International Paper 2012 Annual Report Download - page 87

The identifiable intangible assets acquired in con-
nection with the SCA acquisition included the follow-
ing:
In millions
Estimated
Fair
Value
Average
Remaining
Useful Life
Asset Class:
(at acquisition
date)
Land-use rights $29 39 years
Customer relationships 916 years
Total $38
Pro forma information related to the acquisition of
SCA has not been included as it does not have a
material effect on the Company’s consolidated
results of operations.
JOINT VENTURES
2013: On January 14, 2013, International Paper and
Brazilian corrugated packaging producer, Jari
Celulose Embalagens e Papel S.A (Jari), a Grupo
Orsa company, formed Orsa International Paper
Embalagens S.A. (ORSA IP). The new entity, in which
International Paper holds a 75% stake, includes three
containerboard mills and four box plants, which
make up Jari’s former industrial packaging assets.
This acquisition supports the Company’s strategy of
growing its global packaging presence and better
serving its global customer base.
The value of International Paper’s investment in
ORSA IP is approximately $470 million. The Com-
pany has not completed the valuation of assets
acquired and liabilities assumed; however, the
Company anticipates providing a preliminary pur-
chase price allocation in its 2013 first quarter Form
10-Q filing. Pro forma information related to our
investment in the joint venture is not included as it
does not have a material effect on the Company’s
consolidated results of operations. Because Interna-
tional Paper acquired majority control of the joint
venture, ORSA IP’s financial results will be con-
solidated with our Industrial Packaging segment
from the date of formation on January 14, 2013.
Pro forma information related to the acquisition of
ORSA IP has not been included as it does not have a
material effect on the Company’s consolidated
results of operations.
2011: On April 15, 2011, International Paper and
Sun Paper Industry Co. Ltd. entered into a Coopera-
tive Joint Venture agreement to establish Shandong
IP & Sun Food Packaging Co., Ltd. in China. During
December 2011, the business license was obtained
and International Paper contributed $55 million in
cash for a 55% interest in the joint venture and Sun
Paper Industry Co. Ltd. contributed land-use rights
valued at approximately $28 million, representing a
45% interest. The purpose of the joint venture is to
build and operate a new production line to manu-
facture coated paperboard for food packaging with a
designed annual production capacity of 500,000 tons.
The financial position and results of operations of
this joint venture have been included in International
Paper’s consolidated financial statements from the
date of formation in December 2011.
Additionally, during 2011 the Company recorded a
gain of $7 million (before and after taxes) related to a
bargain purchase price adjustment on an acquisition
by our joint venture in Turkey. This gain is included
in Equity earnings (losses), net of taxes in the
accompanying consolidated statement of operations.
NOTE 6 BUSINESSES HELD FOR SALE,
DIVESTITURES AND IMPAIRMENTS
DISCONTINUED OPERATIONS
2012: Upon the acquisition of Temple-Inland,
management committed to a plan to sell the Temple-
Inland Building Products business, and on
December 12, 2012, International Paper reached an
agreement to sell the business (including Del-Tin
Fiber L.L.C. (Del-Tin)) to Georgia-Pacific for $750 mil-
lion in cash, subject to satisfaction of customary
closing conditions, including satisfactory review by
the DOJ, and to certain pre-and post-closing pur-
chase price adjustments. The assets to be sold
include 16 manufacturing facilities. Subsequently, on
February 13, 2013, the Company entered into an
agreement to sell Temple-Inland’s 50% interest in
Del-Tin to joint venture partner Deltic Timber Corpo-
ration (Deltic) for $20 million in assumed liabilities
and cash. Accordingly, the Del-Tin assets will be
excluded from the sale to Georgia-Pacific and the
purchase price under our sale agreement with
Georgia-Pacific will be adjusted to $710 million. The
operating results of the Temple-Inland Building
Products business have been included in Dis-
continued operations from the date of acquisition.
The assets of this business, totaling $759 million at
December 31, 2012, are included in Assets of busi-
nesses held for sale in current assets in the accom-
panying consolidated balance sheet at December 31,
2012. Included in this amount are $26 million and
$153 million related to goodwill and intangibles,
respectively. The liabilities of this business, totaling
$44 million at December 31, 2012, are included in
Liabilities of businesses held for sale in the accom-
panying consolidated balance sheet at December 31,
2012.
2011: The sale of the Company’s Kraft Papers
business that closed in January 2007 contained
an earnout provision that could have required
KapStone to make an additional payment to
International Paper in 2012. Based on the results
through the first four years of the earnout period,
KapStone concluded that the threshold would be
attained and the full earnout payment would
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