New York
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13-0872805
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation of organization)
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Identification No.)
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|
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6400 Poplar Avenue, Memphis, TN
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38197
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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PAGE NO.
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ITEM 1.
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FINANCIAL STATEMENTS
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net Sales
|
$
|
7,406
|
|
|
$
|
7,026
|
|
|
$
|
21,831
|
|
|
$
|
20,758
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
||||||||
Cost of products sold
|
5,313
|
|
|
5,140
|
|
|
15,947
|
|
|
15,394
|
|
||||
Selling and administrative expenses
|
572
|
|
|
527
|
|
|
1,654
|
|
|
1,514
|
|
||||
Depreciation, amortization and cost of timber harvested
|
401
|
|
|
383
|
|
|
1,176
|
|
|
1,111
|
|
||||
Distribution expenses
|
438
|
|
|
403
|
|
|
1,309
|
|
|
1,198
|
|
||||
Taxes other than payroll and income taxes
|
47
|
|
|
39
|
|
|
143
|
|
|
124
|
|
||||
Restructuring and other charges
|
76
|
|
|
33
|
|
|
131
|
|
|
88
|
|
||||
Net (gains) losses on sales and impairments of businesses
|
1
|
|
|
18
|
|
|
1
|
|
|
89
|
|
||||
Net bargain purchase gain on acquisition of business
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
||||
Interest expense, net
|
147
|
|
|
163
|
|
|
479
|
|
|
503
|
|
||||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings
|
411
|
|
|
320
|
|
|
1,004
|
|
|
737
|
|
||||
Income tax provision (benefit)
|
41
|
|
|
130
|
|
|
66
|
|
|
257
|
|
||||
Equity earnings (losses), net of taxes
|
16
|
|
|
34
|
|
|
(30
|
)
|
|
52
|
|
||||
Earnings (Loss) From Continuing Operations
|
386
|
|
|
224
|
|
|
908
|
|
|
532
|
|
||||
Discontinued operations, net of taxes
|
(10
|
)
|
|
14
|
|
|
40
|
|
|
35
|
|
||||
Net Earnings (Loss)
|
376
|
|
|
238
|
|
|
948
|
|
|
567
|
|
||||
Less: Net earnings (loss) attributable to noncontrolling interests
|
(6
|
)
|
|
1
|
|
|
(11
|
)
|
|
8
|
|
||||
Net Earnings (Loss) Attributable to International Paper Company
|
$
|
382
|
|
|
$
|
237
|
|
|
$
|
959
|
|
|
$
|
559
|
|
Basic Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from continuing operations
|
$
|
0.88
|
|
|
$
|
0.51
|
|
|
$
|
2.07
|
|
|
$
|
1.20
|
|
Discontinued operations, net of taxes
|
(0.02
|
)
|
|
0.03
|
|
|
0.09
|
|
|
0.08
|
|
||||
Net earnings (loss)
|
$
|
0.86
|
|
|
$
|
0.54
|
|
|
$
|
2.16
|
|
|
$
|
1.28
|
|
Diluted Earnings (Loss) Per Share Attributable to International Paper Company Common Shareholders
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from continuing operations
|
$
|
0.87
|
|
|
$
|
0.51
|
|
|
$
|
2.05
|
|
|
$
|
1.19
|
|
Discontinued operations, net of taxes
|
(0.02
|
)
|
|
0.03
|
|
|
0.09
|
|
|
0.08
|
|
||||
Net earnings (loss)
|
$
|
0.85
|
|
|
$
|
0.54
|
|
|
$
|
2.14
|
|
|
$
|
1.27
|
|
Average Shares of Common Stock Outstanding – assuming dilution
|
449.7
|
|
|
439.8
|
|
|
448.7
|
|
|
439.7
|
|
||||
Cash Dividends Per Common Share
|
$
|
0.3000
|
|
|
$
|
0.2625
|
|
|
$
|
0.9000
|
|
|
$
|
0.7875
|
|
Amounts Attributable to International Paper Company Common Shareholders
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from continuing operations
|
$
|
392
|
|
|
$
|
223
|
|
|
$
|
919
|
|
|
$
|
524
|
|
Discontinued operations, net of taxes
|
(10
|
)
|
|
14
|
|
|
40
|
|
|
35
|
|
||||
Net earnings (loss)
|
$
|
382
|
|
|
$
|
237
|
|
|
$
|
959
|
|
|
$
|
559
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net Earnings (Loss)
|
$
|
376
|
|
|
$
|
238
|
|
|
$
|
948
|
|
|
$
|
567
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
||||||||
Amortization of pension and post-retirement prior service costs and net loss:
|
|
|
|
|
|
|
|
||||||||
U.S. plans
|
76
|
|
|
48
|
|
|
230
|
|
|
146
|
|
||||
Pension and postretirement liability adjustments:
|
|
|
|
|
|
|
|
||||||||
U.S. plans
|
103
|
|
|
4
|
|
|
103
|
|
|
28
|
|
||||
Change in cumulative foreign currency translation adjustment
|
34
|
|
|
114
|
|
|
(312
|
)
|
|
(161
|
)
|
||||
Net gains/losses on cash flow hedging derivatives:
|
|
|
|
|
|
|
|
||||||||
Net gains (losses) arising during the period
|
7
|
|
|
7
|
|
|
(3
|
)
|
|
13
|
|
||||
Reclassification adjustment for (gains) losses included in net earnings (loss)
|
4
|
|
|
4
|
|
|
(5
|
)
|
|
17
|
|
||||
Total Other Comprehensive Income (Loss), Net of Tax
|
224
|
|
|
177
|
|
|
13
|
|
|
43
|
|
||||
Comprehensive Income (Loss)
|
600
|
|
|
415
|
|
|
961
|
|
|
610
|
|
||||
Net (earnings) loss attributable to noncontrolling interests
|
6
|
|
|
(1
|
)
|
|
11
|
|
|
(8
|
)
|
||||
Other comprehensive (income) loss attributable to noncontrolling interests
|
—
|
|
|
(12
|
)
|
|
15
|
|
|
3
|
|
||||
Comprehensive Income (Loss) Attributable to International Paper Company
|
$
|
606
|
|
|
$
|
402
|
|
|
$
|
987
|
|
|
$
|
605
|
|
|
September 30,
2013 |
|
December 31,
2012 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and temporary investments
|
$
|
1,946
|
|
|
$
|
1,302
|
|
Accounts and notes receivable, net
|
4,024
|
|
|
3,562
|
|
||
Inventories
|
2,841
|
|
|
2,730
|
|
||
Deferred income tax assets
|
421
|
|
|
323
|
|
||
Assets of businesses held for sale
|
—
|
|
|
759
|
|
||
Other current assets
|
243
|
|
|
229
|
|
||
Total Current Assets
|
9,475
|
|
|
8,905
|
|
||
Plants, Properties and Equipment, net
|
13,697
|
|
|
13,949
|
|
||
Forestlands
|
580
|
|
|
622
|
|
||
Investments
|
755
|
|
|
887
|
|
||
Financial Assets of Special Purpose Entities (Note 13)
|
2,122
|
|
|
2,108
|
|
||
Goodwill
|
4,491
|
|
|
4,315
|
|
||
Deferred Charges and Other Assets
|
1,469
|
|
|
1,367
|
|
||
Total Assets
|
$
|
32,589
|
|
|
$
|
32,153
|
|
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Notes payable and current maturities of long-term debt
|
$
|
783
|
|
|
$
|
444
|
|
Accounts payable
|
2,904
|
|
|
2,775
|
|
||
Accrued payroll and benefits
|
513
|
|
|
508
|
|
||
Liabilities of businesses held for sale
|
—
|
|
|
44
|
|
||
Other accrued liabilities
|
1,195
|
|
|
1,227
|
|
||
Total Current Liabilities
|
5,395
|
|
|
4,998
|
|
||
Long-Term Debt
|
8,900
|
|
|
9,696
|
|
||
Nonrecourse Financial Liabilities of Special Purpose Entities (Note 13)
|
2,042
|
|
|
2,036
|
|
||
Deferred Income Taxes
|
3,330
|
|
|
3,026
|
|
||
Pension Benefit Obligation
|
3,932
|
|
|
4,112
|
|
||
Postretirement and Postemployment Benefit Obligation
|
435
|
|
|
473
|
|
||
Other Liabilities
|
1,013
|
|
|
1,176
|
|
||
Equity
|
|
|
|
||||
Common stock, $1 par value, 2013 – 447.0 shares and 2012 – 439.9 shares
|
447
|
|
|
440
|
|
||
Paid-in capital
|
6,432
|
|
|
6,042
|
|
||
Retained earnings
|
4,212
|
|
|
3,662
|
|
||
Accumulated other comprehensive loss
|
(3,812
|
)
|
|
(3,840
|
)
|
||
|
7,279
|
|
|
6,304
|
|
||
Less: Common stock held in treasury, at cost, 2013 – 1.1 shares and 2012 – 0.013 shares
|
49
|
|
|
—
|
|
||
Total Shareholders’ Equity
|
7,230
|
|
|
6,304
|
|
||
Noncontrolling interests
|
312
|
|
|
332
|
|
||
Total Equity
|
7,542
|
|
|
6,636
|
|
||
Total Liabilities and Equity
|
$
|
32,589
|
|
|
$
|
32,153
|
|
|
Nine Months Ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
Operating Activities
|
|
|
|
||||
Net earnings (loss)
|
$
|
948
|
|
|
$
|
567
|
|
Discontinued operations, net of taxes
|
(40
|
)
|
|
(35
|
)
|
||
Earnings (loss) from continuing operations
|
908
|
|
|
532
|
|
||
Depreciation, amortization and cost of timber harvested
|
1,176
|
|
|
1,111
|
|
||
Deferred income tax provision, net
|
55
|
|
|
192
|
|
||
Restructuring and other charges
|
131
|
|
|
88
|
|
||
Pension plan contribution
|
(31
|
)
|
|
(44
|
)
|
||
Net (gains) losses on sales and impairments of businesses
|
1
|
|
|
89
|
|
||
Net bargain purchase gain on acquisition of business
|
(13
|
)
|
|
—
|
|
||
Equity (earnings) losses, net
|
30
|
|
|
(52
|
)
|
||
Periodic pension expense, net
|
413
|
|
|
256
|
|
||
Other, net
|
(112
|
)
|
|
(66
|
)
|
||
Changes in current assets and liabilities
|
|
|
|
||||
Accounts and notes receivable
|
(357
|
)
|
|
226
|
|
||
Inventories
|
(121
|
)
|
|
23
|
|
||
Accounts payable and accrued liabilities
|
(19
|
)
|
|
(125
|
)
|
||
Interest payable
|
(8
|
)
|
|
65
|
|
||
Other
|
(89
|
)
|
|
(21
|
)
|
||
Cash Provided By (Used For) Operations – Continuing Operations
|
1,964
|
|
|
2,274
|
|
||
Cash Provided By (Used For) Operations – Discontinued Operations
|
27
|
|
|
(20
|
)
|
||
Cash Provided By (Used For) Operations
|
1,991
|
|
|
2,254
|
|
||
Investment Activities
|
|
|
|
||||
Invested in capital projects
|
(759
|
)
|
|
(1,001
|
)
|
||
Acquisitions, net of cash acquired
|
(507
|
)
|
|
(3,734
|
)
|
||
Proceeds from divestitures
|
733
|
|
|
474
|
|
||
Equity investment in Ilim
|
—
|
|
|
(45
|
)
|
||
Proceeds from sale of fixed assets
|
76
|
|
|
—
|
|
||
Other
|
(33
|
)
|
|
(115
|
)
|
||
Cash Provided By (Used For) Investment Activities – Continuing Operations
|
(490
|
)
|
|
(4,421
|
)
|
||
Cash Provided By (Used For) Investment Activities – Discontinued Operations
|
1
|
|
|
(61
|
)
|
||
Cash Provided By (Used For) Investment Activities
|
(489
|
)
|
|
(4,482
|
)
|
||
Financing Activities
|
|
|
|
||||
Repurchases of common stock and payments of restricted stock tax withholding
|
(70
|
)
|
|
(35
|
)
|
||
Issuance of common stock
|
288
|
|
|
60
|
|
||
Issuance of debt
|
212
|
|
|
2,052
|
|
||
Reduction of debt
|
(637
|
)
|
|
(2,123
|
)
|
||
Change in book overdrafts
|
(65
|
)
|
|
(52
|
)
|
||
Dividends paid
|
(400
|
)
|
|
(344
|
)
|
||
Redemption of securities
|
(150
|
)
|
|
—
|
|
||
Other
|
(28
|
)
|
|
(38
|
)
|
||
Cash Provided By (Used For) Financing Activities
|
(850
|
)
|
|
(480
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
(8
|
)
|
|
(11
|
)
|
||
Change in Cash and Temporary Investments
|
644
|
|
|
(2,719
|
)
|
||
Cash and Temporary Investments
|
|
|
|
||||
Beginning of period
|
1,302
|
|
|
3,994
|
|
||
End of period
|
$
|
1,946
|
|
|
$
|
1,275
|
|
|
Nine Months Ended
September 30, |
||||||||||||||||||||||
|
2013
|
|
2012
|
||||||||||||||||||||
In millions, except per share amounts
|
Total
International
Paper
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|
Total
International
Paper
Shareholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
||||||||||||
Balance, January 1
|
$
|
6,304
|
|
|
$
|
332
|
|
|
$
|
6,636
|
|
|
$
|
6,645
|
|
|
$
|
340
|
|
|
$
|
6,985
|
|
Issuance of stock for various plans, net
|
418
|
|
|
—
|
|
|
418
|
|
|
144
|
|
|
—
|
|
|
144
|
|
||||||
Repurchase of stock
|
(70
|
)
|
|
—
|
|
|
(70
|
)
|
|
(35
|
)
|
|
—
|
|
|
(35
|
)
|
||||||
Common stock dividends ($0.9000 per share in 2013 and $0.7875 per share in 2012)
|
(409
|
)
|
|
—
|
|
|
(409
|
)
|
|
(353
|
)
|
|
—
|
|
|
(353
|
)
|
||||||
Dividends paid to noncontrolling interests by subsidiary
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Noncontrolling interests of acquired entities, net
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Acquisition of noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||||
Comprehensive income (loss)
|
987
|
|
|
(26
|
)
|
|
961
|
|
|
605
|
|
|
5
|
|
|
610
|
|
||||||
Ending Balance, September 30
|
$
|
7,230
|
|
|
$
|
312
|
|
|
$
|
7,542
|
|
|
$
|
7,006
|
|
|
$
|
339
|
|
|
$
|
7,345
|
|
In millions
|
|
Defined Benefit Pension and Postretirement Items (a)
|
|
Change in Cumulative Foreign Currency Translation Adjustments (a)
|
|
Net Gains and Losses on Cash Flow Hedging Derivatives (a)
|
|
Total (a)
|
||||||||
Balance as of June 30, 2013
|
|
$
|
(3,442
|
)
|
|
$
|
(592
|
)
|
|
$
|
(17
|
)
|
|
$
|
(4,051
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
103
|
|
|
34
|
|
|
7
|
|
|
144
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
76
|
|
|
—
|
|
|
4
|
|
|
80
|
|
||||
Net Current Period Other Comprehensive Income
|
|
179
|
|
|
34
|
|
|
11
|
|
|
224
|
|
||||
Balance as of September 30, 2013
|
|
$
|
(3,263
|
)
|
|
$
|
(558
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3,827
|
)
|
In millions
|
|
Defined Benefit Pension and Postretirement Items (a)
|
|
Change in Cumulative Foreign Currency Translation Adjustments (a)
|
|
Net Gains and Losses on Cash Flow Hedging Derivatives (a)
|
|
Total (a)
|
||||||||
Balance as of June 30, 2012
|
|
$
|
(2,730
|
)
|
|
$
|
(392
|
)
|
|
$
|
(17
|
)
|
|
$
|
(3,139
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
4
|
|
|
114
|
|
|
7
|
|
|
125
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
48
|
|
|
—
|
|
|
4
|
|
|
52
|
|
||||
Net Current Period Other Comprehensive Income
|
|
52
|
|
|
114
|
|
|
11
|
|
|
177
|
|
||||
Balance as of September 30, 2012
|
|
$
|
(2,678
|
)
|
|
$
|
(278
|
)
|
|
$
|
(6
|
)
|
|
$
|
(2,962
|
)
|
In millions
|
|
Defined Benefit Pension and Postretirement Items (a)
|
|
Change in Cumulative Foreign Currency Translation Adjustments (a)
|
|
Net Gains and Losses on Cash Flow Hedging Derivatives (a)
|
|
Total (a)
|
||||||||
Balance as of January 1, 2013
|
|
$
|
(3,596
|
)
|
|
$
|
(246
|
)
|
|
$
|
2
|
|
|
$
|
(3,840
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
103
|
|
|
(329
|
)
|
|
(3
|
)
|
|
(229
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
230
|
|
|
17
|
|
|
(5
|
)
|
|
242
|
|
||||
Net Current Period Other Comprehensive Income
|
|
333
|
|
|
(312
|
)
|
|
(8
|
)
|
|
13
|
|
||||
Balance as of September 30, 2013
|
|
$
|
(3,263
|
)
|
|
$
|
(558
|
)
|
|
$
|
(6
|
)
|
|
$
|
(3,827
|
)
|
In millions
|
|
Defined Benefit Pension and Postretirement Items (a)
|
|
Change in Cumulative Foreign Currency Translation Adjustments (a)
|
|
Net Gains and Losses on Cash Flow Hedging Derivatives (a)
|
|
Total (a)
|
||||||||
Balance as of January 1, 2012
|
|
$
|
(2,852
|
)
|
|
$
|
(117
|
)
|
|
$
|
(36
|
)
|
|
$
|
(3,005
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
28
|
|
|
(126
|
)
|
|
13
|
|
|
(85
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
|
146
|
|
|
(35
|
)
|
|
17
|
|
|
128
|
|
||||
Net Current Period Other Comprehensive Income
|
|
174
|
|
|
(161
|
)
|
|
30
|
|
|
43
|
|
||||
Balance as of September 30, 2012
|
|
$
|
(2,678
|
)
|
|
$
|
(278
|
)
|
|
$
|
(6
|
)
|
|
$
|
(2,962
|
)
|
Details About Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (a)
|
|
Location of Amount Reclassified from AOCI
|
||
In millions:
|
|
|
|
|
||
Defined benefit pension and postretirement items:
|
|
|
|
|
||
Prior-service costs
|
|
$
|
(2
|
)
|
(b)
|
Cost of products sold
|
Actuarial gains/(losses)
|
|
(123
|
)
|
(b)
|
Cost of products sold
|
|
Total pre-tax amount
|
|
(125
|
)
|
|
|
|
Tax (expense)/benefit
|
|
49
|
|
|
|
|
Net of tax
|
|
$
|
(76
|
)
|
|
|
Net gains and losses on cash flow hedging derivatives:
|
|
|
|
|
||
Foreign exchange contracts
|
|
$
|
(6
|
)
|
(c)
|
Cost of products sold
|
Total pre-tax amount
|
|
(6
|
)
|
|
|
|
Tax (expense)/benefit
|
|
2
|
|
|
|
|
Net of tax
|
|
(4
|
)
|
|
|
|
Total reclassifications for the period
|
|
$
|
(80
|
)
|
|
|
Details About Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (a)
|
|
Location of Amount Reclassified from AOCI
|
||
In millions:
|
|
|
|
|
||
Defined benefit pension and postretirement items:
|
|
|
|
|
||
Prior-service costs
|
|
$
|
(1
|
)
|
(b)
|
Cost of products sold
|
Actuarial gains/(losses)
|
|
(78
|
)
|
(b)
|
Cost of products sold
|
|
Total pre-tax amount
|
|
(79
|
)
|
|
|
|
Tax (expense)/benefit
|
|
31
|
|
|
|
|
Net of tax
|
|
$
|
(48
|
)
|
|
|
Net gains and losses on cash flow hedging derivatives:
|
|
|
|
|
||
Foreign exchange contracts
|
|
$
|
(6
|
)
|
(c)
|
Cost of products sold
|
Total pre-tax amount
|
|
(6
|
)
|
|
|
|
Tax (expense)/benefit
|
|
2
|
|
|
|
|
Net of tax
|
|
(4
|
)
|
|
|
|
Total reclassifications for the period
|
|
$
|
(52
|
)
|
|
|
Details About Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (a)
|
|
Location of Amount Reclassified from AOCI
|
||
In millions
|
|
|
|
|
||
Defined benefit pension and postretirement items:
|
|
|
|
|
||
Prior-service costs
|
|
$
|
(7
|
)
|
(b)
|
Cost of products sold
|
Actuarial gains/(losses)
|
|
(370
|
)
|
(b)
|
Cost of products sold
|
|
Total pre-tax amount
|
|
(377
|
)
|
|
|
|
Tax (expense)/benefit
|
|
147
|
|
|
|
|
Net of tax
|
|
$
|
(230
|
)
|
|
|
Change in cumulative foreign currency translation adjustments:
|
|
|
|
|
||
Business acquisition/divestitures
|
|
$
|
(17
|
)
|
|
Net bargain purchase gain on acquisition of business
|
Tax (expense)/benefit
|
|
—
|
|
|
|
|
Net of tax
|
|
$
|
(17
|
)
|
|
|
Net gains and losses on cash flow hedging derivatives:
|
|
|
|
|
||
Foreign exchange contracts
|
|
$
|
7
|
|
(c)
|
Cost of products sold
|
Total pre-tax amount
|
|
7
|
|
|
|
|
Tax (expense)/benefit
|
|
(2
|
)
|
|
|
|
Net of tax
|
|
5
|
|
|
|
|
Total reclassifications for the period
|
|
$
|
(242
|
)
|
|
|
Details About Accumulated Other Comprehensive Income Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Income (a)
|
|
Location of Amount Reclassified from AOCI
|
||
In millions
|
|
|
|
|
||
Defined benefit pension and postretirement items:
|
|
|
|
|
||
Prior-service costs
|
|
$
|
(2
|
)
|
(b)
|
Cost of products sold
|
Actuarial gains/(losses)
|
|
(237
|
)
|
(b)
|
Cost of products sold
|
|
Total pre-tax amount
|
|
(239
|
)
|
|
|
|
Tax (expense)/benefit
|
|
93
|
|
|
|
|
Net of tax
|
|
$
|
(146
|
)
|
|
|
Change in cumulative foreign currency translation adjustments:
|
|
|
|
|
||
Business acquisitions/divestitures
|
|
$
|
48
|
|
|
Net (gains) losses on sales and impairments of businesses
|
Tax (expense)/benefit
|
|
(13
|
)
|
|
|
|
Net of tax
|
|
$
|
35
|
|
|
|
Net gains and losses on cash flow hedging derivatives:
|
|
|
|
|
||
Foreign exchange contracts
|
|
$
|
(16
|
)
|
(c)
|
Cost of products sold
|
Natural gas contracts
|
|
(11
|
)
|
(c)
|
Cost of products sold
|
|
Total pre-tax amount
|
|
(27
|
)
|
|
|
|
Tax (expense)/benefit
|
|
10
|
|
|
|
|
Net of tax
|
|
(17
|
)
|
|
|
|
Total reclassifications for the period
|
|
$
|
(128
|
)
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions, except per share amounts
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Earnings (loss) from continuing operations
|
$
|
392
|
|
|
$
|
223
|
|
|
$
|
919
|
|
|
$
|
524
|
|
Effect of dilutive securities (a)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Earnings (loss) from continuing operations – assuming dilution
|
$
|
392
|
|
|
$
|
223
|
|
|
$
|
919
|
|
|
$
|
524
|
|
Average common shares outstanding
|
445.9
|
|
|
435.1
|
|
|
444.1
|
|
|
434.7
|
|
||||
Effect of dilutive securities (a)
|
|
|
|
|
|
|
|
||||||||
Restricted stock performance share plan
|
3.6
|
|
|
4.7
|
|
|
4.3
|
|
|
5.0
|
|
||||
Stock options (b)
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Average common shares outstanding – assuming dilution
|
449.7
|
|
|
439.8
|
|
|
448.7
|
|
|
439.7
|
|
||||
Basic earnings (loss) from continuing operations per common share
|
$
|
0.88
|
|
|
$
|
0.51
|
|
|
$
|
2.07
|
|
|
$
|
1.20
|
|
Diluted earnings (loss) from continuing operations per common share
|
$
|
0.87
|
|
|
$
|
0.51
|
|
|
$
|
2.05
|
|
|
$
|
1.19
|
|
(b)
|
Options to purchase
10.7 million
shares for the
three
months ended
September 30, 2012
and
9.4 million
shares for the
nine
months ended
September 30, 2012
were not included in the computation of diluted common shares outstanding because their exercise price exceeded the average market price of the Company’s common stock for each respective reporting period.
|
|
Three Months Ended
September 30, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
15
|
|
|
$
|
9
|
|
xpedx restructuring
|
6
|
|
|
4
|
|
||
xpedx transaction costs
|
11
|
|
|
7
|
|
||
Courtland mill shutdown
|
51
|
|
|
31
|
|
||
Bellevue box plant facility sale
|
(9
|
)
|
|
(6
|
)
|
||
Other
|
2
|
|
|
2
|
|
||
Total
|
$
|
76
|
|
|
$
|
47
|
|
|
Three Months Ended
June 30, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
3
|
|
|
$
|
2
|
|
Insurance reimbursements
|
(30
|
)
|
|
(19
|
)
|
||
xpedx restructuring
|
17
|
|
|
10
|
|
||
Other
|
6
|
|
|
5
|
|
||
Total
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
Three Months Ended
March 31, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
6
|
|
|
$
|
4
|
|
xpedx restructuring
|
7
|
|
|
4
|
|
||
Augusta paper machine shutdown
|
44
|
|
|
27
|
|
||
Other
|
2
|
|
|
1
|
|
||
Total
|
$
|
59
|
|
|
$
|
36
|
|
|
Three Months Ended
September 30, 2012 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
13
|
|
|
$
|
8
|
|
xpedx restructuring
|
8
|
|
|
4
|
|
||
EMEA packaging restructuring
|
16
|
|
|
11
|
|
||
Other
|
(4
|
)
|
|
1
|
|
||
Total
|
$
|
33
|
|
|
$
|
24
|
|
|
Three Months Ended June 30, 2012
|
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
10
|
|
|
$
|
6
|
|
xpedx restructuring
|
10
|
|
|
6
|
|
||
Other
|
1
|
|
|
1
|
|
||
Total
|
$
|
21
|
|
|
$
|
13
|
|
|
Three Months Ended March 31, 2012
|
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
16
|
|
|
$
|
10
|
|
xpedx restructuring
|
19
|
|
|
14
|
|
||
Other
|
(1
|
)
|
|
(1
|
)
|
||
Total
|
$
|
34
|
|
|
$
|
23
|
|
In millions
|
|
||
Cash and temporary investments
|
$
|
5
|
|
Accounts and notes receivable
|
72
|
|
|
Inventory
|
31
|
|
|
Other current assets
|
2
|
|
|
Plants, properties and equipment
|
105
|
|
|
Investments
|
11
|
|
|
Total assets acquired
|
226
|
|
|
Notes payable and current maturities of long-term debt
|
17
|
|
|
Accounts payable and accrued liabilities
|
27
|
|
|
Deferred income tax liability
|
4
|
|
|
Postretirement and postemployment benefit obligation
|
6
|
|
|
Total liabilities assumed
|
54
|
|
|
Noncontrolling interest
|
18
|
|
|
Net assets acquired
|
$
|
154
|
|
In millions
|
|
||
Accounts and notes receivable
|
$
|
466
|
|
Inventory
|
484
|
|
|
Deferred income tax assets – current
|
140
|
|
|
Other current assets
|
57
|
|
|
Plants, properties and equipment
|
2,911
|
|
|
Financial assets of special purpose entities
|
2,091
|
|
|
Goodwill
|
2,139
|
|
|
Other intangible assets
|
693
|
|
|
Deferred charges and other assets
|
54
|
|
|
Total assets acquired
|
9,035
|
|
|
Notes payable and current maturities of long-term debt
|
130
|
|
|
Accounts payable and accrued liabilities
|
704
|
|
|
Long-term debt
|
527
|
|
|
Nonrecourse financial liabilities of special purpose entities
|
2,030
|
|
|
Deferred income tax liability
|
1,252
|
|
|
Pension benefit obligation
|
338
|
|
|
Postretirement and postemployment benefit obligation
|
99
|
|
|
Other liabilities
|
221
|
|
|
Total liabilities assumed
|
5,301
|
|
|
Net assets acquired
|
$
|
3,734
|
|
In millions
|
Estimated
Fair Value
|
|
Average
Remaining
Useful Life
|
||
|
|
|
(at acquisition date)
|
||
Asset Class:
|
|
|
|
||
Customer relationships
|
$
|
536
|
|
|
12-17 years
|
Developed technology
|
8
|
|
|
5-10 years
|
|
Tradenames
|
109
|
|
|
Indefinite
|
|
Favorable contracts
|
14
|
|
|
4-7 years
|
|
Non-compete agreement
|
26
|
|
|
2 years
|
|
Total
|
$
|
693
|
|
|
|
In millions, except per share amounts
|
|
Nine Months Ended
September 30, 2012 |
||
Net sales
|
|
$
|
21,050
|
|
Earnings (loss) from continuing operations (a)
|
|
567
|
|
|
Net earnings (loss) (a)
|
|
602
|
|
|
Diluted earnings (loss) from continuing operations per common share (a)
|
|
1.29
|
|
|
Diluted net earnings (loss) per common share (a)
|
|
1.37
|
|
In millions
|
|
||
Cash and temporary investments
|
$
|
16
|
|
Accounts and notes receivable, net
|
5
|
|
|
Inventory
|
27
|
|
|
Plants, properties and equipment
|
290
|
|
|
Goodwill
|
220
|
|
|
Other intangible assets
|
110
|
|
|
Other long-term assets
|
3
|
|
|
Total assets acquired
|
671
|
|
|
Accounts payable and accrued liabilities
|
10
|
|
|
Deferred income tax liability
|
56
|
|
|
Total liabilities assumed
|
66
|
|
|
Noncontrolling interest
|
134
|
|
|
Net assets acquired
|
$
|
471
|
|
In millions
|
Estimated
Fair Value
|
|
Average
Remaining
Useful Life
|
||
|
|
|
(at acquisition date)
|
||
Asset Class:
|
|
|
|
||
Customer relationships
|
$
|
88
|
|
|
12 years
|
Trademark
|
3
|
|
|
6 years
|
|
Wood supply agreement
|
19
|
|
|
25 years
|
|
Total
|
$
|
110
|
|
|
|
In millions
|
September 30, 2013
|
|
December 31, 2012
|
||||
Temporary investments
|
$
|
1,545
|
|
|
$
|
934
|
|
In millions
|
September 30, 2013
|
|
December 31, 2012
|
||||
Accounts and notes receivable, net:
|
|
|
|
||||
Trade
|
$
|
3,717
|
|
|
$
|
3,316
|
|
Other
|
307
|
|
|
246
|
|
||
Total
|
$
|
4,024
|
|
|
$
|
3,562
|
|
In millions
|
September 30, 2013
|
|
December 31, 2012
|
||||
Raw materials
|
$
|
410
|
|
|
$
|
360
|
|
Finished pulp, paper and packaging
|
1,792
|
|
|
1,728
|
|
||
Operating supplies
|
571
|
|
|
588
|
|
||
Other
|
68
|
|
|
54
|
|
||
Total
|
$
|
2,841
|
|
|
$
|
2,730
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Depreciation expense
|
$
|
365
|
|
|
$
|
347
|
|
|
$
|
1,081
|
|
|
$
|
1,045
|
|
In millions
|
September 30, 2013
|
|
December 31, 2012
|
||||
Accumulated depreciation
|
$
|
19,826
|
|
|
$
|
18,934
|
|
Allowance for doubtful accounts
|
138
|
|
|
119
|
|
|
Nine Months Ended
September 30, |
||||||
In millions
|
2013
|
|
2012
|
||||
Interest payments
|
$
|
537
|
|
|
$
|
496
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Interest expense (a)
|
$
|
162
|
|
|
$
|
197
|
|
|
$
|
520
|
|
|
$
|
559
|
|
Interest income (a)
|
15
|
|
|
34
|
|
|
41
|
|
|
56
|
|
||||
Capitalized interest costs
|
4
|
|
|
10
|
|
|
12
|
|
|
29
|
|
(a)
|
Interest expense and interest income exclude approximately
$11 million
and
$35 million
for the
three
months and
nine
months ended
September 30, 2013
and
$15 million
and
$35 million
for the
three
months and
nine
months ended
September 30, 2012
, respectively, related to investments in and borrowings from variable interest entities for which the Company has a legal right of offset (see Note 13).
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost
|
4
|
|
|
5
|
|
|
11
|
|
|
15
|
|
||||
Actuarial loss
|
2
|
|
|
3
|
|
|
5
|
|
|
8
|
|
||||
Amortization of prior service credit
|
(6
|
)
|
|
(8
|
)
|
|
(18
|
)
|
|
(22
|
)
|
||||
Net postretirement benefit expense
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
In millions
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Distribution
|
|
Total
|
||||||||||
Balance as of January 1, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
3,165
|
|
|
$
|
2,396
|
|
|
$
|
1,783
|
|
|
$
|
400
|
|
|
$
|
7,744
|
|
Accumulated impairment losses (a)
|
—
|
|
|
(1,765
|
)
|
|
(1,664
|
)
|
|
—
|
|
|
(3,429
|
)
|
|||||
|
3,165
|
|
|
631
|
|
|
119
|
|
|
400
|
|
|
4,315
|
|
|||||
Reclassifications and other (b)
|
(13
|
)
|
|
(49
|
)
|
|
2
|
|
|
—
|
|
|
(60
|
)
|
|||||
Additions/reductions
|
253
|
|
(c)
|
(17
|
)
|
(d)
|
—
|
|
|
—
|
|
|
236
|
|
|||||
Balance as of September 30, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
3,405
|
|
|
2,330
|
|
|
1,785
|
|
|
400
|
|
|
7,920
|
|
|||||
Accumulated impairment losses (a)
|
—
|
|
|
(1,765
|
)
|
|
(1,664
|
)
|
|
—
|
|
|
(3,429
|
)
|
|||||
Total
|
$
|
3,405
|
|
|
$
|
565
|
|
|
$
|
121
|
|
|
$
|
400
|
|
|
$
|
4,491
|
|
(a)
|
Represents accumulated goodwill impairment charges since the adoption of ASC 350, “Intangibles – Goodwill and Other” in 2002.
|
(b)
|
Represents the effects of foreign currency translations and reclassifications.
|
(c)
|
Reflects
$220 million
for Orsa IP, the newly formed joint venture in Brazil, and the adjustment of
$54 million
(
$33 million
after-tax impact to goodwill) previously included as a trade name intangible asset in Deferred Charges and Other Assets on the balance sheet.
|
(d)
|
Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in Brazil.
|
|
September 30, 2013
|
|
December 31, 2012
|
||||||||||||
In millions
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships and lists
|
$
|
634
|
|
|
$
|
138
|
|
|
$
|
644
|
|
|
$
|
112
|
|
Non-compete agreements
|
76
|
|
|
41
|
|
|
83
|
|
|
30
|
|
||||
Tradenames, patents and trademarks
|
77
|
|
|
18
|
|
|
144
|
|
|
16
|
|
||||
Land and water rights
|
75
|
|
|
7
|
|
|
87
|
|
|
6
|
|
||||
Fuel and power agreements
|
11
|
|
|
6
|
|
|
17
|
|
|
12
|
|
||||
Software
|
24
|
|
|
22
|
|
|
22
|
|
|
19
|
|
||||
Other
|
49
|
|
|
27
|
|
|
83
|
|
|
19
|
|
||||
Total
|
$
|
946
|
|
|
$
|
259
|
|
|
$
|
1,080
|
|
|
$
|
214
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Amortization expense related to intangible assets
|
$
|
30
|
|
|
$
|
28
|
|
|
$
|
66
|
|
|
$
|
43
|
|
|
Nine Months Ended
September 30, |
||||||
In millions
|
2013
|
|
2012
|
||||
Income tax payments, net
|
$
|
224
|
|
|
$
|
41
|
|
In millions
|
Unrecognized
Tax Benefits
|
|
Accrued Estimated
Interest and Tax
Penalties
|
||||
Balance at December 31, 2012
|
$
|
(972
|
)
|
|
$
|
(104
|
)
|
Activity for three months ended March 31, 2013
|
99
|
|
|
20
|
|
||
Activity for the three months ended June 30, 2013
|
6
|
|
|
1
|
|
||
Activity for the three months ended September 30, 2013
|
29
|
|
|
13
|
|
||
Balance at September 30, 2013
|
$
|
(838
|
)
|
|
$
|
(70
|
)
|
|
Nine Months Ended
September 30, |
||||||
In millions
|
2013
|
|
2012
|
||||
Special items
|
$
|
(77
|
)
|
|
$
|
(87
|
)
|
Tax-related adjustments:
|
|
|
|
||||
Temple-Inland acquisition
|
—
|
|
|
3
|
|
||
IRS audit settlement
|
(122
|
)
|
|
—
|
|
||
Mexican business restructuring
|
—
|
|
|
3
|
|
||
Other
|
2
|
|
|
—
|
|
||
Income tax provision (benefit) related to special items
|
$
|
(197
|
)
|
|
$
|
(81
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue (a)
|
$
|
11
|
|
|
$
|
15
|
|
|
$
|
35
|
|
|
$
|
35
|
|
Expense (a)
|
20
|
|
|
28
|
|
|
61
|
|
|
68
|
|
||||
Cash receipts (b)
|
14
|
|
|
21
|
|
|
33
|
|
|
36
|
|
||||
Cash payments (c)
|
39
|
|
|
47
|
|
|
84
|
|
|
87
|
|
(a)
|
The net expense related to the Company’s interest in the Entities is included in the accompanying consolidated statement of operations, as International Paper has and intends to affect its legal right to offset as discussed above.
|
(b)
|
The cash receipts are equity distributions from the Entities to International Paper.
|
(c)
|
The semi-annual payments are related to interest on the associated debt obligations discussed above.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue (a)
|
$
|
6
|
|
|
$
|
15
|
|
|
$
|
20
|
|
|
$
|
21
|
|
Expense (b)
|
7
|
|
|
11
|
|
|
22
|
|
|
20
|
|
||||
Cash receipts (c)
|
2
|
|
|
3
|
|
|
6
|
|
|
10
|
|
||||
Cash payments (d)
|
5
|
|
|
6
|
|
|
16
|
|
|
16
|
|
(a)
|
The revenue is included in Interest expense, net in the accompanying consolidated statement of operations and includes approximately
$5 million
and
$14 million
for the
three
months and
nine
months ended
September 30, 2013
, respectively, and
$12 million
for the
three
months and
nine
months ended
September 30, 2012
, respectively, of accretion income for the amortization of the purchase accounting adjustment on the Financial assets of special purpose entities.
|
(b)
|
The expense is included in Interest expense, net in the accompanying consolidated statement of operations and includes approximately
$2 million
and
$5 million
for the
three
months and
nine
months ended
September 30, 2013
, respectively, and
$5 million
for the
three
months and
nine
months ended
September 30, 2012
, respectively, of accretion expense for the amortization of the purchase accounting adjustment on the Nonrecourse financial liabilities of special purpose entities.
|
(c)
|
The cash receipts are interest received on the Financial assets of special purpose entities.
|
(d)
|
The cash payments are interest paid on Nonrecourse financial liabilities of special purpose entities.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Early debt reductions (a)
|
$
|
442
|
|
|
$
|
611
|
|
|
$
|
500
|
|
|
$
|
1,047
|
|
Pre-tax early debt extinguishment costs (b)
|
15
|
|
|
13
|
|
|
24
|
|
|
39
|
|
(a)
|
Reductions related to notes with interest rates ranging from
5.45%
to
7.40%
with original maturities from
2014
to
2033
and from
1.63%
to
6.95%
with original maturities from
2017
to
2023
for the
three
months ended
September 30, 2013
and 2012, respectively, and
5.20%
to
7.95%
with original maturities from
2014
to
2033
and from
1.63%
to
7.95%
with original maturities from
2012
to
2023
for the
nine
months ended
September 30, 2013
and
September 30, 2012
, respectively.
|
(b)
|
Amounts are included in Restructuring and Other Charges in the accompanying consolidated statements of operations.
|
In millions
|
September 30, 2013
|
|
December 31, 2012
|
|
||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
||
Foreign exchange contracts (Sell / Buy; denominated in sell notional): (a)
|
|
|
|
|
||
Brazilian real / U.S. dollar - Forward
|
543
|
|
|
—
|
|
|
British pounds / Brazilian real – Forward
|
16
|
|
|
13
|
|
|
European euro / Brazilian real – Forward
|
21
|
|
|
13
|
|
|
European euro / Polish zloty – Forward
|
263
|
|
|
149
|
|
|
U.S. dollar / Brazilian real – Forward
|
335
|
|
|
238
|
|
|
U.S. dollar / Brazilian real – Zero-cost collar
|
18
|
|
|
18
|
|
|
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
||
Embedded derivative (in USD)
|
—
|
|
|
150
|
|
|
Foreign exchange contracts (Sell / Buy; denominated in sell notional): (b)
|
|
|
|
|
||
Indian rupee / U.S. dollar
|
157
|
|
|
140
|
|
|
Thai baht / U.S. dollar
|
36
|
|
|
261
|
|
|
U.S. dollar / Turkish lira
|
—
|
|
|
56
|
|
|
Interest rate contracts (in USD)
|
—
|
|
|
150
|
|
(c)
|
(a)
|
These contracts had maturities of
three years
or less as of
September 30, 2013
.
|
(b)
|
These contracts had maturities of
one year
or less as of
September 30, 2013
.
|
(c)
|
Includes
$150 million
floating-to-fixed interest rate swap notional to offset the embedded derivative.
|
|
Gain (Loss)
Reclassified from
AOCI
(Effective Portion)
|
|
Location of Gain (Loss)
Reclassified from AOCI
(Effective Portion)
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
||||||||
Derivatives in Cash Flow Hedging Relationships:
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
$
|
5
|
|
|
$
|
(10
|
)
|
|
Cost of products sold
|
Natural gas contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
Cost of products sold
|
||||
Total
|
$
|
(4
|
)
|
|
$
|
(4
|
)
|
|
$
|
5
|
|
|
$
|
(17
|
)
|
|
|
|
Gain (Loss) Recognized
|
Location of Gain (Loss)
In Consolidated
Statement
of Operations
|
|||||||||||||||
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
||||||||
Derivatives Not Designated as Hedging Instruments:
|
|
|
|
|
|
|
|
|
|
||||||||
Electricity contact
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
Cost of products sold
|
Embedded Derivatives
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
Interest expense, net
|
||||
Foreign exchange contracts
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(1
|
)
|
|
Cost of products sold
|
||||
Interest rate contracts
|
7
|
|
|
5
|
|
|
17
|
|
|
17
|
|
|
Interest expense, net
|
||||
Total
|
$
|
7
|
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
11
|
|
|
|
|
Assets
|
|
Liabilities
|
|
||||||||||||
In millions
|
September 30, 2013
|
|
December 31, 2012
|
|
September 30, 2013
|
|
December 31, 2012
|
|
||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts – cash flow
|
$
|
22
|
|
(a)
|
$
|
7
|
|
(c)
|
$
|
28
|
|
(e)
|
$
|
21
|
|
(f)
|
Total derivatives designated as hedging instruments
|
$
|
22
|
|
|
$
|
7
|
|
|
$
|
28
|
|
|
$
|
21
|
|
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
||||||||
Electricity contract
|
$
|
1
|
|
(b)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
(g)
|
Embedded derivatives
|
—
|
|
|
1
|
|
(d)
|
—
|
|
|
—
|
|
|
||||
Foreign exchange contracts
|
—
|
|
|
1
|
|
(d)
|
—
|
|
|
—
|
|
|
||||
Interest rate contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
(g)
|
||||
Total derivatives not designated as hedging instruments
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
Total derivatives
|
$
|
23
|
|
|
$
|
9
|
|
|
$
|
28
|
|
|
$
|
23
|
|
|
(a)
|
Includes
$11 million
recorded in Other current assets and
$11 million
recorded in Deferred charges and other assets in the accompanying consolidated balance sheet.
|
(b)
|
Included in Deferred charges and other assets in the accompanying consolidated balance sheet.
|
(c)
|
Includes
$3 million
recorded in Other current assets and
$4 million
recorded in Deferred charges and other assets in the accompanying consolidated balance sheet.
|
(d)
|
Included in Other current assets in the accompanying consolidated balance sheet.
|
(e)
|
Includes
$17 million
recorded in Other accrued liabilities and
$11 million
recorded in Other liabilities in the accompanying consolidated balance sheet.
|
(f)
|
Includes
$20 million
recorded in Other accrued liabilities and
$1 million
recorded in Other liabilities in the accompanying consolidated balance sheet.
|
(g)
|
Included in Other accrued liabilities in the accompanying consolidated balance sheet.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Service cost
|
$
|
47
|
|
|
$
|
38
|
|
|
$
|
142
|
|
|
$
|
113
|
|
Interest cost
|
143
|
|
|
154
|
|
|
430
|
|
|
452
|
|
||||
Expected return on plan assets
|
(186
|
)
|
|
(190
|
)
|
|
(550
|
)
|
|
(563
|
)
|
||||
Actuarial loss
|
121
|
|
|
76
|
|
|
365
|
|
|
230
|
|
||||
Amortization of prior service cost
|
9
|
|
|
8
|
|
|
26
|
|
|
24
|
|
||||
Net periodic pension expense
|
$
|
134
|
|
|
$
|
86
|
|
|
$
|
413
|
|
|
$
|
256
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Total stock-based compensation expense (selling and administrative)
|
$
|
35
|
|
|
$
|
26
|
|
|
$
|
106
|
|
|
$
|
70
|
|
Income tax benefits related to stock-based compensation
|
3
|
|
|
—
|
|
|
70
|
|
|
40
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Expected volatility
|
25.25 % - 62.58%
|
|
28.39% - 55.33%
|
|
25.25% - 62.58%
|
|
28.39% - 55.33%
|
Risk-free interest rate
|
0.20% - 0.99%
|
|
0.12% - 0.42%
|
|
0.20% - 0.99%
|
|
0.12% - 0.42%
|
|
Nonvested
Shares / Units
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2012
|
8,660,855
|
|
|
$
|
28.37
|
|
Granted
|
3,148,445
|
|
|
40.76
|
|
|
Shares Issued (a)
|
(3,222,492
|
)
|
|
32.48
|
|
|
Forfeited
|
(348,754
|
)
|
|
35.06
|
|
|
Outstanding at September 30, 2013
|
8,238,054
|
|
|
$
|
31.22
|
|
|
Options
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average
Remaining Life
(years)
|
|
Aggregate
Intrinsic
Value
(thousands)
|
|||||
Outstanding at December 31, 2012
|
9,136,060
|
|
|
$
|
38.79
|
|
|
|
|
|
||
Granted
|
4,744
|
|
|
48.11
|
|
|
|
|
|
|||
Exercised
|
(7,067,850
|
)
|
|
38.54
|
|
|
|
|
|
|||
Expired
|
(49,637
|
)
|
|
35.99
|
|
|
|
|
|
|||
Outstanding at September 30, 2013
|
2,023,317
|
|
|
$
|
39.74
|
|
|
0.85
|
|
$
|
10,245
|
|
|
Nonvested
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2012
|
151,549
|
|
|
$
|
30.49
|
|
Granted
|
63,500
|
|
|
44.40
|
|
|
Shares Issued
|
(81,941
|
)
|
|
33.04
|
|
|
Forfeited
|
(17,500
|
)
|
|
37.75
|
|
|
Outstanding at September 30, 2013
|
115,608
|
|
|
$
|
35.22
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||||||
Industrial Packaging
|
$
|
3,755
|
|
|
$
|
3,335
|
|
|
$
|
11,095
|
|
|
$
|
9,900
|
|
|
Printing Papers
|
1,555
|
|
|
1,580
|
|
|
4,635
|
|
|
4,650
|
|
|
||||
Consumer Packaging
|
885
|
|
|
765
|
|
|
2,570
|
|
|
2,355
|
|
|
||||
Distribution
|
1,445
|
|
|
1,535
|
|
|
4,235
|
|
|
4,510
|
|
|
||||
Corporate and Intersegment Sales
|
(234
|
)
|
|
(189
|
)
|
|
(704
|
)
|
|
(657
|
)
|
|
||||
Net Sales
|
$
|
7,406
|
|
|
$
|
7,026
|
|
|
$
|
21,831
|
|
|
$
|
20,758
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
||||||||
Industrial Packaging
|
$
|
499
|
|
(a)
|
$
|
255
|
|
(e)
|
1,328
|
|
(a)
|
$
|
730
|
|
(e)
|
|
Printing Papers
|
93
|
|
(b)
|
202
|
|
(f)
|
318
|
|
(b)
|
452
|
|
(f)
|
||||
Consumer Packaging
|
73
|
|
(c)
|
67
|
|
(g)
|
131
|
|
(c)
|
227
|
|
(g)
|
||||
Distribution
|
13
|
|
(d)
|
15
|
|
(h)
|
8
|
|
(d)
|
18
|
|
(h)
|
||||
Operating Profit
|
678
|
|
|
539
|
|
|
$
|
1,785
|
|
|
1,427
|
|
|
|||
Interest expense, net
|
(147
|
)
|
|
(163
|
)
|
|
(479
|
)
|
(i)
|
(503
|
)
|
|
||||
Noncontrolling interests/equity earnings adjustment (j)
|
(3
|
)
|
|
—
|
|
|
1
|
|
|
8
|
|
|
||||
Corporate items, net
|
(13
|
)
|
|
(1
|
)
|
|
(35
|
)
|
|
(36
|
)
|
|
||||
Restructuring and other charges
|
(26
|
)
|
|
(15
|
)
|
|
(23
|
)
|
|
(40
|
)
|
|
||||
Non-operating pension expense
|
(78
|
)
|
|
(40
|
)
|
|
(245
|
)
|
|
(119
|
)
|
|
||||
Earnings (loss) from continuing operations before income taxes and equity earnings
|
$
|
411
|
|
|
$
|
320
|
|
|
$
|
1,004
|
|
|
$
|
737
|
|
|
Equity earnings (loss), net of taxes – Ilim
|
$
|
11
|
|
|
$
|
33
|
|
|
$
|
(34
|
)
|
|
$
|
48
|
|
|
(a)
|
Includes charges of
$24 million
for the
three
months ended
September 30, 2013
and
$50 million
for the
nine
months ended
September 30, 2013
for integration costs associated with the acquisition of Temple-Inland, a gain of
$14 million
for the
nine
months ended
September 30, 2013
for a bargain purchase adjustment on the first quarter 2013 acquisition of a majority share of our operations in Turkey, a gain of
$9 million
for the
three
months and
nine
months ended
September 30, 2013
related to the sale of the box plant facility in Bellevue, Washington, and charges of
$3 million
for the
three
months ended
September 30, 2013
and
$8 million
for the
nine
months ended
September 30, 2013
for other items.
|
(b)
|
Includes charges of
$51 million
for the
three
months and
nine
months ended
September 30, 2013
for costs associated with the announced shutdown of our Courtland, Alabama mill.
|
(c)
|
Includes charges of
$45 million
for the
nine
months ended
September 30, 2013
for costs associated with the permanent shutdown of a paper machine at our Augusta, Georgia mill.
|
(d)
|
Includes charges of
$6 million
for the
three
months ended
September 30, 2013
and
$30 million
for the
nine
months ended
September 30, 2013
for costs associated with the restructuring of the Company's xpedx operations.
|
(e)
|
Includes charges of
$58 million
and
$136 million
for the
three
months and
nine
months ended
September 30, 2012
for integration costs associated with the Temple-Inland acquisition, charges of
$19 million
and
$28 million
for the
three
months and
nine
months ended
September 30, 2012
for costs associated with the divestiture of three containerboard mills, charges of
$16 million
for the
three
months and
nine
months ended
September 30, 2012
for costs associated with the restructuring of our Packaging business in Europe, a charge of
$62 million
for the
nine
months ended
September 30, 2012
to adjust the value of the long-lived assets of the Hueneme mill in Oxnard, California to their fair value, a charge of
$20 million
for the
nine
months ended
September 30, 2012
related to the write-up of the Temple-Inland inventory to fair value, and gains of
$6 million
and
$5 million
for the
three
months and
nine
months ended
September 30, 2012
for other items.
|
(f)
|
Includes a gain of
$1 million
for the
three
months ended
September 30, 2012
and a net
$0 million
for the
nine
months ended
September 30, 2012
related to the acquisition of the majority interest in Andhra Pradesh Paper Mills Limited.
|
(g)
|
Includes a gain of
$1 million
for the
nine
months ended
September 30, 2012
for adjustments related to the sale of the Shorewood business.
|
(h)
|
Includes charges of
$9 million
and
$42 million
for the
three
months and
nine
months ended
September 30, 2012
for costs associated with the restructuring of the Company's xpedx operation.
|
(i)
|
Includes a gain of
$6 million
for interest related to the settlement of an IRS tax audit.
|
(j)
|
Operating profits for industry segments include each segment’s percentage share of the profits of subsidiaries included in that segment that are less than wholly owned. The pre-tax noncontrolling interest and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
September 30, |
|
Three Months Ended
June 30, |
||||||||
|
2013
|
|
2012
|
|
2013
|
||||||
Operating Earnings (Loss) Per Share Attributable to Shareholders
|
$
|
1.05
|
|
|
$
|
0.81
|
|
|
$
|
0.64
|
|
Non-operating pension
|
(0.11
|
)
|
|
(0.06
|
)
|
|
(0.11
|
)
|
|||
Special items
|
(0.07
|
)
|
|
(0.24
|
)
|
|
(0.01
|
)
|
|||
Diluted Earnings (Loss) Per Share from Continuing Operations
|
0.87
|
|
|
0.51
|
|
|
0.52
|
|
|||
Discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
0.05
|
|
|||
Diluted Earnings (Loss) Per Share Attributable to Shareholders
|
$
|
0.85
|
|
|
$
|
0.54
|
|
|
$
|
0.57
|
|
|
Three Months Ended
|
||||||||||
|
September 30,
|
|
June 30,
|
||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
||||||
Earnings (Loss) From Continuing Operations Attributable to International Paper Company
|
$
|
392
|
|
|
$
|
223
|
|
|
$
|
235
|
|
Add back (deduct):
|
|
|
|
|
|
||||||
Income tax provision (benefit)
|
41
|
|
|
130
|
|
|
94
|
|
|||
Equity (earnings) loss, net of taxes
|
(16
|
)
|
|
(34
|
)
|
|
36
|
|
|||
Noncontrolling interests, net of taxes
|
(6
|
)
|
|
1
|
|
|
(2
|
)
|
|||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings
|
411
|
|
|
320
|
|
|
363
|
|
|||
Interest expense, net
|
147
|
|
|
163
|
|
|
168
|
|
|||
Noncontrolling interests / equity earnings included in operations
|
3
|
|
|
—
|
|
|
(4
|
)
|
|||
Corporate items
|
13
|
|
|
1
|
|
|
—
|
|
|||
Special items
|
26
|
|
|
15
|
|
|
(9
|
)
|
|||
Non-operating pension expense
|
78
|
|
|
40
|
|
|
83
|
|
|||
|
$
|
678
|
|
|
$
|
539
|
|
|
$
|
601
|
|
Industry Segment Operating Profit:
|
|
|
|
|
|
||||||
Industrial Packaging
|
$
|
499
|
|
|
$
|
255
|
|
|
$
|
474
|
|
Printing Papers
|
93
|
|
|
202
|
|
|
76
|
|
|||
Consumer Packaging
|
73
|
|
|
67
|
|
|
51
|
|
|||
Distribution
|
13
|
|
|
15
|
|
|
—
|
|
|||
Total Industry Segment Operating Profit
|
$
|
678
|
|
|
$
|
539
|
|
|
$
|
601
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||
In thousands of short tons
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Industrial Packaging
|
|
|
|
|
|
|
|
||||
Corrugated Packaging (b)
|
2,609
|
|
|
2,665
|
|
|
7,837
|
|
|
7,922
|
|
Containerboard (b)
|
801
|
|
|
823
|
|
|
2,520
|
|
|
2,400
|
|
Recycling
|
603
|
|
|
620
|
|
|
1,764
|
|
|
1,754
|
|
Saturated Kraft
|
49
|
|
|
47
|
|
|
138
|
|
|
130
|
|
Gypsum/Release Kraft (b)
|
47
|
|
|
37
|
|
|
113
|
|
|
89
|
|
Bleached Kraft
|
39
|
|
|
30
|
|
|
110
|
|
|
85
|
|
European Industrial Packaging (c)
|
325
|
|
|
244
|
|
|
996
|
|
|
770
|
|
Asian Box
|
111
|
|
|
108
|
|
|
312
|
|
|
306
|
|
Brazilian Packaging (d)
|
85
|
|
|
—
|
|
|
208
|
|
|
—
|
|
Industrial Packaging
|
4,669
|
|
|
4,574
|
|
|
13,998
|
|
|
13,456
|
|
Printing Papers
|
|
|
|
|
|
|
|
||||
U.S. Uncoated Papers
|
650
|
|
|
668
|
|
|
1,904
|
|
|
1,990
|
|
European and Russian Uncoated Papers
|
359
|
|
|
326
|
|
|
1,027
|
|
|
948
|
|
Brazilian Uncoated Papers
|
288
|
|
|
290
|
|
|
831
|
|
|
859
|
|
Indian Uncoated Papers
|
53
|
|
|
59
|
|
|
170
|
|
|
185
|
|
Uncoated Papers
|
1,350
|
|
|
1,343
|
|
|
3,932
|
|
|
3,982
|
|
Market Pulp (e)
|
413
|
|
|
414
|
|
|
1,272
|
|
|
1,155
|
|
Consumer Packaging
|
|
|
|
|
|
|
|
||||
North American Consumer Packaging
|
409
|
|
|
378
|
|
|
1,188
|
|
|
1,139
|
|
European Coated Paperboard
|
87
|
|
|
93
|
|
|
268
|
|
|
278
|
|
Asian Coated Paperboard
|
365
|
|
|
242
|
|
|
1,063
|
|
|
719
|
|
Consumer Packaging
|
861
|
|
|
713
|
|
|
2,519
|
|
|
2,136
|
|
|
Three Months Ended
September 30, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
15
|
|
|
$
|
9
|
|
xpedx restructuring
|
6
|
|
|
4
|
|
||
xpedx transaction costs
|
11
|
|
|
7
|
|
||
Courtland mill shutdown (a)
|
51
|
|
|
31
|
|
||
Bellevue box plant facility sale
|
(9
|
)
|
|
(6
|
)
|
||
Other
|
2
|
|
|
2
|
|
||
Total
|
$
|
76
|
|
|
$
|
47
|
|
|
Three Months Ended
June 30, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
3
|
|
|
$
|
2
|
|
Insurance reimbursements
|
(30
|
)
|
|
(19
|
)
|
||
xpedx restructuring
|
17
|
|
|
10
|
|
||
Other
|
6
|
|
|
5
|
|
||
Total
|
$
|
(4
|
)
|
|
$
|
(2
|
)
|
|
Three Months Ended
March 31, 2013 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
6
|
|
|
$
|
4
|
|
xpedx restructuring
|
7
|
|
|
4
|
|
||
Augusta paper machine shutdown
|
44
|
|
|
27
|
|
||
Other
|
2
|
|
|
1
|
|
||
Total
|
$
|
59
|
|
|
$
|
36
|
|
|
Three Months Ended
September 30, 2012 |
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
13
|
|
|
$
|
8
|
|
xpedx restructuring
|
8
|
|
|
4
|
|
||
EMEA packaging restructuring
|
16
|
|
|
11
|
|
||
Other
|
(4
|
)
|
|
1
|
|
||
Total
|
$
|
33
|
|
|
$
|
24
|
|
|
Three Months Ended June 30, 2012
|
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
10
|
|
|
$
|
6
|
|
xpedx restructuring
|
10
|
|
|
6
|
|
||
Other
|
1
|
|
|
1
|
|
||
Total
|
$
|
21
|
|
|
$
|
13
|
|
|
Three Months Ended March 31, 2012
|
||||||
In millions
|
Before-Tax
Charges
|
|
After-Tax
Charges
|
||||
Early debt extinguishment costs
|
$
|
16
|
|
|
$
|
10
|
|
xpedx restructuring
|
19
|
|
|
14
|
|
||
Other
|
(1
|
)
|
|
(1
|
)
|
||
Total
|
$
|
34
|
|
|
$
|
23
|
|
|
2013
|
2012
|
|
|
|||||||||||||||||||
In millions
|
3rd Quarter
|
|
2nd Quarter
|
|
Nine Months
|
|
3rd Quarter
|
|
2nd Quarter
|
|
Nine Months
|
||||||||||||
Sales
|
$
|
3,755
|
|
|
$
|
3,780
|
|
|
$
|
11,095
|
|
|
$
|
3,335
|
|
|
$
|
3,450
|
|
|
$
|
9,900
|
|
Operating Profit
|
499
|
|
|
474
|
|
|
1,328
|
|
|
255
|
|
|
260
|
|
|
730
|
|
|
2013
|
|
2012
|
||||||||||||||||||||
In millions
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
||||||||||||
Sales
|
$
|
1,555
|
|
|
$
|
1,540
|
|
|
$
|
4,635
|
|
|
$
|
1,580
|
|
|
$
|
1,510
|
|
|
$
|
4,650
|
|
Operating Profit
|
93
|
|
|
76
|
|
|
318
|
|
|
202
|
|
|
104
|
|
|
452
|
|
|
2013
|
|
2012
|
||||||||||||||||||||
In millions
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
||||||||||||
Sales
|
$
|
885
|
|
|
$
|
855
|
|
|
$
|
2,570
|
|
|
$
|
765
|
|
|
$
|
780
|
|
|
$
|
2,355
|
|
Operating Profit
|
73
|
|
|
51
|
|
|
131
|
|
|
67
|
|
|
57
|
|
|
227
|
|
|
2013
|
|
2012
|
||||||||||||||||||||
In millions
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
|
3rd Quarter
|
|
2nd Quarter
|
|
YTD
|
||||||||||||
Sales
|
$
|
1,445
|
|
|
$
|
1,405
|
|
|
$
|
4,235
|
|
|
$
|
1,535
|
|
|
$
|
1,500
|
|
|
$
|
4,510
|
|
Operating Profit
|
13
|
|
|
—
|
|
|
8
|
|
|
15
|
|
|
5
|
|
|
18
|
|
|
Nine Months Ended
September 30, |
||||||
In millions
|
2013
|
|
2012
|
||||
Cash provided by continuing operations
|
$
|
1,964
|
|
|
$
|
2,274
|
|
Adjustments:
|
|
|
|
||||
Cash invested in capital projects
|
(759
|
)
|
|
(1,001
|
)
|
||
Cash contribution to pension plan
|
31
|
|
|
44
|
|
||
Insurance reimbursement for Guaranty Bank settlement
|
(30
|
)
|
|
—
|
|
||
Cash received from unwinding a timber monetization
|
—
|
|
|
(251
|
)
|
||
Change in control payments related to Temple-Inland acquisition
|
—
|
|
|
120
|
|
||
Free Cash Flow
|
$
|
1,206
|
|
|
$
|
1,186
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
In millions
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Early debt reductions (a)
|
$
|
442
|
|
|
$
|
611
|
|
|
$
|
500
|
|
|
$
|
1,047
|
|
Pre-tax early debt extinguishment costs (b)
|
15
|
|
|
13
|
|
|
24
|
|
|
39
|
|
(a)
|
Reductions related to notes with interest rates ranging from
5.45%
to
7.40%
with original maturities from
2014
to
2033
and from
1.63%
to
6.95%
with original maturities from
2017
to
2023
for the
three
months ended
September 30, 2013
and 2012, respectively, and
5.20%
to
7.95%
with original maturities from
2014
to
2033
and from
1.63%
to
7.95%
with original maturities from
2012
to
2023
for the
nine
months ended
September 30, 2012
.
|
(b)
|
Amounts are included in Restructuring and Other Charges in the accompanying consolidated statements of operations.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number of Shares Purchased (a)
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions)
|
||||
July 1, 2013 - July 31, 2013
|
1,368
|
|
$
|
50.19
|
|
N/A
|
|
N/A
|
September 1, 2013 - September 30, 2013
|
389,685
|
|
47.71
|
|
387,935
|
|
$1.48
|
|
Total
|
391,053
|
|
|
|
|
ITEM 6.
|
EXHIBITS
|
10.1
|
|
Form of Change-in-Control Agreement - Tier I, for the Chief Executive Officer and all "grandfathered" senior vice presidents elected prior to 2012 (all named executive officers) - approved September 2013.
|
|
|
|
10.2
|
|
Form of Change-in-Control Agreement - Tier II, for all future senior vice presidents all "grandfathered" vice presidents elected prior to February 2008 (all named executive officers) - approved September 2013.
|
|
|
|
11
|
|
Statement of Computation of Per Share Earnings.
|
|
|
|
12
|
|
Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
|
|
|
|
31.1
|
|
Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Extension Presentation Linkbase.
|
|
INTERNATIONAL PAPER COMPANY
(Registrant)
|
|
|
|
|
November 6, 2013
|
By
|
/s/ Carol L. Roberts
|
|
|
Carol L. Roberts
|
|
|
Senior Vice President and Chief
Financial Officer
|
|
|
|
November 6, 2013
|
By
|
/s/ Terri L. Herrington
|
|
|
Terri L. Herrington
|
|
|
Vice President – Finance and Controller
|
(a)
|
Segmented Awards:
|
a.
|
Where a segment has been banked, the associated award for such a segment will be paid out based on actual Company performance as banked; and
|
b.
|
Where a segment has not yet been banked, the associated award for such a segment shall be paid out based on target Company performance.
|
(b)
|
Non-Segmented Awards:
|
a.
|
Where less than one year has elapsed between the beginning of the applicable performance period and the Change in Control, such Non-Segmented Awards shall be paid out based on target Company performance; and
|
b.
|
Where one year or more has elapsed between the beginning of the applicable performance period and the Change in Control, such Non-Segmented Awards shall be paid out based on actual Company performance measured through the date of the Change in Control.
|
(a)
|
Segmented Awards:
|
a.
|
Where a segment has been banked, the associated award for such a segment will be paid out based on actual Company performance as banked; and
|
b.
|
Where a segment has not yet been banked, the associated award for such a segment shall be paid out based on target Company performance.
|
(b)
|
Non-Segmented Awards:
|
a.
|
Where less than one year has elapsed between the beginning of the applicable performance period and the Change in Control, such Non-Segmented Awards shall be paid out based on target Company performance; and
|
b.
|
Where one year or more has elapsed between the beginning of the applicable performance period and the Change in Control, such Non-Segmented Awards shall be paid out based on actual Company performance measured through the date of the Change in Control.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Earnings (loss) from continuing operations
|
$
|
392
|
|
|
$
|
223
|
|
|
$
|
919
|
|
|
$
|
524
|
|
Discontinued operations
|
(10
|
)
|
|
14
|
|
|
40
|
|
|
35
|
|
||||
Net earnings (loss)
|
382
|
|
|
237
|
|
|
959
|
|
|
559
|
|
||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net earnings - assuming dilution
|
$
|
382
|
|
|
$
|
237
|
|
|
$
|
959
|
|
|
$
|
559
|
|
Average common shares outstanding
|
445.9
|
|
|
435.1
|
|
|
444.1
|
|
|
434.7
|
|
||||
Effect of dilutive securities
|
|
|
|
|
|
|
|
||||||||
Restricted stock performance share plan
|
3.6
|
|
|
4.7
|
|
|
4.3
|
|
|
5.0
|
|
||||
Stock options
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Average common shares outstanding - assuming dilution
|
449.7
|
|
|
439.8
|
|
|
448.7
|
|
|
439.7
|
|
||||
Earnings (loss) per common share from continuing operations
|
$
|
0.88
|
|
|
$
|
0.51
|
|
|
$
|
2.07
|
|
|
$
|
1.20
|
|
Discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
0.09
|
|
|
0.08
|
|
||||
Net earnings (loss) per common share
|
$
|
0.86
|
|
|
$
|
0.54
|
|
|
$
|
2.16
|
|
|
$
|
1.28
|
|
Earnings (loss) per common share from continuing operations - assuming dilution
|
$
|
0.87
|
|
|
$
|
0.51
|
|
|
$
|
2.05
|
|
|
$
|
1.19
|
|
Discontinued operations
|
(0.02
|
)
|
|
0.03
|
|
|
0.09
|
|
|
0.08
|
|
||||
Net earnings (loss) per common share - assuming dilution
|
$
|
0.85
|
|
|
$
|
0.54
|
|
|
$
|
2.14
|
|
|
$
|
1.27
|
|
|
|
|
For the Years Ended December 31,
|
|
Nine Months Ended
September 30, |
|
||||||||||||||||||||||||
TITLE
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2012
|
|
2013
|
|
|||||||||||||||
(A)
|
Earnings (loss) from continuing operations before income taxes and equity earnings
|
|
$
|
(1,153.0
|
)
|
|
$
|
1,199.0
|
|
|
$
|
822.0
|
|
|
$
|
1,458.0
|
|
|
$
|
1,024.0
|
|
|
$
|
737.0
|
|
|
$
|
1,004.0
|
|
|
(B)
|
Noncontrolling interests, net of taxes
|
|
(3.0
|
)
|
|
(18.0
|
)
|
|
(21.0
|
)
|
|
(14.0
|
)
|
|
(5.0
|
)
|
|
(8.0
|
)
|
|
11.0
|
|
|
|||||||
(C)
|
Fixed charges excluding capitalized interest
|
|
648.2
|
|
|
780.6
|
|
|
718.8
|
|
|
680.7
|
|
|
797.4
|
|
|
604.4
|
|
|
568.2
|
|
|
|||||||
(D)
|
Amortization of previously capitalized interest
|
|
30.0
|
|
|
31.3
|
|
|
30.4
|
|
|
29.2
|
|
|
24.2
|
|
|
18.2
|
|
|
18.3
|
|
|
|||||||
(F)
|
Distributed income of equity investees
|
|
73.0
|
|
|
51.0
|
|
|
33.0
|
|
|
85.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||||
(G)
|
Earnings (loss) from continuing operations before income taxes and fixed charges
|
|
$
|
(404.8
|
)
|
|
$
|
2,043.9
|
|
|
$
|
1,583.2
|
|
|
$
|
2,239.5
|
|
|
$
|
1,840.6
|
|
|
$
|
1,351.6
|
|
|
$
|
1,601.5
|
|
|
Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(H)
|
Interest and amortization of debt expense
|
|
$
|
572.5
|
|
|
$
|
702.3
|
|
|
$
|
643.4
|
|
|
$
|
602.0
|
|
|
$
|
714.7
|
|
|
$
|
538.0
|
|
|
$
|
505.1
|
|
|
(I)
|
Interest factor attributable to rentals
|
|
65.8
|
|
|
72.0
|
|
|
69.9
|
|
|
73.3
|
|
|
77.0
|
|
|
62.1
|
|
|
62.0
|
|
|
|||||||
(J)
|
Preferred dividends of subsidiaries
|
|
9.9
|
|
|
6.3
|
|
|
5.5
|
|
|
5.4
|
|
|
5.7
|
|
|
4.3
|
|
|
1.1
|
|
|
|||||||
(K)
|
Capitalized interest
|
|
27.5
|
|
|
12.1
|
|
|
14.0
|
|
|
21.6
|
|
|
36.6
|
|
|
28.8
|
|
|
12.1
|
|
|
|||||||
(L)
|
Total fixed charges
|
|
$
|
675.7
|
|
|
$
|
792.7
|
|
|
$
|
732.8
|
|
|
$
|
702.3
|
|
|
$
|
834.0
|
|
|
$
|
633.2
|
|
|
$
|
580.3
|
|
|
(M)
|
Ratio of earnings to fixed charges
|
|
|
|
2.58
|
|
|
2.16
|
|
|
3.19
|
|
|
2.21
|
|
|
2.13
|
|
|
2.76
|
|
|
||||||||
(N)
|
Deficiency in earnings necessary to cover fixed charges
|
|
$
|
(1,080.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of International Paper Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 6, 2013
|
|
/s/ John V. Faraci
|
John V. Faraci
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of International Paper Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
November 6, 2013
|
|
/s/ Carol L. Roberts
|
Carol L. Roberts
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John V. Faraci
|
John V. Faraci
|
Chairman and Chief Executive Officer
|
November 6, 2013
|
|
|
/s/ Carol L. Roberts
|
Carol L. Roberts
|
Senior Vice President and Chief Financial Officer
|
November 6, 2013
|