DIVESTITURE AND IMPAIRMENT OF BUSINESS

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

DIVESTITURE AND IMPAIRMENT OF BUSINESS

RUSSIAN OPERATIONS

During the second quarter of 2022, management committed to a plan to sell the Company’s Russian operations. As a result, all historical operating results of the Russian operations are presented as “Discontinued operations, net of taxes” in our consolidated and combined statement of operations. All historical assets and liabilities of the Russian operations are classified as current and long-term assets and liabilities held for sale in the accompanying consolidated balance sheets. The Russian operations were previously part of the Europe business segment.

In October 2022, the Company completed the sale of its Russian operations to Pulp Invest Limited Liability Company, a company incorporated in the Russian Federation, for $420 million. After transaction and foreign currency exchange costs of $35 million, Sylvamo received $385 million in cash proceeds. The Russian operations cash balance of $61 million was divested as part of this transaction.

The following summarizes the major classes of line items comprising “Income Before Income Taxes” reconciled to “Discontinued operations, net of tax,” related to the Russian operations for all periods presented in the consolidated and combined statement of operations.

In millions for the years ended December 31	2022		2021		2020
NET SALES	$	518	$	674	$	624
COSTS AND EXPENSES
Cost of products sold (exclusive of depreciation, amortization and cost of timber harvested shown separately below)	425		518		493
Selling and administrative expenses	10		6		7
Depreciation, amortization and cost of timber harvested	4		17		19
Taxes other than payroll and income taxes	1		2		2
Impairment of business	296		—		—
Interest expense (income), net	(3)		(1)		—
INCOME BEFORE INCOME TAXES	(215)		132		103
Income tax provision	3		28		20
DISCONTINUED OPERATIONS, NET OF TAXES	$	(218)	$	104	$	83

The following summarizes the major classes of assets and liabilities of the Russian operations reconciled to current assets and long-term assets held for sale and current and long-term liabilities held for sale in the accompanying consolidated balance sheets:

In millions as of December 31	2021
Cash and temporary investments	$	21
Accounts and notes receivable	88
Contract assets	3
Inventories	63
Other current assets	4
Current Assets Held for Sale	$	179
Plants, Properties and Equipment	$	121
Goodwill	10
Right of Use Assets	1
Deferred Charges and Other Assets	9
Long-Term Assets Held for Sale	$	141
Notes payable and current maturities of long-term debt	$	1
Accounts payable	58
Accrued payroll and benefits	3
Other current liabilities	29
Current Liabilities Held for Sale	$	91
Long-Term Debt	$	1
Other Liabilities	12
Long-Term Liabilities Held for Sale	$	13

The following summarizes the total cash provided by operating activities from discontinued operations, net and total cash provided by (used for) investing activities from discontinued operations, net and included in the consolidated statement of cash flows:

In millions for the years ended December 31	2022		2021		2020
Cash Provided by Operating Activities	$	20	$	126	$	114
Cash Provided by (Used for) Investment Activities (a)	$	(5)	$	14	$	(11)

(a) Includes cash invested in capital projects of $5 million, $7 million, and $9 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Prior to the disposal of the business and during the first quarter of 2022, as a result of the significant changes in the business climate impacting our Russian operations, a determination was made that the current carrying value of our Russian operations exceeded the estimated fair value. The fair value of the Russian operations was estimated based on a probability-weighted average approach of the potential cash flows from various paths the Company was evaluating to exit the business. As a result, a pre-tax charge of $68 million ($57 million, net of taxes) was recorded for the impairment and allocated to the Russian fixed assets. Also during 2022, pre-tax charges of $228 million ($228 million after taxes) were recorded to reduce the carrying value of the Russian operations to the expected sale price less costs to sell. Included within these charges was the reclassification of $375 million of historical foreign currency losses related to our Russian operations from accumulated other comprehensive income (loss) into net income. These charges are included in “Impairment of business” within the summarized income statement for our Russian operations included in this footnote and is included in “Discontinued operations, net of taxes” in the consolidated and combined statement of operations.