International Paper Reports 2015 Fourth Quarter and Full-Year Earnings

Diluted Earnings Per Share Attributable to International Paper Shareholders

Fourth
Quarter
2015

Fourth
Quarter
2014

Full-
Year
2015

Full-
Year
2014

Net Earnings

$

0.43

$

0.32

$

2.23

$

1.29

Less – Discontinued Operations (Gain) Loss

—

0.02

—

0.02

Net Earnings (Loss) from Continuing Operations

0.43

0.34

2.23

1.31

Add Back – Net Special Items Expense

0.35

0.12

1.04

1.39

Add Back – Non-Operating Pension Expense

0.09

0.07

0.38

0.30

Operating Earnings*

$

0.87

$

0.53

$

3.65

$

3.00

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)

Three Months Ended
December 31,

Three Months
Ended
September 30,

Twelve Months Ended
December 31,

2015

2014

2015

2015

2014

Net Sales

$     5,443

$    5,943

$      5,691

$ 22,365

$ 23,617

Costs and Expenses

Cost of products sold

3,765

4,105

3,891

15,468

16,254

(q)

Selling and administrative expenses

419

462

(e)

417

1,645

1,793

(r)

Depreciation, amortization and cost of timber harvested

314

346

329

1,294

1,406

Distribution expenses

348

384

334

1,406

1,521

Taxes other than payroll and income taxes

41

43

39

168

180

Restructuring and other charges

33

(a)

16

(f)

25

(k)

252

(n)

846

(s)

Net (gains) losses on sales and impairment of businesses

(12)

(b)

38

(g)

186

(l)

174

(o)

38

(g)

Impairment of goodwill and other intangibles

137

(c)

100

(h)

—

137

(c)

100

(h)

Interest expense, net

133

142

141

555

607

(t)

Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings

265

(a-c)

307

(e-h)

329

(k,l)

1,266

(c,n,o)

872

(g,h,q-t)

Income tax provision (benefit)

120

(d)

34

(i)

106

(m)

466

(p)

123

(u)

Equity earnings (loss), net of taxes

33

(136)

(13)

117

(200)

Earnings (Loss) From Continuing Operations

178

(a-d)

137

(e-i)

210

(k-m)

917

(c,n-p)

549

(g,h,q-u)

Discontinued operations, net of taxes

—

(9)

(j)

—

—

(13)

(v)

Net Earnings (Loss)

178

(a-d)

128

(e-j)

210

(k-m)

917

(c,n-p)

536

(g,h,q-v)

Less: Net earnings (loss) attributable to noncontrolling interests

—

(6)

(10)

(21)

(19)

Net Earnings (Loss) Attributable to International Paper Company

$        178

(a-d)

$       134

(e-j)

$         220

(k-m)

$      938

(c,n-p)

$      555

(g,h,q-v)

Basic Earnings Per Common Share Attributable to International Paper Common Shareholders

Earnings (loss) from continuing operations

$       0.43

(a-d)

$      0.34

(e-i)

$        0.53

(k-m)

$     2.25

(c,n-p)

$     1.33

(g,h,q-u)

Discontinued operations

—

(0.02)

(j)

—

—

(0.03)

(v)

Net earnings (loss)

$       0.43

(a-d)

$      0.32

(e-j)

$        0.53

(k-m)

$     2.25

(c,n-p)

$     1.30

(g,h,q-v)

Diluted Earnings Per Common Share Attributable to International Paper Common Shareholders

Earnings (loss) from continuing operations

$       0.43

(a-d)

$      0.34

(e-i)

$        0.53

(k-m)

$     2.23

(c,n-p)

$     1.31

(g,h,q-u)

Discontinued operations

—

(0.02)

(j)

—

—

(0.02)

(v)

Net earnings (loss)

$       0.43

(a-d)

$      0.32

(e-j)

$        0.53

(k-m)

$     2.23

(c,n-p)

$     1.29

(g,h,q-v)

Average Shares of Common Stock Outstanding - Diluted

416.3

424.9

417.5

420.6

432.0

Cash Dividends Per Common Share

$   0.4400

$  0.4000

$    0.4000

$ 1.6400

$ 1.4500

Amounts Attributable to International Paper Common Shareholders

Earnings (loss) from continuing operations, net of tax

$        178

(a-d)

$       143

(e-i)

$         220

(k-m)

$      938

(c,n-p)

$      568

(g,h,q-u)

Discontinued operations, net of tax

—

(9)

(j)

—

—

(13)

(v)

Net earnings

$        178

(a-d)

$       134

(e-j)

$         220

(k-m)

$      938

(c,n-p)

$      555

(g,h,q-v)

The accompanying notes are an integral part of this consolidated statement of operations.

(a)

Includes a pre-tax charge of $15 million ($9 million after taxes) for a legal reserve adjustment, a pre-tax charge of $15 million ($9 million after taxes) related to the sale of the Carolina Coated Bristols brand and costs associated with the Riegelwood mill conversion to 100% pulp production and pre-tax charges of $3 million ($2 million after taxes) for other items.

(b)

Includes a gain of $12 million (before and after taxes) related to the sale of our 55% equity share in the IP-Sun JV.

(c)

Includes a charge of $137 million (before and after taxes) related to the impairment of goodwill and a trade name intangible for our Brazil Packaging business.

(d)

Includes a tax expense of $2 million for other items.

(e)

Includes a charge of $1 million (before and after taxes) for integration costs associated with the acquisition of Temple-Inland.

(f)

Includes a pre-tax charge of $7 million ($4 million after taxes) for costs associated with the shutdown of our Courtland mill, a pre-tax charge of $4 million ($3 million after taxes) for integration costs associated with our Brazil Packaging business, and a net pre-tax charge of $5 million ($3 million after taxes) for other items.

(g)

Includes a pre-tax charge of $47 million ($36 million after taxes) for a loss on the sale of a business by ASG in which we hold an investment and the resulting impairment of our ASG investment, and a pre-tax gain of $9 million ($5 million after taxes) related to the sale of an investment.

(h)

Includes a charge of $100 million (before and after taxes) for a goodwill impairment charge related to our Asia Industrial Packaging business.

(i)

Includes a tax benefit of $90 million associated with internal restructuring.

(j)

Includes a pre-tax loss of $14 million ($9 million after taxes) related to the Building Products divestiture.

(k)

Includes a pre-tax charge of $17 million ($11 million after taxes) for costs associated with the Timber Monetization restructure, a  pre-tax charge of $7 million ($4 million after taxes) related to the sale of the Carolina Coated Bristols brand and costs associated with the Riegelwood mill conversion to 100% pulp production, and a charge of $1 million (before and after taxes) for costs associated with the Coated Paperboard sheet plant closures.

(l)

Includes a pre-tax charge of $186 million ($192 million after taxes) for  asset write-offs associated with the sale of our 55% equity share in the IP-Sun JV.

(m)

Includes a tax benefit of $67 million related to the impairment of the IP-Sun JV.

(n)

Includes a pre-tax charge of $207 million ($133 million after taxes) for debt premium costs, a pre-tax charge of $15 million ($9 million after taxes) for a legal reserve adjustment, a net pre-tax charge of $8 million ($4 million after taxes) related to the sale of the Carolina Coated Bristols brand and costs associated with the Riegelwood mill conversion to 100% pulp production, a pre-tax charge of $16 million ($10 million after taxes) for costs associated with the Timber Monetization restructure, and a pre-tax charge of $6 million ($5 million after taxes) for other items.

(o)

Includes a pre-tax charge of $174 million ($180 million after taxes) for asset write-offs associated with the sale of our 55% equity share in the IP-Sun JV.

(p)

Includes a tax benefit of $67 million related to the impairment of the IP-Sun JV, a tax expense of $23 million for the 2014 tax impact of the 2015 cash pension contribution of $750 million, and a tax expense of $7 million for other items.

(q)

Includes a pre-tax charge of $5 million ($3 million after taxes) for a refund of previously claimed state tax credits.

(r)

Includes a gain of $18 million (before and after taxes) for the resolution of a legal contingency in India, a pre-tax charge of $35 million ($21 million after taxes) for costs associated with a multi-employer pension plan withdrawal liability, a pre-tax charge of $24 million ($13 million after taxes) for costs associated with a  foreign tax amnesty program, and a pre-tax charge of $16 million ($10 million after taxes) for integration costs associated with the acquisition of Temple-Inland.

(s)

Includes a pre-tax charge of $276 million ($169 million after taxes) for debt extinguishment costs, a pre-tax charge of $554 million ($338 million after taxes) for costs associated with the shutdown of our Courtland mill, and a pre-tax charge of $16 million ($11 million after taxes) for other items.

(t)

Includes interest income of $2 million (before and after taxes) associated with the resolution of a legal contingency in India, and a pre-tax expense of $8 million ($4 million after taxes) associated with a foreign tax amnesty program.

(u)

Includes a tax expense of $10 million associated with a state legislative change, a tax benefit of $90 million associated with internal restructuring, and a tax benefit of $1 million for other items.

(v)

Includes the operating earnings of the xpedx business through the date of the spin-off on July 1, 2014, net pre-tax charges of $24 million ($16 million after taxes) for costs associated with the spin-off of the xpedx business, pre-tax charges of $1 million (a gain of $1 million after taxes) for costs associated with the restructuring of xpedx and pre-tax charges of $16 million ($9 million after taxes) associated with the Building Products divestiture.

INTERNATIONAL PAPER COMPANY
Reconciliation of Operating Earnings to Net Earnings (Loss) Attributable to International Paper Company
Preliminary and Unaudited
(In millions, except per share amounts)

Three Months Ended
December 31,

Three Months
Ended
September 30,

Twelve Months Ended
December 31,

2015

2014

2015

2015

2014

Operating Earnings

$        361

$    227

$         407

$  1,534

$ 1,296

Non-Operating Pension

(36)

(32)

(46)

(157)

(129)

Special Items

(147)

(a)

(52)

(b)

(141)

(c)

(439)

(d)

(599)

(e)

Earnings (Loss) from Continuing Operations, including non-controlling interest

178

143

220

938

568

Discontinued operations

—

(9)

(f)

—

—

(13)

(g)

Net Earnings (Loss) as Reported Attributable to International Paper Company

$        178

$    134

$         220

$     938

$    555

Three Months Ended
December 31,

Three Months
Ended
September 30,

Twelve Months Ended
December 31,

Diluted Earnings per Common Share

2015

2014

2015

2015

2014

Operating Earnings Per Share

$       0.87

$   0.53

$        0.97

$    3.65

$   3.00

Non-Operating Pension

(0.09)

(0.07)

(0.11)

(0.38)

(0.30)

Special Items

(0.35)

(0.12)

(0.33)

(1.04)

(1.39)

Continuing Operations

0.43

0.34

0.53

2.23

1.31

Discontinued operations

—

(0.02)

—

—

(0.02)

Diluted Earnings per Common Share as Reported

$       0.43

$   0.32

$        0.53

$    2.23

$   1.29

Notes:

(a)

See footnotes (a) - (d) on the Consolidated Statement of Operations

(b)

See footnotes (e) - (i) on the Consolidated Statement of Operations

(c)

See footnotes (k)- (m) on the Consolidated Statement of Operations

(d)

See footnotes (c), (n)- (p) on the Consolidated Statement of Operations

(e)

See footnotes (g), (h), (q)- (u) on the Consolidated Statement of Operations

(f)

See footnote (j) on the Consolidated Statement of Operations

(g)

See footnote (v) on the Consolidated Statement of Operations

(1)

The Company calculates Operating Earnings by excluding the after-tax effect of non-operating pension expense and items considered by management to be unusual from the earnings reported under U.S. generally accepted accounting principles ("GAAP"). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes that using this information, along with net earnings, provides for a more complete analysis of the results of operations by quarter. Net earnings is the most directly comparable GAAP measure.

(2)

Since diluted earnings per share are computed independently for each period, twelve-month per share amounts may not equal the sum of the respective quarters.

INTERNATIONAL PAPER COMPANY
Reconciliation of Operating Earnings Before Net Interest Expense to Net Earnings Before Taxes and Equity Earnings
Preliminary and Unaudited
(In millions)

2015

2014

2013

Earnings from Continuing Operations Before Income Taxes and Equity Earnings

$                          1,266

$                               872

$                            1,228

Add back: Net Interest Expense

555

607

612

Add back: Special Items Before Taxes

559

1,052

344

Add back: Non-Operating Pension Expense Before Taxes

258

212

323

Operating Earnings Before Interest, Taxes and Equity Earnings

2,638

2,743

2,507

Tax Rate

33 %

31 %

26 %

Operating Earnings Before Interest and Equity Earnings

1,767

1,901

1,855

Equity Earnings, Net of Taxes

117

(200)

(39)

Operating Earnings Before Interest

$                          1,884

$                            1,701

$                            1,816

The Company considers return on invested capital ("ROIC") to be a meaningful indicator of our operating performance, and we evaluate this metric because it measures how effectively and efficiently we use the capital invested in our business. ROIC is not a measure of financial performance under U.S. generally accepted accounting principles ("GAAP") and may not be defined and calculated by other companies in the same manner.  The Company defines and calculates ROIC using in the numerator Operating Earnings Before Interest, the most directly comparable GAAP measure to which is Earnings Before Income Taxes and Equity Earnings.  The Company calculates Operating Earnings Before Interest by excluding net interest expense, the after-tax effect on non-operating pension expense and items considered by management to be unusual from the earnings reported under GAAP.  Management uses this measure to focus on on-going operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results.

The Company calculates Return on Invested Capital (ROIC) using Operating Earnings Before Interest in the numerator. The most directly comparable GAAP measure is Earnings Before Taxes and Equity Earnings.

ROIC = Operating Earnings Before Interest / Average Invested Capital

Average Invested Capital = Equity adjusted to remove pension-related amounts in OCI, net of taxes + interest-bearing debt

INTERNATIONAL PAPER COMPANY
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In millions)

Sales by Industry Segment

Three Months Ended
December 31,

Three
Months
Ended
September 30,

Twelve Months Ended
December 31,

2015

2014

2015

2015

2014

Industrial Packaging

$   3,595

$  3,697

$      3,642

$  14,484

$    14,944

Printing Papers

1,296

1,440

1,258

5,031

5,720

Consumer Packaging

556

855

809

2,940

3,403

Corporate and Inter-segment Sales

(4)

(49)

(18)

(90)

(450)

Net Sales

$   5,443

$  5,943

$      5,691

$  22,365

$    23,617

Operating Profit by Industry Segment

Three Months Ended
December 31,

Three
Months
Ended
September 30,

Twelve Months Ended
December 31,

2015

2014

2015

2015

2014

Industrial Packaging

$      304

(a)

$     379

(c)

$         553

$    1,853

(a)

$      1,896

(c)

Printing Papers

144

148

(d)

179

533

(16)

(d)

Consumer Packaging

35

(b)

51

(e)

(153)

(b)

(25)

(b)

178

(e)

Operating Profit

483

578

579

2,361

2,058

Interest expense, net

(133)

(142)

(141)

(555)

(601)

(f)

Noncontrolling interest/equity earnings adjustment (g)

2

(2)

(6)

(8)

(2)

Corporate items, net

(9)

(35)

(10)

(36)

(51)

Restructuring and other charges

(18)

(1)

(17)

(238)

(282)

Gain (loss) on sales / impairment of business

—

(38)

—

—

(38)

Non-operating pension expense

(60)

(53)

(76)

(258)

(212)

Earnings (Loss) From Continuing Operations
Before Income Taxes and Equity Earnings

$      265

$     307

$         329

$    1,266

$         872

Equity Earnings (Loss) in Ilim Holdings S.A., Net of Taxes

$         34

$    (136)

$            (9)

$       131

$       (194)

(a)

Includes a charge of $137 million for the three months and twelve months ended December 31, 2015 related to the impairment of goodwill and a trade name intangible for our Brazil Packaging business.

(b)

Includes a gain of $12 million and a charge of $186 million for the three months ended December 31, 2015 and September 30, 2015, respectively, and a net charge of $174 million for the twelve months ended December 31, 2015 for asset write-offs associated with the sale of our 55% equity share in the IP-Sun JV, a charge of $15 million and charges of $7 million for the three months ended December 31, 2015 and September 30, 2015, respectively, and a net charge of $8 million for the twelve months ended December 31, 2015 related to the sale of the Carolina Coated Bristols brand and the conversion of the Riegelwood mill to 100% pulp production, and charges of $1 million and $2 million for the three months and twelve months ended September 30, 2015 and December 31, 2015, respectively, for costs associated with the Coated Paperboard sheet plant closures.

(c)

Includes a charge of $100 million for the three months and twelve months ended December 31, 2014 for a goodwill impairment related to our Asia Industrial Packaging operations, charges of $1 million and $16 million for the three months and twelve months ended December 31, 2014  respectively, for integration costs associated with the acquisition of Temple-Inland, a charge of $4 million and a gain of $1 million for the three months and twelve months ended December 31, 2014, respectively, associated with our Brazil Packaging business, a charge of $35 million for the twelve months ended December 31, 2014 for costs associated with a multi-employer pension plan withdrawal liability, charges of $5 million for the three months and twelve months ended December 31, 2014 for costs related to the restructuring of our EMEA packaging business, charges of $3 million and $7 million for the three months and twelve months ended December 31, 2014, respectively, related to the restructuring of our Asia box operations,  and gains of $3 million and $4 million for the three months and twelve months ended December 31, 2014, respectively, for other items.

(d)

Includes charges of $7 million and $554 million for the three months and twelve months ended December 31, 2014, respectively, for costs associated with the shutdown of our Courtland Mill, a gain of $20 million (including $2 million of interest income) for the twelve months ended December 31, 2014 for the resolution of a legal contingency for India, and charges of $32 million (including $8 million of interest expense) for the twelve months ended December 31, 2014 for costs associated with a foreign tax amnesty program.

(e)

Includes charges of $4 million and $8 million for the three months and twelve months ended December 31, 2014, respectively, for costs associated with the Coated Paperboard sheet plant closures.

(f)

Excludes net interest expense of $6 million that is included in the Printing Papers segment operating profit for the twelve months ended December 31, 2014.

(g)

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.

INTERNATIONAL PAPER COMPANY
Reconciliation of Operating Profit to Operating Profit Before Special Items
Preliminary and Unaudited
(In millions)

Three Months Ended December 31, 2015

Industrial
Packaging

Printing
Papers

Consumer
Packaging

Total

Operating Profit Before Special Items

$      441

$      144

$        38

$      623

Special Items (a)

(137)

—

(3)

(140)

Operating Profit as Reported

$      304

$      144

$        35

$      483

Three Months Ended December 31, 2014

Industrial
Packaging

Printing
Papers

Consumer
Packaging

Total

Operating Profit Before Special Items

$      484

$      155

$        55

$      694

Special Items (b)

(105)

(7)

(4)

(116)

Operating Profit as Reported

$      379

$      148

$        51

$      578

Three Months Ended September 30, 2015

Industrial
Packaging

Printing
Papers

Consumer
Packaging

Total

Operating Profit Before Special Items

$      553

$      179

$        41

$      773

Special Items (a)

—

—

(194)

(194)

Operating Profit as Reported

$      553

$      179

$    (153)

$      579

Twelve Months Ended December 31, 2015

Industrial
Packaging

Printing
Papers

Consumer
Packaging

Total

Operating Profit Before Special Items

$   1,990

$      533

$      159

$   2,682

Special Items (a)

(137)

—

(184)

(321)

Operating Profit as Reported

$   1,853

$      533

$      (25)

$   2,361

Twelve Months Ended December 31, 2014

Industrial
Packaging

Printing
Papers

Consumer
Packaging

Total

Operating Profit Before Special Items

$   2,054

$      550

$      186

$   2,790

Special Items (b)

(158)

(566)

(8)

(732)

Operating Profit as Reported

$   1,896

$      (16)

$      178

$   2,058

(a)

See footnote (a) - (b) on Sales and Earnings by Industry Segment

(b)

See footnotes (c) - (e) on Sales and Earnings by Industry Segment

(1)

The Company calculates Operating Profit Before Special Items by excluding the pre-tax effect of items considered by management to be unusual from the earnings reported under U.S. generally accepted accounting principles ("GAAP"). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes that using this information, along with net earnings, provides for a more complete analysis of the results of operations by quarter. Net earnings is the most directly comparable GAAP measure.

INTERNATIONAL PAPER COMPANY
Sales Volume by Product (a)
Preliminary and Unaudited

International Paper Consolidated

Three Months Ended
December 31,

Three Months
Ended
September 30,

Twelve Months Ended
December 31,

2015

2014

2015

2015

2014

Industrial Packaging (In thousands of short tons)

Corrugated Packaging

2,567

2,588

2,609

10,284

10,355

Containerboard

735

771

783

3,110

3,035

Recycling

591

609

588

2,379

2,459

Saturated Kraft

44

43

37

156

186

Gypsum /Release Kraft

46

39

46

171

168

Bleached Kraft

6

5

6

23

26

EMEA Packaging

378

356

340

1,417

1,379

Asian Box

99

113

93

359

408

Brazilian Packaging

77

80

78

305

318

Industrial Packaging

4,543

4,604

4,580

18,204

18,334

Printing Papers (In thousands of short tons)

U.S. Uncoated Papers

475

489

485

1,879

1,968

European & Russian Uncoated Papers

383

409

364

1,493

1,531

Brazilian Uncoated Papers

342

320

294

1,125

1,141

Indian Uncoated Papers

59

58

55

241

231

Uncoated Papers

1,259

1,276

1,198

4,738

4,871

Market Pulp (b)

445

464

446

1,736

1,776

Consumer Packaging (In thousands of short tons)

North American Consumer Packaging

345

357

371

1,425

1,486

European Coated Paperboard

97

101

96

381

354

Asian Coated Paperboard

—

351

339

958

1,358

Consumer Packaging

442

809

806

2,764

3,198

(a)     Sales volumes include third party and inter-segment sales and exclude sales of equity investees.

(b)     Includes North American, European and Brazilian volumes and internal sales to mills.

INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)

December 31, 2015

December 31, 2014

Assets

Current Assets

Cash and Temporary Investments

$                          1,050

$                            1,881

Accounts and Notes Receivable, Net

2,675

3,083

Inventories

2,228

2,424

Deferred Income Tax Assets

312

331

Other

212

240

Total Current Assets

6,477

7,959

Plants, Properties and Equipment, Net

11,980

12,728

Forestlands

366

507

Investments

265

248

Financial Assets of Special Purpose Entities

7,014

2,145

Goodwill

3,335

3,773

Deferred Charges and Other Assets

1,187

1,324

Total Assets

$                        30,624

$                          28,684

Liabilities and Equity

Current Liabilities

Notes Payable and Current Maturities of Long-Term Debt

$                             426

$                               742

Accounts Payable and Accrued Liabilities

3,498

4,167

Total Current Liabilities

3,924

4,909

Long-Term Debt

8,900

8,631

Nonrecourse Financial Liabilities of Special Purpose Entities

6,277

2,050

Deferred Income Taxes

3,231

3,063

Pension Benefit Obligation

3,548

3,819

Postretirement and Postemployment Benefit Obligation

364

396

Other Liabilities

434

553

Equity

Invested Capital

(728)

706

Retained Earnings

4,649

4,409

Total Shareholders' Equity

3,921

5,115

Noncontrolling interests

25

148

Total Equity

3,946

5,263

Total Liabilities and Equity

$                        30,624

$                          28,684

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In millions)

Twelve Months Ended
December 31,

2015

2014

Operating Activities

Net earnings (loss)

$        917

$          536

Depreciation, amortization and cost of timber harvested

1,294

1,414

Deferred income tax expense (benefit), net

281

(135)

Restructuring and other charges

252

881

Pension plan contributions

(750)

(353)

Net (gains) losses on sales and impairments of businesses

174

38

Impairment of goodwill and other intangibles assets

137

100

Equity (earnings) loss, net

(117)

200

Periodic pension expense, net

461

387

Other, net

153

167

Changes in current assets and liabilities

Accounts and notes receivable

7

(97)

Inventories

(131)

(103)

Accounts payable and accrued liabilities

(89)

(18)

Interest payable

(17)

(18)

Other

8

78

Cash Provided By (Used For) Operations

2,580

3,077

Investment Activities

Invested in capital projects

(1,487)

(1,366)

Proceeds from divestitures

23

—

Proceeds from spinoff

—

411

Investment in Special Purpose Entities

(198)

—

Proceeds from sale of fixed assets

37

61

Other

(114)

34

Cash Provided By (Used For) Investment Activities

(1,739)

(860)

Financing Activities

Repurchases of common stock and payments of restricted stock tax withholding

(605)

(1,062)

Issuance of common stock

2

66

Issuance of debt

6,773

1,982

Reduction of debt

(6,847)

(2,095)

Change in book overdrafts

(14)

30

Dividends paid

(685)

(620)

Acquisition of redeemable noncontrolling interest

—

(114)

Debt tender premiums

(211)

(269)

Other

(14)

(4)

Cash Provided By (Used for) Financing Activities

(1,601)

(2,086)

Effect of Exchange Rate Changes on Cash

(71)

(52)

Change in Cash and Temporary Investments

79

Cash and Temporary Investments

Beginning of the period

1,881

1,802

End of the period

$     1,050

$       1,881

INTERNATIONAL PAPER COMPANY
Reconciliation of Free Cash Flow
Preliminary and Unaudited
(In millions)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2015

2014

2015

2014

Cash provided by operations

$    990

$  1,144

$ 2,580

$  3,077

Adjustments:

Cash invested in capital projects

(489)

(405)

(1,487)

(1,366)

Cash contribution to pension plan

—

—

750

353

Free Cash Flow

$    501

$     739

$ 1,843

$  2,064