International Paper 2014 Annual Report Download - page 62

26
Net Losses (Gains) on Sales and Impairments of
Businesses
Net losses (gains) on sales and impairments of
businesses included in special items totaled a pre-tax
loss of $38 million ($31 million after taxes) in 2014, a
pre-tax loss of $3 million ($1 million after taxes) in 2013
and a pre-tax loss of $86 million ($87 million after taxes)
in 2012. The principal components of these gains/
losses were:
2014: During 2014, the Company recorded net pre-tax
charges of $47 million ($36 million after taxes) for a loss
on the sale of a business by ASG in which we hold an
investment and the subsequent partial impairment of
our ASG investment, and a pre-tax gain of $9 million
($5 million after taxes) related to the sale of an
investment.
2013: During 2013, the Company recorded net pre-tax
charges of $3 million ($1 million after taxes) for
adjustments related to the divestiture of three
containerboard mills in 2012 and the sale of the
Shorewood business.
2012: As referenced in Note 6 Acquisitions and Joint
Ventures on pages 56 through 59 in Item. 8 Financial
Statements and Supplementary Data, on July 2, 2012,
International Paper finalized the sales of its Ontario and
Oxnard (Hueneme), California containerboard mills to
New-Indy Containerboard LLC, and its New
Johnsonville, Tennessee containerboard mill to Hood
Container Corporation. During 2012, the Company
recorded pre-tax charges of $29 million ($55 million
after taxes) for costs associated with the divestitures of
these mills. Also during 2012, in anticipation of the
divestiture of the Hueneme mill, a pre-tax charge of $62
million ($38 million after taxes) was recorded to adjust
the long-lived assets of the mill to their fair value.
Industry Segment Operating Profits
Industry segment operating profits of $2.1 billion in 2014
decreased from $2.2 billion in 2013. The benefits from
higher average sales price realizations and mix ($563
million) and lower other costs ($16 million) were offset
by lower sales volumes ($35 million), higher operating
costs ($138 million), higher input costs ($141 million),
higher mill outage costs ($3 million) and higher costs
associated with the closure of our Courtland, Alabama
mill ($41 million). Special items were a $732 million net
loss in 2014 compared with a net loss of $336 million
in 2013.
Market-related downtime in 2014 decreased to
approximately 281,000 tons from approximately
412,000 tons in 2013.
DESCRIPTION OF INDUSTRY SEGMENTS
International Paper’s industry segments discussed
below are consistent with the internal structure used to
manage these businesses. All segments are
differentiated on a common product, common customer
basis consistent with the business segmentation
generally used in the forest products industry.
Industrial Packaging
International Paper is the largest manufacturer of
containerboard in the United States. Our production
capacity is about 13 million tons annually. Our products
include linerboard, medium, whitetop, recycled
linerboard, recycled medium and saturating kraft. About
80% of our production is converted domestically into
corrugated boxes and other packaging by our 168 U.S.
container plants. Additionally, we recycle approximately
one million tons of OCC and mixed and white paper
through our 20 recycling plants. In EMEA, our
operations include three recycled fiber containerboard
mills in Morocco and Turkey and 27 container plants in
France, Italy, Spain, Morocco and Turkey. In Brazil our
operations include three containerboard mills and four
box plants. In Asia, our operations include 17 container
plants in China and additional container plants in
Indonesia, Malaysia, Singapore, and Thailand. Our
container plants are supported by regional design
centers, which offer total packaging solutions and
supply chain initiatives.
Printing Papers
International Paper is one of the world’s leading
producers of printing and writing papers. Products in
this segment include uncoated papers and pulp.
Uncoated Papers: This business produces papers for use
in copiers, desktop and laser printers and digital
imaging. End use applications include advertising and
promotional materials such as brochures, pamphlets,
greeting cards, books, annual reports and direct mail.
Uncoated papers also produces a variety of grades that
are converted by our customers into envelopes, tablets,
business forms and file folders. Uncoated papers are
sold under private label and International Paper brand
names that include Hammermill, Springhill,
Williamsburg, Postmark, Accent, Great White,
Chamex, Ballet, Rey, Pol, and Svetocopy. The mills
producing uncoated papers are located in the United
States, France, Poland, Russia, Brazil and India. The
mills have uncoated paper production capacity of
approximately 4 million tons annually. Brazilian
operations function through International Paper do
Brasil, Ltda, which owns or manages approximately
334,000 acres of forestlands in Brazil.