Discontinued Operations

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Upon entering into the Engineered Papers Offer agreement, the Engineered Papers business met the criteria set forth in Accounting Standards Codification 205-20, Presentation of Financial Statements – Discontinued Operations (“ASC 205-20”), as the sale represents a strategic shift that will have a major effect on the Company’s operations and financial results. As a result, the Company’s consolidated financial statements for all periods presented reflect the Engineered Papers business as a discontinued operation. The divested business was historically reported in the FBS reportable segment.

On November 30, 2023 the Company completed the sale of its Engineered Papers business. Upon closing of the transaction, the Company recorded a gain on sale of $176.3 million ($170.0 million, net of income taxes) and released certain material deferred tax valuation allowances. The gain and cash proceeds are subject to customary working capital adjustments during a specified period following the sale close date.

The Engineered Papers business was tested for recoverability as of each balance sheet date since meeting the discontinued operations criteria and the Company concluded that there is no impairment expense to be recognized.

Included within the Consolidated Balance Sheet are the following major classes of assets and liabilities, respectively, associated with the discontinued operations (in millions):


	December 31, 2022
ASSETS
Cash and cash equivalents	$	23.3
Accounts receivable, net	88.6
Inventories, net	120.2
Income taxes receivable	0.4


Other current assets	1.3

Total current assets	233.8
Property, plant and equipment, net	183.5

Operating lease right-of-use assets	5.2

Investment in equity affiliates	59.1
Goodwill	3.0

Other assets	5.3

Total assets of discontinued operations	$	489.9
LIABILITIES
Current debt	$	1.1

Operating lease liabilities	0.8
Accounts payable	45.1
Income taxes payable	1.2

Accrued expenses and other current liabilities	55.2

Total current liabilities	103.4
Long-term debt	2.9

Operating lease liabilities, noncurrent	4.6
Long-term income tax payable	0.6
Pension and other postretirement benefits	21.3
Deferred income tax liabilities	20.1
Other liabilities	17.4

Total liabilities of discontinued operations	$	170.3

Summary financial results of discontinued operations were as follows (in millions):


	Years Ended December 31,
	2023		2022		2021
Net sales	$	490.9	$	530.5	$	509.3
Cost of products sold	373.4		398.9		362.2
Gross profit	117.5		131.6		147.1

Selling expense	13.2		14.4		14.2
Research and development expense	8.6		7.8		8.5
General expense	16.2		17.6		16.7
Total nonmanufacturing expenses	38.0		39.8		39.4


Restructuring and other impairment expense	0.5		0.2		8.2
Operating profit	79.0		91.6		99.5
Interest expense (1)	49.0		28.8		5.7
Other income, net	194.8		9.3		5.8
Income from discontinued operations before income taxes	224.8		72.1		99.6
Income tax expense	29.1		15.0		18.8
Income (loss) from equity affiliates, net of income taxes	2.5		5.2		6.4
Income from discontinued operations, net of tax	$	198.2	$	62.3	$	87.2

(1) Upon the close of the transaction, the Company used a portion of the net proceeds to repay a portion of its outstanding debt amounting to approximately $641.2 million. This debt repayment is based on the triggering of a financial covenant in the loan agreement and interest expense has been allocated to discontinued operations on a pro-rata basis within the Consolidated Statements of Income (Loss) and the Consolidated Statement of Cash Flows based on the outstanding loan balances.

In conjunction with the sale, the Company and Evergreen Hill Enterprise entered into a transition service agreement (“TSA”). Pursuant to the agreement, which remains in effect until the date all services are completed, but no more than twelve months following the closing date of the EP sale, the Company and Evergreen Hill Enterprise will each provide interim support for various functions to facilitate an orderly transfer of business operations. The continuing cash flows generated by the TSA does not constitute significant continuing involvement in the operations of the EP business. Additionally, under the TSA, we settle any receipts received or payments made on behalf of each party’s customers or vendors. As of December 31, 2023, the net fees and receivable from the TSA were immaterial.