International Paper 2015 Annual Report Download - page 50

33
In October 2015, International Paper announced that
the quarterly dividend would be increased from $0.40
per share to $0.44 per share, effective for the 2015
fourth quarter.
2014: Financing activities during 2014 included debt
issuances of $2.0 billion and retirements of $2.1 billion,
for a net decrease of $113 million.
International Paper utilizes interest rate swaps to
change the mix of fixed and variable rate debt and
manage interest expense. At December 31, 2014,
International Paper had interest rate swaps with a total
notional amount of $230 million and maturities in 2018
(see Note 14 Derivatives and Hedging Activities on
pages 67 through 71 of Item 8. Financial Statements
and Supplementary Data). During 2014, existing swaps
and the amortization of deferred gains on previously
terminated swaps decreased the weighted average
cost of debt from 6.8% to an effective rate of 6.7%. The
inclusion of the offsetting interest income from short-
term investments reduced this effective rate to 6.3%.
During the second quarter of 2014, International Paper
issued $800 million of 3.65% senior unsecured notes
with a maturity date in 2024 and $800 million of 4.80%
senior unsecured notes with a maturity date in 2044.
The proceeds from this borrowing were used to repay
approximately $960 million of notes with interest rates
ranging from 7.95% to 9.38% and original maturities
from 2018 to 2019. Pre-tax early debt retirement costs
of $262 million related to these debt repayments,
including $258 million of cash premiums, are included
in Restructuring and other charges in the
accompanying consolidated statement of operations
for the twelve months ended December 31, 2014.
Other financing activities during 2014 included the net
repurchase of approximately 17.9 million shares of
treasury stock, including restricted stock withholding,
and the issuance of 1.6 million shares of common stock
for various plans, including stock options exercises that
generated approximately $66 million of cash.
Repurchases of common stock and payments of
restricted stock withholding taxes totaled $1.06 billion,
including $983 million related to shares repurchased
under the Company's share repurchase program.
In September 2014, International Paper announced
that the quarterly dividend would be increased from
$0.35 per share to $0.40 per share, effective for the
2014 fourth quarter.
2013: Financing activities during 2013 included debt
issuances of $241 million and retirements of $845
million, for a net decrease of $604 million.
International Paper utilizes interest rate swaps to
change the mix of fixed and variable rate debt and
manage interest expense. At December 31, 2013,
International Paper had interest rate swaps with a total
notional amount of $175 million and maturities in 2018
(see Note 14 Derivatives and Hedging Activities on
pages 67 through 71 of Item 8. Financial Statements
and Supplementary Data). During 2013, existing swaps
and the amortization of deferred gains on previously
terminated swaps decreased the weighted average
cost of debt from 6.7% to an effective rate of 6.5%. The
inclusion of the offsetting interest income from short-
term investments reduced this effective rate to 6.2%.
Other financing activities during 2013 included the net
repurchase of approximately 10.9 million shares of
treasury stock, including restricted stock withholding,
and the issuance of 7.3 million shares of common stock
for various plans, including stock options exercises that
generated approximately $298 million of cash.
Repurchases of common stock and payments of
restricted stock withholding taxes totaled $512 million,
including $461 million related to shares repurchased
under the Company's share repurchase program.
In September 2013, International Paper announced
that the quarterly dividend would be increased from
$0.30 per share to $0.35 per share, effective for the
2013 fourth quarter.
Variable Interest Entities
Information concerning variable interest entities is set
forth in Note 12 Variable Interest Entities on pages 64
through 66 of Item 8. Financial Statements and
Supplementary Data for discussion.
Liquidity and Capital Resources Outlook for 2016
Capital Expenditures and Long-Term Debt
International Paper expects to be able to meet projected
capital expenditures, service existing debt and meet
working capital and dividend requirements during 2016
through current cash balances and cash from
operations. Additionally, the Company has existing
credit facilities totaling $2.1 billion available at
December 31, 2015.
The Company was in compliance with all its debt
covenants at December 31, 2015. The Company’s
financial covenants require the maintenance of a
minimum net worth of $9 billion and a total debt-to-
capital ratio of less than 60%. Net worth is defined as
the sum of common stock, paid-in capital and retained
earnings, less treasury stock plus any cumulative
goodwill impairment charges. The calculation also
excludes accumulated other comprehensive income/
loss and Nonrecourse Financial Liabilities of Special
Purpose Entities. The total debt-to-capital ratio is
defined as total debt divided by the sum of total debt
plus net worth. At December 31, 2015, International
Paper’s net worth was $14.1 billion, and the total-debt-
to-capital ratio was 39.8%.