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Segment Information
 6 Months Ended
Jun. 30, 2021
Segment Reporting [Abstract]  
Segment Information

18.       Segment Information

We report our business in three reportable segments: Packaging, Paper, and Corporate and Other. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies.

During the fourth quarter of 2020, in order to meet strong packaging demand and maintain appropriate inventory levels, we temporarily began producing linerboard on the No. 3 machine at our Jackson, Alabama mill. In the first quarter of 2021, we announced the discontinuation of production of uncoated freesheet paper grades on the machine and the permanent conversion of the machine to produce linerboard. Before October 2020, operating results for the Jackson mill were included in the Paper segment. Beginning in October 2020, operating results for the Jackson mill are included in both the Packaging and Paper segments.

Each segment’s profits and losses are measured on operating profits before interest expense, net, non-operating pension income, and income taxes. For certain allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.

Selected financial information by reportable segment was as follows (dollars in millions):

 

 

 

Sales, net

 

 

 

 

 

Three Months Ended June 30, 2021

 

Trade

 

 

Intersegment

 

 

Total

 

 

Operating Income (Loss)

 

 

Packaging

 

$

1,714.5

 

 

$

4.0

 

 

$

1,718.5

 

 

$

317.2

 

 (a)

Paper

 

 

142.3

 

 

 

—

 

 

 

142.3

 

 

 

2.6

 

 (a)

Corporate and Other

 

 

23.1

 

 

 

32.0

 

 

 

55.1

 

 

 

(25.2

)

 (a)

Intersegment eliminations

 

 

—

 

 

 

(36.0

)

 

 

(36.0

)

 

 

—

 

 

 

 

$

1,879.9

 

 

$

—

 

 

$

1,879.9

 

 

 

294.6

 

 

Non-operating pension income

 

 

 

 

 

 

 

 

 

 

 

5.0

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(24.9

)

 

Income before taxes

 

 

 

 

 

 

 

 

 

 

$

274.7

 

 

 

 

 

 

Sales, net

 

 

 

 

 

Three Months Ended June 30, 2020

 

Trade

 

 

Intersegment

 

 

Total

 

 

Operating Income (Loss)

 

 

Packaging

 

$

1,401.8

 

 

$

8.1

 

 

$

1,409.9

 

 

$

197.6

 

 (b)

Paper

 

 

123.3

 

 

 

—

 

 

 

123.3

 

 

 

(61.4

)

 (b)(c)

Corporate and Other

 

 

16.5

 

 

 

34.0

 

 

 

50.5

 

 

 

(20.1

)

 

Intersegment eliminations

 

 

—

 

 

 

(42.1

)

 

 

(42.1

)

 

 

—

 

 

 

 

$

1,541.6

 

 

$

—

 

 

$

1,541.6

 

 

 

116.1

 

 

Non-operating pension income

 

 

 

 

 

 

 

 

 

 

 

0.6

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(25.1

)

 

Income before taxes

 

 

 

 

 

 

 

 

 

 

$

91.6

 

 

 

 

 

Sales, net

 

 

 

 

 

Six Months Ended June 30, 2021

 

Trade

 

 

Intersegment

 

 

Total

 

 

Operating Income (Loss)

 

 

Packaging

 

$

3,334.3

 

 

$

7.8

 

 

$

3,342.1

 

 

$

575.1

 

 (a)

Paper

 

 

306.7

 

 

 

0.1

 

 

 

306.8

 

 

 

11.3

 

 (a)

Corporate and Other

 

 

46.0

 

 

 

64.5

 

 

 

110.5

 

 

 

(53.5

)

 (a)

Intersegment eliminations

 

 

—

 

 

 

(72.4

)

 

 

(72.4

)

 

 

—

 

 

 

 

$

3,687.0

 

 

$

—

 

 

$

3,687.0

 

 

 

532.9

 

 

Non-operating pension income

 

 

 

 

 

 

 

 

 

 

 

9.8

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(48.4

)

 

Income before taxes

 

 

 

 

 

 

 

 

 

 

$

494.3

 

 

 

 

 

Sales, net

 

 

 

 

 

Six Months Ended June 30, 2020

 

Trade

 

 

Intersegment

 

 

Total

 

 

Operating Income (Loss)

 

 

Packaging

 

$

2,867.2

 

 

$

10.2

 

 

$

2,877.4

 

 

$

397.5

 

 (b)

Paper

 

 

340.7

 

 

 

—

 

 

 

340.7

 

 

 

(29.0

)

 (b)(c)

Corporate and Other

 

 

42.4

 

 

 

68.3

 

 

 

110.7

 

 

 

(43.3

)

 

Intersegment eliminations

 

 

—

 

 

 

(78.5

)

 

 

(78.5

)

 

 

—

 

 

 

 

$

3,250.3

 

 

$

—

 

 

$

3,250.3

 

 

 

325.2

 

 

Non-operating pension income

 

 

 

 

 

 

 

 

 

 

 

1.1

 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

(44.6

)

 

Income before taxes

 

 

 

 

 

 

 

 

 

 

$

281.7

 

 

 

(a)

The three and six months ended June 30, 2021 include the following:

 

1.

$4.7 million and $2.6 million, respectively, of income primarily consisting of an adjustment of the required asset retirement obligation related to the 2020 closure of the San Lorenzo, California facility, a gain on sale of transportation assets, and insurance proceeds received for a natural disaster at one of the corrugated products facilities, partially offset by closure costs related to corrugated products facilities.

 

2.

$3.8 million and $4.9 million, respectively, of charges related to the announced discontinuation of production of uncoated freesheet paper grades on the No. 3 machine at the Jackson, Alabama mill in the first quarter of 2021 associated with the permanent conversion of the machine to produce linerboard.

 

 

 

(b)

The three and six months ended June 30, 2020 include the following:

 

1.

$20.4 million and $20.8 million of charges, respectively, consisting of closure costs related to corrugated products facilities, substantially all of which relates to the closure of the San Lorenzo, California facility during the second quarter of 2020, partially offset by income related to the sale of a corrugated products facility.

 

2.

$6.1 million and $6.9 million, respectively, of incremental, out-of-pocket costs related to COVID-19, including supplies, cleaning and sick pay. Beginning in July 2020, all corresponding COVID-19 related expenses were included in normalized costs.

 

 

 

(c)

During the second quarter of 2020, with the exacerbated deterioration in uncoated freesheet market conditions and the estimated impact on our Paper reporting unit arising from the COVID-19 pandemic, as well as projected future results of operations, we identified a triggering event indicating possible impairment of goodwill within our Paper reporting unit. The Company performed an interim quantitative impairment analysis as of May 31, 2020, and, based on the evaluation performed, we determined that goodwill was fully impaired for the Paper reporting unit and recognized a non-cash impairment charge of $55.2 million. See Note 9, Goodwill and Intangible Assets, for additional information.