The condensed combined financial statements have been prepared on a carve-out basis and are derived from the consolidated financial statements and accounting records of International Paper. The following discussion summarizes activity between the Company and International Paper.

The condensed combined statements of operations includes expenses for certain centralized functions and other programs provided and administered by International Paper that are charged directly to the Company. In addition, for purposes of preparing these condensed combined financial statements on a carve-out basis, we have been allocated a portion of International Paper’s total corporate expense to the Company. See Note 1 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a carve-out basis.

The Company sold products to International Paper businesses in the amounts of $2 million and $3 million for the three months and $5 million and $12 million for the nine months ended September 30, 2021 and 2020, respectively, which are included in net sales in the condensed combined statements of operations.

The Company purchases certain of its products from International Paper which are produced in facilities that will remain with International Paper. The Company continues to purchase uncoated freesheet and bristols pursuant to an offtake agreement between the Company and International Paper. The Company purchased and recognized in cost of products sold, inventory associated with the offtake agreements of $76 million and $40 million for the three months ended September 30, 2021 and 2020, respectively, and $180 million and $169 million for the nine months ended September 30, 2021 and 2020, respectively.

The Company purchases fiber pursuant to a fiber purchase agreement between the Company and International Paper. The Company purchased and recognized in cost of products sold inventory associated with the fiber supply agreements of $44 million and $38 million for the three months ended and $118 million and $113 million for the nine months ended September 30, 2021 and 2020, respectively.

In addition, the Company is a party to the Joint Marketing Agreement with JSC Ilim Group, a subsidiary of International Paper’s equity method investee Ilim SA, under which the Company continues to purchase, market and sell paper produced by JSC Ilim Group. The Company purchased and recognized in cost of products sold, inventory under this agreement of $49 million and $36 million for the three months ended September 30, 2021 and 2020, respectively, and $140 million and $116 million for the nine months ended September 30, 2021 and 2020, respectively.


In millions	September 30, 2021		December 31, 2020
Due from Parent cash pool	$	—	$	202
Professional services provided to Parent / other	25		19
Total	$	25	$	221

Included in our September 30, 2021 inventory purchases payable is a $77 million related party payable, pursuant to the terms of the supply and offtake agreements between the Company and International Paper, which will be paid for throughout the first six months of 2022. In addition, the Company recognized a $3 million related party payable to International Paper for fiber supply in connection with the fiber purchase agreement.

Net transfers (to) from Parent are included within Parent company investment on the condensed combined balance sheets and within the summary of changes in equity included in Note 4. The components of the net transfers (to) from International Paper are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2021		2020		2021		2020
General financing activities	$	(522)	$	(63)	$	(601)	$	(310)
Corporate allocations	32		37		112		109
Stock-based compensation	3		4		10		11
Total net transfers (to) from Parent	$	(487)	$	(22)	$	(479)	$	(190)

As part of our separation from International Paper and pursuant to the Employee Matters Agreement, we have assumed responsibility for certain deferred compensation and non-qualified pension plan balances related to our employees. These employees previously participated in plans sponsored by International Paper. As our employees become eligible for and these benefits are paid, we will be reimbursed by International Paper. We have recorded a receivable of $24 million reflected within deferred charges and other assets of our condensed combined balance sheet related to the plans.