International Paper 2012 Annual Report Download - page 37

imposition of civil or criminal sanctions and the
prosecution of executives overseeing our interna-
tional operations.
RISKS RELATING TO LEGAL
PROCEEDINGS AND COMPLIANCE COSTS
EXPENDITURES RELATED TO THE COST OF
COMPLIANCE WITH ENVIRONMENTAL,
HEALTH AND SAFETY LAWS AND REQUIRE-
MENTS COULD IMPACT OUR BUSINESS AND
RESULTS OF OPERATIONS. Our operations are
subject to U.S. and non-U.S. laws and regulations
relating to the environment, health and safety. We
have incurred, and expect that we will continue to
incur, significant capital, operating and other
expenditures complying with applicable environ-
mental laws and regulations. There can be no
assurance that future remediation requirements
and compliance with existing and new laws and
requirements, including with global climate change
laws and regulations, Boiler MACT and National
Ambient Air Quality Standards (NAAQSs), will not
require significant expenditures, or that existing
reserves for specific matters will be adequate to
cover future costs. We could also incur substantial
fines or sanctions, enforcement actions (including
orders limiting our operations or requiring correc-
tive measures), cleanup and closure costs, and
third-party claims for property damage and
personal injury as a result of violations of, or
liabilities under, environmental laws, regulations,
codes and common law. The amount and timing of
environmental expenditures is difficult to predict,
and, in some cases, liability may be imposed with-
out regard to contribution or to whether we knew
of, or caused, the release of hazardous substances.
RESULTS OF LEGAL PROCEEDINGS COULD
HAVE A MATERIAL EFFECT ON OUR CON-
SOLIDATED FINANCIAL STATEMENTS. The
costs and other effects of pending litigation against
us cannot be determined with certainty. Although we
believe that the outcome of any pending or threat-
ened lawsuits or claims, or all of them combined, will
not have a material effect on our business or con-
solidated financial statements, there can be no
assurance that the outcome of any lawsuit or claim
will be as expected.
RISKS RELATING TO OUR OPERATIONS
MATERIAL DISRUPTIONS AT ONE OF OUR
MANUFACTURING FACILITIES COULD NEG-
ATIVELY IMPACT OUR FINANCIAL RESULTS.
We operate our facilities in compliance with appli-
cable rules and regulations and take measures to
minimize the risks of disruption at our facilities. A
material disruption at our corporate headquarters or
one of our manufacturing facilities could prevent us
from meeting customer demand, reduce our sales
and/or negatively impact our financial condition. Any
of our manufacturing facilities, or any of our
machines within an otherwise operational facility,
could cease operations unexpectedly due to a
number of events, including:
• fires, floods, earthquakes, hurricanes or other
catastrophes;
• the effect of a drought or reduced rainfall on its
water supply;
• terrorism or threats of terrorism;
• domestic and international laws and regulations
applicable to our Company and our business
partners, including joint venture partners,
around the world;
• unscheduled maintenance outages;
• prolonged power failures;
• an equipment failure;
• a chemical spill or release;
• explosion of a boiler;
• damage or disruptions caused by third parties
operating on or adjacent to one of our manu-
facturing facilities;
• disruptions in the transportation infrastructure,
including roads, bridges, railroad tracks and
tunnels;
• labor difficulties; and
• other operational problems.
Any such downtime or facility damage could prevent
us from meeting customer demand for our products
and/or require us to make unplanned expenditures. If
one of these machines or facilities were to incur sig-
nificant downtime, our ability to meet our production
targets and satisfy customer requirements could be
impaired, resulting in lower sales and having a neg-
ative effect on our business and financial results.
WE ARE SUBJECT TO CYBER-SECURITY
RISKS RELATED TO BREACHES OF SECURITY
PERTAINING TO SENSITIVE COMPANY,
CUSTOMER, EMPLOYEE AND VENDOR
INFORMATION AS WELL AS BREACHES IN
THE TECHNOLOGY THAT MANAGES OPER-
ATIONS AND OTHER BUSINESS PROCESSES.
International Paper business operations rely upon
secure information technology systems for data
capture, processing, storage and reporting. Despite
careful security and controls design,
implementation, updating and independent third
party verification, our information technology sys-
tems, and those of our third party providers, could
become subject to cyber attacks. Network, system,
application and data breaches could
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