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Two Manhattanville Road
Purchase, N.Y. 10577
News Release
Media Contact: Jack Cox, 914-397-1952
Jennifer Boardman, 901-763-5944
Analyst Contacts: Carol Tutundgy, 914-397-1632
Rochelle Weitzner, 914-397-1623
International Paper Reports First-Quarter 2001 Earnings
April 18, 2001
Purchase, N.Y. - International Paper today reported first-quarter 2001 earnings
of $24 million ($.05 per share) before special and extraordinary items. Earnings
for the same period a year earlier were $249 million ($.60 per share) before
special and extraordinary items. First-quarter 2001 net sales were $6.9 billion,
compared to $6.4 billion in the first-quarter 2000. Fourth-quarter 2000 earnings
before special and extraordinary items were $145 million ($.28 per share) and
sales were $7.2 billion. First-quarter 2000 figures do not include Champion
International Corporation, which International Paper acquired in June of last
year.
"While we can't change the economy, we are changing the company. We are taking
actions that we are convinced are benefiting shareholders in the short term and
are positioning the company to win in the long term," said John Dillon, chairman
and chief executive officer. "We are matching our production to our orders,
which has led to reductions in inventories. We are focusing on our three core
businesses -- paper, packaging and forest products - and are reinforcing
relationships with our customers. And our continuing internal improvement effort
will give International Paper a superior competitive position when the business
outlook improves."
The continuation of a dramatic slow down of orders due to a very weak U.S.
economy and strong U.S. dollar hammered domestic profitability and export
competitiveness. Also influencing earnings this quarter were higher energy
costs, lower volumes and downward pressure on pricing. In addition, several of
the company's larger facilities did not operate well early in the quarter. The
company does not expect those operating issues to have a significant impact on
performance in the second quarter.
During the quarter, International Paper took approximately 490,000 tons of
market-related downtime.
The company's divestiture program is moving ahead as planned. In the first
quarter, International Paper received proceeds from the sale of its west coast
forestlands, oil & gas properties and Zanders, a European coated paper business.
In March, the company announced the sale of its Curtis/Palmer hydroelectric
project in Corinth, New York. Including all of these sales, the company will
have generated nearly $2 billion in proceeds from divestitures since the
acquisition of Champion last June.
In the Coated and Supercalendered Papers business, sales were weakened by a
significant reduction in corporate and general business advertising. Printing
and Communications Papers earnings reflect weak overall demand but somewhat
better conditions in the converting markets. Pulp prices remained under
increasing pressure.
In the European Papers business, markets remained stable with the exception of
weak pulp demand and pricing.
The company's distribution business, xpedx, experienced lower sales volumes in
commercial printing. To offset slow business conditions, xpedx is consolidating
facilities and reducing some jobs while pursuing sales growth initiatives.
Earnings in Consumer Packaging were affected by weakened bleached board demand
and an increasingly competitive marketplace. Prices, however, remained steady.
Industrial Packaging earnings were affected by taking significant downtime -
about 270,000 tons, or 20 percent of our system capacity - to match our
production with our customer orders. In addition, prices for containerboard were
down slightly.
In the Forest Products segment, our Wood Products businesses improved
performance from the fourth-quarter 2000 but continue to be impacted by
depressed prices in lumber and panels. Over supply in the market has prices
running near 10-year lows.
The company will hold a webcast to discuss earnings and current market
conditions at 11:30 a.m. (EDT) today. All interested parties are invited to
listen to the webcast live via the company's Internet site at
http://www.internationalpaper.com by clicking on the Investor Information
button. Persons who wish to listen to the live earnings webcast must
pre-register at the site. A replay of the webcast will also be available on the
web-site beginning at 2:30 p.m. (EDT) this afternoon.
After special and extraordinary items, International Paper reported a net loss
of $44 million ($.09 per share) in the first quarter of 2001, compared with net
earnings of $378 million ($.91 per share) in the first-quarter of 2000 after
special and extraordinary items. The company reported a net loss of $371 million
($.85 per share) in the fourth quarter of 2000 after special and extraordinary
items.
Special and extraordinary items in the first quarter represented the cumulative
impact of adopting the new accounting standard for derivative and hedging
transactions ($25 million before taxes and minority interest), an extraordinary
item for additional anticipated losses on dispositions ($73 million before
taxes) and a special item for additional Champion merger integration costs ($10
million before taxes). The total pre-tax charge was $108 million or $68 million
after taxes and minority interest ($.14 per share).
International Paper (http://www.internationalpaper.com) is the world's largest
paper and forest products company. Businesses include paper, packaging, and
forest products. As one of the largest private forest landowners in the world,
the company manages its forests under the principles of the Sustainable Forestry
Initiative (SFI'sm') program, a system that ensures the perpetual planting,
growing and harvesting of trees while protecting wildlife, plants, soil, air and
water quality. Headquartered in the United States, International Paper has
operations in nearly 50 countries, employs more than 113,000 people and exports
its products to more than 130 nations.
# # # #
Statements in this press release that are not historical are forward-looking.
These statements are subject to risks and uncertainties that could cause actual
results to differ materially, including risks related to whether our efforts
relating to capacity rationalization and realignment initiatives will positively
impact earnings, whether anticipated merger benefits will continue to be
realized, and whether the divestiture process will move ahead as expected. In
view of such uncertainties, investors are cautioned not to place undue reliance
on these forward-looking statements.
International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended
March 31,
------------------------------------
2001 2000
-------------- -------------
Net Sales (In billions) $6.9 $6.4
-------------- -------------
Earnings Before Interest, Income Taxes,
Minority Interest , Extraordinary Items
and Cumulative Effect of Accounting Change 335 (a) 566 (c)
Interest expense, net 248 131
-------------- -------------
Earnings Before Income Taxes, Minority
Interest, Extraordinary Items and
Cumulative Effect of Accounting Change 87 (a) 435 (c)
Income tax provision 27 (a) 136 (c)
Minority interest expense, net of taxes 42 55
-------------- -------------
Earnings Before Extraordinary Items
and Cumulative Effect of Accounting Change 18 (a) 244 (c)
Gains (losses) on sales of investments
and businesses, net of taxes (46)(b) 134 (d)
Cumulative effect of change in
accounting for derivatives and hedging activities,
net of taxes (16) -
-------------- -------------
Net Earnings (Loss) $(44) (a,b) $378 (c,d)
============== =============
Earnings Per Common Share Before
Extraordinary Items and Cumulative
Effect of Accounting Change $0.04 (a) $0.59 (c)
Earnings (Loss) Per Common Share -
Extraordinary Items $(0.10) (b) $0.32 (d)
Cumulative Effect of Accounting Change (0.03) -
-------------- -------------
Earnings (Loss) Per Common Share $(0.09) (a,b) $0.91 (c,d)
============== =============
Earnings (Loss) Per Common Share -
Assuming Dilution $(0.09) (a,b) $0.91 (c,d)
============== =============
Average Shares of Common Stock Outstanding 482.7 413.5
============== =============
(a) Includes $10 million of pre-tax charges ($6 million after taxes) for
Champion merger integration costs.
(b) Includes an extraordinary pre-tax charge of $73 million ($46 million after
taxes) related to the impairment of our Masonite business to be sold and
the divestiture of our Petroleum and Minerals assets.
(c) Includes $8 million of pre-tax charges ($5 million after taxes) for Union
Camp merger integration costs.
(d) Includes an extraordinary gain of $385 million before taxes and minority
interest expense ($134 million after taxes and minority interest expense)
on the sale of our investment in Scitex and Carter Holt Harvey's sale of
its share of COPEC.
International Paper
Sales by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended
March 31,
-----------------------------
2001 2000 (1)
------------- ------------
Printing Papers $ 2,025 $ 1,400
Industrial and Consumer Packaging 1,710 1,665
Distribution 1,800 1,750
Forest Products 685 500
Carter Holt Harvey 395 410
Other Businesses (2) 655 1,015
Less: Intersegment Sales (376) (369)
--------- ---------
$ 6,894 $ 6,371
========= =========
(1) Certain reclassifications and adjustments have been made to prior year
amounts. Includes businesses identified in the company's divestiture program.
International Paper
Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended
March 31,
-----------------------------
2001 2000 (1)
------------- -----------
Printing Papers $ 150 $ 166
Industrial and Consumer Packaging 116 192
Distribution 14 30
Forest Products 136 132
Carter Holt Harvey (2) 1 17
Other Businesses (3) 9 66
------------- -----------
Operating Profit 426 603
Interest expense, net (248) (131)
Minority interest adjustment 3 24
Corporate items, net (84) (53)
Merger integration costs (10) (8)
------------- -----------
Earnings before income taxes, minority
interest, extraordinary items and cumulative
effect of accounting change $87 $ 435
============== ===========
(1) Certain reclassifications and adjustments have been made to prior year
amounts.
(2) Includes equity earnings (in millions) of $1 in 2001 and $4 in 2000. Half of
these equity earnings amounts are in the Carter Holt Harvey segment and half are
in the minority interest adjustment.
(3) Includes businesses identified in the company's divestiture program.
INTERNATIONAL PAPER
PRODUCTION BY PRODUCT
(UNAUDITED)
Three Months Ended
March 31,
-------------------------------
2001 2000
Printing Papers (In thousands of tons)
White Papers and Bristols (a) 1,641 1,380
Coated Papers 698 325
Market Pulp (b) 676 522
Newsprint 28 27
Packaging
Containerboard (a) 1,047 1,203
Bleached Packaging Board 492 532
Industrial Papers 221 241
Industrial and Consumer Packaging (a) (c) 1,208 1,322
Specialty Products (In thousands of tons)
Tissue 41 41
Forest Products (In millions)
Panels (d) 649 493
Lumber 948 715
MDF 94 60
Particleboard 101 49
(a) Certain reclassifications and adjustments have been made to current and
prior year amounts.
(b) Excludes market pulp purchases.
(c) A significant portion of the tonnage was fabricated from paperboard and
paper produced at International Paper's own mills and included in the
containerboard, bleached packaging board and industrial papers amounts in this
table.
(d) Panels include plywood and oriented strand boards.
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
March 31, December 31,
2001 2000
------------ ------------
Assets
Current Assets
Cash and temporary investments $ 1,119 $ 1,198
Accounts and notes receivable, net 3,433 3,433
Inventories 3,154 3,182
Assets of businesses held for sale 1,315 1,890
Other current assets 786 752
------------ ------------
Total Current Assets 9,807 10,455
------------ ------------
Plants, Properties and Equipment, net 15,662 16,011
Forestlands 5,127 5,966
Investments 318 269
Goodwill 6,530 6,310
Deferred Charges and Other Assets 3,071 3,098
------------ ------------
Total Assets $ 40,515 $ 42,109
============ ============
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 2,009 $ 2,115
Liabilities of businesses held for sale 281 541
Accounts payable and accrued liabilities 4,368 4,757
------------ ------------
Total Current Liabilities 6,658 7,413
------------ ------------
Long-Term Debt 12,115 12,648
Deferred Income Taxes 4,667 4,699
Other Liabilities 2,125 2,155
Minority Interest 1,332 1,355
Preferred Securities 1,805 1,805
Common Shareholders' Equity
Invested capital 5,668 5,726
Retained earnings 6,145 6,308
------------ ------------
Total Common Shareholders' Equity 11,813 12,034
------------ ------------
Total Liabilities and Common Shareholders' Equity $ 40,515 $ 42,109
============ ============