International Paper 2014 Annual Report Download - page 59

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23
businesses through strategic acquisitions, as
appropriate.
Capital spending for 2015 is targeted at $1.5 billion, or
about 105% of depreciation and amortization.
Legal
See Note 11 Commitments and Contingent Liabilities on
pages 64 through 67 of Item 8. Financial Statements and
Supplementary Data for a discussion of legal matters.
CORPORATE OVERVIEW
While the operating results for International Paper’s
various business segments are driven by a number of
business-specific factors, changes in International
Paper’s operating results are closely tied to changes in
general economic conditions in North America, Europe,
Russia, Latin America, Asia, Africa and the Middle East.
Factors that impact the demand for our products include
industrial non-durable goods production, consumer
spending, commercial printing and advertising activity,
white-collar employment levels, and movements in
currency exchange rates.
Product prices are affected by general economic
trends, inventory levels, currency exchange rate
movements and worldwide capacity utilization. In
addition to these revenue-related factors, net earnings
are impacted by various cost drivers, the more
significant of which include changes in raw material
costs, principally wood, recycled fiber and chemical
costs; energy costs; freight costs; salary and benefits
costs, including pensions; and manufacturing
conversion costs.
The following is a discussion of International Paper’s
results of operations for the year ended December 31,
2014, and the major factors affecting these results
compared to 2013 and 2012.
RESULTS OF OPERATIONS
For the year ended December 31, 2014, International
Paper reported net sales of $23.6 billion, compared with
$23.5 billion in 2013 and $21.9 billion in 2012.
International net sales (including U.S. exports) totaled
$9.3 billion or 39% of total sales in 2014. This compares
with international net sales of $9.5 billion in 2013 and
$8.4 billion in 2012.
Full year 2014 net earnings attributable to International
Paper Company totaled $555 million ($1.29 per share),
compared with net earnings of $1.4 billion ($3.11 per
share) in 2013 and $794 million ($1.80 per share) in
2012. Amounts in all periods include the results of
discontinued operations.
Earnings from continuing operations attributable to
International Paper Company after taxes in 2014 were
$568 million, including $599 million of net special items
charges and $129 million of non-operating pension
expense compared with $1.7 billion, including $528
million of net special items gains and $197 million of
non-operating pension expense in 2013, and $717
million, including $272 million of net special items
charges and $113 million of non-operating pension
expense in 2012. Compared with 2013, the benefit from
higher average sales price realizations and mix, lower
corporate and other costs and lower interest expense
were offset by lower sales volumes, higher operating
costs, higher maintenance outage costs, higher input
costs, higher costs associated with the closure of the
Courtland mill, and higher tax expense. In addition,
2014 results included lower equity earnings, net of
taxes, relating to the Company’s investment in Ilim
Holdings, SA.
See Industry Segment Results on pages 27 through 31
for a discussion of the impact of these factors by
segment.
Discontinued Operations
2014:
In 2014, $24 million of net income adjustments were
recorded relating to discontinued businesses, including
$16 million of costs associated with the spin-off of the
xpedx business and $9 million of costs associated with
the divestiture of the Temple-Inland Building Products
business. Also included are the operating earnings of
the xpedx business prior to the spin-off on July 1, 2014.
2013:
In 2013, $418 million of net income adjustments were
recorded relating to discontinued businesses, including
goodwill impairment charges of $366 million associated
with the xpedx business, $19 million for costs
associated with the restructuring of the xpedx business,
$14 million for costs associated with the spin-off of the
xpedx business and $19 million for costs associated
with the sale of the Temple-Inland Building Products
business. Also included are the operating profits for the
xpedx business for the full year and for the Temple-