MEMPHIS, Tenn. - International Paper today reported full-year 2015 net earnings attributable to International Paper of $938 million($2.23 per share) compared with $555 million ($1.29 per share) in full-year 2014.  In the fourth quarter 2015, the Company reported net earnings of $178 million ($0.43 per share) compared with $134 million ($0.32 per share) in the fourth quarter of 2014. Net earnings in all periods include the impact of special items, if any, non-operating pension expense and discontinued operations.

*    Operating Earnings is defined as net earnings from continuing operations attributable to International Paper Company (GAAP) excluding special items and non-operating pension expense.

Full-year 2015 Operating Earnings were $1.5 billion ($3.65 per share) compared with $1.3 billion ($3.00 per share) in 2014. Operating Earnings in the fourth quarter of 2015 totaled $361 million ($0.87 per share) compared with $227 million ($0.53 per share) in the fourth quarter of 2014.

Annual net sales totaled $22.4 billion in 2015 compared with $23.6 billion in 2014. Quarterly net sales were $5.4 billion in the fourth quarter of 2015 compared with $5.9 billionin the fourth quarter of 2014.  Revenues continue to be negatively impacted by foreign exchange translation.

Full-year 2015 business segment operating profits were $2.7 billion compared with $2.8 billion in 2014. Business segment operating profits in the fourth quarter of 2015 were $623 million, compared with $694 million in the fourth quarter of 2014.

Free cash flow was $1.8 billion for the full-year 2015 and $501 million in the fourth quarter. Cash from operations was $2.6 billion ($3.3 billion excluding the pension contribution) for the full-year 2015 and $990 million for the fourth quarter of 2015.

"International Paper finished the year strong with record ROIC of 11 percent, which was well above our cost of capital and the highest earnings per share in 20 years primarily due to robust performance in our NA Industrial Packaging business and from our Ilim JV," said Mark Sutton, Chairman and Chief Executive Officer.  "As we move into 2016, we remain confident in our ability to execute well, generate strong free cash flow and deploy capital to create shareholder value."

SEGMENT INFORMATION

The performance of the Company's business segments is measured quarter to quarter without variations caused by special items, as management focuses on business segment operating profits excluding those items. Fourth quarter 2015 business segment operating profits and business trends compared with the prior quarter are as follows:

Industrial Packaging operating profits in the fourth quarter of 2015 were $441 million ($304 million including special items) compared with $553 million in the third quarter of 2015.  In North America, box shipments were down due to three fewer shipping days, but this was partially offset by seasonally stronger daily shipments.  Volume and price for containerboard exports were also lower. Higher planned maintenance outage costs impacted earnings as well, partially offset by lower input costs. 

Printing Papers operating profits were $144 million in the fourth quarter of 2015 versus $179 million in the third quarter of 2015.  North America earnings were lower mostly due to higher maintenance outage spending, costs associated with severe flooding in the Southeast, and seasonally lower sales volumes. In Brazil, earnings improved primarily due to seasonal volume increases and mix improvements. Earnings in Europe improved mainly due to lower planned maintenance outage costs. 

Consumer Packaging operating profits were $38 million ($35 million including special items) in the fourth quarter of 2015 compared with $41 million (a loss of $153 millionincluding special items) in the third quarter of 2015.  In North America,  higher planned maintenance outage costs and a seasonally weaker market were partially offset by lower input costs. Earnings in Europe were slightly higher due to favorable pricing, input costs and lower planned maintenance outage costs. The sale of our Sun JV interest was completed at the start of the fourth quarter. 

International Paper recorded Ilim joint venture equity earnings of $34 million in the fourth quarter of 2015 compared with an equity loss of $9 million in the third quarter of 2015. Primarily due to Ilim's U.S. dollar denominated net debt, the Company recognized a non-cash after-tax foreign exchange loss of $19 million in the fourth quarter of 2015 ($0.05 per share), compared with an after-tax loss of $65 million in the third quarter of 2015 ($0.15 per share). The JV recorded solid operational EBITDA results for the quarter due to increased volumes on export sales and strong operational performance. 

CORPORATE EXPENSES

Net corporate expenses, excluding non-operating pension expense, for the fourth quarter of 2015 were $9 million compared with $10 million in the third quarter of 2015. 

EFFECTIVE TAX RATE

The effective tax rate before special items and non-operating pension expense for the fourth quarter of 2015 was 32%, compared with an effective tax rate of 33% in the third quarter of 2015. The principal reason for the lower rate in the fourth quarter is the December 18, 2015 enactment of the Protecting Americans from Tax Hikes Act of 2015 (the "Act"), which retroactively restored several expired business tax provisions. 

EFFECTS OF SPECIAL ITEMS

Special items in the fourth quarter of 2015 included a pre-tax loss of $33 million ($20 million after taxes) for Restructuring and other charges. Included within Restructuring and other charges were 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 conversion of the Riegelwood, North Carolina facility to 100% pulp production, a pre-tax charge of $15 million ($9 million after taxes) to adjust a legal reserve and pre-tax charges of $3 million ($2 million after taxes) for other items.  Special items also included a gain of $12 million (before and after taxes) to reflect the sale of the IP-Sun JV, a charge of $137 million (before and after taxes) for the impairment of the goodwill and other intangible assets of the Company's Brazil Packaging business and a tax expense of $2 million for other items.   

Special items in the third quarter of 2015 included a pre-tax loss of $25 million ($16 million after taxes) for Restructuring and other charges. Included within Restructuring and other charges were a pre-tax charge of $17 million ($11 million after taxes) related to the restructuring of our 2006 timber monetization, net pre-tax charges of $7 million ($4 million after taxes) related to the sale of the Carolina® Coated Bristols brand and costs associated with the conversion of the Riegelwood, North Carolina facility to 100% pulp production and a charge of $1 million (before and after taxes) for other items.  Special items also included a pre-tax charge of $186 million ($125 million after taxes) for the estimated impairment of goodwill and other assets of the IP-Sun JV. 

Special items in the fourth quarter of 2014 included a net pre-tax loss of $16 million ($10 million after taxes) for Restructuring and other charges. Included within Restructuring and other charges were pre-tax charges of $7 million ($4 million after taxes) for costs associated with the closure of our Courtland, Alabama mill, pre-tax charges of $4 million($3 million after taxes) for costs related to our Brazil Packaging business and pre-tax charges of $5 million ($3 million after taxes) for other items. Also included in special items were 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,  a pre-tax gain of $9 million ($5 million after taxes) for the sale of an investment, a charge of $100 million (before and after taxes) for the impairment of goodwill in the Company's Asia Industrial Packaging business, a tax benefit of $90 million related to an internal restructuring and a charge of $1 million (before and after taxes) for other items.

DISCONTINUED OPERATIONS

As a result of the July 1, 2014 spin-off of the xpedx business, all prior year amounts have been adjusted to reflect xpedx as a discontinued operation. Previously reported information regarding the Distribution reportable segment has been excluded as this reportable segment was comprised solely of the xpedx business.

Discontinued operations in the fourth quarter of 2014 included a loss of $14 million ($9 million after taxes) related to the divestiture of the Temple-Inland Building Products business.