International Paper 2015 Annual Report Download - page 39

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22
net tax benefit for other special items and a $83 million
tax benefit related to non-operating pension expense,
the tax provision was $659 million, or 31% of pre-tax
earnings before equity earnings.
A net income tax benefit of $498 million was recorded
for 2013, including a tax benefit of $770 million related
to the settlement of tax audits and a net benefit of $4
million for other items. Excluding these items, a $95
million net tax benefit for other special items and a $126
million tax benefit related to non-operating pension
expense, the tax provision was $497 million, or 26% of
pre-tax earnings before equity earnings.
Equity Earnings, Net of Taxes
Equity earnings, net of taxes in 2015, 2014 and 2013
consisted principally of the Company’s share of
earnings from its 50% investment in Ilim Holding S.A.
in Russia (see page 30).
Corporate Items and Interest Expense
Corporate items totaled $36 million of expense for the
year ended December 31, 2015 compared with $51
million in 2014 and $61 million in 2013. The decrease
in 2015 from 2014 reflects the absence of a one-time
non-cash foreign exchange charge related to the
administrative restructuring of some international
entities that occurred in 2014. The decrease in 2014
from 2013 reflects lower pension expenses partially
offset by a one-time non-cash foreign exchange charge
related to the administrative restructuring of some
international entities.
Net corporate interest expense totaled $555 million in
2015, $601 million in 2014 and $612 million in 2013.
The decrease in 2015 compared with 2014 reflects
lower average interest rates. The decrease in 2014
compared with 2013 also reflects lower average interest
rates.
Net earnings attributable to noncontrolling interests
totaled a loss of $21 million in 2015 compared with a
loss of $19 million in 2014 and a loss of $17 million in
2013. The decrease in 2015 reflects the sale of our
equity share of the IP-Sun JV and lower earnings for
the Shandong IP & Sun Food Packaging Co., Ltd joint
venture in China prior to its divestiture. The decrease
in 2014 compared with 2013 reflects the impact of the
acquisition of the remaining 25% share of Orsa IP from
the joint venture partner.
Special Items
Restructuring and Other Charges
International Paper continually evaluates its operations
for improvement opportunities targeted to (a) focus our
portfolio on our core businesses, (b) rationalize and
realign capacity to operate fewer facilities with the same
revenue capability and close high cost facilities, and
(c) reduce costs. Annually, strategic operating plans are
developed by each of our businesses. If it subsequently
becomes apparent that a facility’s plan will not be
achieved, a decision is then made to (a) invest
additional capital to upgrade the facility, (b) shut down
the facility and record the corresponding charge, or
(c) evaluate the expected recovery of the carrying value
of the facility to determine if an impairment of the assets
have occurred. In recent years, this policy has led to
the shutdown of a number of facilities and the recording
of significant asset impairment charges and severance
costs. It is possible that additional charges and costs
will be incurred in future periods in our core businesses
should such triggering events occur.
2015: During 2015, corporate restructuring and other
charges totaling $242 million before taxes ($155 million
after taxes) were recorded. These charges included:
• a $207 million charge before taxes ($133
million after taxes) for premiums paid on a cash
tender offer on outstanding debt (see Note 13
Debt and Lines of Credit on pages 66 and 67
of Item 8. Financial Statements and
Supplementary Data),
• a $16 million charge before taxes ($10 million
after taxes) for costs related to the restructuring
of our 2006 timber monetization,
• a $15 million charge before taxes ($9 million
after taxes) for legal reserve adjustments, and
• a $4 million charge before taxes ($3 million after
taxes) for other items.
In addition, restructuring and other charges totaling $10
million before taxes ($6 million after taxes) were
recorded in the Consumer Packaging industry segment
including:
• an $8 million net charge before taxes ($4 million
after taxes) related to costs associated with the
conversion of the Riegelwood, North Carolina
facility to 100% pulp production, net of
proceeds from the sale of the Carolina Coated
Bristols brand, and
• a $2 million charge (before and after taxes) for
other items.
2014: During 2014, corporate restructuring and other
charges totaling $277 million before taxes ($169 million
after taxes) were recorded. These charges included:
• a $276 million charge before taxes ($169 million
after taxes) for costs related to the early
extinguishment of debt (see Note 13 Debt and
Lines of Credit on pages 66 and 67 of Item 8.
Financial Statements and Supplementary Data)