International Paper 2012 Annual Report Download - page 38

result in operational disruptions or information
misappropriation including, but not limited to inter-
ruption to systems availability, denial of access to
and misuse of applications required by our custom-
ers to conduct business with International Paper.
Access to internal applications required to plan our
operations, source materials, manufacture and ship
finished goods and account for orders could be
denied or misused. Theft of intellectual property or
trade secrets, and inappropriate disclosure of con-
fidential information, could stem from such
incidents. Any of these operational disruptions and/
or misappropriation of information could result in
lost sales, business delays, negative publicity and
could have a material effect on our business.
SEVERAL OPERATIONS ARE CONDUCTED BY
JOINT VENTURES THAT WE CANNOT OPER-
ATE SOLELY FOR OUR BENEFIT. Several oper-
ations, particularly in emerging markets, are carried
on by joint ventures such as the Ilim joint venture in
Russia and the recently established Orsa Interna-
tional Paper joint venture in Brazil. In joint ventures
we share ownership and management of a company
with one or more parties who may or may not have
the same goals, strategies, priorities or resources as
we do. In general, joint ventures are intended to be
operated for the benefit of all co-owners, rather than
for our exclusive benefit. Operating a business as a
joint venture often requires additional organizational
formalities as well as time-consuming procedures for
sharing information and making decisions. In joint
ventures, we are required to pay more attention to
our relationship with our co-owners as well as with
the joint venture, and if a co-owner changes, our
relationship may be adversely affected. In addition,
the benefits from a successful joint venture are
shared among the co-owners, so that we do not
receive all the benefits from our successful joint
ventures.
WE MAY NOT ACHIEVE THE EXPECTED
BENEFITS FROM STRATEGIC ACQUISITIONS,
JOINT VENTURES AND DIVESTITURES. Our
strategy for long-term growth, productivity and
profitability depends, in part, on our ability to
accomplish prudent strategic acquisitions, joint
ventures and divestitures and to realize the benefits
we expect from such transactions, and are subject to
the risk that we may not achieve the expected bene-
fits. Among the benefits we expect from potential as
well as recently completed acquisitions and joint
ventures are synergies, cost savings, growth oppor-
tunities or access to new markets (or a combination
thereof), and in the case of divestitures, the realiza-
tion of proceeds from the sale of businesses and
assets to purchasers placing higher strategic value
on such businesses and assets than does Interna-
tional Paper.
For example, on December 12, 2012, the Company
signed an agreement to divest our Temple-Inland
Building Products business unit to Georgia-Pacific
LLC. Our ability to complete the transaction is subject
to certain conditions, including approval of the
transaction by the U.S. Department of Justice. Fail-
ure to consummate the agreed sale to Georgia-
Pacific could result in significant delay in
accomplishing a divestiture of Temple-Inland Build-
ing Products and inability to reach an agreement
with one or more alternative purchasers on terms as
favorable as the agreement with Georgia-Pacific.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
FORESTLANDS
As of December 31, 2012, the Company owned or
managed approximately 327,000 acres of forestlands
in Brazil, and had, through licenses and forest man-
agement agreements, harvesting rights on
government-owned forestlands in Russia. All owned
lands in Brazil are independently third-party certified
for sustainable forestry under CERFLOR.
MILLS AND PLANTS
A listing of our production facilities by segment, the
vast majority of which we own, can be found in
Appendix I hereto, which is incorporated herein by
reference.
The Company’s facilities are in good operating con-
dition and are suited for the purposes for which they
are presently being used. We continue to study the
economics of modernization or adopting other
alternatives for higher cost facilities.
CAPITAL INVESTMENTS AND
DISPOSITIONS
Given the size, scope and complexity of our business
interests, we continually examine and evaluate a
wide variety of business opportunities and planning
alternatives, including possible acquisitions and
sales or other dispositions of properties. You can
find a discussion about the level of planned capital
investments for 2013 on page 36, and dispositions
and restructuring activities as of December 31, 2012,
on pages 23 through 25 of Item 7. Management’s
Discussion and Analysis of Financial Condition and
Results of Operations, and on pages 56 through 61 of
Item 8. Financial Statements and Supplementary
Data.
11