International Paper 2015 Annual Report Download - page 78

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61
Included in the Company’s 2015, 2014 and 2013
income tax provision (benefit) are $(121) million, $(453)
million and $(869) million, respectively, related to
special items. The components of the net provisions
related to special items were as follows:
In millions 2015 2014 2013
Special items $(84)$(372)$ (95)
Tax-related adjustments:
Return to accrual 23 ——
Internal restructurings (62) (90) (4)
Settlement of tax audits and
legislative changes —10 (770)
Medicare D deferred income tax
write-off ———
Other tax adjustments 2(1) —
Income tax provision (benefit)
related to special items $(121)$(453)$ (869)
Excluding the impact of special items and nonoperating
pension expense, the 2015, 2014 and 2013 income tax
provisions were $687 million, $659 million and $497
million, respectively, or 33%, 31% and 26%,
respectively, of pre-tax earnings before equity earnings.
The following details the scheduled expiration dates of
the Company’s net operating loss and income tax credit
carryforwards:
In millions
2016
Through
2025
2026
Through
2035 Indefinite Total
U.S. federal and
non-U.S. NOLs $76 $ — $ 519 $ 595
State taxing
jurisdiction NOLs 147 57 — 204
U.S. federal, non-
U.S. and state tax
credit carryforwards 144 32 241 417
U.S. federal and
state capital loss
carryforwards 23 ——23
Total $ 390 $ 89 $ 760 $ 1,239
Deferred income taxes are not provided for temporary
differences of approximately $5.7 billion, $5.2 billion
and $5.1 billion as of December 31, 2015, 2014 and
2013, respectively, representing earnings of non-U.S.
subsidiaries intended to be permanently reinvested.
Computation of the potential deferred tax liability
associated with these undistributed earnings and other
basis differences is not practicable.
The American Taxpayer Relief Act of 2012 (the “Act”)
was signed into law on January 2, 2013. The Act
retroactively restored several expired business tax
provisions, including the research and experimentation
credit and the Subpart F controlled foreign corporation
look-through exception. Because a change in tax law
is accounted for in the period of enactment, the
retroactive effect of the Act on the Company's U.S.
federal taxes for 2012 of a benefit of approximately $32
million was recognized in the first quarter of 2013.
NOTE 11 COMMITMENTS AND CONTINGENT
LIABILITIES
PURCHASE COMMITMENTS AND OPERATING LEASES
Certain property, machinery and equipment are leased
under cancelable and non-cancelable agreements.
Unconditional purchase obligations have been entered
into in the ordinary course of business, principally for
capital projects and the purchase of certain pulpwood,
logs, wood chips, raw materials, energy and services,
including fiber supply agreements to purchase
pulpwood that were entered into concurrently with the
Company’s 2006 Transformation Plan forestland sales
and in conjunction with the 2008 acquisition of
Weyerhaeuser Company’s Containerboard, Packaging
and Recycling business.
At December 31, 2015, total future minimum
commitments under existing non-cancelable operating
leases and purchase obligations were as follows:
In millions 2016 2017 2018 2019 2020 Thereafter
Lease
obligations $ 118 $ 95 $ 72 $ 55 $ 41 $ 128
Purchase
obligations
(a) 3,001 541 447 371 358 1,579
Total $ 3,119 $ 636 $ 519 $ 426 $ 399 $ 1,707
(a) Includes $2.1 billion relating to fiber supply agreements
entered into at the time of the Company’s 2006 Transformation
Plan forestland sales and in conjunction with the 2008
acquisition of Weyerhaeuser Company’s Containerboard,
Packaging and Recycling business.
Rent expense was $170 million, $154 million and $168
million for 2015, 2014 and 2013, respectively.
GUARANTEES
In connection with sales of businesses, property,
equipment, forestlands and other assets, International
Paper commonly makes representations and
warranties relating to such businesses or assets, and
may agree to indemnify buyers with respect to tax and
environmental liabilities, breaches of representations
and warranties, and other matters. Where liabilities for
such matters are determined to be probable and subject
to reasonable estimation, accrued liabilities are
recorded at the time of sale as a cost of the transaction.
ENVIRONMENTAL PROCEEDINGS
CERCLA and State Actions
International Paper has been named as a potentially
responsible party in environmental remediation actions
under various federal and state laws, including the