-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HDPxjs1BJpSRRXneIGiMRkPRqCFduG3iCTqnwoLzvfRTHb+VQxu/j4RHU82OtM5t I6ytzvqdTYlVeWKL2gnL8g== 0001047469-98-026045.txt : 19980701 0001047469-98-026045.hdr.sgml : 19980701 ACCESSION NUMBER: 0001047469-98-026045 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980630 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL PAPER CO /NEW/ CENTRAL INDEX KEY: 0000051434 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 130872805 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-03157 FILM NUMBER: 98658574 BUSINESS ADDRESS: STREET 1: TWO MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9143971500 MAIL ADDRESS: STREET 1: TWO MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL PAPER & POWER CORP DATE OF NAME CHANGE: 19710527 11-K 1 FORM 11-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1997 COMMISSION FILE NUMBER 1-3157 INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN (FULL TITLE OF THE PLAN) INTERNATIONAL PAPER COMPANY TWO MANHATTANVILLE ROAD PURCHASE, NY 10577 TELEPHONE: (914) 397-1500 (NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE) 13-0872805 (I.R.S. EMPLOYER IDENTIFICATION NO.) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- FINANCIAL STATEMENTS. Financial statements for the International Paper Company Retirement Savings Plan and the report of Arthur Andersen LLP with respect thereto are as follows: PAGE(S) ------- Report of Independent Public Accountants 2 Statements of Net Assets Available for Benefits, with Fund Information -December 31, 1997 and 1996 3-4 Statements of Changes in Net Assets Available for Benefits, with Fund Information -Years Ended December 31, 1997 and 1996 5-6 Notes to Financial Statements 7-19
-1- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To the Plan Administrator of the International Paper Company Retirement Savings Plan: We have audited the accompanying statements of net assets available for benefits, with fund information, of the International Paper Company Retirement Savings Plan (the "Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits, with fund information, for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statements of net assets available for benefits and in the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Memphis, Tennessee, June 26, 1998. -2-
INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION --------------------------------------------------------------------- DECEMBER 31, 1997 ----------------- (in thousands) Fund Information ----------------------------------------------------------------------- Stable Company S&P 500 Value Stock Index Balanced International Growth Fund Fund Fund Fund Stock Fund Fund Total -------- -------- -------- -------- ------------- -------- --------- Equity in net assets of International Paper Company Defined Contribution Plans Master Trust (Note 1) $ 32,606 $ 36,359 $ 11,497 $ 3,225 $ 760 $ 1,659 $ 86,106 -------- -------- -------- -------- ----- -------- --------- Receivables: Interest receivable - 25 11 1 - 1 38 Employee contributions 192 67 28 - - 25 312 Loan repayments - 169 87 9 3 11 279 Loans 3,362 2,083 1,214 290 24 12 6,985 Interfund transfers - 253 52 29 3 152 489 Transfers from other plans 19 - 2 - - - 21 -------- -------- -------- -------- ----- -------- --------- Total receivables 3,573 2,597 1,394 329 30 201 8,124 -------- -------- -------- -------- ----- -------- --------- Total assets 36,179 38,956 12,891 3,554 790 1,860 94,230 Liabilities: Loans payable (195) (165) (62) (12) (5) (13) (452) Interfund transfers (489) - - - - - (489) Administrative expenses (4) (9) (1) - - - (14) Contributions refundable and other (86) (54) - (17) (35) - (192) -------- -------- -------- -------- ----- -------- --------- Total liabilities (774) (228) (63) (29) (40) (13) (1,147) -------- -------- -------- -------- ----- -------- --------- NET ASSETS AVAILABLE FOR BENEFITS $ 35,405 $ 38,728 $ 12,828 $ 3,525 $ 750 $ 1,847 $ 93,083 -------- -------- -------- -------- ----- -------- --------- -------- -------- -------- -------- ----- -------- --------- The accompanying notes are an integral part of this financial statement.
-3-
INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION --------------------------------------------------------------------- DECEMBER 31, 1996 ----------------- (in thousands) Fund Information ----------------------------------------------------------- Fixed Company Diversified Income Stock Equity Balanced Other Fund Fund Fund Fund Funds Total ------ ------- ----------- -------- ----- ----- Equity in net assets of International Paper Company Defined Contribution Plans Master Trust (Note 1) $20,128 $31,768 $5,417 $1,754 $ - $59,067 ------- ------- ------ ------ ------- ------- Investments at fair value: Federal Paper Board Retirement Savings Plan for Non-Union Hourly Employees (Note 7) - - - - 18,813 18,813 ------- ------- ------ ------ ------- ------- Receivables: Employee contributions - - - 3 - 3 Loan repayments - 11 - - - 11 Loans 1,921 1,525 835 193 - 4,474 Interfund transfers - - 90 15 - 105 Transfers from other plans 453 - - - - 453 ------- ------- ------ ------ ------- ------- Total receivables 2,374 1,536 925 211 - 5,046 ------- ------- ------ ------ ------- ------- Total assets 22,502 33,304 6,342 1,965 18,813 82,926 ------- ------- ------ ------ ------- ------- Liabilities: Contributions refundable and other (96) (94) (9) - - (199) Interfund transfers - (105) - - - (105) Transfers to other plans (102) (15) - - - (117) ------- ------- ------ ------ ------- ------- Total liabilities (198) (214) (9) - - (421) ------- ------- ------ ------ ------- ------- NET ASSETS AVAILABLE FOR BENEFITS $22,304 $33,090 $6,333 $1,965 $18,813 $82,505 ------- ------- ------ ------ ------- ------- ------- ------- ------ ------ ------- ------- The accompanying notes are an integral part of this financial statement.
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INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1997 ---------------------------- (in thousands) Fund Information --------------------------------------------------------------------------- Stable Company S&P 500 Value Stock Index Balanced International Growth Other Fund Fund Fund Fund Stock Fund Fund Funds Total ------ ------- ------- -------- ------------- ------ ----- ----- Increase (decrease) attributable to: Equity in investment activities of International Paper Company Defined Contribution Plans Master Trust (Note 1) $ 2,319 $ 2,517 $ 2,735 $ 565 $ 53 $ 205 $ - $ 8,394 Participant contributions 1,801 2,837 1,949 764 273 917 - 8,541 Company contributions (net of forfeitures of $44) 480 3,354 - - - - - 3,834 Distributions and withdrawals (2,721) (3,566) (514) (197) (20) (30) - (7,048) Administrative fees (157) (160) (29) (1) (1) (3) - (351) Transfers from (to) other funds 11,548 3,252 2,375 435 445 758 (18,813) - Transfers to other plans (169) (2,596) (21) (6) - - - (2,792) ------- ------- ------ ------ ---- ------ ------- -------- Increase (decrease) in net assets 13,101 5,638 6,495 1,560 750 1,847 (18,813) 10,578 NET ASSETS AVAILABLE FOR BENEFITS: December 31, 1996 22,304 33,090 6,333 1,965 - - 18,813 82,505 ------- ------- ------ ------ ---- ------ ------- -------- December 31, 1997 $35,405 $38,728 $12,828 $3,525 $750 $1,847 $ - $ 93,083 ======= ======= ======= ====== ==== ====== ======= ======== The accompanying notes are an integral part of this financial statement.
-5-
INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- (in thousands) Fund Information --------------------------------------------------- Fixed Company Diversified Income Stock Equity Balanced Other Fund Fund Fund Fund Funds Total ---- ---- ---- ---- ----- ----- Increase (decrease) attributable to: Equity in investment activities of International Paper Company Defined Contribution Plans Master Trust (Note 1) $ 1,643 $ 3,156 $ 811 $ 185 $ - $ 5,795 Participant contributions 407 4,281 551 224 - 5,463 Company contributions (net of forfeitures of $40) 460 2,165 - - - 2,625 Distributions and withdrawals (2,597) (2,390) (97) 24 - (5,060) Administrative fees (78) (111) (14) (5) - (208) Transfers (to) from other funds (309) (270) 548 31 - - Transfers (to) from other plans (Note 7): Federal Paper Board Retirement Savings Plan for Non-Union Hourly Employees: Fixed Income Fund - - - - 11,967 11,967 Index 500 Portfolio - - - - 1,144 1,144 Life Strategy Growth Portfolio - - - - 199 199 Life Strategy Conservative Growth Portfolio - - - - 20 20 Life Strategy Moderate Groh Portfolio - - - - 202 202 Life Strategy Income Portfolio - - - - 5 5 Vanguard Windsor II - - - - 485 485 Total Bond Market - - - - 32 32 Company Stock Fund - - - - 3,197 3,197 International Growth Portfolio - - - - 147 147 Loans to participants - - - - 1,415 1,415 Other plans (1,899) (2,424) (539) (62) - (4,924) ------- ------- ------ ----- ------- ------- Increase (decrease) in net assets (2,373) 4,407 1,260 397 18,813 22,504 Net assets available for benefits: December 31, 1995 24,677 28,683 5,073 1,568 - 60,001 ------ ------ ----- ----- ------- ------- December 31, 1996 $22,304 $33,090 $6,333 $1,965 $18,813 $82,505 ======= ======= ====== ====== ======= ======= The accompanying notes are an integral part of this financial statement. -6-
INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY RETIREMENT --------------------------------------------------------- SAVINGS PLAN ------------ The following description of the International Paper Company Retirement Savings Plan (the "Plan") provides general information about the provisions of the Plan. Participants should refer to the Plan's Summary Plan Description for detailed Plan provisions. General - ------- The Plan is a defined contribution plan providing retirement benefits to certain designated groups of non-bargaining employees of International Paper Company and its subsidiaries (the "Company"). The Plan was established January 1, 1991, and was amended and restated effective January 1, 1994, for certain designated employees not eligible to contribute to any other tax-qualified defined contribution plan of the Company, to provide an incentive for them to accumulate funds for their future needs and to assist them in developing a proprietary interest in the success of the Company. The assets of the Plan are held by State Street Bank and Trust Company (the "Trustee") and administered under a master trust agreement (referred to herein as the "Defined Contribution Plans Master Trust"). All administrative costs are charged to the Plan. At December 31, 1996, the assets of the Plan related to the merger of the Federal Paper Board Retirement Savings Plan for Non-Union Hourly Employees ("FPB Plan") were held by Vanguard Fiduciary Trust Company ("Vanguard"). In connection with this merger, the Company terminated the trust agreement with Vanguard and the assets previously held under the FPB Plan were transferred to the Trustee subsequent to December 31, 1996. Selected financial data of the Defined Contribution Plans Master Trust are included in Note 9. The Plan's percent of equity in each fund of the Defined Contribution Plans Master Trust as of December 31, 1997 and 1996, are as follows: Percent of Equity ----------------------- Investment Fund 1997 1996 --------------- ---- ---- Stable Value Fund 6% 5% Company Stock Fund 4% 4% S & P 500 Index Fund 4% 3% Balanced Fund 3% 2% International Stock Fund 3% - Growth Fund 4% - -7- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY RETIREMENT --------------------------------------------------------- SAVINGS PLAN (Continued) ------------------------ It is the Company's intention to continue the Plan. However, it reserves the right to amend, suspend or terminate the Plan at any time. In the event of termination, assets of the Plan will be used solely for the benefit of the participants and their beneficiaries. Contributions - ------------- Participants in the Plan can make basic contributions on either a before-tax or after-tax basis (but not both). The Company will make a matching contribution as a percentage of the participants' basic contributions. In addition, participants can make supplemental contributions on a before-tax or after-tax basis (but not both), provided the participant has made the maximum basic contributions. The Company does not make any contributions matching the supplemental contributions. Employee contributions are subject to statutory limitations on annual contributions. Participants from the Company's Androscoggin, Lock Haven and Nicolet locations can make basic contributions from 1% to 4% of prior year's total pay and supplemental contributions from 1% to 8% of their prior year's total pay. The Company makes matching contributions equal to 50% of the participants' basic contributions. For all other participants, basic and supplemental contributions may be made on a set weekly dollar amount (usually $3, $6, $9, $12 and $15). Company matching contributions are made according to the following schedule: Years of Service Company Matching Contributions ---------------- ------------------------------ Less than 10 50% of basic contributions 10 but less than 15 75% of basic contributions 15 or more 100% of basic contributions Prior to 1997, all employee basic contributions were invested in the Company Stock Fund. Effective January 1,1997, participants may direct their employee basic contributions among the following six investment options: Stable Value Fund (formerly the Fixed Income Fund), Balanced Fund, S & P 500 Index Fund (formerly the Diversified Equity Fund), International Stock Fund, Growth Fund and Company Stock Fund. Company matching contributions are invested in the Company Stock Fund. Supplemental contributions may be invested in any of the six investment options, as directed by the participant. -8- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY RETIREMENT --------------------------------------------------------- SAVINGS PLAN (Continued) ------------------------ For those participants covered by a pension formula based on the former Retirement Thrift Plan - Defined Benefit Portion, a Company fixed contribution is made for each week worked, based on a set dollar amount which varies by location, and is invested in the Stable Value Fund. The Plan is authorized to accept rollover contributions and direct trust-to-trust transfers of amounts which participants are entitled to receive from other qualified profit-sharing, stock bonus or savings plans. Vesting - ------- Participants are immediately 100% vested in their basic contributions, supplemental contributions and rollover contributions. A participant becomes vested in the shares of Company stock purchased with Company matching contributions, including shares purchased with reinvested dividends, and, if applicable, in Company fixed contributions made on his or her bahalf, according to the following schedule: Vesting Years of Service Percent Vested ------------------------ -------------- Less than 3 0% 3 but less than 4 35% 4 but less than 5 70% 5 or more 100% A participant also becomes fully vested if one of the following occurs: (1) attainment of age 65 while employed by the Company; (2) termination of employment due to permanent closing of the participant's work facility or department; or (3) the participant's death or total disability. The vesting schedule of a merged plan shall be substituted for this schedule if it is more favorable to an employee who was participating in such plan on the merger date. Participation - ------------- An employee is generally eligible to participate in the Plan if the employee: (1) is a union-free hourly employee; (2) is not contributing to another qualified defined contribution plan sponsored by the Company; (3) is employed on a non-temporary basis; and (4) has completed 12 months of continuous employment from the date of hire. Participant contributions to the Plan are voluntary. As of December 31, 1997 and 1996, there were 8,857 and 8,238 employees, respectively, participating in the Plan. -9- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY RETIREMENT --------------------------------------------------------- SAVINGS PLAN (Continued) ------------------------ Valuation of Participants' Accounts - ----------------------------------- Participants' accounts in each fund are adjusted to reflect their contributions during each month and the effect of income (collected and accrued), realized and unrealized gains and losses, expenses and all other transactions during such month. As of the end of each month, an allocation is made to each participant's account of the Company common stock provided by Company matching contributions during such month, and such account is adjusted to reflect dividends paid or any rights, warrants or options issued on such shares previously allocated to the participant. Distributions and Withdrawals - ----------------------------- Distributions are normally made when a participant retires, terminates employment or dies. With the exception of the Company Stock Fund, distributions are in cash for the value of the participant's account. Distributions from the Company Stock Fund are made in shares of Company common stock, in cash or in a combination of shares and cash, as selected by the participant. In the event of retirement, disability, layoff, closing of a work facility or department, or other termination of employment with at least 15 years of service where commencement of benefit payments is deferred to at least age 55, a participant may choose to receive payment from the Plan in a lump-sum, in monthly installments for 5 to 20 years, in a combination of lump-sum and installments or through the purchase of an annuity. Death benefits to a beneficiary are paid in a lump-sum. A participant may make partial or full general withdrawals in the following order: (1) all or part of the value of after-tax supplemental contributions, and all or part of the value of after-tax basic contributions made prior to the last 24 months, without a suspension of future Company matching contributions; (2) all or part of the value of the basic after-tax contributions made during the last 24 months, with future Company matching contributions suspended for three months; (3) all or part of the value of a rollover account, if any; and (4) all or part of the value of vested Company matching contributions made prior to January 1, 1993, which have been held in the Plan for at least 24 months with future Company matching contributions suspended for six months. Withdrawals of after-tax amounts contributed after 1986 include a pro-rata portion of earnings on the contributions. -10- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY RETIREMENT --------------------------------------------------------- SAVINGS PLAN (Continued) ------------------------ If the total amount available to a participant under a general withdrawal is insufficient to meet his or her financial needs, a participant who has not attained age 59-1/2 may apply to the plan administrator for a "hardship" withdrawal of part or all of the value of vested Company matching contributions made before the last 24 months and before-tax contributions and pre-1989 earnings thereon. Participants who make a hardship withdrawal must suspend contributions to the Plan for 12 months. Participants who have attained age 59-1/2 may withdraw the value of their before-tax contributions and the value of all vested Company matching contributions, in addition to other amounts available under a general withdrawal, with all contributions suspended for six months. Withdrawals may be made at intervals of at least 12 months. Subject to statutory limitations, loans are also available to participants up to (on a cumulative outstanding basis) the lesser of 50% of the vested value of a participant's account or $50,000 less the excess of the highest outstanding loan balance during the preceding 12 months over the outstanding balance of loans from the Plan on the date the loan is made. Loans are repayable through payroll deduction with a minimum loan period of one year. The interest rate is determined by the plan administrator based on the greater of the prime interest rate as published in the Wall Street Journal or the current yield of the Stable Value Fund at the time the interest rate is established. Interest rates ranged from 7.5% to 10.75% at December 31, 1997 and 1996. Forfeitures - ----------- Any unvested Company contributions forfeited by an employee upon termination of employment are credited against subsequent Company contributions. Reclassifications - ----------------- Certain prior year balances have been reclassified to conform with current year presentation. Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. -11- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ------------------------------------------------------ The financial statements of the Plan have been prepared on the accrual basis of accounting. The Plan's net assets available for benefits consists primarily of the Plan's equity in the net assets of the Defined Contribution Plans Master Trust and, as of December 31, 1996, includes assets of the FPB Plan. Investments in the Company Stock Fund, the S & P 500 Index Fund, the Balanced Fund, the International Stock Fund, the Growth Fund and portions of the Stable Value Fund, are reflected at quoted market value as of the Plan's year-end. As noted in the following paragraph, portions of the Stable Value Fund invested in certain investment contracts are reflected at contract value. In accordance with Statement of Position 94-4 ("SOP 94-4"), "Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined-Contribution Pension Plans," the Plan reports certain investment contracts at contract value. Fully benefit-responsive investment contracts (as defined in SOP 94-4) are valued at contract value, which represents the principal balance of the investment contracts, plus accrued interest at the stated contract rate, less payments received and contract charges by the investment company. All other investment contracts are reported at fair market value. The crediting interest rate is reset according to the terms of the investment contracts and is based on the investment company's applicable rate schedule. The aggregate average yield of the investment contracts for the years ended December 31, 1997 and 1996 was 6.69% and 7.28%, respectively. The aggregate crediting interest rate for the investment contracts as of December 31, 1997 and 1996 was 6.75% and 7.57%, respectively. The Plan accounts for realized and unrealized appreciation or depreciation of Plan assets using the current value approach, as required by the Department of Labor. This approach requires that realized and unrealized appreciation or depreciation of plan assets be based on the value of the assets as of the beginning of the plan year or at the time of purchase during the year. Contributions, benefit payments and transfers are specifically identified within the Plan. Net investment income of the Defined Contribution Plans Master Trust is allocated to the Plan in proportion to the Plan's equity in the Defined Contribution Plans Master Trust. -12- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 3. INVESTMENTS ----------- The assets of the Stable Value Fund are primarily invested in investment contracts and investment-grade fixed income securities. The Stable Value Fund's investment managers are Bankers Trust Company Global Investment Management, Sanford C. Bernstein and Company and Pacific Investment Management Company. At December 31, 1997 and 1996, the Stable Value Fund held U.S. Treasury Notes futures used primarily to enhance portfolio returns. The futures represent approximately 6.1% and 4.5% at December 31, 1997 and 1996, respectively, of the total Stable Value Fund of the Defined Contribution Plans Master Trust. Futures contracts are contracts for delayed delivery of securities in which the seller agrees to make delivery on a specified date of a specified instrument at a specified price. The futures contracts are recorded on the statement of net assets available for benefits with no cost or market value, because they are marked-to-market on a daily basis. The Plan does not hold or issue financial instruments for trading purposes. The assets of the Company Stock Fund consist of shares of Company common stock. The assets of the S & P 500 Index Fund consist primarily of an interest in the Vanguard Institutional Index Fund, a diversified common stock fund managed by Vanguard. The assets of the Balanced Fund consist primarily of an interest in the Vanguard Wellington Fund, a mutual fund sponsored by Vanguard. The assets of the International Stock Fund consist primarily of an interest in a diversified mutual fund of stocks of companies located outside the United States. The assets of the Growth Fund consist primarily of an interest in a managed mutual fund of common stocks of mid to large capitalization companies exhibiting above average prospects for growth. Dividends, interest and other property received by the Trustee with respect to any fund are reinvested in the same fund. Prior to December 31, 1996, participants in the FPB Plan were able to direct their contributions into the various funds offered by the FPB Plan. Company matching contributions made subsequent to March 12, 1996, were invested in common stock of the Company. The accompanying December 31, 1996 statement of net assets available for benefits reflects the amounts invested in the FPB Plan. In January 1997, the investments in these funds were transferred to the Trustee. Occasionally, the funds hold cash on a temporary basis pending investment or withdrawals. Cash balances are invested in the Trustee's short-term investment fund. -13- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 4. FEDERAL INCOME TAXES -------------------- On August 22, 1996, the Internal Revenue Service issued a favorable determination letter regarding the tax status of the Plan, ruling that the Plan in form satisfies the requirements of Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). Because all plans participating in the Defined Contribution Plans Master Trust have received favorable IRS determination letters, the trust satisfies the qualification requirements of Section 401 of the Code and qualifies for tax-exempt status under Section 501 of the Code. In the opinion of management, the Plan qualifies in operation for favorable income tax treatment in accordance with the requirements of Sections 401 and 501 of the Code. Accordingly, no provision for Federal income taxes has been made in the accompanying financial statements. Note 5. CONTRIBUTIONS RECEIVABLE ------------------------ Contributions receivable from participants and the Company as of December 31, 1997 and 1996, were remitted to the Trustee during 1998 and 1997, respectively. Note 6. PLAN AMENDMENTS --------------- Effective January 1, 1997, the following changes were made to the Plan. Two additional investment funds, the International Stock Fund and the Growth Fund were added and the names of the Fixed Income Fund and the Diversified Equity Fund were changed to the Stable Value Fund and the S & P 500 Index Fund, respectively. Future basic contributions may now be invested among the six investment funds, at the participant's election. Diversification of the contributions restricted to investment in the Company Stock Fund was amended so that a participant may diversify up to 20% a year beginning with the year in which the participant attains age 55. Note 7. SIGNIFICANT MERGER ------------------ Effective December 31, 1996, assets totaling approximately $18,813,000 for the accounts of employees in the Federal Paper Board Retirement Savings Plan for Non-Union Hourly Employees were merged into the Plan. -14- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 8. RECONCILIATION TO FORM 5500 --------------------------- As of December 31, 1997 and 1996, the Plan had approximately $933,000 and $528,000, respectively, of pending obligations to participants who had elected final distributions from the Plan. These amounts are recorded as liabilities in the Plan's Form 5500; however, these amounts are not recorded as liabilities in the accompanying financial statements in accordance with generally accepted accounting principles. The following table reconciles net assets available for benefits per the financial statements to the Form 5500 as filed by the Company for the years ended December 31, 1997 and 1996. (in thousands) Net Assets Available for Benefits Benefits December 31 Payable to Benefits ---------------------- Participants Paid 1997 1996 ------------ --------- --------- ------- Per Financial Statements $ - $7,048 $ 93,083 $82,505 Accrued Benefit Payments 933 933 (933) (528) Reversal of 1996 Accrual for Benefit Payments - (528) - - ------ ------ -------- ------- Per Form 5500 $933 $7,453 $ 92,150 $81,977 ------ ------ -------- ------- ------ ------ -------- -------
-15- INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 9. Selected Financial Data of the Defined Contribution Plans Master Trust ----------------------------------------------------------------------
INTERNATIONAL PAPER COMPANY --------------------------- DEFINED CONTRIBUTION PLANS MASTER TRUST --------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION --------------------------------------------------------------------- DECEMBER 31, 1997 ----------------- (in thousands) Fund Information --------------------------------------------------------------- Inter- Stable Company S&P 500 USG national Value Stock Index Balanced Stock Stock Growth Fund Fund Fund Fund Fund Fund Fund Total -------- -------- -------- -------- ----- ------- ------- ---------- ASSETS Investments, at fair value: Guaranteed investment contracts $1,279 $ - $ - $ - $ - $ - $ - $ 1,279 Investments in International Paper Company common stock (cost $508,283) - 926,452 - - - - - 926,452 Investments in S&P 500 Index Fund (cost $255,024) - - 268,411 - - - - 268,411 Investments in Balanced Fund (cost $103,795) - - - 125,998 - - - 125,998 Investments in USG Stock Fund (cost $354) - - - - 114 - - 114 Investments in International Stock Fund (cost $25,082) - - - - - 25,957 - 25,957 Investments in Growth Fund (cost $43,930) - - - - - - 43,110 43,110 Investments, at contract value*: Guaranteed investment contracts 487,273 - - - - - - 487,273 -------- -------- -------- -------- ----- ------- ------- ---------- Total investments 488,552 926,452 268,411 125,998 114 25,957 43,110 1,878,594 -------- -------- -------- -------- ----- ------- ------- ---------- Receivables: Dividends and interest 2,612 92 - - - - - 2,704 Receivables for investments sold 12,217 - - - - - - 12,217 -------- -------- -------- -------- ----- ------- ------- ---------- Total receivables 14,829 92 - - - - - 14,921 -------- -------- -------- -------- ----- ------- ------- ---------- Total assets 503,381 926,544 268,411 125,998 114 25,957 43,110 1,893,515 -------- -------- -------- -------- ----- ------- ------- ---------- LIABILITIES Payable for investments purchased (2) (28) (6) (5) - (1) - (42) -------- -------- -------- -------- ----- ------- ------- ---------- Total liabilities (2) (28) (6) (5) - (1) - (42) -------- -------- -------- -------- ----- ------- ------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $503,379 $926,516 $268,405 $125,993 $ 114 $25,956 $43,110 $1,893,473 -------- -------- -------- -------- ----- ------- ------- ---------- -------- -------- -------- -------- ----- ------- ------- ----------
*The aggregate fair value of these contracts was approximately $504,084 as of December 31, 1997. 16 INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 9. Selected Financial Data of the Defined Contribution Plans Master Trust ---------------------------------------------------------------------- (Continued) -----------
INTERNATIONAL PAPER COMPANY --------------------------- DEFINED CONTRIBUTION PLANS MASTER TRUST --------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION -------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1997 ------------------------------------ (in thousands) Fund Information ---------------------------------------------------------------------- Inter- Stable Company S&P 500 USG national Value Stock Index Balanced Stock Stock Growth Fund Fund Fund Fund Fund Fund Fund Total -------- -------- -------- -------- ----- ------- ------- ---------- Change attributable to: Investment activities: Dividend and interest income $ 32,993 $ 22,298 $ 6,253 $ 10,686 $ - $ 870 $ 6,132 $ 79,232 Unrealized appreciation (depreciation) of investments - 10,452 (31,845) 9,837 77 875 (820) (11,424) Net gain (loss) on sale of investments - 60,269 93,161 2,758 (42) 228 237 156,611 Other income 4 17 - - - - - 21 -------- -------- -------- -------- ----- ------- ------- ---------- Net investment income (loss) 32,997 93,036 67,569 23,281 35 1,973 5,549 224,440 Employee contributions 33,375 26,016 19,074 8,529 - 4,201 8,802 99,997 Employer contributions 9,411 32,937 21 8 - - - 42,377 Transfers,net 70,319 (26,038) 34,356 16,165 (3) 21,194 30,035 146,028 -------- -------- -------- -------- ----- ------- ------- ---------- Total 146,102 125,951 121,020 47,983 32 27,368 44,386 512,842 -------- -------- -------- -------- ----- ------- ------- ---------- Distributions and withdrawals (61,679) (100,610) (22,230) (11,669) (5) (1,364) (1,206) (198,763) Administrative fees (2,034) (3,132) (691) (328) - (48) (70) (6,303) -------- -------- -------- -------- ----- ------- ------- ---------- Total (63,713) (103,742) (22,921) (11,997) (5) (1,412) (1,276) (205,066) -------- -------- -------- -------- ----- ------- ------- ---------- Net increase (decrease) in net assets 82,389 22,209 98,099 35,986 27 25,956 43,110 307,776 NET ASSETS AVAILABLE FOR BENEFITS: December 31, 1996 420,990 904,307 170,306 90,007 87 - - 1,585,697 -------- -------- -------- -------- ----- ------- ------- ---------- December 31, 1997 $503,379 $926,516 $268,405 $125,993 $ 114 $25,956 $43,110 $1,893,473 -------- -------- -------- -------- ----- ------- ------- ---------- -------- -------- -------- -------- ----- ------- ------- ----------
17 INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 9. Selected Financial Data of the Defined Contribution Plans Master Trust ---------------------------------------------------------------------- (Continued) -----------
INTERNATIONAL PAPER COMPANY --------------------------- DEFINED CONTRIBUTION PLANS MASTER TRUST --------------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION --------------------------------------------------------------------- DECEMBER 31, 1996 ----------------- (in thousands) Fund Information --------------------------------------------------------- Fixed Company Diversified USG Income Stock Equity Balanced Stock Fund Fund Fund Fund Fund Total --------- --------- --------- --------- ----- ----------- ASSETS Investments, at fair value: Interest-bearing cash and temporary investments $ 19,911 $ 1,776 $ 33 $ 28 $ 1 $ 21,749 Guaranteed investment contracts 12,974 - - - - 12,974 Investments in International Paper Company common stock (cost $511,207) - 902,316 - - - 902,316 Investments in Diversified Equity Fund (cost $125,031) - - 170,261 - - 170,261 Investments in Balanced Fund (cost $77,608) - - - 89,971 - 89,971 Investments in USG Stock Fund (cost $409) - - - - 86 86 Investments, at contract value*: Guaranteed investment contracts 388,092 - - - - 388,092 --------- --------- --------- --------- ----- ----------- Total investments 420,977 904,092 170,294 89,999 87 1,585,449 --------- --------- --------- --------- ----- ----------- Receivables: Dividends and interest 16 215 15 10 - 256 --------- --------- --------- --------- ----- ----------- Total receivables 16 215 15 10 - 256 --------- --------- --------- --------- ----- ----------- Total assets 420,993 904,307 170,309 90,009 87 1,585,705 --------- --------- --------- --------- ----- ----------- LIABILITIES Administrative fees (3) - (3) (2) - (8) --------- --------- --------- --------- ----- ----------- Total liabilities (3) - (3) (2) - (8) --------- --------- --------- --------- ----- ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 420,990 $ 904,307 $ 170,306 $ 90,007 $ 87 $ 1,585,697 --------- --------- --------- --------- ----- ----------- --------- --------- --------- --------- ----- -----------
*The aggregate fair value of these contracts was approximately $390,572 as of December 31, 1996. 18 INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN --------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Continued) ----------------------------------------- DECEMBER 31, 1997 AND 1996 -------------------------- Note 9. Selected Financial Data of the Defined Contribution Plans Master Trust ---------------------------------------------------------------------- (Continued) -----------
INTERNATIONAL PAPER COMPANY --------------------------- DEFINED CONTRIBUTION PLANS MASTER TRUST --------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION -------------------------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, 1996 ------------------------------------ (in thousands) Fund Information --------------------------------------------------------- Fixed Company Diversified USG Income Stock Equity Balanced Stock Fund Fund Fund Fund Fund Total ---------- ---------- ---------- -------- ------ ----------- Change attributable to: Investment activities: Dividend and interest income $ 26,016 $ 24,811 $ 5,651 $ 6,966 $ - $ 63,444 Unrealized appreciation of investments - 57,234 22,608 4,517 5 84,364 Net gain (loss) on sale of investments - 2,034 910 318 (1) 3,261 Other income 14 29 60 35 - 138 ---------- ---------- ---------- -------- ------ ----------- Net investment income 26,030 84,108 29,229 11,836 4 151,207 Employee contributions 22,768 54,135 6,502 2,864 - 86,269 Employer contributions 10,077 29,089 358 169 39,693 Interfund transfers (2,022) (35,487) 26,789 10,728 (8) - Transfers, net 3,620 1,930 14,548 15,502 - 35,600 ---------- ---------- ---------- -------- ------ ----------- Total 60,473 133,775 77,426 41,099 (4) 312,769 ---------- ---------- ---------- -------- ------ ----------- Distributions and withdrawals (54,900) (76,501) (12,820) (8,207) (1) (152,429) Administrative fees (1,415) (2,161) (411) (217) - (4,204) ---------- ---------- ---------- -------- ------ ----------- Total (56,315) (78,662) (13,231) (8,424) (1) (156,633) ---------- ---------- ---------- -------- ------ ----------- Net increase (decrease) in net assets 4,158 55,113 64,195 32,675 (5) 156,136 NET ASSETS AVAILABLE FOR BENEFITS: December 31, 1995 416,832 849,194 106,111 57,332 92 1,429,561 ---------- ---------- ---------- -------- ------ ----------- December 31, 1996 $ 420,990 $ 904,307 $ 170,306 $ 90,007 $ 87 $ 1,585,697 ---------- ---------- ---------- -------- ------ ----------- ---------- ---------- ---------- -------- ------ -----------
19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the person who administers the Plan has duly caused this annual report to be signed by the undersigned thereunto duly authorized. INTERNATIONAL PAPER COMPANY RETIREMENT SAVINGS PLAN By /s/ ROBERT M. BYRNES --------------------------------------- Robert M. Byrnes, Senior Vice President and Administrator of the Plan Date: June 26, 1998 Purchase, New York -20- EX-1 2 EXHIBIT 1 Exhibit 1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated June 26, 1998, included in this Annual Report on Form 11-K of the International Paper Company Retirement Savings Plan, into the Company's previously filed Form S-8 Registration No. 33-38133. ARTHUR ANDERSEN LLP Memphis, Tennessee, June 26, 1998. -21- -----END PRIVACY-ENHANCED MESSAGE-----