International Paper 2015 Annual Report Download - page 44

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compared with $6.2 billion in 2013. Operating profits in
2015 were significantly higher than in both 2014 and
2013. Excluding facility closure costs, impairment costs
and other special items, operating profits in 2015 were
3% lower than in 2014 and 4% higher than in 2013.
Benefits from lower input costs ($18 million), lower costs
associated with the closure of our Courtland, Alabama
mill ($44 million) and favorable foreign exchange ($33
million) were offset by lower average sales price
realizations and mix ($52 million), lower sales volumes
($16 million), higher operating costs ($18 million) and
higher planned maintenance downtime costs ($26
million). In addition, operating profits in 2014 include
special items costs of $554 million associated with the
closure of our Courtland, Alabama mill. During 2013,
the Company accelerated depreciation for certain
Courtland assets, and evaluated certain other assets
for possible alternative uses by one of our other
businesses. The net book value of these assets at
December 31, 2013 was approximately $470 million.
In the first quarter of 2014, we completed our evaluation
and concluded that there were no alternative uses for
these assets. We recognized approximately $464
million of accelerated depreciation related to these
assets in 2014. Operating profits in 2014 also include
a charge of $32 million associated with a foreign tax
amnesty program, and a gain of $20 million for the
resolution of a legal contingency in India, while
operating profits in 2013 included costs of $118 million
associated with the announced closure of our
Courtland, Alabama mill and a $123 million impairment
charge associated with goodwill and a trade name
intangible asset in our India Papers business.
Printing Papers
In millions 2015 2014 2013
Sales $5,031 $5,720 $6,205
Operating Profit (Loss) 533 (16) 271
North American Printing Papers net sales were $1.9 billion
in 2015, $2.1 billion in 2014 and $2.6 billion in 2013.
Operating profits in 2015 were $179 million compared
with a loss of $398 million (a gain of $156 million
excluding costs associated with the shutdown of our
Courtland, Alabama mill) in 2014 and a gain of $36
million ($154 million excluding costs associated with the
Courtland mill shutdown) in 2013.
Sales volumes in 2015 decreased compared with 2014
primarily due to the closure of our Courtland mill in 2014.
Shipments to the domestic market increased, but export
shipments declined. Average sales price realizations
decreased, primarily in the domestic market. Input
costs were lower, mainly for energy. Planned
maintenance downtime costs were $12 million higher
in 2015. Operating profits in 2014 were negatively
impacted by costs associated with the shutdown of our
Courtland, Alabama mill.
Entering the first quarter of 2016, sales volumes are
expected to be up slightly compared with the fourth
quarter of 2015. Average sales margins should be
about flat reflecting lower average sales price
realizations offset by a more favorable product mix.
Input costs are expected to be stable. Planned
maintenance downtime costs are expected to be about
$14 million lower with an outage scheduled in the 2016
first quarter at our Georgetown mill compared with
outages at our Eastover and Riverdale mills in the 2015
fourth quarter.
In January 2015, the United Steelworkers, Domtar
Corporation, Packaging Corporation of America, Finch
Paper LLC and P. H. Glatfelter Company (the
Petitioners) filed an anti-dumping petition before the
United States International Trade Commission (ITC)
and the United States Department of Commerce (DOC)
alleging that paper producers in China, Indonesia,
Australia, Brazil, and Portugal are selling uncoated free
sheet paper in sheet form (the Products) in violation of
international trade rules. The Petitioners also filed a
countervailing-duties petition with these agencies
regarding imports of the Products from China and
Indonesia. In January 2016, the DOC announced its
final countervailing duty rates on imports of the
Products to the United States from certain producers
from China and Indonesia. Also, in January 2016, the
DOC announced its final anti-dumping duty rates on
imports of the Products to the United States from certain
producers from Australia, Brazil, China, Indonesia and
Portugal. In February 2016, the ITC concluded its anti-
dumping and countervailing duties investigations and
made a final determination that the U.S. market had
been injured by imports of the Products. Accordingly,
the DOC’s previously announced countervailing duty
rates and anti-dumping duty rates will be in effect for a
minimum of five years. We do not believe the impact
of these rates will have a material, adverse effect on
our consolidated financial statements.
Brazilian Papers net sales for 2015 were $878 million
compared with $1.1 billion in 2014 and $1.1 billion in
2013. Operating profits for 2015 were $186 million
compared with $177 million ($209 million excluding
costs associated with a tax amnesty program) in 2014
and $210 million in 2013.
Sales volumes in 2015 were lower compared with 2014
reflecting weak economic conditions and the absence
of 2014 one-time events. Average sales price
realizations improved for domestic uncoated freesheet
paper due to the realization of price increases
implemented in the second half of 2015. Margins were
unfavorably affected by an increased proportion of
sales to the lower-margin export markets. Raw material
costs increased for energy and wood. Operating costs
were higher than in 2014, while planned maintenance
downtime costs were $4 million lower.