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 June 30, 2023

☐ 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: (901) 419-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	IP	New 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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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 July 21, 2023 was 345,999,129.

INDEX

 

		PAGE NO.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Statement of Operations - Three Months and Six Months Ended June 30, 2023 and 2022	1
	Condensed Consolidated Statement of Comprehensive Income - Three Months and Six Months Ended June 30, 2023 and 2022	2
	Condensed Consolidated Balance Sheet - June 30, 2023 and December 31, 2022	3
	Condensed Consolidated Statement of Cash Flows - Six Months Ended June 30, 2023 and 2022	4
	Condensed Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

ITEM 1.FINANCIAL STATEMENTS

INTERNATIONAL PAPER COMPANY

Condensed Consolidated Statement of Operations

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net Sales	$	4,682	$	5,389	$	9,702	$	10,626
Costs and Expenses
Cost of products sold	3,360		3,806		7,002		7,645
Selling and administrative expenses	336		300		717		641
Depreciation, amortization and cost of timber harvested	244		267		485		528
Distribution expenses	376		442		798		866
Taxes other than payroll and income taxes	40		36		76		72
Net (gains) losses on mark to market investments	—		(3)		—		(49)
Interest expense, net	59		74		121		143
Non-operating pension expense (income)	12		(47)		27		(96)
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	255		514		476		876
Income tax provision (benefit)	33		96		81		191
Equity earnings (loss), net of taxes	—		(2)		(1)		(2)
Earnings (Loss) From Continuing Operations	$	222	$	416	$	394	$	683
Discontinued operations, net of taxes	13		95		13		188
Net Earnings (Loss)	$	235	$	511	$	407	$	871
Basic Earnings (Loss) Per Share
Earnings (loss) from continuing operations	$	0.64	$	1.13	$	1.13	$	1.83
Discontinued operations, net of taxes	0.04		0.26		0.04		0.51
Net earnings (loss)	$	0.68	$	1.39	$	1.17	$	2.34
Diluted Earnings (Loss) Per Share
Earnings (loss) from continuing operations	$	0.64	$	1.13	$	1.12	$	1.82
Discontinued operations, net of taxes	0.04		0.25		0.04		0.50
Net earnings (loss)	$	0.68	$	1.38	$	1.16	$	2.32
Average Shares of Common Stock Outstanding – assuming dilution	346.5		370.7		349.5		375.7

The accompanying notes are an integral part of these condensed financial statements.

1

INTERNATIONAL PAPER COMPANY

(Unaudited)

(In millions)

 

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net Earnings (Loss)	$	235	$	511	$	407	$	871
Other Comprehensive Income (Loss), Net of Tax:
Amortization of pension and post-retirement prior service costs and net loss:
U.S. plans	21		23		44		43
Change in cumulative foreign currency translation adjustment	(30)		182		(39)		134
Total Other Comprehensive Income (Loss), Net of Tax	(9)		205		5		177
Comprehensive Income (Loss)	$	226	$	716	$	412	$	1,048

The accompanying notes are an integral part of these condensed financial statements.

2

INTERNATIONAL PAPER COMPANY

(In millions)

	June 30, 2023		December 31, 2022
	(unaudited)
Assets
Current Assets
Cash and temporary investments	$	746	$	804
Accounts and notes receivable, net	3,140		3,284
Contract assets	490		481
Inventories	1,911		1,942
Assets held for sale	30		133
Other current assets	159		126
Total Current Assets	6,476		6,770
Plants, Properties and Equipment, net	10,473		10,431
Investments	183		186
Long-Term Financial Assets of Variable Interest Entities (Note 14)	2,303		2,294
Goodwill	3,043		3,041
Overfunded Pension Plan Assets	315		297
Right of Use Assets	449		424
Deferred Charges and Other Assets	441		497
Total Assets	$	23,683	$	23,940
Liabilities and Equity
Current Liabilities
Notes payable and current maturities of long-term debt	$	248	$	763
Accounts payable	2,394		2,708
Accrued payroll and benefits	385		355
Other current liabilities	1,040		1,174
Total Current Liabilities	4,067		5,000
Long-Term Debt	5,572		4,816
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 14)	2,110		2,106
Deferred Income Taxes	1,735		1,732
Underfunded Pension Benefit Obligation	283		281
Postretirement and Postemployment Benefit Obligation	139		150
Long-Term Lease Obligations	304		283
Other Liabilities	1,069		1,075
Equity
Common stock, $1 par value, 2023 – 448.9 shares and 2022 – 448.9 shares	449		449
Paid-in capital	4,688		4,725
Retained earnings	9,938		9,855
Accumulated other comprehensive loss	(1,920)		(1,925)
	13,155		13,104
Less: Common stock held in treasury, at cost, 2023 – 102.9 shares and 2022 – 98.6 shares	4,751		4,607
Total Equity	8,404		8,497
Total Liabilities and Equity	$	23,683	$	23,940

The accompanying notes are an integral part of these condensed financial statements.

3

INTERNATIONAL PAPER COMPANY

(Unaudited)

(In millions)

	Six Months Ended June 30,
	2023		2022
Operating Activities
Net earnings (loss)	$	407	$	871
Depreciation, amortization and cost of timber harvested	485		528
Deferred income tax provision (benefit), net	(13)		(5)
Net (gains) losses on mark to market investments	—		(49)
Net (gains) losses on sales and impairments of equity method investments	76		—
Equity method dividends received	13		204
Equity (earnings) losses, net of taxes	(88)		(186)
Periodic pension (income) expense, net	47		(58)
Other, net	34		72
Changes in current assets and liabilities
Accounts and notes receivable	160		(276)
Contract assets	(9)		(129)
Inventories	87		(133)
Accounts payable and accrued liabilities	(280)		199
Interest payable	(23)		3
Other	(23)		(63)
Cash Provided By (Used For) Operations	873		978
Investment Activities
Invested in capital projects, net of insurance recoveries	(608)		(371)
Proceeds from exchange of equity securities	—		144
Proceeds from sale of fixed assets	3		11
Other	2		(1)
Cash Provided By (Used For) Investment Activities	(603)		(217)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding	(218)		(823)
Issuance of debt	772		232
Reduction of debt	(536)		(243)
Change in book overdrafts	(33)		(47)
Dividends paid	(322)		(344)
Other	(1)		(1)
Cash Provided By (Used For) Financing Activities	(338)		(1,226)
Effect of Exchange Rate Changes on Cash and Temporary Investments	10		(4)
Change in Cash and Temporary Investments	(58)		(469)
Cash and Temporary Investments
Beginning of period	804		1,295
End of period	$	746	$	826

The accompanying notes are an integral part of these condensed financial statements.

4

INTERNATIONAL PAPER COMPANY

(Unaudited)

The accompanying unaudited condensed consolidated 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 six months of the year may not necessarily be indicative of full year results. You should read these condensed financial statements 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, 2022 (the "Annual Report"), which have previously been filed with the Securities and Exchange Commission.

These condensed 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.

Russia-Ukraine Conflict

The military conflict between Russia and Ukraine, including ongoing sanctions, actions by the Russian government, and associated domestic and global economic and geopolitical conditions, has adversely affected and may continue to adversely affect our Ilim joint venture and our businesses, financial condition, results of operations and cash flows. On January 24, 2023, we announced that we have reached an agreement to sell our equity interest in Ilim S.A. ("Ilim") and have also received from the same purchaser an indication of interest to purchase our equity investment in JSC Ilim Group ("Ilim Group" and together with Ilim, the "Ilim joint venture"), however, we cannot be certain if and when the completion of these sales may occur. Our ability to complete such sales is subject to various risks, including (i) purchasers’ inability to obtain necessary regulatory approvals or to finance the purchase pursuant to the terms of the agreement, (ii) adverse actions by the Russian government, and (iii) new or expanded sanctions imposed by the U.S., the United Kingdom, or the European Union or its member countries. We are unable to predict the full impact that Russia’s ongoing invasion of Ukraine, current or potential future sanctions, ongoing or potential disruptions resulting from the conflict, the changing regulatory environment in Russia, negative macroeconomic conditions arising from such conflict, supply chain disruptions, and geopolitical instability and shifts, may have on us or our ability to complete the sale of our interest in the Ilim joint venture.

Recently Adopted Accounting Pronouncements

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, 2024. The Company has applied and will continue to apply the amendments in this update to account for contract modifications due to changes in reference rates as those modifications occur. We do not expect these amendments to have a material impact on our consolidated financial statements and related disclosures.

Liabilities - Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." This guidance requires a business entity operating as a buyer in a supplier finance agreement to disclose qualitative and quantitative information about its supplier finance programs. This guidance is effective for annual reporting periods beginning after December 15, 2022, and interim periods within those years. The Company adopted the provisions of this guidance in the first quarter of 2023. See Note 8 - Supplemental Financial Information.

5

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

	Three Months Ended June 30, 2023
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	3,305	$	616	$	100	$	4,021
EMEA	351		26		—		377
Pacific Rim and Asia	7		56		—		63
Americas, other than U.S.	221		—		—		221
Total	$	3,884	$	698	$	100	$	4,682
Operating Segments
North American Industrial Packaging	$	3,550	$	—	$	—	$	3,550
EMEA Industrial Packaging	351		—		—		351
Global Cellulose Fibers	—		698		—		698
Intra-segment Eliminations	(17)		—		—		(17)
Corporate & Intersegment Sales	—		—		100		100
Total	$	3,884	$	698	$	100	$	4,682

(a) Net sales are attributed to countries based on the location of the seller.

	Six Months Ended June 30, 2023
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	6,760	$	1,346	$	226	$	8,332
EMEA	742		51		—		793
Pacific Rim and Asia	15		112		—		127
Americas, other than U.S.	450		—		—		450
Total	$	7,967	$	1,509	$	226	$	9,702
Operating Segments
North American Industrial Packaging	$	7,274	$	—	$	—	$	7,274
EMEA Industrial Packaging	742		—		—		742
Global Cellulose Fibers	—		1,509		—		1,509
Intra-segment Eliminations	(49)		—		—		(49)
Corporate & Intersegment Sales	—		—		226		226
Total	$	7,967	$	1,509	$	226	$	9,702

(a) Net sales are attributed to countries based on the location of the seller.

6

	Three Months Ended June 30, 2022
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	3,842	$	752	$	109	$	4,703
EMEA	413		25		—		438
Pacific Rim and Asia	11		11		1		23
Americas, other than U.S.	225		—		—		225
Total	$	4,491	$	788	$	110	$	5,389
Operating Segments
North American Industrial Packaging	$	4,126	$	—	$	—	$	4,126
EMEA Industrial Packaging	413		—		—		413
Global Cellulose Fibers	—		788		—		788
Intra-segment Eliminations	(48)		—		—		(48)
Corporate & Intersegment Sales	—		—		110		110
Total	$	4,491	$	788	$	110	$	5,389

(a) Net sales are attributed to countries based on the location of the seller.

	Six Months Ended June 30, 2022
In millions	Industrial Packaging		Global Cellulose Fibers		Corporate & Intersegment		Total
Primary Geographical Markets (a)
United States	$	7,603	$	1,414	$	229	$	9,246
EMEA	823		55		—		878
Pacific Rim and Asia	21		29		2		52
Americas, other than U.S.	450		—		—		450
Total	$	8,897	$	1,498	$	231	$	10,626
Operating Segments
North American Industrial Packaging	$	8,151	$	—	$	—	$	8,151
EMEA Industrial Packaging	823		—		—		823
Global Cellulose Fibers	—		1,498		—		1,498
Intra-segment Eliminations	(77)		—		—		(77)
Corporate & Intersegment Sales	—		—		231		231
Total	$	8,897	$	1,498	$	231	$	10,626

(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 $38 million are included in Other current liabilities in the accompanying condensed consolidated balance sheet as of June 30, 2023 and December 31, 2022, respectively. The Company also recorded a contract liability of $115 million related to a previous acquisition. The balance of this contract liability was $95 million and $99 million at June 30, 2023 and December 31, 2022, 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 and six months ended June 30, 2023 and 2022 is provided below:

	Three Months Ended June 30, 2023
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance, April 1	$	449	$	4,699	$	9,866	$	(1,911)	$	4,714	$	8,389
Issuance of stock for various plans, net	—		(11)		—		—		(3)		(8)
Repurchase of stock	—		—		—		—		40		(40)
Common stock dividends ($0.4625 per share)	—		—		(163)		—		—		(163)
Comprehensive income (loss)	—		—		235		(9)		—		226
Ending Balance, June 30	$	449	$	4,688	$	9,938	$	(1,920)	$	4,751	$	8,404

	Six Months Ended June 30, 2023
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance, January 1	$	449	$	4,725	$	9,855	$	(1,925)	$	4,607	$	8,497
Issuance of stock for various plans, net	—		(37)		—		—		(75)		38
Repurchase of stock	—		—		—		—		219		(219)
Common stock dividends ($0.9250 per share)	—		—		(324)		—		—		(324)
Comprehensive income (loss)	—		—		407		5		—		412
Ending Balance, June 30	$	449	$	4,688	$	9,938	$	(1,920)	$	4,751	$	8,404

	Three Months Ended June 30, 2022
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance, April 1	$	449	$	4,670	$	9,218	$	(1,694)	$	3,756	$	8,887
Issuance of stock for various plans, net	—		5		—		—		(2)		7
Repurchase of stock	—		—		—		—		395		(395)
Common stock dividends ($0.4625 per share)	—		—		(172)		—		—		(172)
Comprehensive income (loss)	—		—		511		205		—		716
Ending Balance, June 30	$	449	$	4,675	$	9,557	$	(1,489)	$	4,149	$	9,043

	Six Months Ended June 30, 2022
In millions, except per share amounts	Common Stock Issued		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Equity
Balance, January 1	$	449	$	4,668	$	9,029	$	(1,666)	$	3,398	$	9,082
Issuance of stock for various plans, net	—		7		—		—		(72)		79
Repurchase of stock	—		—		—		—		823		(823)
Common stock dividends ($0.9250 per share)	—		—		(343)		—		—		(343)
Comprehensive income (loss)	—		—		871		177		—		1,048
Ending Balance, June 30	$	449	$	4,675	$	9,557	$	(1,489)	$	4,149	$	9,043

8

NOTE 5 - OTHER COMPREHENSIVE INCOME

The following table presents changes in Accumulated Other Comprehensive Income (Loss) (AOCI), net of tax, for the three months and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Defined Benefit Pension and Postretirement Adjustments
Balance at beginning of period	$	(1,172)	$	(942)	$	(1,195)	$	(962)
Amounts reclassified from accumulated other comprehensive income	21		23		44		43
Balance at end of period	(1,151)		(919)		(1,151)		(919)
Change in Cumulative Foreign Currency Translation Adjustments
Balance at beginning of period	(731)		(742)		(722)		(694)
Other comprehensive income (loss) before reclassifications	(30)		182		(39)		134
Balance at end of period	(761)		(560)		(761)		(560)
Net Gains and Losses on Cash Flow Hedging Derivatives
Balance at beginning of period	(8)		(10)		(8)		(10)
Balance at end of period	(8)		(10)		(8)		(10)
Total Accumulated Other Comprehensive Income (Loss) at End of Period	$	(1,920)	$	(1,489)	$	(1,920)	$	(1,489)

The following table presents details of the reclassifications out of AOCI for the three months and six months ended June 30, 2023 and 2022:

In millions:	Amount Reclassified from Accumulated Other Comprehensive Income									Location of Amount Reclassified from AOCI
	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Defined benefit pension and postretirement items:
Prior-service costs	$	(6)	$	(6)	$	(12)	$	(11)	(a)	Non-operating pension expense (income)
Actuarial gains (losses)	(22)		(24)		(46)		(46)		(a)	Non-operating pension expense (income)
Total pre-tax amount	(28)		(30)		(58)		(57)
Tax (expense) benefit	7		7		14		14
Net of tax	(21)		(23)		(44)		(43)
Total reclassifications for the period	$	(21)	$	(23)	$	(44)	$	(43)

(a)These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see Note 16 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 from continuing operations and diluted earnings (loss) per share from continuing operations is as follows:

 

	Three Months Ended June 30,				Six Months Ended June 30,
In millions, except per share amounts	2023		2022		2023		2022
Earnings (loss) from continuing operations	$	222	$	416	$	394	$	683
Weighted average common shares outstanding	346.2		367.6		347.7		371.4
Effect of dilutive securities
Restricted performance share plan	0.3		3.1		1.8		4.3
Weighted average common shares outstanding – assuming dilution	346.5		370.7		349.5		375.7
Basic earnings (loss) per share from continuing operations	$	0.64	$	1.13	$	1.13	$	1.83
Diluted earnings (loss) per share from continuing operations	$	0.64	$	1.13	$	1.12	$	1.82

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"). The Company retained 19.9% of the shares of Sylvamo at the time of the separation with the intent to monetize its investment and provide additional proceeds to the Company. 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 connection with the Distribution, the Company and Sylvamo 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 of assets, liabilities and obligations attributable to periods prior to, at and after the Distribution and govern certain relationships between the Company and Sylvamo after the Distribution. The Company has various ongoing operational agreements with Sylvamo under which it sells fiber, paper and other products. Related party sales under these agreements were $211 million and $409 million for the three months and six months ended June 30, 2022, respectively. Following the sale of the Company's ownership interest in Sylvamo during the third quarter 2022, Sylvamo is no longer considered a related party.

In the second quarter 2022, the Company exchanged 4,132,000 shares of Sylvamo common stock owned by the Company in exchange and as repayment for an approximately $144 million term loan obligation which resulted in the reversal of a $31 million deferred tax liability due to the tax-free exchange of the Sylvamo Corporation common stock. In the third quarter 2022, the Company exchanged the remaining 4,614,358 shares of Sylvamo common stock owned by the Company in exchange for $167 million and as partial repayment of a $210 million term loan obligation. This also resulted in the reversal of a $35 million deferred tax liability due to the tax-free exchange of the Sylvamo Corporation common stock. As of the end of the third quarter 2022, the Company no longer had an ownership interest in Sylvamo.

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 $642 million and $690 million at June 30, 2023 and December 31, 2022, respectively.

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Accounts and Notes Receivable

In millions	June 30, 2023		December 31, 2022
Accounts and notes receivable, net:
Trade (less allowances of $35 in 2023 and $31 in 2022)	$	2,892	$	3,064
Other	248		220
Total	$	3,140	$	3,284

Inventories

In millions	June 30, 2023		December 31, 2022
Raw materials	$	251	$	267
Finished pulp, paper and packaging	986		1,071
Operating supplies	600		516
Other	74		88
Total	$	1,911	$	1,942

Plants, Properties and Equipment  

Accumulated depreciation was $18.8 billion and $18.4 billion at June 30, 2023 and December 31, 2022, respectively. Depreciation expense was $235 million and $256 million for the three months ended June 30, 2023 and 2022, respectively, and $467 million and $506 million for the six months ended June 30, 2023 and 2022, respectively.

Non-cash additions to plants, properties and equipment included within accounts payable were $74 million and $185 million at June 30, 2023 and December 31, 2022, respectively.

There were no insurance recoveries included within capital spending for the six months ended June 30, 2023. Insurance recoveries included in capital spending were $25 million for the six months ended June 30, 2022.

Accounts Payable  

Under a supplier finance program, IP agrees to pay a bank the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices. IP or the bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment in full on the due date with no terms exceeding 180 days. The accounts payable balance included $139 million and $122 million of supplier finance program liabilities as of June 30, 2023 and December 31, 2022, respectively.

Interest

Interest payments made during the six months ended June 30, 2023 and 2022 were $240 million and $165 million, respectively.

Amounts related to interest were as follows: 

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Interest expense	$	103	$	83	$	206	$	160
Interest income	44		9		85		17
Capitalized interest costs	6		4		11		8

Asset Retirement Obligations

The Company recorded liabilities in Other Liabilities in the accompanying condensed consolidated balance sheet of $103 million and $105 million related to asset retirement obligations at June 30, 2023 and December 31, 2022, respectively.

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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 30 years. Total lease costs were $73 million and $64 million for the three months ended June 30, 2023 and 2022, respectively, and $148 million and $124 million for the six months ended June 30, 2023 and 2022, respectively.

Supplemental Balance Sheet Information Related to Leases

In millions	Classification	June 30, 2023		December 31, 2022
Assets
Operating lease assets	Right-of-use assets	$	449	$	424
Finance lease assets	Plants, properties and equipment, net (a)	48		49
Total leased assets		$	497	$	473
Liabilities
Current
Operating	Other current liabilities	$	152	$	147
Finance	Notes payable and current maturities of long-term debt	11		10
Noncurrent
Operating	Long-term lease obligations	304		283
Finance	Long-term debt	46		49
Total lease liabilities		$	513	$	489

(a)Finance leases are recorded net of accumulated amortization of $64 million and $59 million as of June 30, 2023 and December 31, 2022, respectively.

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

Ilim S.A.

The Company has a 50% equity interest in Ilim, which has subsidiaries, including the Ilim Group, whose primary operations are in Russia. The Company announced in January 2023 that it had entered into an agreement to sell its interest in Ilim to its joint venture partners for $484 million. The completion of the sale is subject to various closing conditions, including the receipt of regulatory approvals in Russia.

The Company also received an indication of interest from its Ilim joint venture partners to purchase all of the Company’s shares (constituting a 2.39% stake) in Ilim Group for $24 million, on terms and conditions to be agreed. The Company intends to pursue an agreement to sell the Ilim Group shares, and to divest other non-material residual interests associated with Ilim, to its Ilim joint venture partners.

In conjunction with the entry into the announced agreement, a determination was made that the book value of the Ilim and Ilim Group investments plus associated cumulative translation losses, exceeded fair value, based on the agreed upon transaction price for Ilim and the offer price for Ilim Group. As a result, an other than temporary impairment of $33 million, $43 million and $533 million was recorded for the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and $76 million for the six months ended June 30, 2023, to write down these investments to fair value. The impairment charges included approximately $60 million, $43 million and $375 million of foreign currency cumulative translation adjustment loss for the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively, and $103 million for the six months ended June 30, 2023. As of June 30, 2023, approximately $478 million of cumulative translation adjustment loss remained within AOCI with the recognition of this loss recorded as an offset to the investment balance.

The Company evaluated facts and circumstances as of December 31, 2022 and June 30, 2023 and concluded that the held for sale balance sheet classification criteria had been met and therefore classified the Ilim joint venture investment balance, net of impairment, as Assets held for sale.

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All current and historical results of the Ilim joint venture investment are presented as Discontinued Operations, net of taxes in the condensed consolidated statement of operations. The Company recorded equity earnings, net of taxes, of $46 million and $95 million for the three months ended June 30, 2023 and 2022, respectively and $89 million and $188 million for the six months ended June 30, 2023 and 2022, respectively. The Company received cash dividends from the Ilim joint venture of $13 million and $204 million during the first six months of 2023 and 2022, respectively. At June 30, 2023 and December 31, 2022, the Company's investment in the Ilim joint venture, which is recorded in Assets held for sale in the condensed consolidated balance sheets, was $30 million and $133 million, respectively, which was $467 million and $403 million, respectively, lower than the Company's proportionate share of the Ilim joint venture's underlying net assets.

Summarized financial information for the Ilim joint venture is presented in the following tables:

Balance Sheet

In millions	June 30, 2023		December 31, 2022
Current assets	$	708	$	766
Noncurrent assets	3,044		3,663
Current liabilities	1,453		1,275
Noncurrent liabilities	1,261		2,040
Noncontrolling interests	38		40

Income Statement

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Net sales	$	581	$	815	$	1,203	$	1,522
Gross profit	253		444		530		843
Income (loss) from continuing operations	92		189		176		372
Net income (loss)	88		185		168		362

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 six months ended June 30, 2023:

In millions	Industrial Packaging		Global Cellulose Fibers		Total
Balance as of January 1, 2023
Goodwill	$	3,413	$	52	$	3,465
Accumulated impairment losses	(372)		(52)		(424)
	3,041		—		3,041
Currency translation and other (a)	2		—		2
Accumulated impairment loss additions / reductions	—		—		—
Balance as of June 30, 2023
Goodwill	3,415		52		3,467
Accumulated impairment losses	(372)		(52)		(424)
Total	3,043		—		3,043

(a)Represents the effects of foreign currency translations.

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Other Intangibles

Identifiable intangible assets are recorded in Deferred Charges and Other Assets in the accompanying condensed consolidated balance sheet and comprised the following: 

	June 30, 2023						December 31, 2022
In millions	Gross Carrying Amount		Accumulated Amortization		Net Intangible Assets		Gross Carrying Amount		Accumulated Amortization		Net Intangible Assets
Customer relationships and lists	$	494	$	321	$	173	$	490	$	303	$	187
Tradenames, patents and trademarks, and developed technology	170		150		20		170		146		24
Land and water rights	8		2		6		8		2		6
Other	21		18		3		23		20		3
Total	$	693	$	491	$	202	$	691	$	471	$	220

The Company recognized the following amounts as amortization expense related to intangible assets: 

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Amortization expense related to intangible assets	$	9	$	11	$	18	$	22

International Paper made income tax payments, net of refunds, of $215 million and $150 million for the six months ended June 30, 2023 and 2022, respectively.

The Company currently estimates, that as a result of ongoing discussions, pending tax settlements and expirations of statutes of limitations, the amount of unrecognized tax benefits could be reduced by approximately $12 million during the next 12 months.

Guarantees

In connection with sales of businesses, property, equipment, forestlands and other assets, International Paper commonly makes representations and warranties relating to such businesses or assets, and may agree to indemnify buyers with respect to tax and environmental liabilities, breaches of representations and warranties, and other matters. Where liabilities for such matters are determined to be probable and reasonably estimable, accrued liabilities are recorded at the time of sale as a cost of the transaction.

Brazil Goodwill Tax Matter: The Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by Sylvamo do Brasil Ltda. ("Sylvamo Brazil"), which was a wholly-owned subsidiary of the Company, until the October 1, 2021 spin-off of the Printing Papers business, after which it became a subsidiary of Sylvamo. Sylvamo Brazil received assessments for the tax years 2007-2015 totaling approximately $121 million in tax, and $414 million in interest, penalties, and fees as of June 30, 2023 (adjusted for variation in currency exchange rates). After an initial favorable ruling challenging the basis for these assessments, Sylvamo Brazil received subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. Sylvamo Brazil has appealed these decisions and intends to appeal any future unfavorable administrative judgments to the Brazilian federal courts; however, this tax litigation matter may take many years to resolve. Sylvamo Brazil and International Paper believe the transaction underlying these assessments was appropriately evaluated, and that Sylvamo Brazil's tax position would be sustained, based on Brazilian tax law.

This matter pertains to a business that was conveyed to Sylvamo as of October 1, 2021, as part of our spin-off transaction. Pursuant to the terms of the tax matters agreement entered into between the Company and Sylvamo, the Company will pay 60% and Sylvamo will pay 40%, on up to $300 million of any assessment related to this matter, and the Company will pay all amounts of the assessment over $300 million. Under the terms of the agreement, decisions concerning the conduct of the litigation related to this matter, including strategy, settlement, pursuit and abandonment, will be made by the Company. Sylvamo thus has no control over any decision related to this ongoing litigation. The Company intends to vigorously defend this historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015. The Brazilian government may enact a tax amnesty program that would allow Sylvamo Brazil to resolve this dispute for

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less than the assessed amount. As of October 1, 2021, in connection with the recording of the distribution of assets and liabilities resulting from the spin-off transaction, the Company established a liability representing the initial fair value of the contingent liability under the tax matters agreement. The contingent liability was determined in accordance with ASC 460 "Guarantees" based on the probability weighting of various possible outcomes. The initial fair value estimate and recorded liability as of December 31, 2022 was $48 million and remains this amount at June 30, 2023. This liability will not be increased in subsequent periods unless facts and circumstances change such that an amount greater than the initial recognized liability becomes probable and estimable.

Environmental

The Company has been named as a potentially responsible party ("PRP") in environmental remediation actions under various federal and state laws, including the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). Many of these proceedings involve the cleanup of hazardous substances at large commercial landfills that received waste from many different sources. While joint and several liability is authorized under CERCLA and equivalent state laws, as a practical matter, liability for CERCLA cleanups is typically allocated among the many PRPs. There are other remediation costs typically associated with the cleanup of hazardous substances at the Company’s current, closed and formerly-owned facilities, and recorded as liabilities in the balance sheet.

Remediation costs are recorded in the consolidated financial statements when they become probable and reasonably estimable. International Paper has estimated the probable liability associated with these environmental remediation matters, including those described herein, to be approximately $238 million and $243 million in the aggregate as of June 30, 2023 and December 31, 2022, respectively. Other than as described below, completion of required environmental remedial actions is not expected to have a material effect on our consolidated financial statements.

Cass Lake: One of the matters included above arises out of a closed wood-treatment facility located in Cass Lake, Minnesota. In June 2011, the United States Environmental Protection Agency ("EPA") selected and published a proposed soil remedy at the site with an estimated cost of $46 million. In April 2020, the EPA issued a final plan concerning clean-up standards at a portion of the site, the estimated cost of which is included within the soil remedy referenced above.

Kalamazoo River: The Company is a PRP with respect to the Allied Paper, Inc./Portage Creek/Kalamazoo River Superfund Site in Michigan. The EPA asserts that the site is contaminated by polychlorinated biphenyls ("PCBs") primarily as a result of discharges from various paper mills located along the Kalamazoo River, including a paper mill formerly owned by St. Regis Paper Company (St. Regis). The Company is a successor in interest to St. Regis.

•Operable Unit 5, Area 1: In March 2016, the Company and other PRPs received a special notice letter from the EPA (i) inviting participation in implementing a remedy for a portion of the site known as Operable Unit 5, Area 1, and (ii) demanding reimbursement of EPA past costs totaling $37 million, including $19 million in past costs previously demanded by the EPA. The Company responded to the special notice letter. In December 2016, the EPA issued a unilateral administrative order to the Company and other PRPs to perform the remedy. The Company responded to the unilateral administrative order, agreeing to comply with the order subject to its sufficient cause defenses.

•Operable Unit 1: In October 2016, the Company and another PRP received a special notice letter from the EPA inviting participation in the remedial design ("RD") component of the landfill remedy for the Allied Paper Mill, which is also known as Operable Unit 1. The Record of Decision ("ROD") establishing the final landfill remedy for the Allied Paper Mill was issued by the EPA in September 2016. The Company responded to the Allied Paper Mill special notice letter in December 2016. In February 2017, the EPA informed the Company that it would make other arrangements for the performance of the RD. In the summer 2021, remedial action ("RA") activities were initiated by the EPA. In October 2022, the Company received a unilateral administrative order to perform the RA. As a result, the Company increased its reserve by $27 million in the fourth quarter of 2022. The total reserve for the Kalamazoo River superfund site was $35 million and $37 million as of June 30, 2023 and December 31, 2022, respectively.

In addition, in December 2019, the United States published notice in the Federal Register of a proposed consent decree with NCR Corporation (one of the parties to the allocation/apportionment litigation described below), the State of Michigan and natural resource trustees under which NCR Corporation would make payments of more than $100 million and perform work in Operable Unit 5, Areas 2, 3, and 4 at an estimated cost of $136 million. In December 2020, the Federal District Court approved the proposed consent decree.

The Company’s CERCLA liability has not been finally determined with respect to these or any other portions of the site, and except as noted above, the Company has declined to perform any work or reimburse the EPA at this time. As noted below, the

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Company is involved in allocation/apportionment litigation with regard to the site. Accordingly, it is premature to predict the outcome or estimate our maximum reasonably possible loss or range of loss with respect to this site. We have recorded a liability for future remediation costs at the site that are probable and reasonably estimable, and it remains reasonably possible that additional losses in excess of this recorded liability could be material.

The Company was named as a defendant by Georgia-Pacific Consumer Products LP, Fort James Corporation and Georgia Pacific LLC (collectively, "GP") in a contribution and cost recovery action for alleged pollution at the site. NCR Corporation and Weyerhaeuser Company are also named as defendants in the suit. The suit seeks contribution under CERCLA for costs purportedly expended by plaintiffs ($79 million as of the filing of the complaint) and for future remediation costs. In June 2018, the Court issued its Final Judgment and Order, which fixed the past cost amount at approximately $50 million (plus interest to be determined) and allocated to the Company a 15% share of responsibility for those past costs. The Court did not address responsibility for future costs in its decision. In July 2018, the Company and each of the other parties filed notices appealing the Final Judgment and prior orders incorporated into that Judgment. On April 25, 2022, the appellate court reversed the Judgment of the Court, finding that the suit against the Company was time-barred by the applicable statute of limitations. On May 9, 2022, GP filed a petition for remaining with the Sixth Circuit Court of Appeals. The Sixth Circuit issued an order denying GP's petition on July 14, 2022. On November 14, 2022, GP filed a petition for writ of certiorari with the U.S. Supreme Court. The Company has filed a brief in opposition to this writ.

Harris County: International Paper and McGinnis Industrial Maintenance Corporation ("MIMC"), a subsidiary of Waste Management, Inc. ("WMI"), are PRPs at the San Jacinto River Waste Pits Superfund Site in Harris County, Texas. The PRPs have been actively participating in the activities at the site and share the costs of these activities.

In October 2017, the EPA issued a ROD selecting the final remedy for the site: removal and relocation of the waste material from both the northern and southern impoundments. The EPA did not specify the methods or practices needed to perform this work. The EPA’s selected remedy was accompanied by a cost estimate of approximately $115 million ($105 million for the northern impoundment, and $10 million for the southern impoundment). Subsequent to the issuance of the ROD, there have been numerous meetings between the EPA and the PRPs, and the Company continues to work with the EPA and MIMC/WMI to develop the remedial design.

To this end, in April 2018, the PRPs entered into an Administrative Order on Consent ("AOC") with the EPA, agreeing to work together to develop the remedial design for the northern impoundment. That remedial design work is ongoing. The AOC does not include any agreement to perform waste removal or other construction activity at the site. Rather, it involves adaptive management techniques and a pre-design investigation, the objectives of which include filling data gaps (including but not limited to post-Hurricane Harvey technical data generated prior to the ROD and not incorporated into the selected remedy), refining areas and volumes of materials to be addressed, determining if an excavation remedy is able to be implemented in a manner protective of human health and the environment, and investigating potential impacts of remediation activities to infrastructure in the vicinity.

During the first quarter of 2020, through a series of meetings among the Company, MIMC/WMI, our consultants, the EPA and the Texas Commission on Environmental Quality ("TCEQ"), progress was made to resolve key technical issues previously preventing the Company from determining the manner in which the selected remedy for the northern impoundment would be feasibly implemented. As a result of these developments, the Company reserved the following amounts in relation to remediation at this site: (a) $10 million for the southern impoundment; and (b) $55 million for the northern impoundment, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs.

We submitted the Final Design Package for the southern impoundment to the EPA, and the EPA approved this plan May 7, 2021. The EPA issued a Unilateral Administrative Order for Remedial Action of the southern impoundment on August 5, 2021. An addendum to the Final 100% Remedial Design (Amended April 2021) was submitted to the EPA for the southern impoundment on June 2, 2022. This addendum incorporated additional data collected to date which indicated that additional waste material removal will be required, lengthening the time to complete the remedial action.

With respect to the northern impoundment, the respondents submitted final component of the 90% remedial design to the EPA on November 8, 2022. Upon submittal of the final component, an updated engineering estimate was developed and the Company increased the reserved amount by approximately $21 million, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs. While several key technical issues have been resolved, respondents still face significant challenges remediating this area in a cost-efficient manner and without a release to the environment, and therefore our discussions with the EPA on the best approach to remediation will continue. Because of ongoing questions regarding cost effectiveness, timing and gathering other technical data, additional losses in excess of our

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recorded liability are possible. The total reserve for the southern and northern impoundment was $91 million and $95 million as of June 30, 2023 and December 31, 2022, respectively.

Asbestos-Related Matters

We have been named as a defendant in various asbestos-related personal injury litigation, in both state and federal court, primarily in relation to the prior operations of certain companies previously acquired by the Company. The Company's total recorded liability with respect to pending and future asbestos-related claims was $111 million, net of estimated insurance recoveries and $105 million, net of estimated insurance recoveries as of June 30, 2023 and December 31, 2022, respectively. While it is reasonably possible that the Company may incur losses in excess of its recorded liability with respect to asbestos-related matters, we are unable to estimate any loss or range of loss in excess of such liability, and do not believe additional material losses are probable.

Antitrust

In March 2017, the Italian Competition Authority ("ICA") commenced an investigation into the Italian packaging industry to determine whether producers of corrugated sheets and boxes violated the applicable European competition law. In April 2019, the ICA concluded its investigation and issued initial findings alleging that over 30 producers, including our Italian packaging subsidiary ("IP Italy"), improperly coordinated the production and sale of corrugated sheets and boxes. In August 2019, the ICA issued its decision and assessed IP Italy a fine of €29 million (approximately $31 million at the then-current exchange rates) which was recorded in the third quarter of 2019. We appealed the ICA decision and our appeal was denied in May 2021. We further appealed the decision to the Italian Council of State, and in March 2023 the Council of State largely upheld the ICA’s findings, but referred the calculation of IP Italy’s fine back to the ICA, finding that it was disproportionately high based on the conduct found. We have further appealed the Italian Council of State decision to uphold the ICA’s findings. The Company and other producers also have been named in lawsuits, and we have received other claims, by a number of customers in Italy for damages associated with the alleged anticompetitive conduct. We do not believe material losses arising from such private lawsuits and claims are probable.

General

The Company is involved in various other inquiries, administrative proceedings and litigation relating to environmental and safety matters, personal injury, product liability, labor and employment, contracts, sales of property, intellectual property, tax, and other matters, some of which allege substantial monetary damages. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. The Company believes that loss contingencies arising from pending matters including the matters described herein, will not have a material effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Company's control, and the large or indeterminate damages sought in some of these matters, a future adverse ruling, settlement, unfavorable development, or increase in accruals with respect to these matters could result in future charges that could be material to the Company's results of operations or cash flows in any particular reporting period.

Variable Interest Entities

As of June 30, 2023, the fair value of the Timber Notes and Extension Loans for the 2007 Financing Entities was $2.3 billion and $2.1 billion, respectively. The Timber Notes and Extension Loans are classified as Level 2 within the fair value hierarchy, which is further defined in Note 1 in the Company’s Annual Report.

The Timber Notes of $2.3 billion and the Extension Loans of $2.1 billion both mature in 2027 and are shown in Long-term nonrecourse financial assets of variable interest entities and Long-term nonrecourse financial liabilities of variable interest entities, respectively, on the accompanying condensed consolidated balance sheet.

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Activity between the Company and the 2007 Financing Entities was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2023		2022		2023		2022
Revenue (a)	$	36	$	6	$	69	$	13
Expense (b)	35		10		66		16
Cash receipts (c)	28		2		55		3
Cash payments (d)	30		6		57		10

(a)The revenue is included in Interest expense, net in the accompanying statement of operations and includes approximately $4 million and $9 million for the three months and six months ended June 30, 2023 and 2022, respectively, of accretion income for the amortization of the basis difference adjustment on the Financial assets of special purpose entities.

(b)The expense is included in Interest expense, net in the accompanying statement of operations and includes approximately $1 million and $3 million for the three months and six months ended June 30, 2023 and 2022, respectively, of accretion expense for the amortization of the basis difference adjustment on the Nonrecourse financial liabilities of special purpose entities.

(c)The cash receipts are interest received on the Financial assets of special purpose entities.

(d)The cash payments are interest paid on Nonrecourse financial liabilities of special purpose entities.

On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving wholly-owned, special purpose entities (the "2015 Financing Entities"). Under this agreement, the Company was required to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing of the audit. The amount of interest expense recognized in 2022 was $