INTERNATIONAL PAPER PLAZA
400 ATLANTIC STREET
STAMFORD, CT 06921
News Release
Media Contacts: Jennifer Boardman, 203-541-8308
- --------------- 901-351-5943
Analyst Contacts: Carol Tutundgy, 203-541-8632
- ----------------- Darial Sneed, 203-541-8541
International Paper Reports Second-Quarter 2001 Earnings
Stamford, Conn., - July 17, 2001 - International Paper (NYSE: IP) today reported
second-quarter 2001 earnings of $64 million ($.13 per share) before special
items, an increase of $40 million over the previous quarter. First-quarter 2001
earnings before special and extraordinary items were $24 million ($.05 per
share). Earnings for the second quarter last year were $315 million ($.75 per
share) before special items. Second-quarter 2001 net sales were $6.7 billion,
compared to $6.8 billion in the second-quarter 2000 and $6.9 billion in the
first-quarter 2001.
"The external environment continues to be very difficult. We are taking a whole
series of actions to strengthen our company and improve profitability, and those
internal initiatives helped us to achieve improved results this quarter," said
John Dillon, chairman and chief executive officer. "We have continued to reduce
our capacity to match demand from our customers, improved our operations and
began to realign staff resources to better our financial results."
During the quarter and in early July, the company announced approximately 4,000
job reductions related to capacity shutdowns, internal reorganizations and
streamlining of salaried staff functions.
Earnings, despite improved operating efficiencies during the quarter, were
negatively impacted by weak pulp and paper markets. Export competitiveness
continues to slide as a result of the strong U.S. dollar.
The Printing & Communications Papers business is aggressively pursuing
improvement initiatives and expects significant cost savings as a result of a
sector reorganization. However pulp markets continue to weaken, and the European
Papers business is softening. In the Coated and Supercalendered Papers business,
improved operating efficiencies have slightly offset a weak demand for magazine
grades.
The company's distribution business, xpedx, is making progress on its internal
profit improvement program, but was affected by weak printing markets as well as
slowing sales in packaging and industrial supplies.
Earnings in Consumer Packaging increased over the first quarter due to
operations improvements and system-wide cost reductions. The strong dollar
continued to weaken bleached board demand as well as containerboard exports.
Industrial Packaging continued to take extensive market-related downtime, and as
a result announced the indefinite shutdown of 610,000 tons of capacity.
In the Forest Products segment, lumber sales were up in an environment of stable
housing starts, and prices for both oriented strand board and plywood have
improved during the quarter. Stumpage prices continue to decline.
In businesses outside North America, the global economic slowdown also had an
impact on Carter Holt Harvey's forest products and pulp markets in Asia. Late in
the quarter, business slowed in Europe. Market conditions in Brazil are stable,
and financial results are holding up well.
"Going forward, we do not expect any near-term improvement in demand for our
products -- because of the normal summer slowdown -- but we are convinced our
internal improvement efforts will continue to help offset external market
conditions," said Dillon.
After special items, International Paper reported a net loss of $313 million
($.65 per share) in the second quarter of 2001, compared with net earnings of
$270 million ($.64 per share) in the second quarter of 2000 after special items.
In the first quarter of 2001, the company reported a net loss of $44 million
($.09) after special and extraordinary items.
Special items in the second quarter included charges for facility closures,
administrative realignment and related severance ($465 million before taxes and
minority interest), impairment losses on assets of businesses held for sale ($85
million before taxes), and additional Champion merger integration costs ($32
million before taxes).
The company will hold a webcast to discuss earnings and current market
conditions at 10 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 1 p.m. (EDT) this afternoon.
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
internal reorganizations will achieve anticipated cost savings, 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 Six Months Ended
June 30, June 30,
----------------------------- -------------------------------
2001 2000 2001 2000
---------- ---------- ---------- -----------
Net Sales (In billions) $6.7 $6.8 $13.6 $13.2
---------- --------- -------- ---------
Earnings (Loss) Before Interest, Income
Taxes, Minority Interest, Extraordinary Items
and Cumulative Effect of Accounting Change (197)(a,b) 636 (e,f) 138 (b,c) 1,202 (e,g)
Interest expense, net 235 156 483 287
---------- ----------- ---------- -----------
Earnings (Loss) Before Income Taxes,
Minority Interest, Extraordinary Items and
Cumulative Effect of Accounting Change (432)(a,b) 480 (e,f) (345)(b,c) 915 (e,g)
Income tax provision (156)(a,b) 142 (e,f) (129)(b,c) 278 (e,g)
Minority interest expense, net of taxes 37 (b) 68 (e) 79 (b) 123 (e)
---------- ----------- ---------- -----------
Earnings (Loss) Before Extraordinary Items
And Cumulative Effect of Accounting Change (313)(a,b) 270 (e,f) (295)(b,c) 514 (e,g)
Gains (losses) on sales of
investments and businesses, net of taxes and
minority interest - - (46)(d) 134 (h)
Cumulative effect of change in
accounting for derivatives and hedging
activities, net of taxes and minority
interest - - (16) -
---------- ----------- ---------- -----------
Net Earnings (Loss) $(313)(a,b) $270 (e,f) $(357)(b,c,d) $648 (e,g,h)
========== =========== ========== ===========
Earnings (Loss) Per Common Share Before
Extraordinary Items and Cumulative
Effect of Accounting Change $(0.65)(a,b) $0.64 (e,f) $(0.61)(b,c) $1.23 (e,g)
Earnings (Loss) Per Common Share -
Extraordinary Items - - (d) $0.32 (h)
$(0.10)
Cumulative Effect of Accounting Change - - $(0.03) -
---------- ----------- ---------- -----------
Earnings (Loss) Per Common Share $(0.65)(a,b) $0.64 (e,f) $(0.74)(b,c,d) $1.55 (e,g,h)
========== =========== ========== ===========
Earnings (Loss) Per Common Share -
Assuming Dilution $(0.65)(a,b) $0.64 (e,f) $(0.74)(b,c,d) $1.55 (e,g,h)
========== =========== ========== ===========
Average Shares of Common Stock Outstanding 483.1 421.0 482.9 417.3
========== =========== ========== ===========
(a) Includes $32 million of pre-tax charges ($22 million after taxes)
for Champion merger integration costs.
(b) Includes a charge of $465 million before taxes and minority
interest ($300 million after taxes and minority interest) for
facility closures, administrative realignment and related severance
reserves, and a charge of $85 million ($55 million after taxes) for
impairment losses on assets of businesses held for sale.
(c) Includes $42 million of pre-tax charges ($28 million after taxes)
for Champion merger integration costs.
(d) 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.
(e) Includes a charge of $71 million before taxes and minority interest
($42 million after taxes and minority interest) for asset shutdowns
of excess internal capacity and cost reduction actions.
(f) Includes a $4 million pre-tax charge ($3 million after taxes) for
Union Camp and Champion merger integration costs.
(g) Includes a $12 million pre-tax charge ($8 million after taxes) for
Union Camp and Champion merger integration costs.
(h) 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 Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
2001 (1) 2000 (1) 2001 (1) 2000 (1)
------------ ----------- ----------- ----------
Printing Papers $ 1,945 $ 1,440 $ 4,030 $ 2,910
Industrial and Consumer Packaging 1,695 1,865 3,405 3,530
Distribution 1,710 1,700 3,510 3,450
Forest Products 720 460 1,405 960
Carter Holt Harvey 400 460 795 870
Other Businesses (2) 565 955 1,160 1,900
Less: Intersegment Sales (349) (100)(3) (725) (469)(3)
------- -------- --------- ----------
$ 6,686 $ 6,780 $ 13,580 $ 13,151
======= ======== ========= ==========
(1) Certain reclassifications and adjustments have been made to current year
and prior year amounts.
(2) Includes businesses identified in the company's divestiture program.
(3) Includes results from operations of Champion International Corporation
acquired on June 20, 2000.
International Paper
Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- ----------------------------
2001 (1) 2000 (1) 2001 (1) 2000 (1)
------------ ----------- ----------- -----------
Printing Papers $ 119 $ 204 $ 273 $ 376
Industrial and Consumer Packaging 143 236 259 428
Distribution 12 35 26 65
Forest Products 182 151 318 283
Carter Holt Harvey 5 23 6 40
Other Businesses (2) 21 65 26 125
Corporate - 26 (3) - 26 (3)
------ ------ ------- --------
Operating Profit 482 740 908 1,343
Interest expense, net (235) (156) (483) (287)
Minority interest adjustment 10 38 13 62
Corporate items, net (107) (67) (191) (120)
Merger integration costs (32) (4) (42) (12)
Restructuring and other charges (465) (71) (465) (71)
Impairment losses on assets of businesses held (85) - (85) -
for sale
------ ------ ------- --------
Earnings before income taxes,
minority interest, extraordinary
items and cumulative effect of
accounting change $(432) $ 480 $ (345) $ 915
====== ====== ======= ========
(1) Certain reclassifications and adjustments have been made to current year
and prior year amounts.
(2) Includes businesses identified in the company's divestiture program.
(3) Includes results from operation of Champion International Corporation
acquired on June 20, 2000.
INTERNATIONAL PAPER
PRODUCTION BY PRODUCT
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2001 2000 2001 2000
---- ---- ---- ----
Printing Papers (In thousands of tons)
White Papers and Bristols (a) 1,578 1,355 3,219 2,735
Coated Papers 658 317 1,356 642
Market Pulp (b) 655 516 1,331 1,037
Newsprint 27 28 55 55
Packaging (In thousands of tons)
Containerboard 1,061 1,190 2,108 2,394
Bleached Packaging Board 556 542 1,048 1,074
Industrial Papers 193 230 415 471
Industrial and Consumer Packaging (a) (c) 936 1,375 1,888 2,726
Specialty Products (In thousands of tons)
Tissue 40 42 81 83
Forest Products (In millions)
Panels (d) 771 510 1,420 1,003
Lumber 1,001 713 1,949 1,428
MDF 90 84 184 143
Particleboard 111 95 212 143
(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)
June 30, December 31,
2001 2000
--------------- --------------------
Assets
Current Assets
Cash and temporary investments $ 743 $ 1,198
Accounts and notes receivable, net 3,185 3,433
Inventories 2,925 3,182
Assets of businesses held for sale 1,618 1,890
Other current assets 995 752
--------------- ---------------
Total Current Assets 9,466 10,455
--------------- ---------------
Plants, Properties and Equipment, net 15,172 16,011
Forestlands 4,399 5,966
Investments 276 269
Goodwill 6,617 6,310
Deferred Charges and Other Assets 3,395 3,098
--------------- --------------
Total Assets $ 39,325 $ 42,109
=============== ==============
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 1,271 $ 2,115
Liabilities of businesses held for sale 363 541
Accounts payable and accrued liabilities 4,180 4,757
--------------- --------------
Total Current Liabilities 5,814 7,413
--------------- --------------
Long-Term Debt 12,787 12,648
Deferred Income Taxes 4,221 4,699
Other Liabilities 2,128 2,155
Minority Interest 1,341 1,355
Preferred Securities 1,805 1,805
Common Shareholders' Equity
Invested capital 5,518 5,726
Retained earnings 5,711 6,308
--------------- --------------
Total Common Shareholders' Equity 11,229 12,034
--------------- --------------
Total Liabilities and Common Shareholders' Equity $ 39,325 $ 42,109
=============== ==============
STATEMENT OF DIFFERENCES
The service mark symbol shall be expressed as..............................'sm'