INDUSTRY SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 18 - BUSINESS SEGMENT INFORMATION

International Paper’s business segments, Industrial Packaging, Global Cellulose Fibers, Printing Papers, and Consumer Packaging are consistent with the internal structure used to manage these businesses. All segments are differentiated on a common product, common customer basis consistent with the business segmentation generally used in the Forest Products industry. Subsequent to the acquisition of the Weyerhaeuser pulp business in December 2016, the Company began reporting the Global Cellulose Fibers business as a separate business segment due to the increased materiality of the results of this business. This segment includes the Company's legacy pulp business and the newly acquired pulp business. As such, amounts related to the legacy pulp business have been reclassified out of the Printing Papers business segment and into the new Global Cellulose Fibers business segment for all prior periods. In addition, during the first quarter of 2017, as a result of an internal reorganization, the net sales and operating profits for the Asian Distribution operations are included in the results of the businesses that manufacture the products and prior year amounts have been reclassified to conform with current year presentation.

Business segment operating profits are used by International Paper's management to measure the earnings performance of its businesses. Management believes that this measure allows a better understanding of trends in costs, operating efficiencies, prices and volumes. Business segment operating profits are defined as earnings (loss) from continuing operations before income taxes and equity earnings, but included the impact of equity earnings and noncontrolling interests, excluding corporate items and corporate special items.

The Company also has a 50% equity interest in Ilim Holding S.A. (Ilim) in Russia that is a separate reportable business segment. The Company recorded equity earnings (losses), net of taxes, of $50 million and $62 million for the three months ended March 31, 2017 and 2016, respectively, for Ilim. The Company received cash dividends from the joint venture of $127 million during the first quarter of 2017. At March 31, 2017 and December 31, 2016, the Company's investment in Ilim was $247 million and $302 million, respectively, which was $159 million and $164 million, respectively, more than the Company's proportionate share of the joint venture's underlying net assets. The differences primarily relate to purchase price fair value adjustments and currency translation adjustments. The Company is party to a joint marketing agreement with Ilim, under which the Company purchases, markets and sells paper produced by Ilim. Purchases under this agreement were $47 million and $39 million for the three months ended March 31, 2017 and 2016, respectively.

Sales by business segment for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended March 31,
In millions	2017			2016
Industrial Packaging	$	3,499		$	3,411
Global Cellulose Fibers	564			212
Printing Papers	995			972
Consumer Packaging	466			495
Corporate and Intersegment Sales	(13		)	20
Net Sales	$	5,511		$	5,110

Operating profit by business segment for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended March 31,
In millions	2017				2016
Industrial Packaging	$	365		(a)	$	396		(c)
Global Cellulose Fibers	(70		)	(b)	(50		)
Printing Papers	100				135
Consumer Packaging	33				16			(d)
Business Segment Operating Profit	428				497
Earnings (loss) from continuing operations before income taxes and equity earnings	244				317
Interest expense, net	142				123
Noncontrolling interests/equity earnings adjustment (e)	—				—
Corporate items, net	11				21
Restructuring and other charges	—				(8		)
Non-operating pension expense	31				44
Adjusted Operating Profit	$	428			$	497
Equity earnings (loss), net of taxes – Ilim	$	50			$	62

(a) Includes a gain of $6 million for the three months ended March 31, 2017 for a net bargain purchase gain on the June 2016 acquisition of the Holmen Paper newsprint mill in Madrid, Spain and a charge of $1 million for the three months ended March 31, 2017 for other items.

(b) Includes a charge of $14 million for the three months ended March 31, 2017 for the amortization of the inventory fair value step-up for the pulp business acquired in December 2016, a charge of $4 million for the three months ended March 31, 2017 for costs associated with the acquisition of that business and a charge of $1 million for the three months ended March 31, 2017 for other items.

(c) Includes a charge of $37 million for the three months ended March 31, 2016 for the impairment of the assets of our Asia corrugated packaging business and costs associated with the sale of the business.

(d) Includes a charge of $9 million for the three months ended March 31, 2016 for costs associated with the Riegelwood mill conversion to 100% pulp production.

(e) Operating profits for business segments include each segment's percentage share of the profits of subsidiaries included in that segment that are less than wholly owned. The pre-tax noncontrolling interest and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.