SHAREHOLDERS' INTEREST

12 Months Ended

Dec. 31, 2013

SHAREHOLDERS' INTEREST

SHAREHOLDERS’ INTEREST

This note provides details about:

• preferred and preference shares,

• common shares,

• share-repurchase programs and

• cumulative other comprehensive income (loss).

PREFERRED AND PREFERENCE SHARES

We had no preferred shares outstanding at the end of 2013 or 2012. However, we have authorization to issue 7 million preferred shares with a par value of $1 per share.

As part of our purchase of Longview Timber, we issued 13.8 million of our 6.375 percent Mandatory Convertible Preference Shares, Series A, par value $1.00 and liquidation preference of $50.00 per share on June 24, 2013, for net proceeds of $669 million, which remained outstanding at year-end 2013. Dividends will be payable on a cumulative basis when, as and if declared by our Board of Directors, at an annual rate of 6.375 percent on the liquidation preference. We may pay declared dividends in cash or, subject to certain limitations, in common shares or by delivery of any combination of cash and common shares on January 1, April 1, July 1 and October 1 of each year, commencing on October 1, 2013, through, and including, July 1, 2016. These shares will automatically convert on July 1, 2016 into between 1.5015 and 1.8018 of our common shares, subject to anti-dilution adjustments. At any time prior to that date, holders may elect to convert each share into common shares at the minimum conversion rate of 1.5015 common shares, subject to anti-dilution adjustments. See Note 3: Longview Timber Purchase for more information.

We may issue preferred or preference shares at one time or through a series of offerings. The shares may have varying rights and preferences that can include:

• dividend rates,

• redemption rights,

• conversion terms,

• sinking-fund provisions,

• values in liquidation and

• voting rights.

When issued, outstanding preferred and preference shares rank senior to outstanding common shares. That means preferred and preference shares would receive dividends and assets available on liquidation before any payments are made to common shares.

COMMON SHARES

The number of common shares we have outstanding changes when:

• new shares are issued,

• stock options are exercised,

• restricted stock units or performance share units vest,

• stock-equivalent units are paid out,

• shares are tendered,

• shares are repurchased or

• shares are canceled.

Reconciliation of Our Common Share Activity

IN THOUSANDS
	2013	2012	2011
Outstanding at beginning of year	542,393	536,425	535,976
New issuance (Note 3)	33,350	—	—
Stock options exercised	7,209	5,404	2,199
Issued for restricted stock units	462	523	540
Issued for performance shares	134	—	—
Issued for Directors' stock-equivalent units	—	41	—
Repurchased	—	—	(2,290	)
Outstanding at end of year	583,548	542,393	536,425

OUR SHARE REPURCHASE PROGRAMS

During 2011, we repurchased 1,199,800 shares of common stock for $20 million under the 2008 stock repurchase program. On August 11, 2011, our Board of Directors terminated the 2008 stock repurchase program and approved the 2011 stock repurchase program under which we are authorized to repurchase up to $250 million of outstanding shares. During 2011, we repurchased 1,089,824 shares of common stock for $17 million under the 2011 program. As of December 31, 2013, we had remaining authorization of $233 million for future share repurchases.

CUMULATIVE OTHER COMPREHENSIVE INCOME (LOSS)

Changes in amounts included in our cumulative other comprehensive income (loss) by component are:

DOLLAR AMOUNTS IN MILLIONS
				PENSION						OTHER POSTRETIREMENT BENEFITS
	Foreign currency translation adjustments			Actuarial losses			Prior service costs			Actuarial losses			Prior service credits			Unrealized gains on available-for-sale securities		Total
Beginning balance as of December 31, 2011	$	411		$	(1,674	)	$	(20	)	$	(147	)	$	247		$	4	$	(1,179	)
Other comprehensive income (loss) before reclassifications	2			(636		)	(11		)	—			(44		)	—		(689		)
Income taxes	—			249			4			1			8			—		262
Net other comprehensive income (loss) before reclassifications	2			(387		)	(7		)	1			(36		)	—		(427		)
Amounts reclassified from cumulative other comprehensive income (loss)(1)	—			175			7			13			(127		)	—		68
Income taxes	—			(56		)	(3		)	(4		)	43			—		(20		)
Net amounts reclassified from cumulative other comprehensive income (loss)	—			119			4			9			(84		)	—		48
Total other comprehensive income (loss)	2			(268		)	(3		)	10			(120		)	—		(379		)
Beginning balance as of December 31, 2012	413			(1,942		)	(23		)	(137		)	127			4		(1,558		)
Other comprehensive income (loss) before reclassifications	(59		)	1,123			—			24			66			2		1,156
Income taxes	—			(394		)	—			(7		)	(27		)	—		(428		)
Net other comprehensive income (loss) before reclassifications	(59		)	729			—			17			39			2		728
Amounts reclassified from cumulative other comprehensive income (loss)(1)	—			221			7			14			(23		)	—		219
Income taxes	—			(74		)	(3		)	(5		)	7			—		(75		)
Net amounts reclassified from cumulative other comprehensive income (loss)	—			147			4			9			(16		)	—		144
Total other comprehensive income (loss)	(59		)	876			4			26			23			2		872
Ending balance as of December 31, 2013	$	354		$	(1,066	)	$	(19	)	$	(111	)	$	150		$	6	$	(686	)
(1) Actuarial losses and prior service credits (costs) are included in the computation of net periodic benefit costs (credits). See Note 10: Pension and Other Postretirement Benefit Plans.