International Paper 2012 Annual Report Download - page 85

and assumed approximately $700 million of Temple-
Inland’s debt. As a condition to allowing the trans-
action to proceed, the Company entered into an
agreement on a Final Judgment with the Antitrust
Division of the U.S. Department of Justice (DOJ) that
required the Company to divest three containerboard
mills, with approximately 970,000 tons of aggregate
containerboard capacity. On July 2, 2012, Interna-
tional Paper sold its Ontario and Oxnard (Hueneme),
California containerboard mills to New-Indy
Containerboard LLC, and its New Johnsonville,
Tennessee containerboard mill to Hood Container
Corporation. By completing these transactions, the
Company satisfied its divestiture obligations under
the Final Judgment. See Note 6 for further details of
these divestitures, as well as the planned divestiture
of Temple-Inland’s Building Products business.
Temple-Inland’s results of operations are included in
the consolidated financial statements from the date
of acquisition on February 13, 2012.
The following table summarizes the allocation of the
purchase price to the fair value of assets and
liabilities acquired as of February 13, 2012.
In millions
Accounts and notes receivable $ 466
Inventory 484
Deferred income tax assets – current 140
Other current assets 57
Plants, properties and equipment 2,911
Financial assets of special purpose entities 2,091
Goodwill 2,139
Other intangible assets 693
Deferred charges and other assets 54
Total assets acquired 9,035
Notes payable and current maturities of long-term debt 130
Accounts payable and accrued liabilities 704
Long-term debt 527
Nonrecourse financial liabilities of special purpose entities 2,030
Deferred income tax liability 1,252
Pension benefit obligation 338
Postretirement and postemployment benefit obligation 99
Other liabilities 221
Total liabilities assumed 5,301
Net assets acquired $3,734
The purchase price allocation was finalized in the
fourth quarter of 2012.
The identifiable intangible assets acquired in con-
nection with the Temple-Inland acquisition included
the following:
In millions
Estimated
Fair Value
Average
Remaining
Useful Life
Asset Class:
(at acquisition
date)
Customer relationships $536 12-17 years
Developed technology 85-10 years
Tradenames 109 Indefinite
Favorable contracts 14 4-7 years
Non-compete agreement 26 2years
Total $693
In connection with the purchase price allocation,
inventories were written up by approximately $20
million before taxes ( $12 million after taxes) to their
estimated fair value. As the related inventories were
sold in the 2012 first quarter, this amount was
expensed in Cost of products sold for the quarter.
Additionally, Selling and administrative expenses for
the year ended December 31, 2012 included $164
million before taxes ( $105 million after taxes) in
charges for integration costs associated with the
acquisition.
The following unaudited pro forma information for
the years ended December 31, 2012 and 2011 repre-
sents the results of operations of International Paper
as if the Temple-Inland acquisition had occurred on
January 1, 2011. This information is based on histor-
ical results of operations, adjusted for certain acquis-
ition accounting adjustments and does not purport
to represent International Paper’s actual results of
operations as if the transaction described above
would have occurred as of January 1, 2011, nor is it
necessarily indicative of future results.
In millions, except per share amounts 2012 2011
Net sales $28,125 $29,946
Earnings (loss) from continuing operations (a) 805 1,185
Net earnings (loss) (a) 845 1,220
Diluted earnings (loss) from continuing operations
per share (a) 1.82 2.68
Diluted net earnings (loss) per share (a) 1.92 2.79
(a) Attributable to International Paper Company common share-
holders.
2011: On October 14, 2011, International Paper com-
pleted the acquisition of a 75% stake in Andhra
Pradesh Paper Mills Limited (APPM). The Company
purchased 53.5% of APPM for a purchase price of
$226 million in cash plus assumed debt from private
investors. These sellers also entered into a covenant
not to compete for which they received a cash payment
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