SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 12, 1996
INTERNATIONAL PAPER COMPANY
(Exact Name of Registrant as Specified in Charter)
NEW YORK 1-3157 13-0872805
(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification
of Incorporation) No.)
TWO MANHATTANVILLE ROAD, PURCHASE, N.Y. 10577
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
914-397-1500
Not Applicable.
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On March 12, 1996, International Paper Company
(the "Registrant") completed the acquisition of Federal
Paper Board Company, Inc., a North Carolina corporation
("Federal Paper Board") pursuant to the Restated and
Amended Agreement and Plan of Merger dated as of
November 6, 1995 and amended as of February 8, 1996 (the
"Merger Agreement") by and among the Registrant, Federal
Paper Board and Focus Merger Co, Inc., a North Carolina
corporation and a wholly-owned subsidiary of the
Registrant ("Merger Sub"), which provided for the merger
(the "Merger") of Federal Paper Board with and into
Merger Sub. John R. Kennedy, formerly President and
Chief Executive Officer of Federal Paper Board, was
appointed to the Board of Directors of the Registrant as
of the effective time of the Merger. The Merger has been
accounted for using the purchase method. Capitalized
terms used herein which are not otherwise defined herein
have the meanings ascribed to such terms in the Merger
Agreement.
Pursuant to the Merger Agreement, each holder
of Federal Paper Board common stock had the right to
elect whether to receive either $55.00 in cash or Stock
Consideration equal to 1.454 shares of the Registrant's
common stock per share of Federal Paper Board common
stock, or to indicate no preference. The election to
receive cash or stock was subject to adjustment so that,
in the aggregate, approximately 49% of the Federal Paper
Board common stock would be exchanged for cash, and 51%
for stock.
Of the approximately 47.8 million shares of
Federal Paper Board common stock outstanding at the
effective time, approximately 34.9 million shares were
covered by Stock Elections and 11.3 million were covered
by Cash Elections. As a result, each share of Federal
Paper Board common stock covered by a Cash Election or a
Non-Election has been converted into the right to receive
$55.00 in cash, and each share of Federal Paper Board
common stock covered by a Stock Election has been
converted into the right to receive approximately 1.013
shares of the Registrant's common stock and approximately
$16.68 in cash. In aggregate, approximately 35.3 million
shares of the Registrant's common stock were issued and
approximately $1.285 billion is payable to former holders
of Federal Paper Board common stock in connection with
the Merger. The source of funds for the cash portion of
the Merger Consideration was privately placed commercial
paper and money market loans. In addition, options with
respect to approximately 3.6 million shares of the
Registrant's common stock were granted in substitution of
options held pursuant to certain Federal Paper Board
stock option plans upon the same terms and conditions as
under the applicable Federal Paper Board plan.
The foregoing description of the Merger does
not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement
incorporated herein by reference to Annex I to the Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus")
dated February 9, 1996, forming part of the Registration
Statement on Form S-4 (Registration No. 333-00843) of the
Registrant. A copy of a press release, dated March 12,
1996, relating to the above-described transaction is
attached hereto as Exhibit 99.1.
(b) The Registrant does not presently intend to
change substantially the business of Federal Paper Board.
Reference is made to the information contained in the
Proxy Statement/Prospectus under the caption "Summary -
The Companies - Federal Paper Board Company, Inc.", which
information is incorporated herein by reference.
ITEM 7: FINANCIAL STATEMENT, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The audited consolidated balance sheet of
Federal Paper Board as of December 30, 1995 and the
related consolidated statements of income, cash flows and
shareholders' equity for the fiscal year ended
December 30, 1995 and the related notes to the financial
statements are incorporated by reference to the Current
Report on Form 8-K filed by Federal Paper Board on
February 29, 1996.
(b) Pro Forma Financial Information.
INTERNATIONAL PAPER AND FEDERAL PAPER BOARD
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial
information presented herein gives effect to the Merger
of International Paper and Federal Paper Board and the
redemption (the "Redemption") of Federal Paper Board
Convertible Preferred Stock in accordance with the Merger
Agreement. The International Paper statement of earnings
for the year ended December 31, 1995 and the balance
sheet at December 31, 1995 are adjusted from historical
amounts to reflect acquisitions in 1995 of interests in
the following businesses accounted for under the purchase
method (collectively, the "IP Pro Forma Events"): shares
of stock of Carter Holt Harvey, Ltd., the assets of
Carpenter Paper Company and Seaman-Patrick Holding
Company, the high-pressure laminates business of
Westinghouse, the common stock of Papetries de Lana, and
the inks and adhesive resins business of DSM S.A.
("DSM"). The Unaudited Pro Forma Condensed Combined
Balance Sheet combines the historical balance sheets of
International Paper and Federal Paper Board as if the
Merger, the Redemption and the IP Pro Forma Events
occurred as of December 31, 1995, after giving effect to
purchase accounting and the other adjustments described
in the notes thereto. The Unaudited Pro Forma Condensed
Combined Statement of Earnings for the year ended
December 31, 1995 assumes that the Merger, the Redemption
and the IP Pro Forma Events occurred on January 1, 1995.
Accordingly, the pro forma financial information for 1995
is based upon the historical financial statements of
International Paper, including pro forma adjustments for
previous IP acquisitions in 1995, and Federal Paper
Board. The pro forma information reflects stock
consideration of 35,348,059 shares of IP Common Stock
(which includes fractional shares) and cash consideration
of approximately $1.285 billion. In the accompanying
unaudited pro forma condensed combined financial
statements, each share of IP Common Stock has been valued
at $37.65, the average of the closing market price on the
New York Stock Exchange of IP Common Stock over a period
just prior to and after March 7, 1996 (the date that the
number of shares to be issued was determined).
The unaudited pro forma combined financial
statements and accompanying notes reflect the application
of the purchase method of accounting. Under this method
of accounting, the purchase price will be allocated to
the assets acquired and liabilities assumed based on
their estimated fair values at the time of closing. As
described in the accompanying notes, estimates of the
fair values of Federal Paper Board and its subsidiaries'
assets and liabilities have been combined with the
recorded values of the assets and liabilities of
International Paper and its subsidiaries. However,
changes to the adjustments included in the unaudited pro
forma condensed combined financial statements are
expected as evaluations of assets and liabilities are
completed and as additional information becomes
available. In addition, the results of operations of
Federal Paper Board subsequent to December 31, 1995 will
affect the allocation of the purchase price.
Accordingly, the final purchase price allocation will
differ from those amounts set forth in the unaudited pro
forma condensed combined financial statements.
The Unaudited Pro Forma Condensed Combined Statement
of Earnings excludes any non-recurring costs of
International Paper acquiring Federal Paper Board.
International Paper expects to achieve certain reductions
in costs subsequent to the Merger as a result of the
combination and consolidation of the operations of
International Paper and Federal Paper Board. To comply
with the SEC's pro forma reporting rules, the cost
reductions reflected in the accompanying Unaudited Pro
Forma Condensed Combined Statement of Earnings have been
limited to specific salary and benefit costs that are
expected to be eliminated by the Merger.
The unaudited pro forma condensed combined financial
statements are intended for informational purposes only
and are not necessarily indicative of the future
financial position or future results of operations of the
combined company, or of the financial position or results
of operations of the combined company that would have
actually occurred had the Merger, the Redemption and the
IP Pro Forma Events been in effect as of the date or for
the period presented.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
TO REFLECT THE FEDERAL PAPER BOARD MERGER
YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS, EXCEPT PER SHARE DATA)
Internat- Federal
ional Paper Pro
Paper Board Forma Pro
(Pro (Histori Adjust- Forma
Forma)(a) -cal) ments Combined
NET SALES $20,599 $ 1,913 $ 40 (b) $ 22,552
COSTS AND EXPENSES
Cost of products sold 14,385 1,254 (81) (c) 15,558
Depreciation and
amortization 1,075 153 10 (d) 1,238
Distribution expenses 821 -- 105 (e) 926
Selling and
administrative expenses 1,503 97 (24) (f) 1,576
Taxes other than payroll
and income taxes 176 -- -- 176
Restructuring charge -- 72 -- 72
Total Costs and Expenses 17,960 1,576 10 19,546
EARNINGS BEFORE INTEREST,
INCOME TAXES AND
MINORITY INTEREST 2,639 337 30 3,006
Interest expense, net 546 90 61 (g) 697
EARNINGS BEFORE INCOME
TAXES AND MINORITY
INTEREST 2,093 247 (31) 2,309
Provision for income
taxes 720 105 1 (h) 826
Minority interest
expense, net of taxes 202 -- -- 202
NET EARNINGS $ 1,171 $ 142 $ (32) $ 1,281
EARNINGS PER COMMON
SHARE $ 4.57 $ 4.39(i)
AVERAGE SHARES OF
COMMON STOCK
OUTSTANDING 256.5 291.8
The accompanying notes are an integral part of these
Unaudited Pro Forma Condensed Combined Financial
Statements.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
TO REFLECT THE FEDERAL PAPER BOARD MERGER
DECEMBER 31, 1995
(IN MILLIONS, EXCEPT PER SHARE DATA)
Internat- Federal
ional Paper Pro
Paper Board Forma Pro
(Pro (Histori Adjust- Forma
Forma)(a) -cal) ments Combined
ASSETS
Current Assets
Cash and temporary
investments $ 312 $ -- $ -- $ 312
Accounts and notes
receivable, net 2,571 114 (6)(j) 2,679
Inventories 2,784 276 7(k) 3,067
Other current assets 206 58 -- 264
Total Current Assets 5,873 448 1 6,322
Plants, Properties and
Equipment, Net 10,997 1,915 344(l) 13,256
Forestlands 2,803 188 332(l) 3,323
Investments 1,420 -- -- 1,420
Goodwill 1,355 57 1,467(m) 2,879
Deferred Charges and
Other Assets 1,529 53 (6)(n) 1,576
Total Assets $23,977 $2,661 $ 2,138 $ 28,776
LIABILITIES AND COMMON
SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable and
current maturities of
long-term debt $ 2,283 $ 105 $ 1,825(o) $ 4,213
Accounts payable and
accrued liabilities 2,580 267 52(p) 2,899
Total Current Liabilities 4,863 372 1,877 7,112
Long-Term Debt 5,946 816 (400)(o) 6,362
Deferred Income Taxes 1,974 401 131(q) 2,506
Other Liabilities 980 60 139(r) 1,179
Minority Interest 1,967 -- -- 1,967
International Paper
obligated mandatorily
redeemable preferred
securities of Trust
holding solely
International Paper
subordinated debentures 450 -- -- 450
SHAREHOLDERS' EQUITY
Common Stock 263 238 (203)(s) 298
Paid-in capital 1,963 253 1,115(s) 3,331
Retained earnings 5,627 524 (524)(s) 5,627
Less: Common stock
held in treasury,
at cost (56) (3) 3(s) (56)
TOTAL SHAREHOLDERS' EQUITY 7,797 1,012 391 9,200
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $23,977 $2,661 $2,138 $ 28,776
The accompanying notes are an integral part of these
Unaudited Pro Forma Condensed Combined Financial
Statements.
INTERNATIONAL PAPER COMPANY AND FEDERAL PAPER BOARD
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Combined Statement of
Earnings has been prepared as if the Merger, the Redemption and
the IP Pro Forma Events occurred on January 1, 1995. The
Unaudited Pro Forma Condensed Combined Balance Sheet has been
prepared as if the Merger, the Redemption and the IP Pro Forma
Events occurred as of December 31, 1995. The Merger has been
accounted for under the purchase method of accounting. The
excess of the purchase price over the fair value of the net
assets acquired is being amortized on a straight-line basis over
a 40-year period.
A preliminary allocation of the purchase price is summarized
as follows (in millions):
PURCHASE PRICE OF ACQUISITION
Cash consideration (including transaction expenses) . . $1,320
Value of IP Common Stock exchanged for 51% of FPB Common
Stock outstanding . . . . . . . . . . . . . . . . . . 1,331
Value of options on IP Common Stock exchanged for all
outstanding options on FPB Common Stock . . . . . . . 73
$2,724
ALLOCATION OF PURCHASE PRICE
Net assets of Federal Paper Board at December 31, 1995 . . $1,012
Increase (decrease) to Federal Paper Board net asset
value at December 31, 1995 as a result of estimated
fair value adjustments:
Plants, Properties and Equipment, net . . . . . . . 344
Forestlands . . . . . . . . . . . . . . . . . . . . 332
Accrued liabilities . . . . . . . . . . . . . . . . (58)
Current maturities of long-term debt . . . . . . . (105)
Other liabilities . . . . . . . . . . . . . . . . . (139)
Deferred income taxes . . . . . . . . . . . . . . . (131)
Other, net . . . . . . . . . . . . . . . . . . . . 2
Excess of the purchase price over the fair value of the
net assets acquired . . . . . . . . . . . . . . . . . . 1,467
Total purchase price . . . . . . . . . . . . . . . $2,724
The following is a summary of reclassifications and
adjustments reflected in the Unaudited Pro Forma Condensed
Combined Statement of Earnings:
(a) The International Paper Unaudited Pro Forma
Condensed Combined Financial Statements reflect
the IP Pro Forma Events.
(b) Represents the elimination of sales from Federal
Paper Board to International Paper and
reclassification of distribution expenses from net
sales to distribution expenses to conform to
International Paper's financial reporting
presentation. The pro forma adjustments to sales
are as follows:
Elimination of sales . . . . . $(65)
Reclassification of distribution 105
expenses . . . . . . . . . . . $ 40
(c) Represents reversal of the increase in the LIFO
reserve recorded by Federal Paper Board, and, as a
result of recording the excess of the pension
benefit obligation over plan assets for the
defined benefits pension plans and the excess
accumulated postretirement benefit obligation over
plan assets, the amortization of deferred losses
and the transition obligation are being reversed
from the periodic pension cost and postretirement
benefit cost, respectively. Also includes
elimination of cost of sales related to sales from
Federal Paper Board to International Paper. The
pro forma adjustments to cost of products sold are
as follows:
Reversal of increase in the LIFO
reserve . . . . . . . . . . . $ (9)
Reversal of amortization of
deferred pension losses . . . . . (6)
Reversal of amortization of
transition obligation for the
postretirement benefit plan . . . (1)
Elimination of cost of sales
from Federal Paper Board to
International Paper. . . . . . . . (65)
$(81)
(d) Represents net adjustment to depreciation and
amortization expense as a result of (i) the step-
up of Federal Paper Board's plants, properties and
equipment; (ii) the utilization of International
Paper's policy on useful lives of such assets; and
(iii) amortization of excess cost over net assets
acquired over 40 years. Such amounts also reflect
the reversal of amortization expense of start-up
costs that were capitalized by Federal Paper Board
and the reversal of goodwill amortization that was
recorded by Federal Paper Board on previous
acquisitions. The pro forma adjustments to
depreciation and amortization are as follows:
Reduction of depreciation expense . . . . . $(18)
Amortization of excess cost over
net assets acquired . . . . . . 37
Reversal of amortization of
start-up costs . . . . . . . . . . . . (6)
Reversal of Federal Paper Board
goodwill amortization . . . . . . . . . (3)
$(10)
(e) Represents reclassification of distribution
expense from net sales to distribution expense to
conform to International Paper's financial
reporting presentation.
(f) Represents the planned reduction of salaries
and benefits as a result of eliminating
duplicative office functions.
(g) Represents acquisition interest expense based upon
the private placement of commercial paper and
money market loans at an average interest rate of
5.53%, as well as a reduction of interest expense
for certain privately placed notes held by Federal
Paper Board assumed to be refinanced at applicable
International Paper rates. The pro forma
adjustments to interest expense, net are as
follows:
Interest expense on acquisition
debt . . . . . . . . . . . . . $ 73
Reduction of interest expense on
private placement notes
assumed to be refinanced . . . . . . (12)
$ 61
(h) Represents the tax effect of the Unaudited Pro
Forma Condensed Combined Statements of Earnings
adjustments, excluding goodwill amortization,
based upon the statutory tax rate.
(i) The pro forma combined earnings per share
amounts, as presented in the accompanying
Unaudited Pro Forma Condensed Combined
Statement of Earnings, is based on the
weighted average number of shares of
International Paper outstanding for the
period presented.
The following is a summary of reclassifications and
adjustments reflected in the Unaudited Pro Forma Condensed
Combined Balance Sheet:
(j) Represents the elimination of receivables
between Federal Paper Board and International
Paper.
(k) Represents the step-up of inventory to fair value
by $14 million and to expense Federal Paper
Board's by-product inventory of $7 million to
conform with International Paper's financial
reporting presentation.
(l) Represents the preliminary adjustments of
assets to fair value.
(m) Represents the preliminary estimate of excess
purchase price over the fair value of Federal
Paper Board net assets acquired. The estimated
purchase price (estimated at $2,724 million)
includes acquisition related expenses and the
value of options on IP Common Stock exchanged for
all outstanding options on FPB common stock.
(n) Represents the reversal of deferred start-up costs
of $6 million to attain consistent accounting of
such costs with International Paper.
(o) Represents the issuance of privately placed
commercial paper and money market loans to finance
the transaction and an adjustment to record
certain Federal Paper Board privately placed notes
at fair market value which are assumed to be
refinanced by International Paper using commercial
paper.
(p) Represents accrual of estimated severance related
expenses of $63 million resulting from the Merger,
elimination of payables between International
Paper and Federal Paper Board of $6 million and
reversal of deferred gains on financial
instruments of $5 million.
(q) Represents the net tax effect of the pro forma
adjustments.
(r) Represents the recording of the excess of the
pension benefit obligation over plan assets for
the defined pension plans of $25 million and the
accumulated benefit obligation over plan assets of
$20 million for the postretirement benefit plan,
the reversal of deferred gains on financial
instruments of $6 million as well as the accrual
of additional costs of $100 million related to the
Merger.
(s) Represents the elimination of Federal Paper
Board's historical equity, issuance of shares by
International Paper to acquire 51% of the
outstanding shares of Federal Paper Board at the
conversion rate of 1.454 International Paper
shares for each share of Federal Paper Board and
the cost of exchanging outstanding options on
shares of Federal Paper Board stock for options of
International Paper stock based upon 2,450,280
Federal Paper Board stock options outstanding at
December 31, 1995 at an average exercise price of
$24.53 per share. The pro forma adjustments to
shareholders' equity are summarized as follows:
Common Paid in Retained Treasury
Stock Capital Earnings Stock
Reversal of Federal Paper
Board's equity . . . . $(238) $ (253) $(524) $(3)
Issuance of IP Common
Stock for 51% of FPB
Common Stock outstanding. 35 1,295 -- --
Value of options on IP
Common Stock exchanged
for all outstanding
options on FPB
Common Stock. . . . . -- 73 -- --
$(203) $1,115 $(524) $(3)
INTERNATIONAL PAPER COMPANY AND ACQUISITIONS
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF
EARNINGS TO REFLECT IP PRO FORMA EVENTS
The following unaudited pro forma condensed combined
statement of earnings for the year ended December 31,
1995, and the related pro forma adjustments described in
the accompanying notes, present the combined results of
the continuing operations of International Paper, Carter
Holt Harvey, Ltd., Carpenter Paper Company, Seaman-
Patrick Holding Company, the high-pressure laminates
business of Westinghouse, Papetries de Lana, and the inks
and adhesive resins business of DSM, collectively
referred to herein as the "IP Pro Forma Events".
The acquisition of 26.5% of Carter Holt Harvey, Ltd.
("CHH") common stock was completed on April 20, 1995,
thereby increasing International Paper's total ownership
in CHH to 50.3% (50.2% on a fully diluted basis). CHH
was accounted for under the equity method in
International Paper's historical financial statements
until May 1, 1995, at which time International Paper
began consolidating CHH's financial statements. CHH is
consolidated for all periods in the accompanying pro
forma statements of earnings.
The assets of Carpenter Paper Company and Seaman-
Patrick Holding Company were acquired on January 31, 1995
in exchange for shares of IP Common Stock. The common
stock of Papetries de Lana was acquired on July 6, 1995.
The high-pressure laminates business was acquired from
Westinghouse on September 1, 1995. The acquisition of
DSM was completed during October 1995.
The unaudited pro forma condensed combined statement
of earnings is prepared as if the transactions occurred
as of the beginning of the period. The pro forma
adjustments are based on available information, estimated
purchase price allocations and certain assumptions that
International Paper believes are reasonable. There can
be no assurance that the assumptions and estimates will
be realized. The unaudited pro forma condensed combined
statement of earnings does not purport to represent
International Paper's actual results of operations if the
transactions described above would have occurred at the
beginning of the period. In addition, the unaudited pro
forma condensed combined statement of earnings may not be
indicative of future results. An unaudited pro forma
condensed combined balance sheet as of December 31, 1995
is not included in this document because International
Paper's historical consolidated balance sheet as of
December 31, 1995 includes the consolidation of the
assets and liabilities of acquired businesses.
INTERNATIONAL PAPER COMPANY AND ACQUISITIONS
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF EARNINGS TO REFLECT IP PRO FORMA EVENTS
YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS, EXCEPT PER SHARE DATA)
Internat-
ional Acquired Pro Inter-
Paper Business Forma national
(Histori- (Histori- Adjust- Paper (Pro
cal) cal) ments(a) Forma)
NET SALES $19,797 $ 802 $ -- $20,599
COSTS AND EXPENSES
Cost of products sold 13,896 470 19 (b) 14,385
Depreciation and
amortization 1,031 38 6 (c) 1,075
Distribution expenses 794 28 (1)(d) 821
Selling and
administrative
expenses 1,381 122 -- 1,503
Taxes other than
payroll and income
taxes 174 2 -- 176
Total Costs and
Expenses 17,276 660 24 17,960
EARNINGS BEFORE
INTEREST, INCOME
TAXES AND MINORITY
INTEREST 2,521 142 (24) 2,639
Interest expense, net 493 22 31 (e) 546
EARNINGS BEFORE INCOME
TAXES AND MINORITY
INTEREST 2,028 120 (55) 2,093
Provision for income
taxes 719 22 (21)(f) 720
Minority interest
expense, net of taxes 156 -- 46 (g) 202
NET EARNINGS $1,153 $ 98 $ (80) $ 1,171
EARNINGS PER COMMON
SHARE $ 4.50 -- -- $ 4.57
AVERAGE SHARES OF COMMON
STOCK OUTSTANDING 256.5 -- -- 256.5
The accompanying notes are an integral part of
the Unaudited Pro Forma Statements of Earnings.
INTERNATIONAL PAPER COMPANY AND ACQUISITIONS
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
TO REFLECT IP PRO FORMA EVENTS
(a) The unaudited pro forma condensed combined statement of earnings
adjusts the historical International Paper amounts to reflect
acquisitions in 1995 of interests in the following businesses
accounted for under the purchase method (collectively, the "IP
Pro Forma Events"): shares of stock of Carter Holt Harvey, Ltd.;
the assets of Carpenter Paper Company and Seaman-Patrick Holding
Company; the high-pressure laminates business of Westinghouse;
the common stock of Papetries de Lana; and the inks and adhesive
resins business of DSM.
(b) The elimination of earnings for acquired businesses previously
accounted for under the equity method.
(c) The pro forma adjustments include the increase in depreciation
and goodwill amortization expense resulting from the purchase
adjustments related to the acquired businesses. Depreciation
expense is computed under the straight-line method over lives
ranging from 6 to 40 years. Goodwill is amortized over 40 years.
The pro forma adjustments to depreciation and amortization are as
follows:
Increase in depreciation expense . $ 3
Amortization of excess cost over net 5
assets acquired . . . . . . . . . . (2)
Reversal of goodwill amortization . $ 6
(d) The planned reduction in salaries, benefits and facility costs
resulting from the closure of duplicative distribution facilities
of an acquired business.
(e) Interest expense on acquisition related debt.
(f) Deferred taxes on the pro forma adjustments.
(g) The minority interest in the acquired businesses.
(c) Exhibits.
2.1 The Merger Agreement is incorporated herein
by reference to Annex A of the Proxy
Statement/Prospectus, dated February 9,
1996, forming part of the Registration
Statement on Form S-4 (Registration No. 333-
00843).
23.1 Consent of Independent Auditors.
99.1 Press release issued by International Paper
Company.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
INTERNATIONAL PAPER COMPANY
By: /s/ Syvert E. Nerheim
Name: Syvert E. Nerheim
Title: Assistant Secretary
Date: March 27, 1996
EXHIBIT INDEX
2.1 The Merger Agreement is incorporated herein
by reference to Annex A of the Proxy
Statement/Prospectus, dated February 9,
1996, forming part of the Registration
Statement on Form S-4 (Registration No. 333-
00843).
23.1 Consent of Independent Auditors.
99.1 Press release issued by International Paper
Company.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference
in this Current Report on Form 8-K of International Paper
Company of our report related to the financial statements of
Federal Paper Board Company, Inc. dated February 14, 1996,
appearing in the Current Report on Form 8-K of Federal Paper
Board Company, Inc. dated February 29, 1996.
/s/ DELOITTE & TOUCHE L.L.P.
Parsippany, New Jersey
March 26, 1996
EXHIBIT 99.1
INTERNATIONAL PAPER AND FEDERAL PAPER BOARD MERGE
MARCH 12, 1996
PURCHASE, N.Y. -- International Paper and Federal Paper
Board merged today after Federal Paper Board's
shareholders approved the $3.6 billion transaction.
With the combination of the two companies,
International Paper becomes a $22 billion corporation in
revenues, with 88,000 employees and $28 billion in
assets.
"We're excited about the potential the
combined companies give us to compete in the global
market," said John A. Georges, International Paper's
chairman and chief executive officer. "Our two
organizations and our market segments fit very well
together."
"The merger brings together two world-class
companies with modern facilities, strong market
franchises and outstanding asset bases. Our primary
focus as a merged company will be on serving customers,
and we will aggressively support all the Federal Paper
Board brands, market franchises and customer relationships."
By coordinating mill operations,
International Paper will be able to run its paper
machines more efficiently. With more capacity, the
company can schedule its paper machines to run those
grades they manufacture best, resulting in more product
available and more consistent quality.
In addition to Federal Paper Board's
manufacturing facilities, International Paper will have
700,000 more acres of forestlands, a high proportion of
which are mature and close by its paper and saw mills in
the Southeastern United States.
Already the world's largest forest products
company, International Paper now has 27 mills and over
6.4 million acres of forestland in the United States. In
addition, the company has manufacturing operations in 31
countries, an interest in another 800,000 acres of
forestlands in New Zealand, and exports its products to
more than 130 nations.
Federal Paper Board shareholders will
receive either cash, International Paper common stock, or
a combination of both, for their shares. In the
aggregate, the shareholders will receive 49 percent in
cash and 51 percent in International Paper stock.
As of March 11, the election deadline,
holders of approximately 35 million shares of Federal
Paper Board common stock out of 47.8 million have elected
to receive their consideration in stock. On Friday
(after the deadline for delivery of share certificates to
the exchange agent), International Paper expects to
announce the combination of stock and cash that these
shareholders, or those who failed to make an election,
will receive. Those shareholders who elected to receive
their consideration in cash will receive $55 for each of
their shares, and the company expects to begin paying for
these shares on Wednesday.
# # #
