EQUITY METHOD INVESTMENTS (Note)

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

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

Ilim S.A.

The Company has a 50% equity interest in Ilim, which has subsidiaries, including the Ilim Group, whose primary operations are in Russia. The Company announced in January 2023 that it had entered into an agreement to sell its interest in Ilim to its joint venture 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 Ilim joint venture partners to purchase all of the Company’s shares (constituting a 2.39% stake) in Ilim Group for $24 million, on terms and conditions to be agreed. The Company intends to pursue an agreement to sell the Ilim Group shares, and to divest other non-material residual interests associated with Ilim, to its Ilim joint venture partners.

In conjunction with the entry into the announced agreement, a determination was made that the book value of the Ilim and Ilim Group investments plus associated cumulative translation losses, exceeded fair value, based on the agreed upon transaction price for Ilim and the offer price for Ilim Group. As a result, an other than temporary impairment of $33 million, $43 million and $533 million was recorded for the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and $76 million for the six months ended June 30, 2023, to write down these investments to fair value. The impairment charges included approximately $60 million, $43 million and $375 million of foreign currency cumulative translation adjustment loss for the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and $103 million for the six months ended June 30, 2023. As of June 30, 2023, approximately $478 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 evaluated facts and circumstances as of December 31, 2022 and June 30, 2023 and concluded that the held for sale balance sheet classification criteria had been met and therefore classified the Ilim joint venture investment balance, net of impairment, as Assets held for sale.

All current and historical results of the Ilim joint venture investment are presented as Discontinued Operations, net of taxes in the condensed consolidated statement of operations. The Company recorded equity earnings, net of taxes, of $46 million and $95 million for the three months ended June 30, 2023 and 2022, respectively and $89 million and $188 million for the six months ended June 30, 2023 and 2022, respectively. The Company received cash dividends from the Ilim joint venture of $13 million and $204 million during the first six months of 2023 and 2022, respectively. At June 30, 2023 and December 31, 2022, the Company's investment in the Ilim joint venture, which is recorded in Assets held for sale in the condensed consolidated balance sheets, was $30 million and $133 million, respectively, which was $467 million and $403 million, respectively, lower than the Company's proportionate share of the Ilim joint venture's underlying net assets.

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

Balance Sheet

In millions	June 30, 2023		December 31, 2022
Current assets	$	708	$	766
Noncurrent assets	3,044		3,663
Current liabilities	1,453		1,275
Noncurrent liabilities	1,261		2,040
Noncontrolling interests	38		40

Income Statement

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Net sales	$	581	$	815	$	1,203	$	1,522
Gross profit	253		444		530		843
Income (loss) from continuing operations	92		189		176		372
Net income (loss)	88		185		168		362

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