International Paper 2014 Annual Report Download - page 97

61
In millions 2014 2013 2012
Depreciation expense $ 1,308 $1,415 $1,390
INTEREST
Cash payments related to interest were as follows:
In millions 2014 2013 2012
Interest payments $ 718 $ 751 $ 740
Amounts related to interest were as follows:
In millions 2014 2013 2012
Interest expense (a) $ 677 $ 669 $ 742
Interest income (a) 70 57 71
Capitalized interest costs 23 17 37
(a) Interest expense and interest income exclude approximately
$38 million, $45 million and $49 million in 2014, 2013 and 2012,
respectively, related to investments in and borrowings from
variable interest entities for which the Company has a legal
right of offset (see Note 12).
NOTE 9 GOODWILL AND OTHER INTANGIBLES
GOODWILL
The following tables present changes in the goodwill
balances as allocated to each business segment for the
years ended December 31, 2014 and 2013:
In millions
Industrial
Packaging
Printing
Papers
Consumer
Packaging Distribution Total
Balance as of
January 1, 2014
Goodwill $3,430 $2,311 $1,787 $400 $7,928
Accumulated
impairment
losses (a) — (1,877) (1,664) (400) (3,941)
3,430 434 123 — 3,987
Reclassifications
and other (b) (34) (57) (3) — (94)
Additions/
reductions — (20) (c) — — (20)
Impairment loss (100) (d) — ——(100)
Write off of
goodwill —— —(400) (400)
Write off of
accumulated
impairment loss —— — 400 400
Balance as of
December 31, 2014
Goodwill 3,396 2,234 1,784 — 7,414
Accumulated
impairment
losses (a) (100) (1,877) (1,664) — (3,641)
Total $3,296 $357 $120 $— $3,773
(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) Reflects a charge of $100 million for goodwill impairment related
to our Asia Industrial Packaging business.
In millions
Industrial
Packaging
Printing
Papers
Consumer
Packaging Distribution Total
Balance as of
January 1, 2013
Goodwill $ 3,165 $ 2,396 $ 1,783 $ 400 $ 7,744
Accumulated
impairment
losses (a) — (1,765) (1,664) — (3,429)
3,165 631 119 400 4,315
Reclassifications
and other (b) (28) (63) 3 — (88)
Additions/
reductions 293 (c) (22) (d) 1 — 272
Impairment loss —(112) (e) —(400) (e) (512)
Balance as of
December 31, 2013
Goodwill 3,430 2,311 1,787 400 7,928
Accumulated
impairment
losses (a) — (1,877) (1,664) (400) (3,941)
Total $ 3,430 $ 434 $ 123 $ — $ 3,987
(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 $260 million for Orsa IP, the newly formed joint venture
in Brazil and the adjustment of $54 million ($33 million after-tax)
previously included as a trade name intangible asset in Deferred
Charges and Other Assets on the balance sheet.
(d) Reflects a reduction from tax benefits generated by the deduction
of goodwill amortization for tax purposes in Brazil.
(e) Represents the impairment of goodwill for the India Papers
business and xpedx.
At December 31, 2013, there was $400 million of goodwill
and $400 million of accumulated impairment losses
included in the consolidated balance sheet associated with
the xpedx business (Distribution segment). Effective July
1, 2014, the Company completed the spinoff of its xpedx
business which had historically represented the
Company's Distribution reportable segment. Following the
spinoff of xpedx, the assets and liabilities of this business
have been reclassified as discontinued operations and
adjusted off of the consolidated balance sheet and are not
included in balances as of December 31, 2014.
In the fourth quarter of 2014, in conjunction with the annual
testing of its reporting units for possible goodwill
impairments, the Company calculated the estimated fair
value of its Asia Industrial Packaging business using the
discounted future cash flows and determined that all of the
goodwill in this business, totaling $100 million, should be
written off. The decline in the fair value of the Asia Industrial
Packaging business and resulting impairment charge was
due to a change in the strategic outlook for the business.
In the fourth quarter of 2013, in conjunction with the annual
testing of its reporting units for possible goodwill
impairments, the Company calculated the estimated fair
value of its India Papers business using the discounted
future cash flows and determined that all of the goodwill of
this business, totaling $112 million, should be written off.
The decline in the fair value of the India Papers reporting
unit and resulting impairment charge was due to a change
in the strategic outlook for the India Papers operations.