International Paper 2015 Annual Report Download - page 38

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21
industrial non-durable goods production, consumer
spending, commercial printing and advertising activity,
white-collar employment levels, and movements in
currency exchange rates.
Product prices are affected by general economic
trends, inventory levels, currency exchange rate
movements and worldwide capacity utilization. In
addition to these revenue-related factors, net earnings
are impacted by various cost drivers, the more
significant of which include changes in raw material
costs, principally wood, recycled fiber and chemical
costs; energy costs; freight costs; salary and benefits
costs, including pensions; and manufacturing
conversion costs.
The following is a discussion of International Paper’s
results of operations for the year ended December 31,
2015, and the major factors affecting these results
compared to 2014 and 2013.
RESULTS OF OPERATIONS
For the year ended December 31, 2015, International
Paper reported net sales of $22.4 billion, compared with
$23.6 billion in 2014 and $23.5 billion in 2013.
International net sales (including U.S. exports) totaled
$7.8 billion or 35% of total sales in 2015. This compares
with international net sales of $9.3 billion in 2014 and
$9.5 billion in 2013.
Full year 2015 net earnings attributable to International
Paper Company totaled $938 million ($2.23 per share),
compared with net earnings of $555 million ($1.29 per
share) in 2014 and $1.4 billion ($3.11 per share) in 2013.
Amounts in all periods include the results of
discontinued operations.
Earnings from continuing operations attributable to
International Paper Company after taxes in 2015 were
$938 million, including $439 million of net special items
charges and $157 million of non-operating pension
expense compared with $568 million, including $599
million of net special items charges and $129 million of
non-operating pension expense in 2014, and $1.7
billion, including $528 million of net special items gains
and $197 million of non-operating pension expense in
2013. Compared with 2014, the benefits from lower
input costs, lower corporate and other costs and lower
interest expense were offset by lower average sales
price realizations and mix, lower sales volumes, higher
operating costs, higher maintenance outage costs, and
higher tax expense. In addition, 2015 results included
higher equity earnings, net of taxes, relating to the
Company’s investment in Ilim Holdings, SA.
See Industry Segment Results on pages 25 through 30
for a discussion of the impact of these factors by
segment.
Discontinued Operations
2014:
In 2014, $24 million of net income adjustments were
recorded relating to discontinued businesses, including
$16 million of costs associated with the spin-off of the
xpedx business and $9 million of costs associated with
the divestiture of the Temple-Inland Building Products
business. Also included are the operating earnings of
the xpedx business prior to the spin-off on July 1, 2014.
2013:
In 2013, $418 million of net income adjustments were
recorded relating to discontinued businesses, including
goodwill impairment charges of $366 million associated
with the xpedx business, $19 million for costs
associated with the restructuring of the xpedx business,
$14 million for costs associated with the spin-off of the
xpedx business and $19 million for costs associated
with the sale of the Temple-Inland Building Products
business. Also included are the operating profits for the
xpedx business for the full year and for the Temple-
Inland Building Products business through the date of
sale of July 19, 2013.
Income Taxes
A net income tax provision of $466 million was recorded
for 2015, including a tax benefit of $62 million related
to internal restructurings, a tax expense of $23 million
for the tax impact of the 2015 cash pension contribution
of $750 million and a $2 million tax expense for other
items. Excluding these items, an $83 million net tax
benefit for other special items and a $101 million tax
benefit related to non-operating pension expense, the
tax provision was $687 million, or 33% of pre-tax
earnings before equity earnings.
A net income tax provision of $123 million was recorded
for 2014 including a tax benefit of $90 million related to
internal restructurings and a net $9 million tax expense
for other items. Excluding these items, a $372 million