impairment and other related charges		98		7		105
Total	$	396	$	7	$	403

During the three and six months ended June 30, 2022, we recorded $1 million of other restructuring charges within the Food and Beverage Merchandising segment, which were reflected within restructuring, asset impairment and other related charges.

The following table summarizes the changes to our restructuring liability related to the Beverage Merchandising Restructuring during the six months ended June 30, 2023:

	December 31, 2022		Charges to Earnings		Cash Paid			June 30, 2023
Severance, termination and related costs	$	—	$	39	$	(22	)	$	17
Exit, disposal and other transition costs		—		54		(21	)		33
Total(1)	$	—	$	93	$	(43	)	$	50

(1)Included $44 million classified within accrued and other current liabilities and $6 million classified within other non-current liabilities as of June 30, 2023.