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56
2013: On January 14, 2013, International Paper and
Jari formed Orsa IP with International Paper holding a
75% stake. The value of International Paper's
investment in Orsa IP was approximately $471 million.
Because International Paper acquired a majority control
of the joint venture, Orsa IP's financial results have been
consolidated with our Industrial Packaging segment
from the date of formation on January 14, 2013. The
25% owned by Jari was considered a redeemable
noncontrolling interest and met the requirements to be
classified outside permanent equity. As such, the
Company reported $163 million in Redeemable
noncontrolling interest in the December 31, 2013
consolidated balance sheet.
The following table summarizes the final allocation of
the purchase price to the fair value of assets and
liabilities acquired as of January 14, 2013, which was
completed in the fourth quarter of 2013.
In millions
Cash and temporary investments $16
Accounts and notes receivable 5
Inventory 27
Plants, properties and equipment 290
Goodwill 260
Other intangible assets 110
Other long-term assets 2
Total assets acquired 710
Accounts payable and accrued liabilities 68
Deferred income tax liability 37
Total liabilities assumed 105
Noncontrolling interest 134
Net assets acquired $ 471
The identifiable intangible assets acquired in
connection with the Orsa IP acquisition included the
following:
In millions
Estimated
Fair Value
Average
Remaining
Useful Life
Asset Class:
(at acquisition
date)
Customer relationships $ 88 12 years
Trademark 3 6 years
Wood supply agreement 19 25 years
Total $ 110
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.
Due to the complex organizational structure of Orsa IP's
operations, and the extended time required to prepare
consolidated financial information in accordance with
accounting principles generally accepted in the United
States, the Company reports Orsa IP's operating results
on a one-month lag basis.
NOTE 7 DIVESTITURES / SPINOFF
DISCONTINUED OPERATIONS
2014: On July 1, 2014, International Paper completed
the spinoff of its distribution business, xpedx, which
subsequently merged with Unisource Worldwide, Inc.,
with the combined companies now operating as Veritiv
Corporation (Veritiv). The xpedx business had
historically represented the Company's Distribution
reportable segment.
The spinoff was accomplished by the contribution of the
xpedx business to Veritiv and the distribution of
8,160,000 shares of Veritiv common stock on a pro-rata
basis to International Paper shareholders. International
Paper received a payment of approximately $411
million, financed with new debt in Veritiv's capital
structure.
All current and historical operating results for xpedx are
included in Discontinued operations, net of tax, in the
accompanying consolidated statement of operations.
The following summarizes the major classes of line
items comprising Earnings (Loss) Before Income Taxes
and Equity Earnings reconciled to Discontinued
Operations, net of tax, related to the xpedx spinoff for
all periods presented in the consolidated statement of
operations:
In millions 2014 2013
Net Sales $ 2,604 $5,597
Costs and Expenses
Cost of products sold 2,309 4,941
Selling and administrative expenses 191 409
Depreciation, amortization and cost of
timber harvested 916
Distribution expenses 69 149
Restructuring and other charges 25 54
Impairment of goodwill and other
intangibles —400
Other, net 37
Earnings (Loss) Before Income Taxes
and Equity Earnings (2) (379)
Income tax provision (benefit) (1) (25)
Discontinued Operations, Net of Taxes (a) $ (1) $(354)
(a) These amounts, along with those disclosed below related to
the Temple-Inland Building Products divestitures, are included
in Discontinued operations, net of tax, in the consolidated
statement of operations.
Total cash provided by operations related to xpedx of
$29 million and $81 million for 2014 and 2013,
respectively, is included in Cash Provided By (Used For)
Operations in the consolidated statement of cash flows.
Total cash provided by (used for) investing activities
related to xpedx of $3 million and $12 million for 2014