Segment Information

6 Months Ended

Jun. 30, 2020

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.

Each segment’s profits and losses are measured on operating profits before interest expense, net, non-operating pension expense, 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, 2020	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,401.8	$	8.1		$	1,409.9		$	197.6		(a)
Paper		123.3		—			123.3			(61.4	)	(a)(b)
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
Three Months Ended June 30, 2019	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,497.8	$	6.8		$	1,504.6		$	263.9
Paper		237.8		—			237.8			38.8
Corporate and Other		24.3		31.5			55.8			(22.3	)
Intersegment eliminations		—		(38.3	)		(38.3	)		—
	$	1,759.9	$	—		$	1,759.9			280.4
Non-operating pension expense										(2.0	)
Interest expense, net										(22.4	)
Income before taxes									$	256.0

	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		(a)
Paper		340.7		—			340.7			(29.0	)	(a)(b)
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

	Sales, net
Six Months Ended June 30, 2019	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	2,968.6	$	13.6		$	2,982.2		$	513.4		(c)
Paper		477.5		—			477.5			84.4		(c)
Corporate and Other		47.5		65.0			112.5			(42.0	)
Intersegment eliminations		—		(78.6	)		(78.6	)		—
	$	3,493.6	$	—		$	3,493.6			555.8
Non-operating pension expense										(4.1	)
Interest expense, net										(46.4	)
Income before taxes									$	505.3

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

1. $20.4 million and $20.8 million, respectively, consisting of closure costs related to corrugated products facilities, substantially all of which relates to the previously announced closure of the San Lorenzo, California facility during the second quarter, 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.

(b) 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.

(c) The six months ended June 30, 2019 include $0.6 million of charges related to the second quarter 2018 discontinuation of uncoated free sheet and coated one-side grades at the Wallula, Washington mill associated with the conversion of the No. 3 paper machine to produce virgin kraft linerboard.