International Paper 10-K 2014-12-31

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10-K 1 ip10-k123114.htm 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

(Mark One)

ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2014

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File No. 1-3157

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)

New York13-0872805
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

6400 Poplar Avenue

Memphis, Tennessee

(Address of principal executive offices)

38197

(Zip Code)

Registrant’s telephone number, including area code: (901) 419-9000


Securities registered pursuant to Section 12(b) of the Act:

Title of each className of each exchange on which registered
Common Stock, $1 per share par valueNew York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer xAccelerated filerNon-accelerated filerSmaller reporting company
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

The aggregate market value of the Company’s outstanding common stock held by non-affiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2014) was approximately $21,745,527,580.

The number of shares outstanding of the Company’s common stock as of February 20, 2015 was 422,845,435.

Documents incorporated by reference:

Portions of the registrant’s proxy statement filed within 120 days of the close of the registrant’s fiscal year in connection with registrant’s 2015 annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

INTERNATIONAL PAPER COMPANY

INDEX TO ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2014

PART I.1
ITEM 1.BUSINESS.1
General1
Financial Information Concerning Industry Segments1
Financial Information About International and U.S. Operations1
Competition and Costs1
Marketing and Distribution2
Description of Principal Products2
Sales Volumes by Product3
Research and Development4
Environmental Protection4
Climate Change4
Employees6
Executive Officers of the Registrant6
Raw Materials7
Forward-looking Statements7
ITEM 1A.RISK FACTORS.8
ITEM 1B.UNRESOLVED STAFF COMMENTS.12
ITEM 2.PROPERTIES.12
Forestlands12
Mills and Plants12
Capital Investments and Dispositions12
ITEM 3.LEGAL PROCEEDINGS.12
ITEM 4.MINE SAFETY DISCLOSURES.12
PART II.13
ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.13
ITEM 6.SELECTED FINANCIAL DATA.15
ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.19
Executive Summary19
Corporate Overview23
Results of Operations23
[Description of Industry Segments](#sA03432E7B

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Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Dividend per share data on the Company’s common stock and the high and low sales prices for the Company’s common stock for each of the four quarters in 2014 and 2013 are set forth on page 87 of Item 8. Financial Statements and Supplementary Data. As of

the filing of this Annual Report on Form 10-K, the Company’s common shares are traded on the New York Stock Exchange. As of February 20, 2015, there were approximately 13,267 record holders of common stock of the Company.

The table below presents information regarding the Company’s purchase of its equity securities for the time periods presented.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

PeriodTotal Number of Shares Purchased (a)Average Price Paid per ShareTotal Number of Shares (or Units) Purchased as Part of Publicly Announced ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions)
October 1, 2014 - October 31, 20142,825,448$46.802,825,448$1.59
November 1, 2014 - November 30, 2014177,53252.68177,3001.58
December 1, 2014 - December 31, 2014545,68153.84533,3401.56
Total3,548,661
(a)12,573 shares were acquired from employees from share withholdings to pay income taxes under the Company’s restricted stock programs. The remainder were purchased under a share repurchase program that was approved by our Board of Directors and announced on September 10, 2013, and through which we were authorized to purchase, in open market transactions (including block trades), privately negotiated transactions or otherwise, up to $1.5 billion of our common stock by December 31, 2016. Another repurchase program was approved by our Board of Directors and announced on July 8, 2014, to supplement the former program. Through the latter program, which does not have an expiration date, we were authorized to purchase, in open market transactions (including block trades), privately negotiated transactions or otherwise, up to $1.5 billion of additional shares of our common stock. As of February 20, 2015, approximately $1.54 billion of shares of our common stock remained authorized for purchase under our share repurchase programs.

PERFORMANCE GRAPH

The performance graph shall not be deemed to be “soliciting material” or to be “filed” with the Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act of 1934, as amended.

The following graph compares a $100 investment in Company stock on December 31, 2009 with a $100 investment in our Return on Invested Capital (ROIC) Peer Group and the S&P 500 also made at market close on December 31, 2009. The graph portrays total return, 2009–2014, assuming reinvestment of dividends.

Note: The companies included in the ROIC Peer Group are Domtar Inc., Fibria Celulose S.A., Klabin S.A., MeadWestvaco Corp., Metsa Board Corporation, Mondi Group, Packaging Corporation of America, Rock-Tenn Company, Smurfit Kappa Group, Stora Enso Group, and UPM-Kymmene Corp.

ITEM 6. SELECTED FINANCIAL DATA

FIVE-YEAR FINANCIAL SUMMARY (a)

Dollar amounts in millions, except per share amounts and stock prices20142013201220112010
RESULTS OF OPERATIONS
Net sales$23,617$23,483$21,852$19,464$18,496
Costs and expenses, excluding interest22,13821,64320,21417,52817,169
Earnings (loss) from continuing operations before income taxes and equity earnings872(b)1,228(e)967(h)1,395(k)719(n)
Equity earnings (loss), net of taxes(200)(39)61140111
Discontinued operations, net of taxes(13)(c)(309)(f)77(i)82(l)65(o)
Net earnings (loss)536(b-d)1,378(e-g)799(h-j)1,336(k-m)712(n-p)
Noncontrolling interests, net of taxes(19)(17)51421
Net earnings (loss) attributable to International Paper Company555(b-d)1,395(e-g)794(h-j)1,322(k-m)691(n-p)
FINANCIAL POSITION
Current assets less current liabilities$3,050$3,898$3,907$5,718$3,525
Plants, properties and equipment, net12,72813,67213,94911,81712,002
Forestlands507557622660747
Total assets28,68431,52832,15327,01825,409
Notes payable and current maturities of long-term debt742661444719313
Long-term debt8,6318,8279,6969,1898,358
Total shareholders’ equity5,1158,1056,3046,6456,875
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS
Earnings (loss) from continuing operations$1.33$3.85$1.65$2.87$1.46
Discontinued operations(0.03)(0.70)0.170.190.15
Net earnings (loss)1.303.151.823.061.61
DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS
Earnings (loss) from continuing operations$1.31$3.80$1.63$2.84$1.44
Discontinued operations(0.02)(0.69)0.170.190.15
Net earnings (loss)1.293.111.803.031.59
Cash dividends1.45001.25001.0880.9750.400
Total shareholders’ equity12.1818.5714.3315.2115.71
COMMON STOCK PRICES
High$55.73$50.33$39.88$33.01$29.25
Low44.2439.4727.2921.5519.33
Year-end53.5849.0339.8429.6027.24
FINANCIAL RATIOS
Current ratio1.61.81.82.21.8
Total debt to capital ratio0.650.540.620.600.56
Return on shareholders’ equity7.7%(b-d)

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