New York | 13-0872805 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |
6400 Poplar Avenue, Memphis, Tennessee | 38197 | |
(Address of principal executive offices) | (ZIP Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | Part II, Item 6. Selected Financial Data; |
• | Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; |
• | Part II, Item 8. Financial Statements and Supplementary Data; |
• | Part IV, Item 15. Exhibits and Financial Statement Schedules- |
Exhibit Number | Description | |
23.1 | Consent of Independent Registered Public Accounting Firm | |
99.1 | Form 10-K, Part II, Item 6. Selected Financial Data | |
99.2 | Form 10-K, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
99.3 | Form 10-K, Part II, Item 8. Financial Statements and Supplementary Data | |
99.4 | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Schedule II - Valuation and Qualifying Accounts (included in Exhibit 99.3). | |
101.INS | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.INS - XBRL Instance Document. | |
101.SCH | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.SCH - XBRL Taxonomy Extension Schema. | |
101.CAL | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.CAL - XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.DEF - XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.LAB - XBRL Taxonomy Extension Label Linkbase. | |
101.PRE | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.PRE - XBRL Extension Presentation Linkbase. |
Exhibit Number | Description | |
23.1 | Consent of Independent Registered Public Accounting Firm. | |
99.1 | Form 10-K, Part II, Item 6. Selected Financial Data. | |
99.2 | Form 10-K, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. | |
99.3 | Form 10-K, Part II, Item 8. Financial Statements and Supplementary Data. | |
99.4 | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Schedule II - Valuation and Qualifying Accounts (included in Exhibit 99.3). | |
101.INS | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.INS - XBRL Instance Document. | |
101.SCH | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.SCH - XBRL Taxonomy Extension Schema. | |
101.CAL | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.CAL - XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.DEF - XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.LAB - XBRL Taxonomy Extension Label Linkbase. | |
101.PRE | Form 10-K, Part IV, Item 15 (Exhibits and Financial Statement Schedules) - Exhibit 101.PRE - XBRL Extension Presentation Linkbase. |
Dollar amounts in millions, except per share amounts and stock prices | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||
RESULTS OF OPERATIONS | ||||||||||||||||||||
Net sales | $ | 21,079 | $ | 22,365 | $ | 23,617 | $ | 23,483 | $ | 21,852 | ||||||||||
Costs and expenses, excluding interest | 19,603 | 20,544 | 22,138 | 21,643 | 20,214 | |||||||||||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | 956 | (b) | 1,266 | (e) | 872 | (g) | 1,228 | (j) | 967 | (m) | ||||||||||
Equity earnings (loss), net of taxes | 198 | 117 | (200 | ) | (39 | ) | 61 | |||||||||||||
Discontinued operations, net of taxes | (5 | ) | (c) | — | (13 | ) | (h) | (309 | ) | (k) | 77 | (n) | ||||||||
Net earnings (loss) | 902 | (b-d) | 917 | (e-f) | 536 | (g-i) | 1,378 | (j-l) | 799 | (m-o) | ||||||||||
Noncontrolling interests, net of taxes | (2 | ) | (21 | ) | (19 | ) | (17 | ) | 5 | |||||||||||
Net earnings (loss) attributable to International Paper Company | 904 | (b-d) | 938 | (e-f) | 555 | (g-i) | 1,395 | (j-l) | 794 | (m-o) | ||||||||||
FINANCIAL POSITION | ||||||||||||||||||||
Current assets less current liabilities | $ | 2,601 | $ | 2,244 | $ | 2,719 | $ | 3,597 | $ | 3,585 | ||||||||||
Plants, properties and equipment, net | 13,990 | 11,980 | 12,728 | 13,672 | 13,949 | |||||||||||||||
Forestlands | 456 | 366 | 507 | 557 | 622 | |||||||||||||||
Total assets | 33,093 | 30,271 | 28,369 | 31,242 | 31,829 | |||||||||||||||
Notes payable and current maturities of long-term debt | 239 | 426 | 742 | 661 | 444 | |||||||||||||||
Long-term debt | 11,075 | 8,844 | 8,584 | 8,787 | 9,649 | |||||||||||||||
Total shareholders’ equity | 4,341 | 3,884 | 5,115 | 8,105 | 6,304 | |||||||||||||||
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 2.21 | $ | 2.25 | $ | 1.33 | $ | 3.85 | $ | 1.65 | ||||||||||
Discontinued operations | (0.01 | ) | — | (0.03 | ) | (0.70 | ) | 0.17 | ||||||||||||
Net earnings (loss) | 2.20 | 2.25 | 1.30 | 3.15 | 1.82 | |||||||||||||||
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 2.19 | $ | 2.23 | $ | 1.31 | $ | 3.80 | $ | 1.63 | ||||||||||
Discontinued operations | (0.01 | ) | — | (0.02 | ) | (0.69 | ) | 0.17 | ||||||||||||
Net earnings (loss) | 2.18 | 2.23 | 1.29 | 3.11 | 1.80 | |||||||||||||||
Cash dividends | 1.783 | 1.640 | 1.450 | 1.250 | 1.088 | |||||||||||||||
Total shareholders’ equity | 10.56 | 9.43 | 12.18 | 18.57 | 14.33 | |||||||||||||||
COMMON STOCK PRICES | ||||||||||||||||||||
High | $ | 54.68 | $ | 57.90 | $ | 55.73 | $ | 50.33 | $ | 39.88 | ||||||||||
Low | 32.50 | 36.76 | 44.24 | 39.47 | 27.29 | |||||||||||||||
Year-end | 53.06 | 37.70 | 53.58 | 49.03 | 39.84 | |||||||||||||||
FINANCIAL RATIOS | ||||||||||||||||||||
Current ratio | 1.6 | 1.6 | 1.5 | 1.7 | 1.7 | |||||||||||||||
Total debt to capital ratio | 0.72 | 0.70 | 0.65 | 0.54 | 0.62 | |||||||||||||||
Return on shareholders’ equity | 22.1 | % | (b-d) | 20.0 | % | (e-f) | 7.7 | % | (g-i) | 20.2 | % | (j-l) | 11.6 | % | (m-o) | |||||
CAPITAL EXPENDITURES | $ | 1,348 | $ | 1,487 | $ | 1,366 | $1,198 | $1,383 | ||||||||||||
NUMBER OF EMPLOYEES | 55,000 | 56,000 | 58,000 | 64,000 | 65,000 |
(a) | All periods presented have been restated to reflect the xpedx business and the Temple-Inland Building Products business as discontinued operations and prior period amounts have been adjusted to conform with current year presentation, if applicable. |
2016 | ||||||||
In millions | Before Tax | After Tax | ||||||
Riegelwood mill conversion costs | $ | 9 | $ | 6 | ||||
India Packaging evaluation write-off | 17 | 11 | ||||||
Write-off of certain regulatory pre-engineering costs | 8 | 5 | ||||||
Early debt extinguishment costs | 29 | 18 | ||||||
Costs associated with the newly acquired pulp business | 31 | 21 | ||||||
Asia Box impairment / restructuring | 70 | 58 | ||||||
Gain on sale of investment in Arizona Chemical | (8 | ) | (5 | ) | ||||
Turkey mill closure | 7 | 6 | ||||||
Amortization of Weyerhaeuser inventory fair value step-up | 19 | 11 | ||||||
Total special items | $ | 182 | $ | 131 | ||||
Non-operating pension expense | 610 | 375 | ||||||
Total | $ | 792 | $ | 506 |
In millions | 2016 | |||
Cash pension contribution | $ | 23 | ||
U.S. Federal audit | (14 | ) | ||
Brazil goodwill | (57 | ) | ||
International legal entity restructuring | (6 | ) | ||
Luxembourg tax rate change | 31 | |||
Total | $ | (23 | ) |
2015 | ||||||||
In millions | Before Tax | After Tax | ||||||
Riegelwood mill conversion costs, net of proceeds from sale of the Carolina Coated Bristols brand | $ | 8 | $ | 4 | ||||
Timber monetization restructuring | 16 | 10 | ||||||
Early debt extinguishment costs | 207 | 133 | ||||||
IP-Sun JV impairment | 174 | 180 | ||||||
Legal reserve adjustment | 15 | 9 | ||||||
Refund and state tax credits | (4 | ) | (2 | ) | ||||
Impairment of Orsa goodwill and trade name intangible | 137 | 137 | ||||||
Other items | 6 | 5 | ||||||
Total special items | $ | 559 | $ | 476 | ||||
Non-operating pension expense | 258 | 157 | ||||||
Total | $ | 817 | $ | 633 |
In millions | 2015 | |||
IP-Sun JV impairment | $ | (67 | ) | |
Cash pension contribution | 23 | |||
Other items | 7 | |||
Total | $ | (37 | ) |
2014 | ||||||||
In millions | Before Tax | After Tax | ||||||
Temple-Inland integration | $ | 16 | $ | 10 | ||||
Courtland mill shutdown | 554 | 338 | ||||||
Early debt extinguishment costs | 276 | 169 | ||||||
India legal contingency resolution | (20 | ) | (20 | ) | ||||
Multi-employer pension plan withdrawal liability | 35 | 21 | ||||||
Foreign tax amnesty program | 32 | 17 | ||||||
Asia Industrial Packaging goodwill impairment | 100 | 100 | ||||||
Loss on sale by investee and impairment of investment | 47 | 36 | ||||||
Other items | 12 | 9 | ||||||
Total special items | $ | 1,052 | $ | 680 | ||||
Non-operating pension expense | 212 | 129 | ||||||
Total | $ | 1,264 | $ | 809 |
2014 | ||||||||
In millions | Before Tax | After Tax | ||||||
xpedx spinoff | $ | 24 | $ | 16 | ||||
Building Products divestiture | 16 | 9 | ||||||
xpedx restructuring | 1 | (1 | ) | |||||
Total | $ | 41 | $ | 24 |
In millions | 2014 | |||
State legislative tax change | $ | 10 | ||
Internal restructuring | (90 | ) | ||
Other items | (1 | ) | ||
Total | $ | (81 | ) |
2013 | ||||||||
In millions | Before Tax | After Tax | ||||||
Temple-Inland integration | $ | 62 | $ | 38 | ||||
Courtland mill shutdown | 118 | 72 | ||||||
Early debt extinguishment costs | 25 | 16 | ||||||
Insurance reimbursement related to legal settlement | (30 | ) | (19 | ) | ||||
Shut down of paper machine at Augusta mill | 45 | 28 | ||||||
India Papers tradename and goodwill impairment | 127 | 122 | ||||||
Fair value adjustment of company airplanes | 9 | 5 | ||||||
Cass Lake environmental reserve | 6 | 4 | ||||||
Bargain purchase adjustment - Turkey | (13 | ) | (13 | ) | ||||
Other items | (5 | ) | 2 | |||||
Total | $ | 344 | $ | 255 | ||||
Non-operating pension expense | 323 | 197 | ||||||
Total | $ | 667 | $ | 452 |
2013 | ||||||||
In millions | Before Tax | After Tax | ||||||
xpedx spinoff | $ | 22 | $ | 14 | ||||
xpedx goodwill impairment | 400 | 366 | ||||||
Building Products divestiture | 23 | 19 | ||||||
xpedx restructuring | 32 | 19 | ||||||
Total | $ | 477 | $ | 418 |
In millions | 2013 | |||
Settlement of U.S. federal tax audits | $ | (744 | ) | |
Income tax reserve release | (31 | ) | ||
Other items | 1 | |||
Total | $ | (774 | ) |
2012 | ||||||||
In millions | Before Tax | After Tax | ||||||
Temple-Inland integration | $ | 164 | $ | 105 | ||||
Early debt extinguishment costs | 48 | 30 | ||||||
EMEA packaging business restructuring | 17 | 12 | ||||||
Temple-Inland inventory fair value adjustment | 20 | 12 | ||||||
Hueneme mill long-lived asset fair value adjustment | 62 | 38 | ||||||
Containerboard mill divestitures | 29 | 55 | ||||||
Other | (5 | ) | (5 | ) | ||||
Total | $ | 335 | $ | 247 | ||||
Non-operating pension expense | 159 | 113 | ||||||
Total | $ | 494 | $ | 360 |
2012 | ||||||||
In millions | Before Tax | After Tax | ||||||
Building Products divestiture | $ | 15 | $ | 9 | ||||
xpedx restructuring | 44 | 28 | ||||||
Total | $ | 59 | $ | 37 |
In millions | 2012 | |||
Internal restructuring | $ | 14 | ||
Deferred tax asset adjustment related to Medicare Part D reimbursement | 5 | |||
Other | 6 | |||
Total | $ | 25 |
2016 | 2015 | 2014 | |||||||
Diluted Earnings (Loss) Attributable to Shareholders | $ | 904 | $ | 938 | $ | 555 | |||
Add back - Discontinued operations (gain) loss | 5 | — | 13 | ||||||
Diluted Earnings (Loss) from Continuing Operations | 909 | 938 | 568 | ||||||
Add back - Non-operating pension (income) expense | 610 | 258 | 212 | ||||||
Add back - Net special items expense (income) | 182 | 559 | 1,052 | ||||||
Income tax effect - Non-operating pension and special items expense | (309 | ) | (221 | ) | (536 | ) | |||
Adjusted Operating Earnings (Loss) Attributable to Shareholders | $ | 1,392 | $ | 1,534 | $ | 1,296 |
2016 | 2015 | 2014 | |||||||
Diluted Earnings (Loss) Per Share Attributable to Shareholders | $ | 2.18 | $ | 2.23 | $ | 1.29 | |||
Add back - Discontinued operations (gain) loss per share | 0.01 | — | 0.02 | ||||||
Diluted Earnings (Loss) Per Share from Continuing Operations | 2.19 | 2.23 | 1.31 | ||||||
Add back - Non-operating pension (income) expense | 1.47 | 0.61 | 0.49 | ||||||
Add back - Net special items expense (income) | 0.44 | 1.33 | 2.44 | ||||||
Income tax effect - Non-operating pension and special items expense | (0.75 | ) | (0.52 | ) | (1.24 | ) | |||
Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders | $ | 3.35 | $ | 3.65 | $ | 3.00 |
Three Months Ended December 31, 2016 | Three Months Ended September 30, 2016 | Three Months Ended December 31, 2015 | ||||||||||
Diluted Earnings (Loss) Attributable to Shareholders | $ | 218 | $ | 312 | $ | 178 | ||||||
Add back - Discontinued operations (gain) loss | — | — | — | |||||||||
Diluted Earnings (Loss) from Continuing Operations | 218 | 312 | 178 | |||||||||
Add back - Non-operating pension (income) expense | 37 | 42 | 60 | |||||||||
Add back - Net special items expense (income) | 45 | 66 | 158 | |||||||||
Income tax effect - Non-operating pension and special items expense | 3 | (40 | ) | (35 | ) | |||||||
Adjusted Operating Earnings (Loss) Attributable to Shareholders | $ | 303 | $ | 380 | $ | 361 |
Three Months Ended December 31, 2016 | Three Months Ended September 30, 2016 | Three Months Ended December 31, 2015 | ||||||||||
Diluted Earnings (Loss) Per Share Attributable to Shareholders | $ | 0.53 | $ | 0.75 | $ | 0.43 | ||||||
Add back - Discontinued operations (gain) loss per share | — | — | — | |||||||||
Diluted Earnings (Loss) Per Share from Continuing Operations | 0.53 | 0.75 | 0.43 | |||||||||
Add back - Non-operating pension (income) expense per share | 0.09 | 0.10 | 0.14 | |||||||||
Add back - Net special items expense (income) per share | 0.11 | 0.16 | 0.38 | |||||||||
Income tax effect per share - Non-operating pension and special items expense | — | (0.10 | ) | (0.08 | ) | |||||||
Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders | $ | 0.73 | $ | 0.91 | $ | 0.87 |
In millions | 2016 | 2015 | 2014 | ||||||
Earnings (Loss) From Continuing Operations Attributable to International Paper Company | $ | 909 | $ | 938 | $ | 568 | |||
Add back (deduct) | |||||||||
Income tax provision (benefit) | 247 | 466 | 123 | ||||||
Equity (earnings) loss, net of taxes | (198 | ) | (117 | ) | 200 | ||||
Noncontrolling interests, net of taxes | (2 | ) | (21 | ) | (19 | ) | |||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings | 956 | 1,266 | 872 | ||||||
Interest expense, net | 520 | 555 | 601 | ||||||
Noncontrolling interests/equity earnings included in operations | 1 | 8 | 2 | ||||||
Corporate items | 67 | 34 | 49 | ||||||
Corporate special items (income) expense | 46 | 238 | 320 | ||||||
Non-operating pension expense | 610 | 258 | 212 | ||||||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings | $ | 2,200 | $ | 2,359 | $ | 2,056 | |||
Business Segment Operating Profit | |||||||||
Industrial Packaging | $1,648 | $1,851 | $1,893 | ||||||
Global Cellulose Fibers | (179 | ) | 68 | 62 | |||||
Printing Papers | 540 | 465 | (77 | ) | |||||
Consumer Packaging | 191 | (25 | ) | 178 | |||||
Total Business Segment Operating Profit | $ | 2,200 | $ | 2,359 | $ | 2,056 |
• | Industrial Packaging’s profits of $1.6 billion were $203 million lower than in 2015 as the benefits of higher sales volumes, lower maintenance outage costs and lower input costs were more than offset by lower average sales price realizations and mix, higher operating costs and higher other costs. In addition, operating profits in 2016 included a charge of $70 million for impairment and other costs associated with the sale of our corrugated packaging business in Asia and a charge of $7 million related to the closure of a mill in Turkey. In 2015, operating profits included a goodwill and trade name impairment charge of $137 million related to our Brazil Packaging business. |
• | Global Cellulose Fibers' operating loss of $179 million was $247 million unfavorable versus 2015 as the benefits of higher sales volumes, lower input costs, lower other costs and the earnings from the newly acquired business were more than offset by lower average sales price realizations and mix, higher operating costs and higher maintenance outage costs. The operating loss in 2016 included $31 million of costs associated with the acquisition of the pulp business and a charge of $19 million to amortize the newly acquired pulp business inventory fair value adjustment. |
• | Printing Papers’ profits of $540 million represented a $75 million increase in operating profits from 2015. The benefits from higher sales volumes, higher average sales price realizations and mix, lower operating costs, lower maintenance outage costs and lower input costs were partially offset by higher other costs. |
• | Consumer Packaging’s operating profit of $191 million represented a $216 million increase in operating profits from 2015. The benefits from lower operating costs, lower maintenance outage costs, and lower input costs were partially offset by lower |
In millions | 2016 | 2015 | 2014 | |||||||||
Earnings from continuing operations attributable to International Paper Company | $ | 909 | (a) | $ | 938 | (b) | $ | 568 | (c) |
Restructuring and Other | ||||||||||||
In millions | 2016 | 2015 | 2014 | |||||||||
Business Segments | ||||||||||||
Riegelwood mill conversion costs net of proceeds from the sale of Carolina Coated Bristols brand | $ | 9 | (a) | $ | 8 | (a) | $ | — | ||||
Turkey mill closure | 7 | (b) | — | — | ||||||||
Courtland mill shutdown | — | — | 554 | (c) | ||||||||
Other items | — | 2 | (a) | 15 | (d) | |||||||
16 | 10 | 569 | ||||||||||
Corporate | ||||||||||||
Early debt extinguishment costs (see Note 13) | $ | 29 | 207 | 276 | ||||||||
India Packaging business evaluation write-off | 17 | — | — | |||||||||
Gain on sale of investment in Arizona Chemical | (8 | ) | — | — | ||||||||
Timber monetization restructuring | — | 16 | — | |||||||||
Legal liability reserve adjustment | — | 15 | — | |||||||||
Other Items | — | 4 | 1 | |||||||||
38 | 242 | 277 | ||||||||||
Total | $ | 54 | $ | 252 | $ | 846 |
Other Corporate Items | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Write-off of certain regulatory pre-engineering costs | $ | 8 | $ | — | $ | — | |||
Sale of investment by ASG and impairment of that investment | — | — | 47 | ||||||
Other | — | (4 | ) | (4 | ) | ||||
Total | $ | 8 | $ | (4 | ) | $ | 43 |
Industrial Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 13,899 | $ | 14,240 | $ | 14,749 | |||
Operating Profit (Loss) | $ | 1,648 | $ | 1,851 | $ | 1,893 | |||
Turkey mill closure | 7 | — | — | ||||||
Asia Packaging restructuring and impairment | 70 | — | 7 | ||||||
Brazil Packaging goodwill and trade name impairment | — | 137 | — | ||||||
Temple-Inland acquisition | — | — | 16 | ||||||
Multi-employer pension withdrawal liability | — | — | 35 | ||||||
Box plant closures | — | — | (5 | ) | |||||
EMEA Packaging restructuring | — | — | 5 | ||||||
Turkey acquisition | — | — | 1 | ||||||
Brazil Packaging integration costs | — | — | (1 | ) | |||||
Asia Packaging goodwill impairment | — | — | 100 | ||||||
Operating Profit Before Special Items | $ | 1,725 | $ | 1,988 | $ | 2,051 |
North American Industrial Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Sales | $ | 12,307 | $ | 12,618 | $ | 12,752 | |||
Operating Profit (Loss) | $ | 1,757 | $ | 2,009 | $ | 1,986 | |||
Temple-Inland acquisition | — | — | 16 | ||||||
Multi-employer pension withdrawal liability | — | — | 35 | ||||||
Box plant closures | — | — | (5 | ) | |||||
Operating Profit Before Special Items | $ | 1,757 | $ | 2,009 | $ | 2,032 |
EMEA Industrial Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,227 | $ | 1,114 | $ | 1,307 | |||
Operating Profit (Loss) | $ | 15 | $ | 13 | $ | 25 | |||
Turkey Mill Closure | 7 | — | — | ||||||
EMEA Packaging restructuring | — | — | 5 | ||||||
Turkey acquisition | — | — | 1 | ||||||
Operating Profit Before Special Items | $ | 22 | $ | 13 | $ | 31 |
Brazilian Industrial Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 232 | $ | 228 | $ | 349 | |||
Operating Profit (Loss) | $ | (43 | ) | $ | (163 | ) | $ | (3 | ) |
Brazil Packaging goodwill and trade name impairment | — | 137 | — | ||||||
Brazil Packaging integration costs | — | — | (1 | ) | |||||
Operating Profit Before Special Items | $ | (43 | ) | $ | (26 | ) | $ | (4 | ) |
Asian Industrial Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 133 | $ | 280 | $ | 341 | |||
Operating Profit (Loss) | $ | (81 | ) | $ | (8 | ) | $ | (115 | ) |
Asia Packaging restructuring and impairment | 70 | — | 7 | ||||||
Asia Packaging goodwill impairment | — | — | 100 | ||||||
Operating Profit Before Special Items | $ | (11 | ) | $ | (8 | ) | $ | (8 | ) |
Global Cellulose Fibers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,092 | $ | 975 | $ | 1,046 | |||
Operating Profit (Loss) | $ | (179 | ) | $ | 68 | $ | 62 | ||
Acquisition costs | 31 | — | — | ||||||
Inventory fair value step-up amortization | 19 | — | — | ||||||
Operating Profit Before Special Items | $ | (129 | ) | $ | 68 | $ | 62 |
Printing Papers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 4,058 | $ | 4,056 | $ | 4,615 | |||
Operating Profit (Loss) | $ | 540 | $ | 465 | $ | (77 | ) | ||
Courtland mill closure | — | — | 554 | ||||||
Brazil tax amnesty | — | — | 32 | ||||||
India legal contingency | — | — | (20 | ) | |||||
Operating Profit Before Special Items | $ | 540 | $ | 465 | $ | 489 |
North American Printing Papers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,890 | $ | 1,942 | $ | 2,055 | |||
Operating Profit (Loss) | $ | 236 | $ | 179 | $ | (398 | ) | ||
Courtland mill closure | — | — | 554 | ||||||
Operating Profit Before Special Items | $ | 236 | $ | 179 | $ | 156 |
Brazilian Papers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 897 | $ | 878 | $ | 1,061 | |||
Operating Profit (Loss) | $ | 173 | $ | 186 | $ | 177 | |||
Brazil tax amnesty | — | — | 32 | ||||||
Operating Profit Before Special Items | $ | 173 | $ | 186 | $ | 209 |
European Papers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,109 | $ | 1,064 | $ | 1,321 | |||
Operating Profit (Loss) | $ | 142 | $ | 111 | $ | 136 |
Indian Papers | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 167 | $ | 172 | $ | 178 | |||
Operating Profit (Loss) | $ | (11 | ) | $ | (11 | ) | $ | 8 | |
India legal contingency | — | — | (20 | ) | |||||
Operating Profit Before Special Items | $ | (11 | ) | $ | (11 | ) | $ | (12 | ) |
Consumer Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,955 | $ | 2,940 | $ | 3,403 | |||
Operating Profit (Loss) | $ | 191 | $ | (25 | ) | $ | 178 | ||
Riegelwood conversion costs net of proceeds from the sale of the Carolina coated bristols brand | 9 | 8 | — | ||||||
Asia Coated Paperboard goodwill and PP&E impairment | — | 174 | — | ||||||
NA Coated Paperboard sheet plant closures | — | 2 | 8 | ||||||
Operating Profit Before Special Items | $ | 200 | $ | 159 | $ | 186 |
North American Consumer Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 1,628 | $ | 1,939 | $ | 1,993 | |||
Operating Profit (Loss) | $ | 98 | $ | 81 | $ | 92 | |||
Riegelwood conversion costs net of proceeds from the sale of the Carolina coated bristols brand | 9 | 8 | — | ||||||
NA Coated Paperboard sheet plant closures | — | 2 | 8 | ||||||
Operating Profit Before Special Items | $ | 107 | $ | 91 | $ | 100 |
European Consumer Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | 327 | $ | 319 | $ | 365 | |||
Operating Profit (Loss) | $ | 93 | $ | 87 | $ | 91 |
Asian Consumer Packaging | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Net Sales | $ | — | $ | 682 | $ | 1,045 | |||
Operating Profit (Loss) | $ | — | $ | (193 | ) | $ | (5 | ) | |
Asia Coated Paperboard goodwill and PP&E impairment | — | 174 | — | ||||||
Operating Profit Before Special Items | $ | — | $ | (19 | ) | $ | (5 | ) |
In millions | 2016 | 2015 | 2014 | ||||||
Cash provided by operations | $ | 2,478 | $ | 2,580 | $ | 3,077 | |||
Adjustments: | |||||||||
Cash invested in capital projects | (1,348 | ) | (1,487 | ) | (1,366 | ) | |||
Cash contribution to pension plan | 750 | 750 | 353 | ||||||
Free Cash Flow | $ | 1,880 | $ | 1,843 | $ | 2,064 |
In millions | Three Months Ended December 31, 2016 | Three Months Ended September 30, 2016 | Three Months Ended December 31, 2015 | ||||||
Cash provided by operations | $ | 912 | $ | 341 | $ | 990 | |||
Adjustments: | |||||||||
Cash invested in capital projects | (445 | ) | (266 | ) | (489 | ) | |||
Cash contribution to pension plan | — | 500 | — | ||||||
Free Cash Flow | $ | 467 | $ | 575 | $ | 501 |
In millions | 2016 | 2015 | 2014 | ||||||
Industrial Packaging | $ | 816 | $ | 858 | $ | 754 | |||
Global Cellulose Fibers | 174 | 129 | 75 | ||||||
Printing Papers | 215 | 232 | 243 | ||||||
Consumer Packaging | 124 | 216 | 233 | ||||||
Subtotal | 1,329 | 1,435 | 1,305 | ||||||
Corporate and other | 19 | 52 | 61 | ||||||
Capital Spending | $ | 1,348 | $ | 1,487 | $ | 1,366 |
In millions | 2016 | 2015 | 2014 | ||||||
Debt reductions (a) | $ | 266 | $ | 2,151 | $ | 1,625 | |||
Pre-tax early debt extinguishment costs (b) | 29 | 207 | 276 |
(a) | Reductions related to notes with interest rates ranging from 2.00% to 9.38% with original maturities from 2015 to 2030 for the years ended December 31, 2016, 2015 and 2014. Includes the $630 million payment for a portion of the Special Purpose Entity Liability for the year ended December 31, 2015 (see Note 12 Variable Interest Entities on pages 64 through 67 of Item 8. Financial Statements and Supplementary Data). |
(b) | Amounts are included in Restructuring and other charges in the accompanying consolidated statements of operations. |
In millions | 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | ||||||||||||
Maturities of long-term debt (a) | $ | 239 | $ | 690 | $ | 433 | $ | 179 | $ | 612 | $ | 9,161 | ||||||
Lease obligations | 119 | 91 | 69 | 51 | 38 | 125 | ||||||||||||
Purchase obligations (b) | 3,165 | 635 | 525 | 495 | 460 | 2,332 | ||||||||||||
Total (c) | $ | 3,523 | $ | 1,416 | $ | 1,027 | $ | 725 | $ | 1,110 | $ | 11,618 |
(a) | Total debt includes scheduled principal payments only. |
(b) | Includes $2 billion relating to fiber supply agreements entered into at the time of the 2006 Transformation Plan forestland sales and in conjunction with the 2008 acquisition of Weyerhaeuser Company’s Containerboard, Packaging and Recycling business. Also includes $1.1 billion relating to fiber supply agreements assumed in conjunction with the 2016 acquisition of Weyerhaeuser's pulp business. |
(c) | Not included in the above table due to the uncertainty as to the amount and timing of the payment are unrecognized tax benefits of approximately $77 million. |
In millions | Benefit Obligation | Fair Value of Plan Assets | ||||
U.S. qualified pension | $ | 13,307 | $ | 10,312 | ||
U.S. nonqualified pension | 376 | — | ||||
U.S. postretirement | 280 | — | ||||
Non-U.S. pension | 219 | 153 | ||||
Non-U.S. postretirement | 23 | — |
2016 | 2015 | 2014 | ||||
Discount rate | 4.10 | % | 4.40 | % | 4.10 | % |
Rate of compensation increase | 3.75 | % | 3.75 | % | 3.75 | % |
2016 | 2015 | |||
Health care cost trend rate assumed for next year | 6.50 | % | 7.00 | % |
Rate that the cost trend rate gradually declines to | 5.00 | % | 5.00 | % |
Year that the rate reaches the rate it is assumed to remain | 2022 | 2022 |
Year | Return | Year | Return | ||
2016 | 7.1 | % | 2011 | 2.5 | % |
2015 | 1.3 | % | 2010 | 15.1 | % |
2014 | 6.4 | % | 2009 | 23.8 | % |
2013 | 14.1 | % | 2008 | (23.6 | )% |
2012 | 14.1 | % | 2007 | 9.6 | % |
In millions | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||
Pension expense | |||||||||||||||
U.S. plans (non-cash) | $ | 809 | $ | 461 | $ | 387 | $ | 545 | $ | 342 | |||||
Non-U.S. plans | 4 | 6 | — | 5 | 3 | ||||||||||
Postretirement expense | |||||||||||||||
U.S. plans | 13 | 8 | 7 | (1 | ) | (4 | ) | ||||||||
Non-U.S. plans | 1 | 5 | 7 | 7 | 1 | ||||||||||
Net expense | $ | 827 | $ | 480 | $ | 401 | $ | 556 | $ | 342 |
In millions | 2018 (1) | 2017 (1) | ||||
Pension expense | ||||||
U.S. plans (non-cash) | $ | 252 | $ | 310 | ||
Non-U.S. plans | 3 | 4 | ||||
Postretirement expense | ||||||
U.S. plans | 15 | 18 | ||||
Non-U.S. plans | 1 | 1 | ||||
Net expense | $ | 271 | $ | 333 |
(1) | Based on assumptions at December 31, 2016. |
In millions, except per share amounts, for the years ended December 31 | 2016 | 2015 | 2014 | ||||||
NET SALES | $ | 21,079 | $ | 22,365 | $ | 23,617 | |||
COSTS AND EXPENSES | |||||||||
Cost of products sold | 15,152 | 15,468 | 16,254 | ||||||
Selling and administrative expenses | 1,575 | 1,645 | 1,793 | ||||||
Depreciation, amortization and cost of timber harvested | 1,227 | 1,294 | 1,406 | ||||||
Distribution expenses | 1,361 | 1,406 | 1,521 | ||||||
Taxes other than payroll and income taxes | 164 | 168 | 180 | ||||||
Restructuring and other charges | 54 | 252 | 846 | ||||||
Impairment of goodwill and other intangibles | — | 137 | 100 | ||||||
Net (gains) losses on sales and impairments of businesses | 70 | 174 | 38 | ||||||
Interest expense, net | 520 | 555 | 607 | ||||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY EARNINGS (LOSSES) | 956 | 1,266 | 872 | ||||||
Income tax provision (benefit) | 247 | 466 | 123 | ||||||
Equity earnings (loss), net of taxes | 198 | 117 | (200 | ) | |||||
EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 907 | 917 | 549 | ||||||
Discontinued operations, net of taxes | (5 | ) | — | (13 | ) | ||||
NET EARNINGS (LOSS) | 902 | 917 | 536 | ||||||
Less: Net earnings (loss) attributable to noncontrolling interests | (2 | ) | (21 | ) | (19 | ) | |||
NET EARNINGS (LOSS) ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY | $ | 904 | $ | 938 | $ | 555 | |||
BASIC EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS | |||||||||
Earnings (loss) from continuing operations | $ | 2.21 | $ | 2.25 | $ | 1.33 | |||
Discontinued operations, net of taxes | (0.01 | ) | — | (0.03 | ) | ||||
Net earnings (loss) | $ | 2.20 | $ | 2.25 | $ | 1.30 | |||
DILUTED EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS | |||||||||
Earnings (loss) from continuing operations | $ | 2.19 | $ | 2.23 | $ | 1.31 | |||
Discontinued operations, net of taxes | (0.01 | ) | — | (0.02 | ) | ||||
Net earnings (loss) | $ | 2.18 | $ | 2.23 | $ | 1.29 | |||
AMOUNTS ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS | |||||||||
Earnings (loss) from continuing operations | $ | 909 | $ | 938 | $ | 568 | |||
Discontinued operations, net of taxes | (5 | ) | — | (13 | ) | ||||
Net earnings (loss) | $ | 904 | $ | 938 | $ | 555 |
In millions for the years ended December 31 | 2016 | 2015 | 2014 | ||||||
NET EARNINGS (LOSS) | $ | 902 | $ | 917 | $ | 536 | |||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | |||||||||
Amortization of pension and postretirement prior service costs and net loss: | |||||||||
U.S. plans (less tax of $343, $186 and $154) | 545 | 296 | 242 | ||||||
Pension and postretirement liability adjustments: | |||||||||
U.S. plans (less tax of $283, $206 and $798) | (451 | ) | (329 | ) | (1,253 | ) | |||
Non-U.S. plans (less tax of $4, $0 and $5) | 3 | (2 | ) | (18 | ) | ||||
Change in cumulative foreign currency translation adjustment | 260 | (1,042 | ) | (876 | ) | ||||
Net gains/losses on cash flow hedging derivatives: | |||||||||
Net gains (losses) arising during the period (less tax of $3, $3 and $3) | (6 | ) | (3 | ) | 10 | ||||
Reclassification adjustment for (gains) losses included in net earnings (less tax of $3, $8 and $1) | (7 | ) | 12 | (4 | ) | ||||
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX | 344 | (1,068 | ) | (1,899 | ) | ||||
Comprehensive Income (Loss) | 1,246 | (151 | ) | (1,363 | ) | ||||
Net (Earnings) Loss Attributable to Noncontrolling Interests | 2 | 21 | 19 | ||||||
Other Comprehensive (Income) Loss Attributable to Noncontrolling Interests | 2 | 6 | 12 | ||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY | $ | 1,250 | $ | (124 | ) | $ | (1,332 | ) |
In millions, except per share amounts, at December 31 | 2016 | 2015 | ||||
ASSETS | ||||||
Current Assets | ||||||
Cash and temporary investments | $ | 1,033 | $ | 1,050 | ||
Accounts and notes receivable, less allowances of $70 in 2016 and $70 in 2015 | 3,001 | 2,675 | ||||
Inventories | 2,438 | 2,228 | ||||
Other current assets | 198 | 212 | ||||
Total Current Assets | 6,670 | 6,165 | ||||
Plants, Properties and Equipment, net | 13,990 | 11,980 | ||||
Forestlands | 456 | 366 | ||||
Investments | 360 | 228 | ||||
Financial Assets of Special Purpose Entities (Note 12) | 7,033 | 7,014 | ||||
Goodwill | 3,364 | 3,335 | ||||
Deferred Charges and Other Assets | 1,220 | 1,183 | ||||
TOTAL ASSETS | $ | 33,093 | $ | 30,271 | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities | ||||||
Notes payable and current maturities of long-term debt | $ | 239 | $ | 426 | ||
Accounts payable | 2,309 | 2,078 | ||||
Accrued payroll and benefits | 430 | 434 | ||||
Other accrued liabilities | 1,091 | 983 | ||||
Total Current Liabilities | 4,069 | 3,921 | ||||
Long-Term Debt | 11,075 | 8,844 | ||||
Nonrecourse Financial Liabilities of Special Purpose Entities (Note 12) | 6,284 | 6,277 | ||||
Deferred Income Taxes | 3,127 | 2,974 | ||||
Pension Benefit Obligation | 3,400 | 3,548 | ||||
Postretirement and Postemployment Benefit Obligation | 330 | 364 | ||||
Other Liabilities | 449 | 434 | ||||
Commitments and Contingent Liabilities (Note 11) | ||||||
Equity | ||||||
Common stock $1 par value, 2016 - 448.9 shares & 2015 – 448.9 shares | 449 | 449 | ||||
Paid-in capital | 6,189 | 6,243 | ||||
Retained earnings | 4,818 | 4,649 | ||||
Accumulated other comprehensive loss | (5,362 | ) | (5,708 | ) | ||
6,094 | 5,633 | |||||
Less: Common stock held in treasury, at cost, 2016 – 37.671 shares and 2015 – 36.776 shares | 1,753 | 1,749 | ||||
Total Shareholders’ Equity | 4,341 | 3,884 | ||||
Noncontrolling interests | 18 | 25 | ||||
Total Equity | 4,359 | 3,909 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 33,093 | $ | 30,271 |
In millions for the years ended December 31 | 2016 | 2015 | 2014 | ||||||
OPERATING ACTIVITIES | |||||||||
Net earnings (loss) | $ | 902 | $ | 917 | $ | 536 | |||
Depreciation, amortization, and cost of timber harvested | 1,227 | 1,294 | 1,414 | ||||||
Deferred income tax provision (benefit), net | 136 | 281 | (135 | ) | |||||
Restructuring and other charges | 54 | 252 | 881 | ||||||
Pension plan contribution | (750 | ) | (750 | ) | (353 | ) | |||
Periodic pension expense, net | 809 | 461 | 387 | ||||||
Net (gains) losses on sales and impairments of businesses | 70 | 174 | 38 | ||||||
Equity (earnings) losses, net of taxes | (198 | ) | (117 | ) | 200 | ||||
Impairment of goodwill and other intangible assets | — | 137 | 100 | ||||||
Other, net | 157 | 153 | 167 | ||||||
Changes in current assets and liabilities | |||||||||
Accounts and notes receivable | (94 | ) | 7 | (97 | ) | ||||
Inventories | 11 | (131 | ) | (103 | ) | ||||
Accounts payable and accrued liabilities | 98 | (89 | ) | (18 | ) | ||||
Interest payable | 41 | (17 | ) | (18 | ) | ||||
Other | 15 | 8 | 78 | ||||||
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES | 2,478 | 2,580 | 3,077 | ||||||
INVESTMENT ACTIVITIES | |||||||||
Invested in capital projects | (1,348 | ) | (1,487 | ) | (1,366 | ) | |||
Acquisitions, net of cash acquired | (2,228 | ) | — | — | |||||
Proceeds from divestitures | 108 | 23 | — | ||||||
Proceeds from spinoff | — | — | 411 | ||||||
Investment in Special Purpose Entities | — | (198 | ) | — | |||||
Proceeds from sale of fixed assets | 19 | 37 | 61 | ||||||
Other | (49 | ) | (114 | ) | 34 | ||||
CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES | (3,498 | ) | (1,739 | ) | (860 | ) | |||
FINANCING ACTIVITIES | |||||||||
Repurchase of common stock and payments of restricted stock tax withholding | (132 | ) | (605 | ) | (1,062 | ) | |||
Issuance of common stock | — | 2 | 66 | ||||||
Issuance of debt | 3,830 | 6,873 | 1,982 | ||||||
Reduction of debt | (1,938 | ) | (6,947 | ) | (2,095 | ) | |||
Change in book overdrafts | — | (14 | ) | 30 | |||||
Dividends paid | (733 | ) | (685 | ) | (620 | ) | |||
Acquisition of redeemable noncontrolling interest | — | — | (114 | ) | |||||
Debt tender premiums paid | (31 | ) | (211 | ) | (269 | ) | |||
Other | (14 | ) | (14 | ) | (4 | ) | |||
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES | 982 | (1,601 | ) | (2,086 | ) | ||||
Effect of Exchange Rate Changes on Cash | 21 | (71 | ) | (52 | ) | ||||
Change in Cash and Temporary Investments | (17 | ) | (831 | ) | 79 | ||||
Cash and Temporary Investments | |||||||||
Beginning of the period | 1,050 | 1,881 | 1,802 | ||||||
End of the period | $ | 1,033 | $ | 1,050 | $ | 1,881 |
In millions | Common Stock Issued | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total International Paper Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||
BALANCE, JANUARY 1, 2014 | $ | 447 | $ | 6,463 | $ | 4,446 | $ | (2,759 | ) | $ | 492 | $ | 8,105 | $ | 179 | $ | 8,284 | |||||||
Issuance of stock for various plans, net | 2 | 69 | — | — | (212 | ) | 283 | — | 283 | |||||||||||||||
Repurchase of stock | — | — | — | — | 1,062 | (1,062 | ) | — | (1,062 | ) | ||||||||||||||
xpedx spinoff | — | (287 | ) | — | — | — | (287 | ) | — | (287 | ) | |||||||||||||
Dividends | — | — | (633 | ) | — | — | (633 | ) | — | (633 | ) | |||||||||||||
Acquisition of redeemable noncontrolling interests | — | — | 46 | — | — | 46 | — | 46 | ||||||||||||||||
Remeasurement of redeemable noncontrolling interest | — | — | (5 | ) | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Comprehensive income (loss) | — | — | 555 | (1,887 | ) | — | (1,332 | ) | (31 | ) | (1,363 | ) | ||||||||||||
BALANCE, DECEMBER 31, 2014 | 449 | 6,245 | 4,409 | (4,646 | ) | 1,342 | 5,115 | 148 | 5,263 | |||||||||||||||
Issuance of stock for various plans, net | — | 35 | — | — | (198 | ) | 233 | — | 233 | |||||||||||||||
Repurchase of stock | — | — | — | — | 605 | (605 | ) | — | (605 | ) | ||||||||||||||
Dividends | — | — | (698 | ) | — | — | (698 | ) | — | (698 | ) | |||||||||||||
Transactions of equity method investees | — | (37 | ) | — | — | — | (37 | ) | — | (37 | ) | |||||||||||||
Divestiture of noncontrolling interests | — | — | — | — | — | — | (96 | ) | (96 | ) | ||||||||||||||
Comprehensive income (loss) | — | — | 938 | (1,062 | ) | — | (124 | ) | (27 | ) | (151 | ) | ||||||||||||
BALANCE, DECEMBER 31, 2015 | 449 | 6,243 | 4,649 | (5,708 | ) | 1,749 | 3,884 | 25 | 3,909 | |||||||||||||||
Issuance of stock for various plans, net | — | (6 | ) | — | — | (128 | ) | 122 | — | 122 | ||||||||||||||
Repurchase of stock | — | — | — | — | 132 | (132 | ) | — | (132 | ) | ||||||||||||||
Dividends | — | — | (743 | ) | — | — | (743 | ) | — | (743 | ) | |||||||||||||
Transactions of equity method investees | — | (48 | ) | — | — | — | (48 | ) | — | (48 | ) | |||||||||||||
Divestiture of noncontrolling interests | — | — | — | — | — | — | (3 | ) | (3 | ) | ||||||||||||||
Other | — | — | 8 | — | — | 8 | — | 8 | ||||||||||||||||
Comprehensive income (loss) | — | — | 904 | 346 | — | 1,250 | (4 | ) | 1,246 | |||||||||||||||
BALANCE, DECEMBER 31, 2016 | $ | 449 | $ | 6,189 | $ | 4,818 | $ | (5,362 | ) | $ | 1,753 | $ | 4,341 | $ | 18 | $ | 4,359 |
In millions, except per share amounts | 2016 | 2015 | |||||
Reclassification from: | |||||||
Deferred income tax assets | $ | (299 | ) | $ | (312 | ) | |
Other accrued liabilities | 3 | 3 | |||||
Reclassification to: | |||||||
Deferred charges and other assets | 48 | 52 | |||||
Deferred income taxes | 248 | 257 |
In millions, except per share amounts | 2016 | 2015 | 2014 | ||||||||
Earnings (loss) from continuing operations | $ | 909 | $ | 938 | $ | 568 | |||||
Effect of dilutive securities | — | — | — | ||||||||
Earnings (loss) from continuing operations – assuming dilution | $ | 909 | $ | 938 | $ | 568 | |||||
Average common shares outstanding | 411.1 | 417.4 | 427.7 | ||||||||
Effect of dilutive securities: | |||||||||||
Restricted performance share plan | 4.5 | 3.2 | 4.2 | ||||||||
Stock options (a) | — | — | 0.1 | ||||||||
Average common shares outstanding – assuming dilution | 415.6 | 420.6 | 432.0 | ||||||||
Basic earnings (loss) per share from continuing operations | $ | 2.21 | $ | 2.25 | $ | 1.33 | |||||
Diluted earnings (loss) per share from continuing operations | $ | 2.19 | $ | 2.23 | $ | 1.31 |
(a) | Options to purchase shares were not included in the computation of diluted common shares outstanding if their exercise price exceeded the average market price of the Company’s common stock for each respective reporting date. |
In millions | Defined Benefit Pension and Postretirement Items (a) | Change in Cumulative Foreign Currency Translation Adjustments (a) | Net Gains and Losses on Cash Flow Hedging Derivatives (a) | Total (a) | ||||||||
Balance as of December 31, 2015 | $ | (3,169 | ) | $ | (2,549 | ) | $ | 10 | $ | (5,708 | ) | |
Other comprehensive income (loss) before reclassifications | (448 | ) | 263 | (6 | ) | (191 | ) | |||||
Amounts reclassified from accumulated other comprehensive income | 545 | (3 | ) | (7 | ) | 535 | ||||||
Net Current Period Other Comprehensive Income | 97 | 260 | (13 | ) | 344 | |||||||
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | — | 2 | — | 2 | ||||||||
Balance as of December 31, 2016 | $ | (3,072 | ) | $ | (2,287 | ) | $ | (3 | ) | $ | (5,362 | ) |
In millions | Defined Benefit Pension and Postretirement Items (a) | Change in Cumulative Foreign Currency Translation Adjustments (a) | Net Gains and Losses on Cash Flow Hedging Derivatives (a) | Total (a) | ||||||||
Balance as of December 31, 2014 | $ | (3,134 | ) | $ | (1,513 | ) | $ | 1 | $ | (4,646 | ) | |
Other comprehensive income (loss) before reclassifications | (331 | ) | (1,002 | ) | (3 | ) | (1,336 | ) | ||||
Amounts reclassified from accumulated other comprehensive income | 296 | (40 | ) | 12 | 268 | |||||||
Net Current Period Other Comprehensive Income | (35 | ) | (1,042 | ) | 9 | (1,068 | ) | |||||
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | — | 6 | — | 6 | ||||||||
Balance as of December 31, 2015 | $ | (3,169 | ) | $ | (2,549 | ) | $ | 10 | $ | (5,708 | ) |
In millions | Defined Benefit Pension and Postretirement Items (a) | Change in Cumulative Foreign Currency Translation Adjustments (a) | Net Gains and Losses on Cash Flow Hedging Derivatives (a) | Total (a) | ||||||||
Balance as of December 31, 2013 | $ | (2,105 | ) | $ | (649 | ) | $ | (5 | ) | $ | (2,759 | ) |
Other comprehensive income (loss) before reclassifications | (1,271 | ) | (863 | ) | 10 | (2,124 | ) | |||||
Amounts reclassified from accumulated other comprehensive income | 242 | (13 | ) | (4 | ) | 225 | ||||||
Net Current Period Other Comprehensive Income | (1,029 | ) | (876 | ) | 6 | (1,899 | ) | |||||
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | — | 12 | — | 12 | ||||||||
Balance as of December 31, 2014 | $ | (3,134 | ) | $ | (1,513 | ) | $ | 1 | $ | (4,646 | ) |
Details About Accumulated Other Comprehensive Income Components | Amount Reclassified from Accumulated Other Comprehensive Income (a) | Location of Amount Reclassified from AOCI | |||||||||
2016 | 2015 | 2014 | |||||||||
In millions | |||||||||||
Defined benefit pension and postretirement items: | |||||||||||
Prior-service costs | $ | (37 | ) | $ | (33 | ) | $ | (17 | ) | (b) | Cost of products sold |
Actuarial gains/(losses) | (851 | ) | (449 | ) | (379 | ) | (b) | Cost of products sold | |||
Total pre-tax amount | (888 | ) | (482 | ) | (396 | ) | |||||
Tax (expense)/benefit | 343 | 186 | 154 | ||||||||
Net of tax | (545 | ) | (296 | ) | (242 | ) | |||||
Change in cumulative foreign currency translation adjustments: | |||||||||||
Business acquisition/divestiture | 3 | 40 | 13 | Net (gains) losses on sales and impairments of businesses or Retained earnings | |||||||
Tax (expense)/benefit | — | — | — | ||||||||
Net of tax | 3 | 40 | 13 | ||||||||
Net gains and losses on cash flow hedging derivatives: | |||||||||||
Foreign exchange contracts | 10 | (20 | ) | 3 | (c) | Cost of products sold | |||||
Total pre-tax amount | 10 | (20 | ) | 3 | |||||||
Tax (expense)/benefit | (3 | ) | 8 | 1 | |||||||
Net of tax | 7 | (12 | ) | 4 | |||||||
Total reclassifications for the period | $ | (535 | ) | $ | (268 | ) | $ | (225 | ) |
In millions | 2016 | |||
Early debt extinguishment costs (see Note 13) | $ | 29 | ||
India packaging evaluation write-off | 17 | |||
Gain on sale of investment in Arizona Chemical | (8 | ) | ||
Riegelwood mill conversion costs (a) | 9 | |||
Turkey mill closure (b) | 7 | |||
Total | $ | 54 |
(a) | Includes $3 million of accelerated depreciation, $3 million of inventory write-off charges and $3 million of other charges. |
(b) | Includes $4 million of accelerated depreciation and $3 million of severance charges which is related to 85 employees. |
In millions | 2015 | |||
Early debt extinguishment costs (see Note 13) | $ | 207 | ||
Timber monetization restructuring | 16 | |||
Legal liability reserve adjustment | 15 | |||
Riegelwood mill conversion costs net of proceeds from the sale of Carolina Coated Bristols brand (a) | 8 | |||
Other | 6 | |||
Total | $ | 252 |
(a) | Includes $5 million of severance charges, which is related to 69 employees, $24 million of accelerated depreciation, sale proceeds of $22 million and $1 million of other charges. |
In millions | 2014 | |||
Early debt extinguishment costs (see Note 13) | $ | 276 | ||
Courtland mill shutdown (a) | 554 | |||
Other (b) | 16 | |||
Total | $ | 846 |
In millions | |||
Cash and temporary investments | $ | 12 | |
Accounts and notes receivable | 195 | ||
Inventory | 254 | ||
Other current assets | 11 | ||
Plants, properties and equipment | 1,711 | ||
Goodwill | 19 | ||
Other intangible assets | 212 | ||
Deferred charges and other assets | 6 | ||
Total assets acquired | 2,420 | ||
Accounts payable and accrued liabilities | 111 | ||
Long-term debt | 104 | ||
Other long-term liabilities | 22 | ||
Total liabilities assumed | 237 | ||
Net assets acquired | $ | 2,183 |
In millions | Estimated Fair Value | Average Remaining Useful Life | |||
Asset Class: | (at acquisition date) | ||||
Customer relationships and lists | $ | 95 | 24 years | ||
Trade names, patents, trademarks and developed technology | 113 | 8 years | |||
Other | 4 | 10 years | |||
Total | $ | 212 |
In millions | 2014 | |||
Net Sales | $ | 2,604 | ||
Costs and Expenses | ||||
Cost of products sold | 2,309 | |||
Selling and administrative expenses | 191 | |||
Depreciation, amortization and cost of timber harvested | 9 | |||
Distribution expenses | 69 | |||
Restructuring and other charges | 25 | |||
Impairment of goodwill and other intangibles | — | |||
Other, net | 3 | |||
Earnings (Loss) Before Income Taxes and Equity Earnings | (2 | ) | ||
Income tax provision (benefit) | (1 | ) | ||
Discontinued Operations, Net of Taxes (a) | $ | (1 | ) |
In millions at December 31 | 2016 | 2015 | ||||
Accounts and notes receivable: | ||||||
Trade | $ | 2,759 | $ | 2,480 | ||
Other | 242 | 195 | ||||
Total | $ | 3,001 | $ | 2,675 |
In millions at December 31 | 2016 | 2015 | ||||
Raw materials | $ | 296 | $ | 339 | ||
Finished pulp, paper and packaging products | 1,381 | 1,248 | ||||
Operating supplies | 661 | 563 | ||||
Other | 100 | 78 | ||||
Inventories | $ | 2,438 | $ | 2,228 |
In millions at December 31 | 2016 | 2015 | ||||
Pulp, paper and packaging facilities | $ | 34,259 | $ | 31,466 | ||
Other properties and equipment | 1,311 | 1,242 | ||||
Gross cost | 35,570 | 32,708 | ||||
Less: Accumulated depreciation | 21,580 | 20,728 | ||||
Plants, properties and equipment, net | $ | 13,990 | $ | 11,980 |
In millions | 2016 | 2015 | 2014 | ||||||
Interest expense (a) | $ | 695 | $ | 644 | $ | 677 | |||
Interest income (a) | 175 | 89 | 70 | ||||||
Capitalized interest costs | 28 | 25 | 23 |
(a) | Interest expense and interest income exclude approximately $25 million and $38 million in 2015 and 2014, respectively, related to investments in and borrowings from variable interest entities for which the Company has a legal right of offset (see Note 12). |
In millions | Industrial Packaging | Global Cellulose Fibers | Printing Papers | Consumer Packaging | Total | ||||||||||||||
Balance as of January 1, 2016 | |||||||||||||||||||
Goodwill | $3,325 | $— | $2,124 | $1,664 | $7,113 | ||||||||||||||
Accumulated impairment losses (a) | (237 | ) | — | (1,877 | ) | (1,664 | ) | (3,778 | ) | ||||||||||
3,088 | — | 247 | — | 3,335 | |||||||||||||||
Reclassifications and other (b) | (4 | ) | — | 33 | — | 29 | |||||||||||||
Additions/reductions | (5 | ) | (c) | 19 | (d) | (14 | ) | (e) | — | — | |||||||||
Impairment loss | — | — | — | — | — | ||||||||||||||
Balance as of December 31, 2016 | |||||||||||||||||||
Goodwill | 3,316 | 19 | 2,143 | 1,664 | 7,142 | ||||||||||||||
Accumulated impairment losses (a) | (237 | ) | — | (1,877 | ) | (1,664 | ) | (3,778 | ) | ||||||||||
Total | $3,079 | $19 | $266 | $— | $3,364 |
(a) | Represents accumulated goodwill impairment charges since the adoption of ASC 350, “Intangibles – Goodwill and Other” in 2002. |
(b) | Represents the effects of foreign currency translations and reclassifications. |
(c) | Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in the U.S. |
(d) | Reflects the acquisition of the newly acquired pulp business. |
(e) | Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in Brazil. |
In millions | Industrial Packaging | Global Cellulose Fibers | Printing Papers | Consumer Packaging | Total | ||||||||||||||
Balance as of January 1, 2015 | |||||||||||||||||||
Goodwill | $3,396 | $— | $2,234 | $1,784 | $7,414 | ||||||||||||||
Accumulated impairment losses (a) | (100 | ) | — | (1,877 | ) | (1,664 | ) | (3,641 | ) | ||||||||||
3,296 | — | 357 | 120 | 3,773 | |||||||||||||||
Reclassifications and other (b) | (70 | ) | — | (95 | ) | (3 | ) | (168 | ) | ||||||||||
Additions/reductions | (1 | ) | — | (15 | ) | (c) | (117 | ) | (d) | (133 | ) | ||||||||
Impairment loss | (137 | ) | (e) | — | — | — | (137 | ) | |||||||||||
Balance as of December 31, 2015 | |||||||||||||||||||
Goodwill | 3,325 | — | 2,124 | 1,664 | 7,113 | ||||||||||||||
Accumulated impairment losses (a) | (237 | ) | — | (1,877 | ) | (1,664 | ) | (3,778 | ) | ||||||||||
Total | $3,088 | $— | $247 | $— | $3,335 |
(a) | Represents accumulated goodwill impairment charges since the adoption of ASC 350, “Intangibles – Goodwill and Other” in 2002. |
(b) | Represents the effects of foreign currency translations and reclassifications. |
(c) | Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in Brazil. |
(d) | Reduction due to the sale and de-consolidation of Shandong Sun joint venture in Asia. |
(e) | Reflects a charge for goodwill impairment related to our Brazil Industrial Packaging business. |
2016 | 2015 | |||||||||||
In millions at December 31 | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||
Customer relationships and lists | $ | 605 | $ | 211 | $ | 495 | $ | 166 | ||||
Non-compete agreements | 69 | 64 | 69 | 56 | ||||||||
Tradenames, patents and trademarks, and developed technology | 173 | 56 | 61 | 54 | ||||||||
Land and water rights | 10 | 2 | 33 | 6 | ||||||||
Software | 21 | 20 | 22 | 20 | ||||||||
Other | 48 | 26 | 46 | 29 | ||||||||
Total | $ | 926 | $ | 379 | $ | 726 | $ | 331 |
In millions | 2016 | 2015 | 2014 | ||||||
Amortization expense related to intangible assets | $ | 54 | $ | 60 | $ | 73 |
In millions | 2016 | 2015 | 2014 | ||||||
Earnings (loss) | |||||||||
U.S. | $ | 573 | $ | 1,147 | $ | 565 | |||
Non-U.S. | 383 | 119 | 307 | ||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | $ | 956 | $ | 1,266 | $ | 872 |
In millions | 2016 | 2015 | 2014 | ||||||
Current tax provision (benefit) | |||||||||
U.S. federal | $ | 35 | $ | 62 | $ | 175 | |||
U.S. state and local | — | 12 | 9 | ||||||
Non-U.S. | 76 | 111 | 74 | ||||||
$ | 111 | $ | 185 | $ | 258 | ||||
Deferred tax provision (benefit) | |||||||||
U.S. federal | $ | 138 | $ | 321 | $ | (67 | ) | ||
U.S. state and local | 23 | 30 | 5 | ||||||
Non-U.S. | (25 | ) | (70 | ) | (73 | ) | |||
$ | 136 | $ | 281 | $ | (135 | ) | |||
Income tax provision (benefit) | $ | 247 | $ | 466 | $ | 123 |
In millions | 2016 | 2015 | 2014 | ||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | $ | 956 | $ | 1,266 | $ | 872 | |||
Statutory U.S. income tax rate | 35 | % | 35 | % | 35 | % | |||
Tax expense (benefit) using statutory U.S. income tax rate | 335 | 443 | 305 | ||||||
State and local income taxes | 15 | 27 | 10 | ||||||
Tax rate and permanent differences on non-U.S. earnings | (27 | ) | (44 | ) | (72 | ) | |||
Net U.S. tax on non-U.S. dividends | 21 | 12 | 16 | ||||||
Tax benefit on manufacturing activities | (12 | ) | (14 | ) | (46 | ) | |||
Non-deductible business expenses | 9 | 8 | 7 | ||||||
Non-deductible impairments | — | 109 | 35 | ||||||
Sale of non-strategic assets | 12 | (61 | ) | — | |||||
Tax audits | (14 | ) | — | — | |||||
Subsidiary liquidation | (63 | ) | — | (85 | ) | ||||
Retirement plan dividends | (6 | ) | (5 | ) | (5 | ) | |||
Tax credits | (28 | ) | (15 | ) | (34 | ) | |||
Other, net | 5 | 6 | (8 | ) | |||||
Income tax provision (benefit) | $ | 247 | $ | 466 | $ | 123 | |||
Effective income tax rate | 26 | % | 37 | % | 14 | % |
In millions | 2016 | 2015 | ||||
Deferred income tax assets: | ||||||
Postretirement benefit accruals | $ | 165 | $ | 172 | ||
Pension obligations | 1,344 | 1,403 | ||||
Alternative minimum and other tax credits | 270 | 283 | ||||
Net operating and capital loss carryforwards | 662 | 732 | ||||
Compensation reserves | 257 | 265 | ||||
Other | 251 | 244 | ||||
Gross deferred income tax assets | 2,949 | 3,099 | ||||
Less: valuation allowance | (403 | ) | (430 | ) | ||
Net deferred income tax asset | $ | 2,546 | $ | 2,669 | ||
Deferred income tax liabilities: | ||||||
Intangibles | $ | (231 | ) | $ | (271 | ) |
Plants, properties and equipment | (2,828 | ) | (2,727 | ) | ||
Forestlands, related installment sales, and investment in subsidiary | (2,260 | ) | (2,253 | ) | ||
Gross deferred income tax liabilities | $ | (5,319 | ) | $ | (5,251 | ) |
Net deferred income tax liability | $ | (2,773 | ) | $ | (2,582 | ) |
In millions | 2016 | 2015 | 2014 | ||||||
Balance at January 1 | $ | (150 | ) | $ | (158 | ) | $ | (161 | ) |
(Additions) reductions based on tax positions related to current year | (4 | ) | (6 | ) | (15 | ) | |||
Additions for tax positions of prior years | (3 | ) | (6 | ) | (1 | ) | |||
Reductions for tax positions of prior years | 33 | 7 | 9 | ||||||
Settlements | 19 | 2 | — | ||||||
Expiration of statutes of limitations | 5 | 4 | 2 | ||||||
Currency translation adjustment | 2 | 7 | 8 | ||||||
Balance at December 31 | $ | (98 | ) | $ | (150 | ) | $ | (158 | ) |
In millions | 2016 | 2015 | 2014 | ||||||
Special items | $ | (51 | ) | $ | (84 | ) | $ | (372 | ) |
Tax-related adjustments: | |||||||||
Return to accrual | 23 | 23 | — | ||||||
Internal restructurings | (63 | ) | (62 | ) | (90 | ) | |||
Settlement of tax audits and legislative changes | (14 | ) | — | 10 | |||||
Tax rate changes | 23 | — | — | ||||||
Other tax adjustments | 8 | 2 | (1 | ) | |||||
Income tax provision (benefit) related to special items | $ | (74 | ) | $ | (121 | ) | $ | (453 | ) |
In millions | 2017 Through 2026 | 2027 Through 2036 | Indefinite | Total | ||||||||
U.S. federal and non-U.S. NOLs | $ | 67 | $ | 9 | $ | 455 | $ | 531 | ||||
State taxing jurisdiction NOLs | 139 | 52 | — | 191 | ||||||||
U.S. federal, non- U.S. and state tax credit carryforwards | 176 | 21 | 183 | 380 | ||||||||
U.S. federal and state capital loss carryforwards | 22 | — | — | 22 | ||||||||
Total | $ | 404 | $ | 82 | $ | 638 | $ | 1,124 |
In millions | 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | ||||||||||||
Lease obligations | $ | 119 | $ | 91 | $ | 69 | $ | 51 | $ | 38 | $ | 125 | ||||||
Purchase obligations (a) | 3,165 | 635 | 525 | 495 | 460 | 2,332 | ||||||||||||
Total | $ | 3,284 | $ | 726 | $ | 594 | $ | 546 | $ | 498 | $ | 2,457 |
(a) | Includes $2.0 billion relating to fiber supply agreements entered into at the time of the Company’s 2006 Transformation Plan forestland sales and in conjunction with the 2008 acquisition of Weyerhaeuser Company’s Containerboard, Packaging and Recycling business. Also includes $1.1 billion relating to fiber supply agreements assumed in conjunction with the 2016 acquisition of Weyerhaeuser's pulp business. |
• | In March 2016, the Company and other PRPs received a special notice letter from the EPA (i) inviting participation in implementing a remedy for a portion of the site, and (ii) demanding reimbursement of EPA past costs totaling $37 million, including $19 million in past costs previously demanded by the EPA. The Company responded to the special notice letter. In December 2016, EPA issued a unilateral administrative order to the Company and other PRPs to perform the remedy. The unilateral administrative order has not yet become effective and the Company is evaluating its response. |
• | In April 2016, the EPA issued a separate unilateral administrative order to the Company and certain other PRPs for a time-critical removal action (TCRA) of PCB-contaminated sediments from a different portion of the site. The Company responded to the unilateral administrative order and agreed along with |
• | In October 2016, the Company and another PRP received a special notice letter from the EPA inviting participation in the remedial design component of the landfill remedy for the Allied Paper Mill. The record of decision establishing the final landfill remedy for the Allied Paper Mill was issued by the EPA in September 2016. The Company responded to the Allied Paper Mill special notice letter in late December 2016. |
In millions | 2016 | 2015 | 2014 | ||||||
Revenue (a) | $ | 95 | $ | 43 | $ | 38 | |||
Expense (a) | 128 | 81 | 72 | ||||||
Cash receipts (b) | 77 | 21 | 22 | ||||||
Cash payments (c) | 98 | 71 | 73 |
(a) | The net expense related to the Company’s interest in the Entities is included in the accompanying consolidated statement of operations, as International Paper has and intends to effect its legal right to offset as discussed above. After formation of the 2015 Financing Entities, the revenue and expense are included in Interest expense, net in the accompanying consolidated statement of operations. |
(b) | The cash receipts are equity distributions from the Entities to International Paper prior to the formation of the 2015 Financing Entities. After formation of the 2015 Financing Entities, cash receipts are interest received on the Financial assets of special purpose entities. |
(c) | The cash payments are interest payments on the associated debt obligations discussed above. After formation of the 2015 Financing Entities, the payments represent interest paid on Nonrecourse financial liabilities of special purpose entities. |
In millions | 2016 | 2015 | 2014 | ||||||
Revenue (a) | $ | 37 | $ | 27 | $ | 26 | |||
Expense (b) | 37 | 27 | 25 | ||||||
Cash receipts (c) | 15 | 7 | 7 | ||||||
Cash payments (d) | 27 | 18 | 18 |
(a) | The revenue is included in Interest expense, net in the accompanying consolidated statement of operations and includes approximately $19 million for the years ended December 31, 2016, 2015 and 2014, respectively, of accretion income for the amortization of the purchase accounting adjustment on the Financial assets of special purpose entities. |
(b) | The expense is included in Interest expense, net in the accompanying consolidated statement of operations and includes approximately $7 million for the years ended |
(c) | The cash receipts are interest received on the Financial assets of special purpose entities. |
(d) | The cash payments are interest paid on Nonrecourse financial liabilities of special purpose entities. |
In millions | 2016 | 2015 | 2014 | ||||||
Debt reductions (a) | $ | 266 | $ | 2,151 | $ | 1,625 | |||
Pre-tax early debt extinguishment costs (b) | 29 | 207 | 276 |
(a) | Reductions related to notes with interest rates ranging from 2.00% to 9.38% with original maturities from 2015 to 2030 for the years ended December 31, 2016, 2015 and 2014. Includes the $630 million payment for a portion of the Special Purpose Entity Liability for the year ended December 31, 2015 (see Note 12 Variable Interest Entities). |
(b) | Amounts are included in Restructuring and other charges in the accompanying consolidated statements of operations. |
In millions at December 31 | 2016 | 2015 | ||||
8.7% note – due 2038 | $ | 264 | $ | 264 | ||
9 3/8% note – due 2019 | 295 | 295 | ||||
7.95% debenture – due 2018 | 382 | 648 | ||||
7.5% note – due 2021 | 598 | 603 | ||||
7.3% note – due 2039 | 721 | 721 | ||||
6 7/8% notes – due 2023 – 2029 | 131 | 131 | ||||
6.65% note – due 2037 | 4 | 4 | ||||
6.4% to 7.75% debentures due 2025 – 2027 | 142 | 142 | ||||
6 5/8% note – due 2018 | 72 | 185 | ||||
6.0% note – due 2041 | 585 | 585 | ||||
5.25% note – due 2016 | — | 261 | ||||
5.00% to 5.15% notes – due 2035 – 2046 | 1,280 | 1,280 | ||||
4.8% note - due 2044 | 796 | 796 | ||||
4.75% note – due 2022 | 810 | 817 | ||||
3.00% to 4.40% notes – due 2024 – 2047 | 3,786 | 1,490 | ||||
Floating rate notes – due 2016 – 2025 (a) | 763 | 438 | ||||
Environmental and industrial development bonds – due 2016 – 2035 (b) | 681 | 594 | ||||
Short-term notes (c) | — | 5 | ||||
Other (d) | 4 | 11 | ||||
Total (e) | 11,314 | 9,270 | ||||
Less: current maturities | 239 | 426 | ||||
Long-term debt | $ | 11,075 | $ | 8,844 |
(a) | The weighted average interest rate on these notes was 2.2% in 2016 and 2.9% in 2015. |
(b) | The weighted average interest rate on these bonds was 5.9% in 2016 and 5.8% in 2015. |
(c) | The weighted average interest rate was 2.2% in 2015. Includes$5 million at December 31, 2015 related to non-U.S. denominated borrowings with a weighted average interest rate of 2.2% in 2015. |
(d) | Includes $2 million at December 31, 2016 and $8 million at December 31, 2015 related to the unamortized gain on interest rate swap unwinds (see Note 14 Derivatives and Hedging Instruments). |
(e) | The fair market value was approximately $12.0 billion at December 31, 2016 and $9.9 billion at December 31, 2015. |
In millions | December 31, 2016 | December 31, 2015 | ||
Derivatives in Cash Flow Hedging Relationships: | ||||
Foreign exchange contracts (a) | 275 | 290 | ||
Derivatives in Fair Value Hedging Relationships: | ||||
Interest rate contracts | — | 17 | ||
Derivatives Not Designated as Hedging Instruments: | ||||
Electricity contract | 6 | 16 | ||
Foreign exchange contracts | 24 | 35 | ||
Interest rate contracts | — | 38 |
(a) | These contracts had maturities of two years or less as of December 31, 2016. |
Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) | |||||||||
In millions | 2016 | 2015 | 2014 | ||||||
Foreign exchange contracts | $ | 4 | $ | (3 | ) | $ | 10 | ||
Interest rate contracts | (10 | ) | — | — | |||||
Total | $ | (6 | ) | $ | (3 | ) | $ | 10 |
Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion) | ||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Derivatives in Cash Flow Hedging Relationships: | |||||||||||
Foreign exchange contracts | $ | 7 | $ | (12 | ) | $ | 4 | Cost of products sold | |||
Total | $ | 7 | $ | (12 | ) | $ | 4 |
Gain (Loss) Recognized in Income | Location of Gain (Loss) in Consolidated Statement of Operations | |||||||||||||||
In millions | 2016 | 2015 | 2014 | |||||||||||||
Derivatives in Fair Value Hedging Relationships: | ||||||||||||||||
Interest rate contracts | $ | — | $ | 3 | $ | 1 | Interest expense, net | |||||||||
Debt | — | (3 | ) | (1 | ) | Interest expense, net | ||||||||||
Total | $ | — | $ | — | $ | — | ||||||||||
Derivatives Not Designated as Hedging Instruments: | ||||||||||||||||
Electricity Contracts | $ | — | $ | (7 | ) | $ | (2 | ) | Cost of products sold | |||||||
Foreign exchange contracts | — | (4 | ) | (1 | ) | Cost of products sold | ||||||||||
Interest rate contracts | 5 | (a) | 13 | (b) | 12 | (c) | Interest expense, net | |||||||||
Total | $ | 5 | $ | 2 | $ | 9 |
(a) | Excluding gain of $2 million related to debt reduction recorded to Restructuring and other charges. |
(b) | Excluding gain of $3 million related to debt reduction recorded to Restructuring and other charges. |
(c) | Excluding gain of $7 million, net related to debt issuance and debt reduction recorded to Restructuring and other charges. |
2016 | 2015 | |||||||||||||||||||||||
In millions | Issued | Terminated | Undesignated | Issued | Terminated | Undesignated | ||||||||||||||||||
Second Quarter | $ | — | $ | — | $ | — | $ | — | $ | 175 | $ | 38 | ||||||||||||
First Quarter | — | 55 | — | — | — | — | ||||||||||||||||||
Total | $ | — | $ | 55 | $ | — | $ | — | $ | 175 | $ | 38 |
Assets | Liabilities | |||||||||||||||
In millions | December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||
Derivatives designated as hedging instruments | ||||||||||||||||
Foreign exchange contracts – cash flow | $ | 3 | (a) | $ | 5 | (a) | $ | 4 | (b) | $ | 1 | (b) | ||||
Total derivatives designated as hedging instruments | $ | 3 | $ | 5 | $ | 4 | $ | 1 | ||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||
Electricity contract | $ | — | $ | — | $ | 2 | (b) | $ | 7 | (c) | ||||||
Total derivatives not designated as hedging instruments | $ | — | $ | — | $ | 2 | $ | 7 | ||||||||
Total derivatives | $ | 3 | $ | 5 | $ | 6 | $ | 8 |
(a) | Included in Other current assets in the accompanying consolidated balance sheet. |
(b) | Included in Other accrued liabilities in the accompanying consolidated balance sheet. |
(c) | Includes $4 million recorded in Other accrued liabilities and $3 million recorded in Other liabilities in the accompanying consolidated balance sheet. |
Common Stock | ||||
In thousands | Issued | Treasury | ||
Balance at January 1, 2014 | 447,222 | 10,868 | ||
Issuance of stock for various plans, net | 1,632 | (4,668 | ) | |
Repurchase of stock | — | 22,534 | ||
Balance at December 31, 2014 | 448,854 | 28,734 | ||
Issuance of stock for various plans, net | 62 | (4,230 | ) | |
Repurchase of stock | — | 12,272 | ||
Balance at December 31, 2015 | 448,916 | 36,776 | ||
Issuance of stock for various plans, net | — | (2,745 | ) | |
Repurchase of stock | — | 3,640 | ||
Balance at December 31, 2016 | 448,916 | 37,671 |
2016 | 2015 | |||||||||||
In millions | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | ||||||||
Change in projected benefit obligation: | ||||||||||||
Benefit obligation, January 1 | $ | 14,438 | $ | 204 | $ | 14,741 | $ | 233 | ||||
Service cost | 158 | 4 | 161 | 6 | ||||||||
Interest cost | 580 | 9 | 597 | 10 | ||||||||
Settlements | (1,222 | ) | (2 | ) | (43 | ) | (12 | ) | ||||
Actuarial loss (gain) | 495 | 35 | (254 | ) | (1 | ) | ||||||
Acquisitions | 1 | — | — | — | ||||||||
Plan amendments | — | (1 | ) | — | — | |||||||
Benefits paid | (767 | ) | (9 | ) | (764 | ) | (7 | ) | ||||
Effect of foreign currency exchange rate movements | — | (21 | ) | — | (25 | ) | ||||||
Benefit obligation, December 31 | $ | 13,683 | $ | 219 | $ | 14,438 | $ | 204 | ||||
Change in plan assets: | ||||||||||||
Fair value of plan assets, January 1 | $ | 10,923 | $ | 155 | $ | 10,918 | $ | 180 | ||||
Actual return on plan assets | 607 | 17 | (1 | ) | 4 | |||||||
Company contributions | 771 | 8 | 813 | 9 | ||||||||
Benefits paid | (767 | ) | (9 | ) | (764 | ) | (7 | ) | ||||
Settlements | (1,222 | ) | (2 | ) | (43 | ) | (12 | ) | ||||
Effect of foreign currency exchange rate movements | — | (16 | ) | — | (19 | ) | ||||||
Fair value of plan assets, December 31 | $ | 10,312 | $ | 153 | $ | 10,923 | $ | 155 | ||||
Funded status, December 31 | $ | (3,371 | ) | $ | (66 | ) | $ | (3,515 | ) | $ | (49 | ) |
Amounts recognized in the consolidated balance sheet: | ||||||||||||
Non-current asset | $ | — | $ | 6 | $ | — | $ | 7 | ||||
Current liability | (40 | ) | (3 | ) | (22 | ) | (2 | ) | ||||
Non-current liability | (3,331 | ) | (69 | ) | (3,493 | ) | (54 | ) | ||||
$ | (3,371 | ) | $ | (66 | ) | $ | (3,515 | ) | $ | (49 | ) |
Amounts recognized in accumulated other comprehensive income under ASC 715 (pre-tax): | ||||||||||||
Prior service cost | $ | 125 | $ | — | $ | 166 | $ | — | ||||
Net actuarial loss | 4,757 | 61 | 4,899 | 42 | ||||||||
$ | 4,882 | $ | 61 | $ | 5,065 | $ | 42 |
In millions | U.S. Plans | Non- U.S. Plans | ||||
Current year actuarial (gain) loss | $ | 703 | $ | 27 | ||
Amortization of actuarial loss | (400 | ) | (1 | ) | ||
Current year prior service cost | — | (1 | ) | |||
Amortization of prior service cost | (41 | ) | — | |||
Settlements | (445 | ) | — | |||
Effect of foreign currency exchange rate movements | — | (6 | ) | |||
$ | (183 | ) | $ | 19 |
2016 | 2015 | |||||||||||
In millions | U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | ||||||||
Projected benefit obligation | $ | 13,683 | $ | 190 | $ | 14,438 | $ | 182 | ||||
Accumulated benefit obligation | 13,535 | 177 | 14,282 | 168 | ||||||||
Fair value of plan assets | 10,312 | 118 | 10,923 | 126 |
2016 | 2015 | 2014 | ||||||||||||||||
In millions | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | ||||||||||||
Service cost | $ | 158 | $ | 4 | $ | 161 | $ | 6 | $ | 145 | $ | 5 | ||||||
Interest cost | 580 | 9 | 597 | 10 | 600 | 13 | ||||||||||||
Expected return on plan assets | (815 | ) | (10 | ) | (783 | ) | (11 | ) | (762 | ) | (14 | ) | ||||||
Actuarial loss / (gain) | 400 | 1 | 428 | 1 | 374 | — | ||||||||||||
Amortization of prior service cost | 41 | — | 43 | — | 30 | — | ||||||||||||
Curtailment loss / (gain) | — | — | — | — | — | (4 | ) | |||||||||||
Settlement loss | 445 | — | 15 | — | — | — | ||||||||||||
Net periodic pension expense (a) | $ | 809 | $ | 4 | $ | 461 | $ | 6 | $ | 387 | $ | — |
2016 | 2015 | 2014 | ||||||||||
U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||||
Actuarial assumptions used to determine benefit obligations as of December 31: | ||||||||||||
Discount rate | 4.10 | % | 3.88 | % | 4.40 | % | 4.64 | % | 4.10 | % | 4.72 | % |
Rate of compensation increase | 3.75 | % | 4.20 | % | 3.75 | % | 4.12 | % | 3.75 | % | 4.03 | % |
Actuarial assumptions used to determine net periodic pension cost for years ended December 31: | ||||||||||||
Discount rate (a) | 4.05 | % | 4.72 | % | 4.10 | % | 4.72 | % | 4.65 | % | 5.07 | % |
Expected long-term rate of return on plan assets (b) | 7.75 | % | 6.55 | % | 7.75 | % | 6.64 | % | 7.75 | % | 7.53 | % |
Rate of compensation increase | 3.75 | % | 4.03 | % | 3.75 | % | 4.03 | % | 3.75 | % | 4.13 | % |
(b) | Represents the expected rate of return for International Paper's qualified pension plan for 2014. The weighted average rate for the Temple-Inland Retirement Plan was 7.00% for 2014. |
In millions | 2017 | ||
Expense/(Income): | |||
Discount rate | $ | 33 | |
Expected long-term rate of return on plan assets | 26 | ||
Rate of compensation increase | (1 | ) |
Asset Class | 2016 | 2015 | Target Allocations | ||
Equity accounts | 51 | % | 48 | % | 43% - 54% |
Fixed income accounts | 27 | % | 33 | % | 25% - 35% |
Real estate accounts | 10 | % | 10 | % | 7% - 13% |
Other | 12 | % | 9 | % | 8% - 17% |
Total | 100 | % | 100 | % |
Fair Value Measurement at December 31, 2016 | ||||||||||||
Asset Class | Total | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||
In millions | ||||||||||||
Equities – domestic | $ | 2,208 | $ | 1,380 | $ | 828 | $ | — | ||||
Equities – international | 2,575 | 1,806 | 769 | — | ||||||||
Corporate bonds | 1,018 | — | 1,018 | — | ||||||||
Government securities | 870 | — | 870 | — | ||||||||
Mortgage backed securities | 41 | — | 40 | 1 | ||||||||
Other fixed income | 245 | — | 234 | 11 | ||||||||
Commodities | 324 | — | 324 | — | ||||||||
Hedge funds | — | — | — | — | ||||||||
Private equity | — | — | — | — | ||||||||
Real estate | — | — | — | — | ||||||||
Derivatives | (71 | ) | — | — | (71 | ) | ||||||
Cash and cash equivalents | 322 | 322 | — | — | ||||||||
Other investments: (a) | ||||||||||||
Hedge funds | 891 | |||||||||||
Private equity | 472 | |||||||||||
Real estate | 1,015 | |||||||||||
Risk parity funds | 402 | |||||||||||
Total Investments | $ | 10,312 | $ | 3,508 | $ | 4,083 | $ | (59 | ) |
Fair Value Measurement at December 31, 2015 | ||||||||||||
Asset Class | Total | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||
In millions | ||||||||||||
Equities – domestic | $ | 2,150 | $ | 1,382 | $ | 768 | $ | — | ||||
Equities – international | 2,563 | 1,818 | 745 | — | ||||||||
Corporate bonds | 1,286 | — | 1,286 | — | ||||||||
Government securities | 518 | — | 518 | — | ||||||||
Mortgage backed securities | 217 | — | 217 | — | ||||||||
Other fixed income | 275 | — | 265 | 10 | ||||||||
Commodities | 118 | — | 118 | — | ||||||||
Hedge funds | — | — | — | — | ||||||||
Private equity | — | — | — | — | ||||||||
Real estate | — | — | — | — | ||||||||
Derivatives | (19 | ) | — | 1 | (20 | ) | ||||||
Cash and cash equivalents | 975 | 975 | — | — | ||||||||
Other investments: (a) | ||||||||||||
Hedge funds | 894 | |||||||||||
Private equity | 492 | |||||||||||
Real estate | 1,094 | |||||||||||
Risk parity funds | 360 | |||||||||||
Total Investments | $ | 10,923 | $ | 4,175 | $ | 3,918 | $ | (10 | ) |
Other Investments at December 31, 2016 | ||||||||
Investment | Fair Value | Unfunded Commitments | Redemption Frequency | Remediation Notice Period | ||||
Hedge funds | $ | 891 | $ | — | Daily to annually | 1 - 100 days | ||
Private equity | 472 | 226 | None | None | ||||
Real estate | 1,015 | 224 | Quarterly | 45 - 60 days | ||||
Risk parity funds | 402 | — | Monthly | 5 - 15 days | ||||
Total | $ | 2,780 | $ | 450 |
Other Investments at December 31, 2015 | ||||||||
Investment | Fair Value | Unfunded Commitments | Redemption Frequency | Remediation Notice Period | ||||
Hedge funds | $ | 894 | $ | — | Daily to annually | 1 - 100 days | ||
Private equity | 492 | 102 | None | None | ||||
Real estate | 1,094 | 59 | Quarterly | 45 - 60 days | ||||
Risk parity funds | 360 | — | Monthly | 5 - 15 days | ||||
Total | $ | 2,840 | $ | 161 |
In millions | Mortgage backed securities | Other fixed income | Derivatives | Total | ||||||||
Beginning balance at December 31, 2015 | $ | — | $ | 10 | $ | (20 | ) | $ | (10 | ) | ||
Actual return on plan assets: | ||||||||||||
Relating to assets still held at the reporting date | — | 1 | (66 | ) | (65 | ) | ||||||
Relating to assets sold during the period | — | — | (24 | ) | (24 | ) | ||||||
Purchases, sales and settlements | 1 | — | 39 | 40 | ||||||||
Transfers in and/or out of Level 3 | — | — | — | — | ||||||||
Ending balance at December 31, 2016 | $ | 1 | $ | 11 | $ | (71 | ) | $ | (59 | ) |
In millions | |||
2017 | $ | 800 | |
2018 | 788 | ||
2019 | 796 | ||
2020 | 804 | ||
2021 | 812 | ||
2022 – 2026 | 4,137 |
In millions | 2016 | 2015 | 2014 | |||||||||||||||
U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||||||||||
Service cost | $ | 1 | $ | — | $ | 1 | $ | 1 | $ | 1 | $ | 1 | ||||||
Interest cost | 11 | 3 | 11 | 5 | 14 | 6 | ||||||||||||
Actuarial loss | 5 | 2 | 6 | 1 | 5 | 1 | ||||||||||||
Amortization of prior service credits | (4 | ) | (4 | ) | (10 | ) | (2 | ) | (13 | ) | (1 | ) | ||||||
Net postretirement (benefit) expense | $ | 13 | $ | 1 | $ | 8 | $ | 5 | $ | 7 | $ | 7 |
2016 | 2015 | 2014 | ||||||||||
U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||||
Discount rate | 4.20 | % | 12.23 | % | 3.90 | % | 11.52 | % | 4.50 | % | 11.94 | % |
2016 | 2015 | |||||||
U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||
Discount rate | 4.00 | % | 10.53 | % | 4.20 | % | 12.23 | % |
Health care cost trend rate assumed for next year | 6.50 | % | 10.90 | % | 7.00 | % | 11.41 | % |
Rate that the cost trend rate gradually declines to | 5.00 | % | 5.81 | % | 5.00 | % | 5.94 | % |
Year that the rate reaches the rate it is assumed to remain | 2022 | 2027 | 2022 | 2026 |
In millions | 2016 | 2015 | ||||||||||
U.S. Plans | Non- U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||||||
Change in projected benefit obligation: | ||||||||||||
Benefit obligation, January 1 | $ | 275 | $ | 45 | $ | 306 | $ | 59 | ||||
Service cost | 1 | — | 1 | 1 | ||||||||
Interest cost | 11 | 3 | 11 | 5 | ||||||||
Participants’ contributions | 5 | — | 12 | — | ||||||||
Actuarial (gain) loss | 31 | 5 | — | (1 | ) | |||||||
Plan amendments | — | (35 | ) | — | 1 | |||||||
Benefits paid | (44 | ) | (1 | ) | (57 | ) | (1 | ) | ||||
Less: Federal subsidy | 1 | — | 2 | — | ||||||||
Currency Impact | — | 6 | — | (19 | ) | |||||||
Benefit obligation, December 31 | $ | 280 | $ | 23 | $ | 275 | $ | 45 | ||||
Change in plan assets: | ||||||||||||
Fair value of plan assets, January 1 | $ | — | $ | — | $ | — | $ | — | ||||
Company contributions | 39 | 1 | 45 | 1 | ||||||||
Participants’ contributions | 5 | — | 12 | — | ||||||||
Benefits paid | (44 | ) | (1 | ) | (57 | ) | (1 | ) | ||||
Fair value of plan assets, December 31 | $ | — | $ | — | $ | — | $ | — | ||||
Funded status, December 31 | $ | (280 | ) | $ | (23 | ) | $ | (275 | ) | $ | (45 | ) |
Amounts recognized in the consolidated balance sheet under ASC 715: | ||||||||||||
Current liability | $ | (29 | ) | $ | (2 | ) | $ | (29 | ) | $ | (2 | ) |
Non-current liability | (251 | ) | (21 | ) | (246 | ) | (43 | ) | ||||
$ | (280 | ) | $ | (23 | ) | $ | (275 | ) | $ | (45 | ) | |
Amounts recognized in accumulated other comprehensive income under ASC 715 (pre-tax): | ||||||||||||
Net actuarial loss (gain) | $ | 68 | $ | 21 | $ | 42 | $ | 15 | ||||
Prior service credit | (8 | ) | (34 | ) | (12 | ) | (2 | ) | ||||
$ | 60 | $ | (13 | ) | $ | 30 | $ | 13 |
In millions | U.S. Plans | Non- U.S. Plans | ||||
Current year actuarial loss | $ | 31 | $ | 5 | ||
Amortization of actuarial (loss) gain | (5 | ) | (2 | ) | ||
Current year prior service cost | — | (34 | ) | |||
Amortization of prior service credit | 4 | 4 | ||||
Currency impact | — | 1 | ||||
$ | 30 | $ | (26 | ) |
In millions | Benefit Payments | Subsidy Receipts | Benefit Payments | ||||||
U.S. Plans | U.S. Plans | Non- U.S. Plans | |||||||
2017 | $ | 31 | $ | 2 | $ | 2 | |||
2018 | 29 | 1 | 2 | ||||||
2019 | 27 | 1 | 1 | ||||||
2020 | 26 | 1 | 1 | ||||||
2021 | 24 | 1 | — | ||||||
2022 – 2026 | 99 | 6 | 3 |
Options (a) | Weighted Average Exercise Price | Weighted Average Remaining Life (years) | Aggregate Intrinsic Value (thousands) | ||||||
Outstanding at December 31, 2013 | 1,752,789 | $39.80 | 0.67 | $16,175 | |||||
Granted | 3,247 | 49.13 | |||||||
Exercised | (1,634,858 | ) | 39.80 | ||||||
Expired | (49,286 | ) | 41.50 | ||||||
Outstanding at December 31, 2014 | 71,892 | 39.03 | 0.18 | 1,046 | |||||
Granted | — | — | |||||||
Exercised | (62,477 | ) | 39.05 | ||||||
Expired | (9,415 | ) | 38.92 | ||||||
Outstanding at December 31, 2015 | — | — | 0.00 | — | |||||
Granted | — | — | |||||||
Exercised | — | — | |||||||
Expired | — | — | |||||||
Outstanding at December 31, 2016 | — | $— | 0.00 | $— |
(a) | The table includes options outstanding under an acquired company plan under which options may no longer be granted. |
Twelve Months Ended December 31, 2016 | |
Expected volatility | 22.36%-30.84% |
Risk-free interest rate | 0.67%-1.31% |
Share/Units | Weighted Average Grant Date Fair Value | ||||
Outstanding at December 31, 2013 | 8,117,489 | $31.20 | |||
Granted | 3,682,663 | 46.82 | |||
Shares issued | (4,025,111 | ) | 37.18 | ||
Forfeited | (499,107 | ) | 43.10 | ||
Outstanding at December 31, 2014 | 7,275,934 | 34.98 | |||
Granted | 1,863,623 | 53.25 | |||
Shares issued | (2,959,160 | ) | 37.09 | ||
Forfeited | (322,664 | ) | 53.97 | ||
Outstanding at December 31, 2015 | 5,857,733 | 38.69 | |||
Granted | 2,617,982 | 37.26 | |||
Shares issued | (2,316,085 | ) | 43.82 | ||
Forfeited | (209,500 | ) | 43.61 | ||
Outstanding at December 31, 2016 | 5,950,130 | $35.89 |
Shares | Weighted Average Grant Date Fair Value | ||||
Outstanding at December 31, 2013 | 112,374 | $36.24 | |||
Granted | 89,500 | 48.19 | |||
Shares issued | (83,275 | ) | 33.78 | ||
Forfeited | (4,000 | ) | 45.88 | ||
Outstanding at December 31, 2014 | 114,599 | 47.03 | |||
Granted | 36,300 | 50.06 | |||
Shares issued | (27,365 | ) | 45.35 | ||
Forfeited | (3,166 | ) | 50.04 | ||
Outstanding at December 31, 2015 | 120,368 | 48.24 | |||
Granted | 117,881 | 42.81 | |||
Shares issued | (59,418 | ) | 47.14 | ||
Forfeited | (9,500 | ) | 39.36 | ||
Outstanding at December 31, 2016 | 169,331 | $45.34 |
In millions | 2016 | 2015 | 2014 | ||||||
Total stock-based compensation expense (included in selling and administrative expense) | $ | 129 | $ | 114 | $ | 118 | |||
Income tax benefits related to stock-based compensation | 34 | 88 | 92 |
In millions | 2016 | 2015 | |||||
Current assets | $ | 774 | $ | 455 | |||
Noncurrent assets | 1,351 | 968 | |||||
Current liabilities | 406 | 665 | |||||
Noncurrent liabilities | 1,422 | 715 | |||||
Noncontrolling interests | 22 | 21 |
In millions | 2016 | 2015 | 2014 | ||||||||
Net sales | $ | 1,927 | $ | 1,931 | $ | 2,138 | |||||
Gross profit | 957 | 971 | 772 | ||||||||
Income from continuing operations | 419 | 254 | (387 | ) | |||||||
Net income attributable to Ilim | 391 | 237 | (360 | ) |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 13,899 | $ | 14,240 | $ | 14,749 | |||||
Global Cellulose Fibers | 1,092 | 975 | 1,046 | ||||||||
Printing Papers | 4,058 | 4,056 | 4,615 | ||||||||
Consumer Packaging | 1,954 | 2,940 | 3,403 | ||||||||
Corporate and Intersegment Sales | 76 | 154 | (196 | ) | |||||||
Net Sales | $ | 21,079 | $ | 22,365 | $ | 23,617 |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 1,648 | $ | 1,851 | $ | 1,893 | |||||
Global Cellulose Fibers | (179 | ) | 68 | 62 | |||||||
Printing Papers | 540 | 465 | (77 | ) | |||||||
Consumer Packaging | 191 | (25 | ) | 178 | |||||||
Operating Profit | 2,200 | 2,359 | 2,056 | ||||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | 956 | 1,266 | 872 | ||||||||
Interest expense, net | 520 | 555 | 601 | ||||||||
Noncontrolling interests / equity earnings adjustment (a) | 1 | 8 | 2 | ||||||||
Corporate items, net | 67 | 34 | 49 | ||||||||
Corporate special items, net | 46 | 238 | 320 | ||||||||
Non-operating pension expense | 610 | 258 | 212 | ||||||||
Adjusted Operating Profit | $ | 2,200 | $ | 2,359 | $ | 2,056 |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 7 | $ | — | $ | 7 | |||||
Global Cellulose Fibers | — | — | — | ||||||||
Printing Papers | — | — | 554 | ||||||||
Consumer Packaging | 9 | 10 | 8 | ||||||||
Corporate | 38 | 242 | 277 | ||||||||
Restructuring and Other Charges | $ | 54 | $ | 252 | $ | 846 |
In millions | 2016 | 2015 | |||||
Industrial Packaging | $ | 14,485 | $ | 14,415 | |||
Global Cellulose Fibers | 3,845 | 1,021 | |||||
Printing Papers | 3,965 | 3,724 | |||||
Consumer Packaging | 1,739 | 2,120 | |||||
Corporate and other (b) | 9,059 | 8,991 | |||||
Assets | $ | 33,093 | $ | 30,271 |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 816 | $ | 858 | $ | 754 | |||||
Global Cellulose Fibers | 174 | 129 | 75 | ||||||||
Printing Papers | 215 | 232 | 243 | ||||||||
Consumer Packaging | 124 | 216 | 233 | ||||||||
Subtotal | 1,329 | 1,435 | 1,305 | ||||||||
Corporate and other (b) | 19 | 52 | 61 | ||||||||
Capital Spending | $ | 1,348 | $ | 1,487 | $ | 1,366 |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 715 | $ | 725 | $ | 775 | |||||
Global Cellulose Fibers | 108 | 73 | 76 | ||||||||
Printing Papers | 232 | 234 | 291 | ||||||||
Consumer Packaging | 121 | 215 | 223 | ||||||||
Corporate | 51 | 47 | 41 | ||||||||
Depreciation and Amortization | $ | 1,227 | $ | 1,294 | $ | 1,406 |
In millions | 2016 | 2015 | 2014 | ||||||||
Industrial Packaging | $ | 13,815 | $ | 14,177 | $ | 14,642 | |||||
Global Cellulose Fibers | 1,090 | 986 | 1,057 | ||||||||
Printing Papers | 4,062 | 4,082 | 4,413 | ||||||||
Consumer Packaging | 1,953 | 2,931 | 3,327 | ||||||||
Other | 159 | 189 | 178 | ||||||||
Net Sales | $ | 21,079 | $ | 22,365 | $ | 23,617 |
In millions | 2016 | 2015 | 2014 | ||||||||
United States (e) | $ | 15,918 | $ | 16,554 | $ | 16,645 | |||||
EMEA | 2,862 | 2,770 | 3,273 | ||||||||
Pacific Rim and Asia | 718 | 1,501 | 1,951 | ||||||||
Americas, other than U.S. | 1,581 | 1,540 | 1,748 | ||||||||
Net Sales | $ | 21,079 | $ | 22,365 | $ | 23,617 |
In millions | 2016 | 2015 | |||||
United States | $ | 11,158 | $ | 9,683 | |||
EMEA | 1,004 | 827 | |||||
Pacific Rim and Asia | 246 | 353 | |||||
Americas, other than U.S. | 1,663 | 1,085 | |||||
Corporate | 375 | 398 | |||||
Long-Lived Assets | $ | 14,446 | $ | 12,346 |
(a) | Operating profits for industry 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 interests and equity earnings for these subsidiaries is added here to present consolidated earnings from continuing operations before income taxes and equity earnings. |
(b) | Includes corporate assets and assets of businesses held for sale. |
(c) | Excludes accelerated depreciation related to the closure and/or repurposing of mills. |
(d) | Net sales are attributed to countries based on the location of the seller. |
(e) | Export sales to unaffiliated customers were $2.0 billion in 2016, $2.0 billion in 2015 and $2.3 billion in 2014. |
(f) | Long-Lived Assets includes Forestlands and Plants, Properties and Equipment, net. |
In millions, except per share amounts and stock prices | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | Year | |||||||||||||||
2016 | ||||||||||||||||||||
Net sales | $ | 5,110 | $ | 5,322 | $ | 5,266 | $ | 5,381 | $ | 21,079 | ||||||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | 317 | (a) | (14 | ) | (a) | 373 | (a) | 280 | (a) | 956 | (a) | |||||||||
Gain (loss) from discontinued operations | (5 | ) | (b) | — | — | — | (5 | ) | (b) | |||||||||||
Net earnings (loss) attributable to International Paper Company | 334 | (a-c) | 40 | (a,c) | 312 | (a,c) | 218 | (a,c) | 904 | (a-c) | ||||||||||
Basic earnings (loss) per share attributable to International Paper Company common shareholders: | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 0.82 | (a) | $ | 0.10 | (a) | $ | 0.76 | (a) | $ | 0.53 | (a) | $ | 2.21 | (a) | |||||
Gain (loss) from discontinued operations | (0.01 | ) | (b) | — | — | — | (0.01 | ) | (b) | |||||||||||
Net earnings (loss) | 0.81 | (a-c) | 0.10 | (a,c) | 0.76 | (a,c) | 0.53 | (a,c) | 2.20 | (a-c) | ||||||||||
Diluted earnings (loss) per share attributable to International Paper Company common shareholders: | ||||||||||||||||||||
Earnings (loss) from continuing operations | 0.82 | (a) | 0.10 | (a) | 0.75 | (a) | 0.53 | (a) | 2.19 | (a) | ||||||||||
Gain (loss) from discontinued operations | (0.01 | ) | (b) | — | — | — | (0.01 | ) | (b) | |||||||||||
Net earnings (loss) | 0.81 | (a-c) | 0.10 | (a,c) | 0.75 | (a,c) | 0.53 | (a,c) | 2.18 | (a-c) | ||||||||||
Dividends per share of common stock | 0.4400 | 0.4400 | 0.4400 | 0.4625 | 1.7825 | |||||||||||||||
Common stock prices | ||||||||||||||||||||
High | $ | 42.09 | $ | 44.60 | $ | 49.90 | $ | 54.68 | $ | 54.68 | ||||||||||
Low | 32.50 | 39.24 | 41.08 | 43.55 | 32.50 | |||||||||||||||
2015 | ||||||||||||||||||||
Net sales | $ | 5,517 | $ | 5,714 | $ | 5,691 | $ | 5,443 | $ | 22,365 | ||||||||||
Earnings (loss) from continuing operations before income taxes and equity earnings | 406 | 266 | (d) | 329 | (d) | 265 | (d) | 1,266 | (d) | |||||||||||
Gain (loss) from discontinued operations | — | — | — | — | — | |||||||||||||||
Net earnings (loss) attributable to International Paper Company | 313 | 227 | (d,e) | 220 | (d,e) | 178 | (d,e) | 938 | (d,e) | |||||||||||
Basic earnings (loss) per share attributable to International Paper Company common shareholders: | ||||||||||||||||||||
Earnings (loss) from continuing operations | $ | 0.74 | $ | 0.54 | (d) | $ | 0.53 | (d) | $ | 0.43 | (d) | $ | 2.25 | (d) | ||||||
Gain (loss) from discontinued operations | — | — | — | — | — | |||||||||||||||
Net earnings (loss) | 0.74 | 0.54 | (d,e) | 0.53 | (d,e) | 0.43 | (d,e) | 2.25 | (d,e) | |||||||||||
Diluted earnings (loss) per share attributable to International Paper Company common shareholders: | ||||||||||||||||||||
Earnings (loss) from continuing operations | 0.74 | 0.54 | (d) | 0.53 | (d) | 0.43 | (d) | 2.23 | (d) | |||||||||||
Gain (loss) from discontinued operations | — | — | — | — | — | |||||||||||||||
Net earnings (loss) | 0.74 | 0.54 | (d,e) | 0.53 | (d,e) | 0.43 | (d,e) | 2.23 | (d,e) | |||||||||||
Dividends per share of common stock | 0.4000 | 0.4000 | 0.4000 | 0.4400 | 1.6400 | |||||||||||||||
Common stock prices | ||||||||||||||||||||
High | $ | 57.90 | $ | 56.49 | $ | 49.49 | $ | 44.83 | $ | 57.90 | ||||||||||
Low | 51.35 | 47.39 | 37.11 | 36.76 | 36.76 |
(a) | Includes the following pre-tax charges (gains): |
2016 | ||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | ||||||||||||
Riegelwood mill conversion costs | $ | 9 | $ | — | $ | — | $ | — | ||||||||
India Packaging evaluation write-off | — | — | 17 | — | ||||||||||||
Early debt extinguishment costs | — | — | 29 | — | ||||||||||||
Write-off of certain regulatory pre-engineering costs | — | — | 8 | — | ||||||||||||
Costs associated with the newly acquired pulp business | — | 5 | 7 | 19 | ||||||||||||
Asia Box impairment / restructuring | 37 | 28 | 5 | — | ||||||||||||
Gain on sale of investment in Arizona Chemical | (8 | ) | — | — | — | |||||||||||
Turkey mill closure | — | — | — | 7 | ||||||||||||
Amortization of Weyerhaeuser inventory fair value step-up | — | — | — | 19 | ||||||||||||
Total | $ | 38 | $ | 33 | $ | 66 | $ | 45 |
2016 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | |||||||||||||
Cash pension contribution | $ | — | $ | 23 | $ | — | $ | — | ||||||||
U.S. Federal audit | (14 | ) | — | — | — | |||||||||||
Brazil goodwill | (57 | ) | — | — | — | |||||||||||
International legal entity restructuring | — | (6 | ) | — | — | |||||||||||
Luxembourg tax rate change | — | — | — | 31 | ||||||||||||
Tax impact of other special items | (3 | ) | (10 | ) | (24 | ) | (14 | ) | ||||||||
Total | $ | (74 | ) | $ | 7 | $ | (24 | ) | $ | 17 |
2015 | ||||||||||||||||
In millions | Q1 | Q2 | Q3 | Q4 | ||||||||||||
Riegelwood mill conversion costs, net of proceeds from sale of the Carolina Coated Bristols brand | $ | — | $ | (14 | ) | $ | 7 | $ | 15 | |||||||
Timber monetization restructuring | — | — | 17 | (1 | ) | |||||||||||
Early debt extinguishment costs | — | 207 | — | — | ||||||||||||
Refund and state tax credits | — | (4 | ) | — | — | |||||||||||
IP-Sun JV impairment | — | — | 186 | (12 | ) | |||||||||||
Legal reserve adjustment | — | — | — | 15 | ||||||||||||
Impairment of Orsa goodwill and trade name intangible | — | — | — | 137 | ||||||||||||
Other items | — | 1 | 1 | 4 | ||||||||||||
Total | $ | — | $ | 190 | $ | 211 | $ | 158 |
2015 | ||||||||||||||||
Q1 | Q2 | Q3 | Q4 | |||||||||||||
Tax expense for cash pension | $ | — | $ | 23 | $ | — | $ | — | ||||||||
Tax benefit related to IP-Sun JV | — | — | (67 | ) | — | |||||||||||
Other items | — | 5 | — | 2 | ||||||||||||
Tax impact of other special items | — | (67 | ) | (3 | ) | (13 | ) | |||||||||
Total | $ | — | $ | (39 | ) | $ | (70 | ) | $ | (11 | ) |
For the Year Ended December 31, 2016 | |||||||||||||||||
Balance at Beginning of Period | Additions Charged to Earnings | Additions Charged to Other Accounts | Deductions from Reserves | Balance at End of Period | |||||||||||||
Description | |||||||||||||||||
Reserves Applied Against Specific Assets Shown on Balance Sheet: | |||||||||||||||||
Doubtful accounts – current | $ | 70 | $ | 9 | $ | — | (9)(a) | $ | 70 | ||||||||
Restructuring reserves | 10 | 3 | — | (7)(b) | 6 |
For the Year Ended December 31, 2015 | |||||||||||||||||
Balance at Beginning of Period | Additions Charged to Earnings | Additions Charged to Other Accounts | Deductions from Reserves | Balance at End of Period | |||||||||||||
Description | |||||||||||||||||
Reserves Applied Against Specific Assets Shown on Balance Sheet: | |||||||||||||||||
Doubtful accounts – current | $ | 82 | $ | 11 | $ | — | (23)(a) | $ | 70 | ||||||||
Restructuring reserves | 16 | 5 | — | (11)(b) | 10 |
For the Year Ended December 31, 2014 | |||||||||||||||||
Balance at Beginning of Period | Additions Charged to Earnings | Additions Charged to Other Accounts | Deductions from Reserves | Balance at End of Period | |||||||||||||
Description | |||||||||||||||||
Reserves Applied Against Specific Assets Shown on Balance Sheet: | |||||||||||||||||
Doubtful accounts – current | $ | 109 | $ | 11 | $ | — | (38)(a) | $ | 82 | ||||||||
Restructuring reserves | 51 | 41 | — | (76)(b) | 16 |
(a) | Includes write-offs, less recoveries, of accounts determined to be uncollectible and other adjustments. |
(b) | Includes payments and deductions for reversals of previously established reserves that were no longer required. |
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