Discontinued Operations

3 Months Ended

Mar. 26, 2022

Discontinued Operations and Disposal Groups [Abstract]

On August 28, 2021, the Company completed the sale of its lumber and newsprint facilities and certain related assets located in Ontario and Québec Canada, to GreenFirst for $232 million, paid in cash, 28.7 million shares of GreenFirst’s common stock and a credit note issued to the Company by GreenFirst in the amount of CAD $8 million (approximately USD $5 million after present value discount). The GreenFirst common shares have been accounted for at fair value, with changes in fair value recorded in the Consolidated Statements of Income and Comprehensive Income. See Note 10 — Fair Value Measurements for additional information. The Company recently sold the GreenFirst common shares. See Note 1 — Basis of Presentation and New Accounting Pronouncements for additional information.

The cash received at closing was preliminary and subject to final purchase price and other sale-related adjustments. During the first quarter of 2022, the Company trued-up certain sale-related items with GreenFirst for a total net cash outflow of $3 million, as previously disclosed. Pursuant to the terms of the asset purchase agreement, GreenFirst and the Company continue efforts to finalize the closing inventory valuation adjustment.

In connection with the transaction, the parties entered into a Transition Services Agreement ("TSA") whereby the Company would provide certain transitional services to GreenFirst, including information technology, accounting, treasury and other services following the closing of the transaction. The TSA is expected to be terminated in the second quarter of 2022.

Income (loss) from discontinued operations is comprised of the following:


	Three Months Ended
	March 26, 2022		March 27, 2021
Net sales (a)	$	—	$	146,463
Cost of sales	(173)		(82,727)
Gross margin	(173)		63,736
Selling, general and administrative expenses and other	(458)		(8,466)
Operating income (loss)	(631)		55,270
Interest expense (b)	—		(2,614)
Other non-operating income	(4)		345
Income (loss) from discontinued operations before income taxes	(635)		53,001
Income tax benefit (expense)	164		(63,818)
Loss from discontinued operations, net of taxes	$	(471)	$	(10,817)

(a) Net of intercompany sales of $0 million and $12 million for three months ended March 26, 2022 and March 27, 2021, respectively.

(b) The Company allocated interest expense to discontinued operations based on the total portion of debt not attributable to other operations repaid as a result of the transaction.

Other discontinued operations information is as follows:


	Three Months Ended
	March 26, 2022		March 27, 2021
Depreciation and amortization	$	—	$	3,173
Capital expenditures	$	—	$	3,488