International Paper 2012 Annual Report Download - page 3

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For International Paper, 2012 was marked by strong execution and
good results against a challenging global economic backdrop. We
delivered our second best earnings per share1 since 1995 and gener-
ated record cash from operations. Shareowners benefited from strong
free cash flow as International Paper raised the dividend 14 percent
in 2012 and maintained a strong balance sheet, retiring $1.9 billion in
debt. International Paper’s success was bolstered by industry leading
margins in our Industrial Packaging business, as well as record
revenue and earnings performance in both IP Russia and our
Foodservice business.
Strong performance in a challenging and unpredictable economic
environment is the result of International Paper’s strategic position-
ing and global balance. However, we should not be measured by
prior results. We should instead be defined by Our Path Forward.
In 2012, we shared with investors International Paper’s plan to
reach our potential through several strategic earnings drivers—that
with continued great execution—will result in our goal of 38 percent
improvement in EBITDA to more than $5 billion in a mid-cycle
environment.
The pages following this letter provide more clarity around the earnings
drivers within each business. It is a story that begins in North
America with the acquisition of Temple-Inland and our creation of a
premier Industrial Packaging business, as well as a powerful cash
flow engine. In less than a year, we achieved higher and faster syn-
ergy and run rate targets, as the acquisition delivered more than
$300 million in 2012—and we expect a synergy run rate of at least
$400 million by first quarter 2013. In North America, we also high-
light our Franklin Mill in southeast Virginia, which was repurposed
and restarted to make fluff pulp, a key material used in manufacturing
TO THE SHAREOWNERS AND
EMPLOYEES OF INTERNATIONAL PAPER,
International Paper / 2012 Annual Report 1
“2012 WAS AN IMPORTANT TRANSITION YEAR
FOR INTERNATIONAL PAPER. I BELIEVE NO
OTHER COMPANY IN OUR INDUSTRY IS AS
WELL-POSITIONED TO CREATE VALUE FOR
OUR SHAREOWNERS ON A GLOBAL SCALE—
OR COMPETE AS SUCCESSFULLY IN OUR
DOMESTIC MARKET IN BOTH PACKAGING
AND PAPER.”
John V. Faraci
Chairman and Chief Executive Officer
International Paper
1Before special items and non-operating pension expenses.