Equity Method Investments (Note)

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

NOTE 11 EQUITY METHOD INVESTMENTS

The Company accounts for the following investments under the equity method of accounting.

ILIM S.A. ("Ilim")

The Company holds a 50% equity interest in Ilim, the holding company for its Ilim joint venture (JV), which has subsidiaries, including JSC Ilim Group, whose primary operations are in Russia. The Company recently announced that it had entered into an agreement to sell its interest in Ilim to its JV partners for $484 million. The completion of the sale is subject to various closing conditions, including the receipt of regulatory approvals in Russia.

The Company also received an indication of interest from its JV partners to purchase all of the Company’s shares (constituting a 2.39% stake) in JSC Ilim Group for $24 million, on terms and conditions to be agreed. The Company intends to pursue an agreement to sell the JSC Ilim Group shares, and to divest other non-material residual interests associated with Ilim, to its JV partners.

In conjunction with the entry into the announced agreement, a determination was made that the book value of the Ilim and JSC Ilim Group investments plus associated cumulative translation losses, exceeded fair value, based upon the agreed upon transaction price for Ilim and the offer price for JSC Ilim Group. As a result, an other than temporary impairment of $533 million was recorded in the fourth quarter of 2022 to write down these investments to fair value. The impairment charge included $375 million of foreign currency cumulative translation adjustment loss. As of December 31, 2022, the $375 million of cumulative translation adjustment loss remained within AOCI with the recognition of this loss recorded as an offset to the investment balance.

The Company also evaluated facts and circumstances as of December 31, 2022 and concluded that the held for sale balance sheet classification criteria had been met as of that date and therefore have classified the Ilim investment balance, net of impairment, as Assets held for sale. Additionally, the December 31, 2021 investment balance has been reclassified to Long-Term Assets Held for Sale.

All current and historical results of the Ilim investment are presented as Discontinued Operations, net of taxes in the consolidated statement of operations. The Company recorded equity earnings, net of taxes, of $296 million, $311 million, and $48 million in 2022, 2021, and 2020, respectively, for Ilim. Equity earnings includes an after-tax foreign exchange (loss) gain of $(50) million in 2020, primarily on the remeasurement of U.S. dollar-denominated net debt. Foreign exchange gains (losses) included in equity earnings in 2022 and 2021, were not material. JSC Ilim Group had no U.S. dollar-denominated debt outstanding as of December 31, 2022. The Company received cash dividends from the joint venture of $204 million, $154 million and $141 million in 2022, 2021 and 2020, respectively. At December 31, 2022 and 2021, the Company's investment in Ilim, which is recorded in Assets held for sale in the consolidated balance sheet, was $133 million and $557 million, respectively, which was $403 million lower and $121 million higher, respectively, than the Company's proportionate share of the joint venture's underlying net assets.

Prior to the spin-off of the Printing Papers segment on October 1, 2021, the Company was party to a joint marketing agreement with JSC Ilim Group, a subsidiary of Ilim, under which the Company purchased, marketed and sold paper produced by JSC Ilim Group. Purchases under this agreement were $125 million and $174 million for the years ended December 31, 2021 and 2020, respectively. The joint marketing agreement was conveyed to Sylvamo as part of the spin-off transaction on October 1, 2021.

Summarized financial information for Ilim is presented in the following tables:

Balance Sheet

In millions	2022		2021
Current assets	$	766	$	1,010
Noncurrent assets	3,663		3,145
Current liabilities	1,275		1,212
Noncurrent liabilities	2,040		2,047
Noncontrolling interests	40		24

Income Statement

In millions	2022		2021		2020
Net sales	$	3,147	$	2,693	$	2,015
Gross profit	1,561		1,432		838
Income from continuing operations	591		635		115
Net income	575		613		113

GRAPHIC PACKAGING INTERNATIONAL PARTNERS, LLC

The Company completed the transfer of its North American Consumer Packaging business in exchange for an initial 20.5% ownership interest (79,911,591 units) in Graphic Packaging International Partners, LLC (GPIP) in 2018. The Company has since fully monetized its investment in GPIP with transactions beginning in the first quarter 2020 through the second quarter 2021.

Date	Transaction Type	Units	Proceeds		Pre-Tax Gain		After-Tax Gain
In millions except units
2020 First Quarter	Units exchange	15,150,784	$	250	$	33	$	25
2020 Third Quarter	Units exchange	17,399,414	250		—		—
2021 First Quarter	Units exchange and open market sale	24,588,316	397		33		25
2021 First Quarter	TRA (a)				42		31
2021 Second Quarter	Units exchange and open market sale	22,773,077	403		64		48
2021 Second Quarter	TRA (a)				66		50

(a) The TRA entitles the Company to 50% of the amount of any tax benefits projected to be realized by GPIP upon the Company's exchange of its units. The Company made income tax payments of $310 million in 2021 as a result of the monetization of its investment in GPIP.

As of June 30, 2021, the Company no longer had an ownership interest in GPIP. The Company recorded equity earnings of $4 million and $40 million for the twelve months ended December 31, 2021 and 2020, respectively. The Company received cash dividends from GPIP of $5 million and $20 million during 2021 and 2020, respectively.

The Company's remaining equity method investments are not material.