99.1
INTERNATIONAL PAPER PLAZA
400 ATLANTIC STREET
STAMFORD, CT 06921
News Release
CONTACTS:
Media: Jennifer Boardman, 203-541-8407
----- 901-351-5943
Investors: Carol Tutundgy, 203-541-8632
--------- Darial Sneed, 203-541-8541
International Paper Reports Third-Quarter 2001 Earnings
Stamford, Conn. - Oct. 17, 2001 - International Paper (NYSE: IP) today reported
third-quarter 2001 earnings of $68 million ($0.14 per share) before special
items, compared with $260 million ($0.53 per share) in the third quarter 2000
and $64 million ($0.13 per share) in the second quarter 2001. All figures are
before special and extraordinary items.
"International Paper continues to take measures that strengthen our company --
focusing on our core businesses, improving our operational performance, working
to manage our capacity and aggressively pursuing divestitures," said John
Dillon, International Paper chairman and chief executive officer. "The programs
we have in place are positively impacting our earnings.
"There is no doubt, however, that the tragic events of September 11 have placed
additional stresses on consumer confidence in an already weak economy," said
Dillon. "Like many other companies, we experienced business interruptions during
the week of the terrorist attacks. The long-term impact on our company resulting
from those events is still undetermined."
Special items in the third quarter 2001 earnings statement include a gain of
$215 million before taxes on the sale of the Curtis/Palmer hydroelectric
facility and charges in the amount of $649 million before taxes in connection
with facility and business rationalizations, an increase in litigation related
reserves, and disposition and impairment losses on assets of businesses held for
sale.
After special items, International Paper reported a third-quarter 2001 net loss
of $275 million ($0.57 per share), compared with a net loss of $135 million
($0.38 per share) in the third quarter 2000 after special and extraordinary
items. In the second quarter of 2001, the company reported a net loss of $313
million ($0.65 per share) after special items.
During the third quarter, International Paper continued to face tough
competitive conditions and soft demand. The economic slowdown in the United
States and other segments of the global economy continued to adversely impact
demand for paper, packaging and wood products.
International Paper's global competitive position continues to be affected by
the relative strength of the U.S. dollar. While there was marginal strengthening
of the Euro versus the dollar during the quarter, the timing of the increase was
insufficient to reverse the downward trend in export competitiveness.
"International Paper is continuing to streamline and improve its operations,"
said Dillon. "We ran our mills more efficiently in the third quarter. And this
week, we announced the permanent closure of our Erie, Pa., Mill to better
utilize more competitive pulp, paper and converting capacity within the
company's uncoated freesheet system.
"We are also focused on cash flow and debt reduction, taking steps to enhance
long term liquidity," said Dillon. In August, the company took advantage of
favorable capital market conditions and issued $1 billion in aggregate principal
amount of ten-year fixed rate notes. The majority of the proceeds was used on
Oct. 8, 2001 to retire $800 million of money market notes due in 2002.
In addition, the company realized $350 million of merger benefits, through the
first nine months of this year, from the June 2000 Champion acquisition.
Segment Information
Compared to third quarter 2000, earnings declined in most segments as the impact
of the slow economy reduced demand for International Paper's products used for
advertising, print, packaging and construction. Forest Products earnings did,
however, improve compared to one year ago. The company realized higher lumber
prices and volumes during the current quarter. Versus second quarter 2001,
prices eroded slightly in most businesses and were partly offset by higher
seasonal paper volumes.
Third-quarter segment earnings and business trends compared to the second
quarter of 2001 are as follows.
Third-quarter earnings for Printing Papers were $146 million, up from $119
million in second quarter 2001 as a result of higher coated paper volumes
reflecting holiday catalog demand. European paper results were slightly weaker
than the prior quarter, due to the increased slowdown in European economies,
which lagged the downturn in the U.S. economy.
Industrial and Consumer Packaging earnings were $133 million in the third
quarter compared to $143 million in the second quarter, due to slightly lower
prices and volumes.
Earnings for the company's distribution business, xpedx, declined to $5 million
from $12 million last quarter, as a result of continued weak printing markets
and slowing sales in packaging and industrial supplies.
Third-quarter Forest Products earnings of $184 million were flat compared with
$182 million in second quarter 2001. Higher lumber and panel volumes were offset
by lower prices.
Earnings at Carter Holt Harvey, International Paper's 50.5% owned subsidiary in
New Zealand, fell to a loss of $1 million from earnings of $5 million in second
quarter 2001. Improvement in construction markets in Australia was not
sufficient to offset the negative impact of continuing
price weakness in the log markets, low pricing for export pulp and linerboard,
and high energy costs.
The company will hold a webcast to discuss earnings and current market
conditions at 11 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 prior to the webcast. 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 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 the effects on our
business of our efforts to balance internal supply with demand, whether
anticipated merger, restructuring and divestiture benefits can be achieved, and
conditions affecting demand for our products, including impacts relating to
foreign exchange rates.
International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -------------------------------
2001 2000 2001 2000
---------- ----------- ---------- ---------
Net Sales (In billions) $6.5 $7.8 $20.1 $21.0
---------- ----------- ---------- ---------
Earnings (Loss) Before Interest, Income
Taxes, Minority Interest , Extraordinary Items
and Cumulative Effect of Accounting Change (52) (a) 589 (g) 86 (a,b,c) 1,791 (h)
Interest expense, net 235 278 718 565
---------- ----------- ---------- ---------
Earnings (Loss) Before Income Taxes,
Minority Interest, Extraordinary Items and
Cumulative Effect of Accounting Change (287) (a) 311 (g) (632)(a,b,c) 1,226 (h)
Income tax provision (benefit) (45) (a) 71 (g) (174)(a,b,c) 349 (h)
Minority interest expense, net of taxes 33 65 112 (b) 188
---------- ----------- ---------- ---------
Earnings (Loss) Before Extraordinary Items
And Cumulative Effect of Accounting Change (275) (a) 175 (g) (570)(a,b,c) 689 (h)
Gains (losses) on sales of investments and
businesses, net of taxes and
minority interest - (310)(f) (46)(d) (176)(f,i)
Cumulative effect of change in accounting for
derivatives and hedging activities,
net of taxes and minority interest - - (16) -
---------- ----------- ---------- ---------
Net Earnings (Loss) $(275) (a) $(135)(f,g) $(632)(a,b,c,d) $513 (f,h,i)
========== =========== ========== =========
Earnings (Loss) Per Common Share Before
Extraordinary Items and Cumulative
Effect of Accounting Change $(0.57) (a) $0.36 (g) $(1.18) (a,b,c) $1.57 (h)
Earnings (Loss) Per Common Share -
Extraordinary Items - (0.64)(f) (0.10) (d) (0.40)(f,i)
Cumulative Effect of Accounting Change - - (0.03) -
---------- ----------- ---------- ---------
Earnings (Loss) Per Common Share $(0.57) (a) $(0.28)(e,f,g) $(1.31) (a,b,c,d) $1.17 (e,f,h,i)
========== =========== ========== =========
Earnings (Loss) Per Common Share -
Assuming Dilution $(0.57) (a) $(0.28)(e,f,g) $(1.31) (a,b,c,d) $1.17 (e,f,h,i)
========== =========== ========== =========
Average Shares of Common Stock Outstanding 482.9 481.6 482.9 438.9
========== ========== ========= =========
(a) Includes a gain of $215 million before taxes ($137 million after taxes) on
the sale of the Curtis/Palmer hydroelectric facility and charges in the
amount of $649 million before taxes ($480 million after taxes) in
connection with facility and business rationalizations, an increase in
litigation related reserves, and disposition and impairment losses on
assets of businesses held for sale.
(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) In order for the 2000 third-quarter earnings per share to add up to the
year-to-date earnings per share, a loss of $.38 per share is required. The
sum of each quarter's earnings (loss) per share for 2000 calculated on the
basis of the weighted-average shares outstanding during each of the
respective quarters is $.10 per share higher than the nine months
year-to-date earnings per share calculated based on the year-to-date
weighted-average number of shares outstanding. The reason for this is that
68.7 million shares were issued in June 2000 related to the Champion
acquisition. On a stand alone basis, the third quarter loss per share,
inclusive of special and extraordinary items was $.28 per share. However,
in order for the quarterly earnings per share to add up to the
year-to-date earnings per share, a loss of $.38 per share is required. The
$.10 difference is essentially attributable to the effect resulting from
dividing the special and extraordinary items by the year-to-date average
number of shares outstanding.
(f) Includes an extraordinary pre-tax charge of $460 million ($310 million
after taxes) related to the impairment of the Zanders and Masonite
businesses to be sold.
(g) Includes a pre-tax charge of $125 million ($80 million after taxes) for
additions to existing Masonite reserves and a net pre-tax charge of $9
million ($5 million after taxes) for Union Camp and Champion merger
related items.
(h) Includes a pre-tax charge of $125 million ($80 million after taxes) for
additions to existing Masonite reserves, a charge of $71 million before
taxes and minority interest ($42 million after taxes and minority
interest) primarily for asset shutdowns of excess internal capacity and
cost reduction actions, and a $21 million net pre-tax charge ($13 million
after taxes) for Union Camp and Champion merger related items.
(i) 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 Nine Months Ended
September 30, September 30,
------------------------------ ----------------------------
2001 2000 (1) 2001 (1) 2000 (1)
------------ ----------- ----------- -----------
Printing Papers $ 1,945 $ 2,235 $ 5,975 $ 5,145
Industrial and Consumer Packaging 1,665 1,810 5,070 5,340
Distribution 1,665 1,930 5,175 5,380
Forest Products 725 755 2,130 1,715
Carter Holt Harvey 455 435 1,250 1,305
Other Businesses (2) 415 965 1,575 2,865
Less: Intersegment Sales (341) (329) (1,066) (798) (3)
------------ ------------ ----------- -----------
$ 6,529 $ 7,801 $ 20,109 $ 20,952
============ ============ =========== ===========
(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 from date of acquisition,
June 20, 2000, through June 30, 2000.
International Paper
Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- ----------------------------
2001 2000 (1) 2001 (1) 2000 (1)
------------ ----------- ----------- -----------
Printing Papers $ 146 $ 297 $ 419 $ 673
Industrial and Consumer Packaging 133 194 392 622
Distribution 5 32 31 97
Forest Products 184 162 502 445
Carter Holt Harvey (1) 21 5 61
Other Businesses (2) 10 51 36 176
Corporate - - - 26 (3)
------------ ----------- ----------- -----------
Operating Profit 477 757 1,385 2,100
Interest expense, net (235) (278) (718) (565)
Minority interest adjustment (6) 32 7 94
Corporate items, net (89) (66) (280) (186)
Merger integration costs - (15) (42) (27)
Restructuring and other charges (481) (125) (946) (196)
Gains (losses) on sales and impairments of
businesses held for sale 47 - (38) -
Reversal of reserves no longer required - 6 - 6
------------ ----------- ----------- -----------
Earnings before income taxes, minority
interest, extraordinary items and
cumulative effect of accounting change $ (287) $ 311 $ (632) $ 1,226
============ =========== =========== ===========
(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 from date of acquisition,
June 20, 2000, through June 30, 2000.
INTERNATIONAL PAPER
PRODUCTION BY PRODUCT
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ---------------------------
2001 2000 2001 2000
---- ---- ---- ----
Printing Papers (In thousands of tons)
White Papers and Bristols 1,517 1,684 4,735 4,419
Coated Papers (a) 534 720 1,601 1,362
Market Pulp (b) 676 837 2,007 1,874
Newsprint 26 26 81 81
Packaging
Containerboard 1,033 1,039 3,141 3,433
Bleached Packaging Board 399 532 1,447 1,607
Industrial Papers (a) 246 265 738 736
Industrial and Consumer Packaging (a) (c) 1,130 1,227 3,598 3,953
Specialty Products (In thousands of tons)
Tissue 43 41 124 124
Forest Products (In millions)
Panels (d) 783 934 2,203 1,941
Lumber 976 999 2,925 2,491
MDF 92 100 276 244
Particleboard 114 122 326 265
(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)
September 30, December 31,
2001 2000
------------------ --------------------
Assets
Current Assets
Cash and temporary investments $ 2,019 $ 1,198
Accounts and notes receivable, net 3,083 3,433
Inventories 2,740 3,182
Assets of businesses held for sale 983 1,890
Other current assets 1,092 752
-------------- --------------
Total Current Assets 9,917 10,455
-------------- --------------
Plants, Properties and Equipment, net 14,833 16,011
Forestlands 4,389 5,966
Investments 256 269
Goodwill 6,552 6,310
Deferred Charges and Other Assets 3,395 3,098
-------------- --------------
Total Assets $ 39,342 $ 42,109
============== ==============
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 1,203 $ 2,115
Liabilities of businesses held for sale 231 541
Accounts payable and accrued liabilities 4,385 4,757
-------------- --------------
Total Current Liabilities 5,819 7,413
-------------- --------------
Long-Term Debt 13,364 12,648
Deferred Income Taxes 4,186 4,699
Other Liabilities 1,978 2,155
Minority Interest 1,350 1,355
Preferred Securities 1,805 1,805
Common Shareholders' Equity
Invested capital 5,525 5,726
Retained earnings 5,315 6,308
-------------- --------------
Total Common Shareholders' Equity 10,840 12,034
-------------- --------------
Total Liabilities and Common Shareholders' Equity $ 39,342 $ 42,109
============== ==============