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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2022
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From              to             
 _________________________________________
Commission File Number 001-03157
INTERNATIONAL PAPER COMPANY
(Exact name of registrant as specified in its charter)

New York
13-0872805
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)
6400 Poplar Avenue, Memphis, Tennessee
38197
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code: (901419-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common SharesIPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange
Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  ☒
The number of shares outstanding of the registrant’s common stock, par value $1.00 per share, as of April 22, 2022 was 370,629,339.


INDEX
 
  PAGE NO.
Condensed Consolidated Statement of Operations - Three Months Ended March 31, 2022 and 2021
Condensed Consolidated Statement of Comprehensive Income - Three Months Ended March 31, 2022 and 2021
Condensed Consolidated Balance Sheet - March 31, 2022 and December 31, 2021
Condensed Consolidated Statement of Cash Flows - Three Months Ended March 31, 2022 and 2021



 

INTERNATIONAL PAPER COMPANY
Condensed Consolidated Statement of Operations
(Unaudited)
(In millions, except per share amounts)
 Three Months Ended
March 31,
 20222021
Net Sales$5,237 $4,593 
Costs and Expenses
Cost of products sold3,839 3,348 
Selling and administrative expenses341 302 
Depreciation, amortization and cost of timber harvested261 268 
Distribution expenses424 335 
Taxes other than payroll and income taxes36 35 
Restructuring and other charges, net 30 
Net (gains) losses on sales and impairments of businesses 2 
Net (gains) losses on sales of equity method investments (74)
Net (gains) losses on mark to market investments(46) 
Interest expense, net69 93 
Non-operating pension expense (income)(49)(52)
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings362 306 
Income tax provision (benefit)95 88 
Equity earnings (loss), net of taxes93 49 
Earnings (Loss) From Continuing Operations$360 $267 
Discontinued operations, net of taxes 82 
Net Earnings (Loss)$360 $349 
Less: Net earnings (loss) attributable to noncontrolling interests  
Net Earnings (Loss) Attributable to International Paper Company$360 $349 
Basic Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
Earnings (loss) from continuing operations$0.96 $0.68 
Discontinued operations, net of taxes 0.21 
Net earnings (loss)$0.96 $0.89 
Diluted Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
Earnings (loss) from continuing operations$0.95 $0.68 
Discontinued operations, net of taxes 0.20 
Net earnings (loss)$0.95 $0.88 
Average Shares of Common Stock Outstanding – assuming dilution379.2 394.8 
The accompanying notes are an integral part of these condensed financial statements.
1

INTERNATIONAL PAPER COMPANY
(Unaudited)
(In millions)
 
 Three Months Ended
March 31,
 20222021
Net Earnings (Loss)$360 $349 
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans20 34 
Change in cumulative foreign currency translation adjustment(48)(143)
Net gains/losses on cash flow hedging derivatives:
Net gains (losses) arising during the period (6)
Reclassification adjustment for (gains) losses included in net earnings (loss) 3 
Total Other Comprehensive Income (Loss), Net of Tax(28)(112)
Comprehensive Income (Loss)332 237 
Other comprehensive (income) loss attributable to noncontrolling interests 1 
Comprehensive Income (Loss) Attributable to International Paper Company$332 $238 
The accompanying notes are an integral part of these condensed financial statements.
2

INTERNATIONAL PAPER COMPANY
(In millions)
March 31,
2022
December 31,
2021
 (unaudited) 
Assets
Current Assets
Cash and temporary investments$1,031 $1,295 
Restricted cash88  
Accounts and notes receivable, net3,363 3,232 
Contract assets491 378 
Inventories1,746 1,814 
Current investments291 245 
Other current assets174 132 
Total Current Assets7,184 7,096 
Plants, Properties and Equipment, net10,336 10,441 
Long-Term Investments608 751 
Long-Term Financial Assets of Variable Interest Entities (Note 16)2,280 2,275 
Goodwill3,128 3,130 
Overfunded Pension Plan Assets653 595 
Right of Use Assets373 365 
Deferred Charges and Other Assets596 590 
Total Assets$25,158 $25,243 
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt$197 $196 
Accounts payable2,657 2,606 
Accrued payroll and benefits345 440 
Other current liabilities943 902 
Total Current Liabilities4,142 4,144 
Long-Term Debt5,468 5,383 
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 16)2,101 2,099 
Deferred Income Taxes2,642 2,618 
Underfunded Pension Benefit Obligation375 377 
Postretirement and Postemployment Benefit Obligation201 205 
Long-Term Lease Obligations241 236 
Other Liabilities1,101 1,099 
Equity
Common stock, $1 par value, 2022 – 448.9 shares and 2021 – 448.9 shares
449 449 
Paid-in capital4,670 4,668 
Retained earnings9,218 9,029 
Accumulated other comprehensive loss(1,694)(1,666)
12,643 12,480 
Less: Common stock held in treasury, at cost, 2022 – 78.3 shares and 2021 – 70.4 shares
3,756 3,398 
Total Equity8,887 9,082 
Total Liabilities and Equity$25,158 $25,243 
The accompanying notes are an integral part of these condensed financial statements.
3

INTERNATIONAL PAPER COMPANY
(Unaudited)
(In millions)
 Three Months Ended
March 31,
 20222021
Operating Activities
Net earnings (loss)$360 $349 
Depreciation, amortization and cost of timber harvested261 309 
Deferred income tax provision (benefit), net30 20 
Restructuring and other charges, net 30 
Net (gains) losses on mark to market investments(46) 
Net (gains) losses on sales and impairments of businesses 2 
Net (gains) losses on sales of equity method investments (74)
Equity method dividends received204 4 
Equity (earnings) losses, net(93)(49)
Periodic pension (income) expense, net(28)(28)
Other, net51 25 
Changes in current assets and liabilities
Accounts and notes receivable(146)(186)
Contract assets(114)(83)
Inventories31 93 
Accounts payable and accrued liabilities89 68 
Interest payable25 15 
Other(36)17 
Cash Provided By (Used For) Operations588 512 
Investment Activities
Invested in capital projects, net of insurance recoveries(185)(89)
Acquisitions, net of cash acquired (61)
Proceeds from sales of equity method investments 397 
Proceeds from sales of businesses, net of cash divested 11 
Proceeds from sale of fixed assets5  
Cash Provided By (Used For) Investment Activities(180)258 
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding(428)(155)
Issuance of debt88 2 
Reduction of debt(3)(111)
Change in book overdrafts(66)(19)
Dividends paid(174)(202)
Net debt tender premiums paid (19)
Cash Provided By (Used For) Financing Activities(583)(504)
Cash Included in Assets Held for Sale (54)
Effect of Exchange Rate Changes on Cash and Temporary Investments and Restricted Cash(1)(20)
Change in Cash and Temporary Investments and Restricted Cash(176)192 
Cash and Temporary Investments and Restricted Cash
Beginning of period1,295 595 
End of period$1,119 $787 
The accompanying notes are an integral part of these condensed financial statements.
4

INTERNATIONAL PAPER COMPANY
(Unaudited)

The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States and in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments that are necessary for the fair presentation of International Paper Company’s ("International Paper's", "the Company’s" or "our") financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first three months of the year may not necessarily be indicative of full year results. It is suggested that these condensed financial statements be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which have previously been filed with the Securities and Exchange Commission.

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States that require the use of management’s estimates. Actual results could differ from management’s estimates.

Printing Papers Spinoff

On October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers segment along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo Corporation. The transaction was implemented through the distribution of shares of the standalone company to International Paper's shareholders (the "Distribution"). As a result of the Distribution, Sylvamo Corporation is an independent public company that trades on the New York Stock Exchange under the symbol "SLVM".

In addition to the spin-off of Sylvamo Corporation, the Company completed the sale of its Kwidzyn, Poland mill on August 6, 2021. All historical operating results of the Sylvamo Corporation businesses and Kwidzyn mill have been presented as Discontinued Operations, net of tax, in the condensed consolidated statement of operations. See Note 9 - Divestitures and Impairments of Businesses for further details regarding the Sylvamo Corporation spin-off and discontinued operations.

Russia/Ukraine Conflict

The Russia-Ukraine conflict, including escalating sanctions, possible actions by the Russian government, and associated domestic and global economic and geopolitical conditions, could materially and adversely affect our Ilim joint venture and could otherwise adversely affect our business, financial condition, results of operations and cash flows. We are currently unable to predict the impact the Russian invasion of Ukraine, sanctions imposed to date or that may be imposed in the future, geopolitical instability and the possibility of broadened military conflict may have on us or our Ilim joint venture, including on our receipt of dividends from our Ilim joint venture. Moreover, we have announced our intention to explore strategic options with respect to Ilim S.A., including a sale of our 50% equity interest in Ilim S.A. In addition, we have disclosed our intent to monetize our remaining equity stake in Sylvamo Corporation (which has certain operations in Russia, and announced in March 2022 that it began the suspension of operations in Russia and that it was continuing to assess various options for its operations in that country). While we may sell our equity interests in the Ilim joint venture and/or Sylvamo in the future, we cannot be certain if and when this may occur, or the impact that possible disruptions in the capital markets, or conditions associated with the Russia-Ukraine conflict, could have on the value of and our ability to sell our equity interests in the Ilim joint venture and/or Sylvamo and the timing of any such sales.


Recently Issued Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective upon issuance and generally can be applied through December 31, 2022. The Company will apply the amendments in this update to account for contract modifications due to changes in reference rates once those occur. We do not expect these amendments to have a material impact on our consolidated financial statements and related disclosures.
5

Government Assistance

In November 2021, the FASB issued ASU 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance." This guidance requires a business entity to provide certain disclosures around assistance received from governments. This guidance is effective for annual reporting periods beginning after December 15, 2021. The Company is currently evaluating the provisions of the guidance.


Generally, the Company recognizes revenue on a point-in-time basis when the customer takes title to the goods and assumes the risks and rewards for the goods. For customized goods where the Company has a legally enforceable right to payment for the goods, the Company recognizes revenue over time which, generally, is as the goods are produced.

Disaggregated Revenue

A geographic disaggregation of revenues across our company segmentation in the following tables provides information to assist in evaluating the nature, timing and uncertainty of revenue and cash flows and how they may be impacted by economic factors.
Three Months Ended March 31, 2022
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate and Inter-segment SalesTotal
Primary Geographical Markets (a)
United States$3,761 $662 $120 $4,543 
EMEA410 30  440 
Pacific Rim and Asia10 18 1 29 
Americas, other than U.S.225   225 
Total$4,406 $710 $121 $5,237 
Operating Segments
North American Industrial Packaging$4,025 $ $— $4,025 
EMEA Industrial Packaging410  — 410 
Global Cellulose Fibers 710 — 710 
Intra-segment Eliminations(29)  (29)
Corporate & Inter-segment Sales  121 121 
Total$4,406 $710 $121 $5,237 
(a) Net sales are attributed to countries based on the location of the seller.

6

Three Months Ended March 31, 2021
In millionsIndustrial PackagingGlobal Cellulose FibersCorporate & IntersegmentTotal
Primary Geographical Markets (a)
United States$3,332 $543 $47 $3,922 
EMEA393 24 (1)416 
Pacific Rim and Asia18 28 14 60 
Americas, other than U.S.187  8 195 
Total$3,930 $595 $68 $4,593 
Operating Segments
North American Industrial Packaging$3,560 $— $— $3,560 
EMEA Industrial Packaging396 — — 396 
Global Cellulose Fibers— 595 — 595 
Intra-segment Eliminations(26)— — (26)
Corporate & Inter-segment Sales— — 68 68 
Total$3,930 $595 $68 $4,593 
(a) Net sales are attributed to countries based on the location of the seller.

Revenue Contract Balances

A contract asset is created when the Company recognizes revenue on its customized products prior to having an unconditional right to payment from the customer, which generally does not occur until title and risk of loss passes to the customer.

A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced once control of the goods is transferred to the customer. The majority of our customer prepayments are received during the fourth quarter each year for goods that will be transferred to customers over the following twelve months. Contract liabilities of $22 million and $27 million are included in Other current liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021, respectively. During the second quarter of 2021, the Company also recorded a contract liability of $115 million related to the April 2021 acquisition disclosed in Note 8 - Acquisitions. The balance of this contract liability was $105 million and $107 million at March 31, 2022 and December 31, 2021, respectively, and is recorded in Other current liabilities and Other Liabilities in the accompanying condensed consolidated balance sheet.

The difference between the opening and closing balances of the Company's contract assets and contract liabilities primarily results from the difference between the price and quantity at comparable points in time for goods for which we have an unconditional right to payment or receive prepayment from the customer, respectively.

7


A summary of the changes in equity for the three months March 31, 2022 and 2021 is provided below:

Three Months Ended March 31, 2022
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
Equity
Balance, January 1$449 $4,668 $9,029 $(1,666)$3,398 $9,082 
Issuance of stock for various plans, net 2   (70)$72 
Repurchase of stock    428 $(428)
Common stock dividends
($0.4625 per share)
  (171)  $(171)
Comprehensive income (loss)  360 (28) $332 
Ending Balance, March 31$449 $4,670 $9,218 $(1,694)$3,756 $8,887 


Three Months Ended March 31, 2021
In millions, except per share amountsCommon Stock IssuedPaid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Common Stock Held In Treasury, At CostTotal
International
Paper
Shareholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance, January 1$449 $6,325 $8,070 $(4,342)$2,648 $7,854 $14 $7,868 
Issuance of stock for various plans, net— (58)— — (84)26 — 26 
Repurchase of stock— — — — 155 (155)— (155)
Common stock dividends ($0.5125 per share)
— — (205)— — (205)— (205)
Comprehensive income (loss)— — 349 (111)— 238 (1)237 
Ending Balance, March 31$449 $6,267 $8,214 $(4,453)$2,719 $7,758 $13 $7,771 


8


The following table presents changes in accumulated other comprehensive income (AOCI) for the three months ended March 31, 2022 and 2021:
Three Months Ended
March 31,
In millions20222021
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period$(962)$(1,880)
Amounts reclassified from accumulated other comprehensive income20 34 
Balance at end of period(942)(1,846)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period(694)(2,457)
Other comprehensive income (loss) before reclassifications(48)(143)
Other comprehensive income (loss) attributable to noncontrolling interest 1 
Balance at end of period(742)(2,599)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period(10)(5)
Other comprehensive income (loss) before reclassifications (6)
Amounts reclassified from accumulated other comprehensive income 3 
Balance at end of period(10)(8)
Total Accumulated Other Comprehensive Income (Loss) at End of Period$(1,694)$(4,453)

The following table presents details of the reclassifications out of AOCI for the three months ended March 31, 2022 and 2021:
In millions:Amount Reclassified from Accumulated Other Comprehensive IncomeLocation of Amount Reclassified from AOCI
Three Months Ended
March 31,
20222021
Defined benefit pension and postretirement items:
Prior-service costs$(5)$(6)(a)Non-operating pension expense
Actuarial gains (losses)(22)(40)(a)Non-operating pension expense
Total pre-tax amount(27)(46)
Tax (expense) benefit7 12 
Total, net of tax(20)(34)
Net gains and losses on cash flow hedging derivatives:
Foreign exchange contracts (4)(b)Cost of products sold
Total pre-tax amount (4)
Tax (expense)/benefit 1 
Net of tax (3)
Total reclassifications for the period$(20)$(37)

(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 19 for additional details).
(b)This accumulated other comprehensive income component is included in our derivatives and hedging activities (see Note 18 for additional details).
9


Basic earnings per share is computed by dividing earnings by the weighted average number of common shares outstanding. Diluted earnings per share is computed assuming that all potentially dilutive securities were converted into common shares. There are no adjustments required to be made to net income for purposes of computing basic and diluted earnings per share. A reconciliation of the amounts included in the computation of basic earnings (loss) per share and diluted earnings (loss) per share is as follows:
 
 Three Months Ended
March 31,
In millions, except per share amounts20222021
Earnings (loss) from continuing operations attributable to International Paper Company common shareholders$360 $267 
Weighted average common shares outstanding375.2 392.8 
Effect of dilutive securities
Restricted performance share plan4.0 2.0 
Weighted average common shares outstanding – assuming dilution379.2 394.8 
Basic earnings (loss) per share from continuing operations$0.96 $0.68 
Diluted earnings (loss) per share from continuing operations$0.95 $0.68 


2022: There were no restructuring and other charges recorded during the three months ended March 31, 2022.

2021: During the three months ended March 31, 2021, the Company recorded an $18 million pre-tax charge in Corporate related to early debt extinguishment costs and a $12 million pre-tax charge in the Industrial Packaging segment for severance related to the optimization of our EMEA Packaging business.


2021: On April 1, 2021, the Company closed on the previously announced acquisition of two box plants located in Spain. The total purchase consideration, inclusive of working capital adjustments, was approximately €71 million (approximately $83 million based on the April 1, 2021 exchange rate).

The following table summarizes the final fair value assigned to assets and liabilities acquired as of April 1, 2021:

In millions
Cash and temporary investments$5 
Accounts and notes receivable10 
Inventories3 
Plants, properties and equipment50 
Goodwill23 
Intangible assets13 
Total assets acquired$104 
Short-term debt2 
Accounts payable and accrued liabilities4 
Other current liabilities2 
Long-term debt1 
Deferred income taxes12 
Total liabilities assumed21 
Net assets acquired$83 



10

Pro forma information has not been included as it is impracticable to obtain the information due to the lack of availability of historical U.S. GAAP financial data. The results of the operations of these businesses do not have a material effect on the Company's consolidated results of operations.

The Company has accounted for the above acquisition under ASC 805, "Business Combinations" and the results of operations have been included in International Paper's financial statements beginning with the date of acquisition.

2021: In April 2021, the Company received a noncontrolling interest in a U.S-based corrugated packaging producer. In the second quarter of 2021, the Company recorded its investment of $115 million based on the fair value of the noncontrolling interest, and a corresponding contract liability that is amortized over 15 years. The Company is party to various agreements with the entity which includes a containerboard supply agreement. The Company is accounting for its interest as an equity method investment.


Printing Papers Spin-off

2021: On October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers segment along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo Corporation. The transaction was implemented through the distribution of shares of the standalone company to International Paper's shareholders (the "Distribution"). As a result of the Distribution, Sylvamo Corporation is an independent public company that trades on the New York Stock Exchange under the symbol "SLVM".

The Distribution was made to the Company's stockholders of record as of the close of business on September 15, 2021 (the "Record Date"), and such stockholders received one share of Sylvamo Corporation common stock for every 11 shares of International Paper common stock held as of the close of business on the Record Date. The Company retained 19.9% of the shares of Sylvamo at the time of the separation and this retained investment is discussed further in Note 10 - Supplementary Financial Statement Information. The spin-off was tax-free for the Company and its shareholders for U.S. federal income tax purposes.

In connection with the Distribution, on September 29, 2021, the Company and Sylvamo Corporation entered into a separation and distribution agreement as well as various other agreements that govern the relationships between the parties following the Distribution, including a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements provide for the allocation between the Company and Sylvamo Corporation of assets, liabilities and obligations attributable to periods prior to, at and after the Distribution and govern certain relationships between the Company and Sylvamo Corporation after the Distribution. The Company is also party to various ongoing operational agreements with Sylvamo Corporation under which it sells fiber, paper and other products. Sales under these agreements were $198 million for the three months ended March 31, 2022.

All historical operating results of the Sylvamo Corporation businesses, as well as the results of our Kwidzyn, Poland mill that was sold on August 6, 2021, are presented as Discontinued Operations, net of tax, in the consolidated statement of operations. Kwidzyn was previously part of the Printing Papers business prior to its sale in August 2021. See Kwidzyn Mill section below for further details regarding this sale.

11

The following summarizes the major classes of line items comprising Earnings (Loss) Before Income Taxes and Equity Earnings reconciled to Discontinued Operations, net of tax, related to the Sylvamo Corporation businesses and Kwidzyn for the three months ended March 31, 2021 in the condensed consolidated statement of operations:

In millionsThree Months Ended
 March 31, 2021
Net Sales$770 
Costs and Expenses
Cost of products sold499 
Selling and administrative expenses59 
Depreciation, amortization and cost of timber harvested41 
Distribution expenses70 
Taxes other than payroll and income taxes8 
Earnings (Loss) Before Income Taxes and Equity Earnings93 
Income tax provision (benefit)11 
Discontinued Operations, Net of Taxes$82 

The following summarizes the total cash provided by operations and total cash used for investing activities related to the Sylvamo Corporation businesses and Kwidzyn and included in the condensed consolidated statement of cash flows for the three months ended March 31, 2021:

In millionsThree Months Ended
March 31, 2021
Cash Provided by (Used For) Operating Activities$79 
Cash Provided by (Used For) Investment Activities$(19)
In anticipation of the spin-off, Sylvamo incurred $1.5 billion in debt during the third quarter of 2021 with the proceeds used for a distribution to the Company and other expenses associated with the transaction. The Company was an obligor of the debt prior to the spin-off as Sylvamo was a wholly-owned subsidiary. Subsequent to the distribution of the net assets, the Company was no longer an obligor of the Sylvamo debt. The $1.5 billion of borrowings was comprised of $450 million of 7.00% senior unsecured notes due 2029 issued in September 2021. It was also comprised of the senior secured credit facility that Sylvamo entered into in September 2021 which consisted of $450 million of borrowings related to its term loan “B” facility, $520 million of borrowings related to its term loan “F” facility, and the $100 million draw on its revolving credit facility which had a capacity of $450 million. Additionally, at the time of the spin-off in the fourth quarter of 2021, the Company distributed $130 million to Sylvamo.
Kwidzyn Mill

2021: On August 6, 2021, the Company completed the sale of its Kwidzyn, Poland mill for €669 million (approximately $794 million using the July 31, 2021 exchange rate) in cash. The business included the pulp and paper mill in Kwidzyn and supporting functions. During the third quarter of 2021, the Company recorded a net gain of $360 million ($350 million after taxes) including a gain of $404 million ($394 million after taxes) related to the sale of net assets and a loss of $44 million (before and after taxes) related to the cumulative foreign currency translation loss. During the fourth quarter of 2021, the Company incurred $9 million ($6 million after taxes) of costs related to the sale of Kwidzyn. All historical operating results for Kwidzyn have been presented as Discontinued Operations, net of tax, in the condensed consolidated statement of operations.

Olmuksan International Paper

2021: On May 31, 2021, the Company completed the sale of its 90.38% ownership interest in Olmuksan International Paper, a corrugated packaging business in Turkey, to Mondi Group for €66 million (approximately $81 million using the May 31, 2021 exchange rate). During the second quarter of 2021, the Company recorded a gain of $6 million ($0 after taxes) related to the business working capital adjustment.

12

In conjunction with the announced agreement in the fourth quarter of 2020, a determination was made that the current book value of the Olmuksan International Paper disposal group exceeded its estimated fair value of $79 million which was based on the agreed upon transaction price. As a result, a preliminary charge of $123 million (before and after taxes) was recorded during the fourth quarter of 2020. During the first quarter of 2021, the Company recorded an additional charge of $2 million (before and after taxes) related to the cumulative foreign currency translation loss. This charge is included in the Net (gains) losses on sales and impairments of businesses in the accompanying condensed consolidated statement of operations and is included in the results for the Industrial Packaging segment.



Temporary Investments 

Temporary investments with an original maturity of three months or less and money market funds with greater than three month maturities but with the right to redeem without notices are treated as cash equivalents and are stated at cost. Temporary investments totaled $889 million and $1.1 billion at March 31, 2022 and December 31, 2021, respectively.

Restricted Cash

A reconciliation of cash and temporary investments and restricted cash in the condensed consolidated balance sheet to cash and temporary investments and restricted cash in the condensed consolidated statement of cash flows for the three months ended March 31, 2022 is below. The Company had no restricted cash at March 31, 2021.

Three Months Ended March 31,
In millions2022
Cash and Temporary Investments$1,031 
Restricted Cash88 
Total Cash and Temporary Investments and Restricted Cash$1,119 

The Company's restricted cash consists of the cash proceeds from the $88 million first quarter 2022 debt issuance. Proceeds from this debt issuance were used to repay debt maturing on April 1, 2022. See Note 17 - Debt for further details regarding the first quarter 2022 debt issuance and the expected debt repayment.

Accounts and Notes Receivable

In millionsMarch 31, 2022December 31, 2021
Accounts and notes receivable, net:
Trade (less allowances of $31 in 2022 and $34 in 2021)
$3,124 $3,027 
Other239 205 
Total$3,363 $3,232 

Inventories

In millionsMarch 31, 2022December 31, 2021
Raw materials$251 $245 
Finished pulp, paper and packaging986 1,014 
Operating supplies458 486 
Other51 69 
Total$1,746 $1,814 


13

Current Investments

As a result of the 2021 spin-off of Sylvamo Corporation, the Company retained 19.9% of the shares of Sylvamo. The intent is to monetize its investment and to provide additional proceeds to the Company. The Company is accounting for its ownership interest in Sylvamo at fair value as an investment in equity securities. The investment was valued at $291 million and $245 million at March 31, 2022 and December 31, 2021, respectively, and is recorded in Current investments in the accompanying condensed consolidated balance sheet.

In April 2022, the Company borrowed approximately $144 million under a term loan credit agreement with a third-party lender. Subsequently, the Company exchanged 4,132,000 shares of Sylvamo Corporation common stock owned by the Company in exchange and as repayment of the approximately $144 million term loan obligation. After this transaction, the Company owns 4,614,358, or approximately 10.5% of the shares, of Sylvamo Corporation common stock.

Plants, Properties and Equipment  

Accumulated depreciation was $17.8 billion and $17.6 billion at March 31, 2022 and December 31, 2021, respectively. Depreciation expense was $250 million and $258 million for the three months ended March 31, 2022 and 2021, respectively.

Non-cash additions to plants, properties and equipment included within accounts payable were $68 million and $106 million at March 31, 2022 and December 31, 2021, respectively.

Amounts invested in capital projects in the accompanying condensed consolidated statement of cash flows are presented net of insurance recoveries of $18 million received during the three months ended March 31, 2022 and $2 million received during the three months ended March 31, 2021.

Interest

Interest payments made during the three months ended March 31, 2022 and 2021 were $56 million and $111 million, respectively.

Amounts related to interest were as follows: 
 Three Months Ended
March 31,
In millions20222021
Interest expense$77 $124 
Interest income8 31 
Capitalized interest costs4 2 

Asset Retirement Obligations

The Company had recorded liabilities of $107 million related to asset retirement obligations at March 31, 2022 and December 31, 2021.


International Paper leases various real estate, including certain operating facilities, warehouses, office space and land. The Company also leases material handling equipment, vehicles, and certain other equipment. The Company's leases have a remaining lease term of up to 31 years. Total lease costs were $60 million for both of the three months ended March 31, 2022 and 2021.


14

Supplemental Balance Sheet Information Related to Leases
In millionsClassificationMarch 31, 2022December 31, 2021
Assets
Operating lease assetsRight-of-use assets$373 $365 
Finance lease assetsPlants, properties and equipment, net (a)55 57 
Total leased assets$428 $422 
Liabilities
Current
OperatingOther current liabilities$137 $132 
FinanceNotes payable and current maturities of long-term debt10 10 
Noncurrent
OperatingLong-term lease obligations241 236 
FinanceLong-term debt54 56 
Total lease liabilities$442 $434 

(a)Finance leases are recorded net of accumulated amortization of $52 million and $51 million as of March 31, 2022 and December 31, 2021, respectively.


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

Ilim S.A.

The Company has a 50% equity interest in Ilim S.A. (Ilim), which has subsidiaries whose primary operations are in Russia. The Company recorded equity earnings, net of taxes, of $93 million and $49 million for the three months ended March 31, 2022 and 2021, respectively. Foreign exchange losses included in equity earnings for the three months ended March 31, 2022 were $15 million, primarily on the remeasurement of U.S. dollar denominated payables. JSC Ilim Group had no U.S. dollar-denominated debt outstanding as of March 31, 2022. Equity earnings (losses) for the three months ended March 31, 2021 included after-tax foreign exchange losses of $2 million primarily on the remeasurement of U.S. dollar-denominated debt. The Company received cash dividends from the joint venture of $204 million during the first three months of 2022. At March 31, 2022 and December 31, 2021, the Company's investment in Ilim, which is recorded in Long-Term Investments in the condensed consolidated balance sheets, was $413 million and $557 million, respectively, which was $125 million and $121 million, respectively, more than the Company's proportionate share of the joint venture's underlying net assets. The differences primarily relate to currency translation adjustments and the basis difference between the fair value of our investment at acquisition and the 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 $41 million for the three months ended March 31, 2021. The joint marketing agreement was conveyed to Sylvamo Corporation 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 millionsMarch 31, 2022December 31, 2021
Current assets772 $1,010 
Noncurrent assets2,830 3,145 
Current liabilities1,404 1,212 
Noncurrent liabilities1,595 2,047 
Noncontrolling interests27 24 

15

Income Statement
Three Months Ended
March 31,
In millions20222021
Net sales$707 $531 
Gross profit399 248 
Income (loss) from continuing operations182 103 
Net income (loss)177 100 

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


Goodwill

The following table presents changes in goodwill balances as allocated to each business segment for the three-months ended March 31, 2022:
In millionsIndustrial
Packaging
Global Cellulose Fibers Total
Balance as of January 1, 2022
Goodwill$3,426 $