International Paper 2015 Annual Report Download - page 98

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NOTE 19 FINANCIAL INFORMATION BY
INDUSTRY SEGMENT AND GEOGRAPHIC AREA
International Paper’s industry segments, Industrial
Packaging, Printing Papers and Consumer Packaging
Businesses, are consistent with the internal structure
used to manage these businesses. All segments are
differentiated on a common product, common customer
basis consistent with the business segmentation
generally used in the Forest Products industry.
For management purposes, International Paper reports
the operating performance of each business based on
earnings before interest and income taxes (EBIT).
Intersegment sales and transfers are recorded at
current market prices.
External sales by major product is determined by
aggregating sales from each segment based on similar
products or services. External sales are defined as
those that are made to parties outside International
Paper’s consolidated group, whereas sales by segment
in the Net Sales table are determined using a
management approach and include intersegment
sales.
The Company also holds a 50% interest in Ilim that is
a separate reportable industry segment. The Company
recorded equity earnings (losses), net of taxes, of $131
million, $(194) million and $(46) million in 2015, 2014,
and 2013, respectively, for Ilim. Equity earnings (losses)
includes an after-tax foreign exchange gain (loss) of
$(75) million, $(269) million and $(32) million in 2015,
2014 and 2013, respectively, primarily on the
remeasurement of U.S. dollar-denominated net debt.
Summarized financial information for Ilim which is
accounted for under the equity method is presented in
the following table.
Balance Sheet
In millions 2015 2014
Current assets $ 455 $ 458
Noncurrent assets 968 1,223
Current liabilities 665 899
Noncurrent liabilities 715 742
Noncontrolling interests 21 15
Income Statement
In millions 2015 2014 2013
Net sales $1,931 $2,138 $1,897
Gross profit 971 772 562
Income from continuing operations 254 (387)(76)
Net income attributable to Ilim 237 (360)(71)
At December 31, 2015 and 2014, the Company's
investment in Ilim was $172 million and $170 million,
respectively, which was $161 million and $158 million,
respectively, more than the Company's proportionate
share of the joint venture's underlying net assets. The
differences primarily relate to purchase price fair value
adjustments and currency translation adjustments. The
Company is party to a joint marketing agreement with
Ilim, under which the Company purchases, markets and
sells paper produced by Ilim. Purchases under this
agreement were $170 million, $200 million and $114
million for the years ended December 31, 2015, 2014
and 2013, respectively.
INFORMATION BY INDUSTRY SEGMENT
Net Sales
In millions 2015 2014 2013
Industrial Packaging $ 14,484 $ 14,944 $ 14,810
Printing Papers 5,031 5,720 6,205
Consumer Packaging 2,940 3,403 3,435
Corporate and Intersegment
Sales (90) (450)(967)
Net Sales $ 22,365 $ 23,617 $ 23,483
Operating Profit
In millions 2015 2014 2013
Industrial Packaging $1,853$1,896 $1,801
Printing Papers 533 (16) 271
Consumer Packaging (25) 178 161
Operating Profit 2,361 2,058 2,233
Interest expense, net (555) (601)(612)
Noncontrolling interests /
equity earnings adjustment
(a) (8) (2) 1
Corporate items, net (36) (51) (61)
Restructuring and other
charges (238) (282)(10)
Net gains (losses) on sales
and impairments of
businesses —(38) —
Non-operating pension
expense (258) (212)(323)
Earnings (Loss) From
Continuing Operations
Before Income Taxes and
Equity Earnings $1,266$ 872 $ 1,228
Restructuring and Other Charges
In millions 2015 2014 2013
Industrial Packaging $—$7$
(2)
Printing Papers —554 118
Consumer Packaging 10 845
Corporate 242 277 (5)
Restructuring and Other
Charges $252$ 846 $ 156