Segment Information

3 Months Ended

Mar. 31, 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 March 31, 2021	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,619.8	$	3.8		$	1,623.6		$	257.9		(a)
Paper		164.4		0.2			164.6			8.7		(a)
Corporate and Other		23.0		32.4			55.4			(28.3	)
Intersegment eliminations		—		(36.4	)		(36.4	)		—
	$	1,807.2	$	—		$	1,807.2			238.3
Non-operating pension income										4.8
Interest expense, net										(23.5	)
Income before taxes									$	219.6

	Sales, net
Three Months Ended March 31, 2020	Trade		Intersegment			Total			Operating Income (Loss)
Packaging	$	1,465.4	$	2.1		$	1,467.5		$	199.8		(b)
Paper		217.4		—			217.4			32.5		(b)
Corporate and Other		25.9		34.3			60.2			(23.2	)
Intersegment eliminations		—		(36.4	)		(36.4	)		—
	$	1,708.7	$	—		$	1,708.7			209.1
Non-operating pension expense										0.6
Interest expense, net										(19.6	)
Income before taxes									$	190.1

(a) The three months ended March 31, 2021 include the following:

1. $2.1 million of charges consisting of closure costs related to corrugated products facilities.

2. $1.1 million 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 months ended March 31, 2020 include the following:

1.$0.8 million 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.

2.$0.4 million of charges consisting of closure costs related to corrugated products facilities.