RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

Prior to the spin-off on October 1, 2021, we historically operated as part of International Paper and not as a standalone company. As a result of the spin-off on October 1, 2021, Sylvamo became an independent public company. The following discussion summarizes activity between the Company and International Paper both prior and subsequent to the spin-off.

Allocation of General Corporate Expenses

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

Net transfers from Parent are included within the summary of changes in equity included in Note 4 Equity. The components of the net transfers from International Paper are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2022		2021		2022		2021
General financing activities	$	—	$	(120)	$	—	$	(79)
Corporate allocations	—		42		—		80
Stock-based compensation	—		4		—		7
Total net transfers from Parent	$	—	$	(74)	$	—	$	8

Related Party Sales and Purchases

The Company purchases certain of its products from International Paper which are produced in facilities that remained 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 inventory associated with the offtake agreements of $147 million for the six months ended June 30, 2022.

The Company purchases fiber pursuant to a fiber purchase agreement between the Company and International Paper. The Company purchased inventory associated with the fiber supply agreements of $47 million for the six months ended June 30, 2022.

Transition Services Agreement

Pursuant to the Transition Services Agreement, International Paper and Sylvamo will provide certain services to one another on an interim, transitional basis. The services to be provided include certain information technology services, finance and accounting services and human resources and employee benefits services. The agreed-upon charges for such services are generally intended to allow the providing company to recover all costs and expenses for providing such services. The total amount of expenses incurred by Sylvamo under the Transition Services Agreement for the six months ended June 30, 2022 was $16 million.

Related Party Receivable

The Company had related party receivables of $1 million and $3 million as of June 30, 2022 and December 31, 2021, respectively, related to product sales to International Paper and other items. Related party receivables are included in “Accounts and notes receivable.”

Related Party Payable

The Company had related party payables of $84 million and $110 million as of June 30, 2022 and December 31, 2021, respectively, related to inventory purchases from International Paper. Related party payables are included in “Accounts payable” and “Other current liabilities.”

Included in our December 31, 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 was repaid throughout the first six months of 2022.