International Paper 2014 Annual Report Download - page 44

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results differing materially from such forward looking
statements are discussed in greater detail below in
“Item 1A. Risk Factors.” We undertake no obligation to
publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
All financial information and statistical measures
regarding our 50/50 Ilim joint venture in Russia (“Ilim”),
other than historical International Paper Equity
Earnings and dividends received by International
Paper, have been prepared by the management of Ilim.
In providing this information in this filing, we are relying
on the effectiveness of Ilim's internal control
environment. Any projected financial information and
statistical measures reflect the current views of Ilim
management and are subject to the risks and
uncertainties that cause actual results to differ
materially from those expressed or implied by such
projections.
ITEM 1A. RISK FACTORS
In addition to the risks and uncertainties discussed
elsewhere in this Annual Report on Form 10-K
(particularly in Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations), or in the Company’s other filings with the
Securities and Exchange Commission, the following
are some important factors that could cause the
Company’s actual results to differ materially from those
projected in any forward-looking statement.
RISKS RELATING TO INDUSTRY CONDITIONS
CHANGES IN THE COST OR AVAILABILITY OF RAW
MATERIALS, ENERGY AND TRANSPORTATION
COULD AFFECT OUR PROFITABILITY. We rely
heavily on the use of certain raw materials (principally
virgin wood fiber, recycled fiber, caustic soda and
starch), energy sources (principally natural gas, coal
and fuel oil) and third-party companies that transport
our goods. The market price of virgin wood fiber varies
based upon availability and source. Increased demand
for biomass to meet a growing number of government
mandates and incentives to promote the use of biomass
for renewable electrical energy generation may also
impact pricing and availability of virgin wood fiber. In
addition, the increase in demand of products
manufactured, in whole or in part, from recycled fiber,
on a global basis, may cause an occasional tightening
in the supply of recycled fiber. Energy prices, in
particular prices for oil and natural gas, have fluctuated
dramatically in the past and may continue to fluctuate
in the future.
Our profitability has been, and will continue to be,
affected by changes in the costs and availability of such
raw materials, energy sources and transportation
sources.
THE INDUSTRIES IN WHICH WE OPERATE
EXPERIENCE BOTH ECONOMIC CYCLICALITY
AND CHANGES IN CONSUMER PREFERENCES.
FLUCTUATIONS IN THE PRICES OF, AND THE
DEMAND FOR, OUR PRODUCTS COULD
MATERIALLY AFFECT OUR FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND
CASH FLOWS. Substantially all of our businesses
have experienced, and are likely to continue to
experience, cycles relating to industry capacity and
general economic conditions. The length and
magnitude of these cycles have varied over time and
by product. In addition, changes in consumer
preferences may increase or decrease the demand for
our fiber-based products and non-fiber substitutes.
These consumer preferences affect the prices of our
products. Consequently, our operating cash flow is
sensitive to changes in the pricing and demand for our
products.
COMPETITION IN THE UNITED STATES AND
INTERNATIONALLY COULD NEGATIVELY IMPACT
OUR FINANCIAL RESULTS. We operate in a
competitive environment, both in the United States and
internationally, in all of our operating segments. Product
innovations, manufacturing and operating efficiencies,
and marketing, distribution and pricing strategies
pursued or achieved by competitors could negatively
impact our financial results.
RISKS RELATING TO MARKET AND ECONOMIC
FACTORS
ADVERSE DEVELOPMENTS IN GENERAL
BUSINESS AND ECONOMIC CONDITIONS COULD
HAVE AN ADVERSE EFFECT ON THE DEMAND
FOR OUR PRODUCTS AND OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
General economic conditions may adversely affect
industrial non-durable goods production, consumer
spending, commercial printing and advertising activity,
white-collar employment levels and consumer
confidence, all of which impact demand for our
products. In addition, volatility in the capital and credit
markets, which impacts interest rates, currency
exchange rates and the availability of credit, could have
a material adverse effect on our business, financial
condition and our results of operations.
THE LEVEL OF OUR INDEBTEDNESS COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION
AND IMPAIR OUR ABILITY TO OPERATE OUR
BUSINESS. As of December 31, 2014, International
Paper had approximately $9.4 billion of outstanding
indebtedness, including $8.7 billion of indebtedness
outstanding under our floating and fixed rate notes.
There was no indebtedness outstanding under our