United States securities and exchange commission logo
April 18, 2024
Timothy S. Nicholls
Chief Financial Officer
International Paper Company
6400 Poplar Avenue
Memphis, Tennessee 38197
Re: International Paper
Company
Form 10-K for the
Year Ended December 31, 2023
Form 8-K furnished
February 1, 2024
File No. 001-03157
Dear Timothy S. Nicholls:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comment(s).
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-K for the Year Ended December 31, 2023
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Executive Summary, page 28
1. Please address the
following comments related to your presentation of "Adjusted
Operating Earnings
(Loss) Attributable to Shareholders" on page 29:
Revise to clearly
disclose the reason(s) for each material non-GAAP adjustment.
Include each
component of the "Net special items expense (income)" adjustment
either within the
reconciliation itself or immediately following the reconciliation.
Although you
provide a special items table on page 35, we note that the subtotals on
page 35 do not
agree with the non-GAAP adjustment in the reconciliation on page 29.
Clarify for us what
the difference represents.
Explain what
"Non-operating pension expense (income)" represents and how you
determined such
adjustment is appropriate.
Timothy S. Nicholls
FirstName LastNameTimothy
International Paper Company S. Nicholls
Comapany
April NameInternational Paper Company
18, 2024
April 218, 2024 Page 2
Page
FirstName LastName
Revise future filings to remove the accelerated depreciation
adjustments included
within special items. Considering the underlying assets
contribute to revenues, which
have not been adjusted, it is not appropriate to remove the
related depreciation.
Clarify if you consider operating income (loss) to be the most
directly comparable
GAAP measure. If so, ensure you present and reconcile to
operating income (loss)
within your non-GAAP presentation.
Clarify why you adjust for your environmental remediation
reserve within special
items when it appears as though such costs may be a normal part
of your business.
See Item 10(e)(1)(ii)(B) of Regulation S-K and Question 100.01 of
the Staff s
Compliance and Disclosure Interpretations on Non-GAAP Financial
Measures
("Non-GAAP C&DI's").
Considering your adjustments represent items considered by
management to be
unusual, please clarify whether your non-GAAP measure adjusts
for the tax benefits,
disclosed on pages 34, 38-39, 66, 73, and 79, related to the
settlement of the timber
monetization restructuring and the Sylvamo tax-free exchange. To
the extent such
items are already included in the income tax effect line item of
your reconciliation,
please advise and ensure you revise future filings to
sufficiently disclose the nature of
your income tax adjustments.
2. Since your "Free Cash Flow" measure on page 30 does not represent
operating cash flows
less capital expenditures, revise your description of this non-GAAP
measure going
forward to indicate that it represents adjusted free cash flow.
Results of Operations, page 31
3. Please revise your results of operations disclosures in future filings
to discuss in sufficient
detail changes in your financial statements line items on a
consolidated basis. As noted in
Item 303(b) of Regulation S-K, your presentation should discuss your
business as a whole
with segment information provided, as necessary, to supplement the
consolidated
discussion. Accordingly, ensure you discuss, qualitatively and
quantitatively, the factors
resulting in material changes in your reported consolidated expense
line items, including a
discussion of material changes within a line item where several
factors offset one
another.
4. Although we note that "Business Segment Operating Profits (Loss)" at
the segment level
represents a required ASC 280 measure, please note that the measure on
a total combined
basis represents a non-GAAP measure. Accordingly, if you continue to
present such
measure outside of your consolidated financial statements, please
label it as a non-GAAP
financial measure and ensure that your presentation and disclosures
comply with non-
GAAP rules, including Item 10(e) of Regulation S-K and the Non-GAAP
C&DI's. Please
Timothy S. Nicholls
FirstName LastNameTimothy
International Paper Company S. Nicholls
Comapany
April NameInternational Paper Company
18, 2024
April 318, 2024 Page 3
Page
FirstName LastName
note, for example, that the measure generally should not exclude
normal, recurring, cash
operating expenses necessary to operate your business. To the extent
applicable, provide
us with the proposed disclosures you intend to include in future
filings. Also apply this
comment to your Form 8-K earnings releases.
Liquidity and Capital Resources
Cash Provided by Operating Activities, page 37
5. Please provide a more informative discussion and analysis of cash
flows from operating
activities, including changes in working capital components, for the
periods presented. In
doing so, explain the underlying reasons and implications of material
changes between
periods to provide investors with an understanding of trends and
variability in cash flows.
Also ensure that your disclosures are not merely a recitation of
changes evident from the
face of the financial statements. Please refer to Item 303(a) of
Regulation S-K and Section
IV.B of SEC Release No. 33-8350.
Effect of Inflation, page 44
6. We note your disclosure that inflationary increases in certain input
costs, such as energy,
wood, recycled fiber, freight and chemical costs, had an adverse
impact on your operating
results in 2023 and 2022. Please revise your disclosures in future
filings to expand upon
the specific actions planned or taken, if any, to mitigate the
inflationary pressures and to
quantify the resulting impact of inflation on your results of
operations and financial
condition.
Financial Statements
Notes to Consolidated Financial Statements
Note 1 Summary of Business and Significant Accounting Policies
Inventories, page 57
7. You disclose that inventories are valued at the lower of cost or
market value. Considering
you utilize first-in, first-out or average cost methods for certain
inventories, please clarify
if you measure such inventories at the lower of cost and net
realizable value as required by
ASC 330-10-35-1B and revise your disclosures as necessary.
Note 3 Revenue Recognition, page 61
8. We note that you disclose disaggregated revenue by reportable segment
and geographical
market. We further note from your fourth quarter 2023 earnings call
transcript that you
track other "segments," such as fresh foods, protein, and beverages.
In addition, in your
fourth quarter 2023 earnings release Form 8-K, you disclose sales
volume by
product. Please tell us how you considered providing disaggregated
revenue disclosures of
such categories pursuant to ASC 606-10-50-5 and ASC 606-10-55-89
through 55-91. If
you believe your current disclosures fully comply with such guidance,
further clarify how
your disclosures comply with the product and services disclosure
requirement of ASC
Timothy S. Nicholls
International Paper Company
April 18, 2024
Page 4
280-10-50-40.
Note 14 Commitments and Contingent Liabilities
Guarantees, page 74
9. We note that you have recorded a $48 million liability pursuant to ASC
460 related to a
Brazilian tax matter. Please clarify how you determined this matter
was within the
guarantee scope of ASC 460-10-15-4 as opposed to other guidance, such
as the
unrecognized tax benefit guidance of ASC 740. Citing authoritative
guidance, where
applicable, clarify where you recorded the debit when you originally
recorded the liability
and whether the original and subsequent entries related to this
liability qualify for
continuing or discontinued operations classification. In addition,
considering the
assessments currently total approximately $393 million and the terms
of your tax matters
agreement, tell us how you determined the fair value of the liability
was only $48
million.
Form 8-K furnished February 1, 2024
Exhibit 99.1, page 1
10. Although you quantify your operational effective tax rate on page 3
and identify it as a
non-GAAP measure, we do not note a reconciliation to the most
comparable GAAP
measure. Please revise future filings to provide a reconciliation in
accordance with Item
10(e)(1)(i)(B) of Regulation S-K.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Heather Clark at 202-551-3624 or Andrew Blume at
202-551-3254 with
any questions.
FirstName LastNameTimothy S. Nicholls Sincerely,
Comapany NameInternational Paper Company
Division of
Corporation Finance
April 18, 2024 Page 4 Office of
Manufacturing
FirstName LastName