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[LOGO OF INTERNATIONAL PAPER]
INTERNATIONAL PAPER PLAZA
400 ATLANTIC STREET
STAMFORD, CT 06921
News Release
CONTACTS:
Media: Jennifer Boardman, 203-541-8407
----- Stacy Wygant, 901-359-6335
Investors: Carol Tutundgy, 203-541-8632
--------- Darial Sneed, 203-541-8541
International Paper Reports First-Quarter 2002 Earnings
Stamford, Conn. - April 19, 2002 - International Paper (NYSE: IP) today reported
2002 first-quarter earnings of $58 million ($0.12 per share), compared with $24
million ($0.05 per share) in the first quarter 2001 and $58 million ($0.12 per
share) in the fourth quarter 2001. All figures are before special and
extraordinary items.
First-quarter net sales were $6 billion compared with $6.9 billion for the same
period in 2001 and $6.3 billion in the fourth quarter of 2001.
"We completed the first quarter with strong momentum, and we continue to improve
our underlying cost structure in a difficult macro environment," said John
Dillon, International Paper chairman and chief executive officer. "Our internal
programs are having a major impact on our earnings, we have continued to match
our production with our customers' demand, and we have delivered on our
commitment to sell businesses that do not meet our long-term goals. Our
inventories have been significantly reduced from last year's levels, and we have
now divested more than $3 billion worth of assets. When the economic rebound
does occur, we are very well positioned to take advantage of it."
After special items, International Paper reported 2002 first-quarter net
earnings of $65 million ($0.13 per share), compared with a net loss of $44
million ($0.09 per share) in the 2001 first quarter after special and
extraordinary items. In the fourth quarter of 2001, the company reported a net
loss of $572 million ($1.19 per share) after special items.
Special items in the first quarter consisted of a $10 million pre-tax credit ($7
million after taxes) for the reversal of reserves no longer required.
First-quarter 2001 special items included a $10 million pre-tax charge ($6
million after taxes) for Champion merger integration costs, an extraordinary
pre-tax charge of $73 million ($46 million after taxes) related to the
impairment of the Masonite business and the divestiture of the Petroleum and
Minerals assets, and a $25 million charge before taxes and minority interest
($16 million after taxes and minority interest) for the cumulative effect of a
change in accounting for derivatives and hedging activities. Special items
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in the 2001 fourth quarter totaled a pre-tax loss of $745 million ($630 million
after taxes), including charges for asset shutdowns of excess internal capacity
and cost reduction actions, losses related to dispositions and asset impairments
of businesses held for sale, and a credit for the reversal of reserves no longer
required.
First quarter 2002 results also reflect new accounting requirements that
eliminated goodwill amortization effective January 1, 2002. Goodwill
amortization totaled approximately $46 million (or $0.10 per share) in each
quarter of 2001. The favorable effect of this accounting change on 2002 first
quarter results was offset by a higher effective tax rate that reduced earnings
by $0.06 per share, and a reduction in pension income primarily due to the
assumed return on assets that reduced earnings by $0.04 per share, both compared
with the fourth quarter of 2001.
Segment Information
Compared to first quarter 2001, operating profit was slightly lower as weak
demand and pricing in the Printing Papers segment offset strong performances in
Packaging and Forest Products.
First-quarter 2002 segment earnings and business trends compared with the fourth
quarter of 2001 are as follows.
First-quarter earnings for Printing Papers were $76 million, down from
fourth-quarter 2001 earnings of $119 million as demand continued to weaken and
prices remained under pressure for market pulp. The strong U.S. dollar and the
start up of offshore coated paper capacity further hampered a weak U.S. market
for coated papers during the quarter.
Industrial and Consumer Packaging earnings were $128 million in the first
quarter, down slightly from $129 million in the fourth quarter 2001. Despite
soft market conditions, results were primarily influenced by rationalization
programs, cost improvement initiatives and lower energy and material costs
within the Consumer Packaging business.
Earnings in the company's distribution business, xpedx, rose to $18 million for
the first quarter 2002 compared with a $10 million loss in the 2001 fourth
quarter, due to aggressive internal cost reduction programs and lower bad debt
charges.
First-quarter Forest Products earnings of $176 million were up from $153 million
in the fourth quarter 2001 due to higher lumber and plywood prices.
Earnings at Carter Holt Harvey, International Paper's 50.4 percent owned
subsidiary in New Zealand, rose slightly to $10 million in the first quarter
compared with fourth-quarter 2001 earnings of $8 million. Internal cost control
programs and stronger volumes in the New Zealand building supplies business
favorably impacted results.
The company will hold a webcast to discuss earnings and current market
conditions at 1 p.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 3 p.m. (EDT) this afternoon.
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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 continual 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 effect 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.
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International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended
March 31,
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2002 2001
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Net Sales (In billions) $6.0 $6.9
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Earnings Before Interest, Income Taxes,
Minority Interest, Extraordinary Items
and Cumulative Effect of Accounting 344(a) 335(b)
Change
Interest expense, net 205 248
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Earnings Before Income Taxes, Minority
Interest, Extraordinary Items and
Cumulative Effect of Accounting Change 139(a) 87(b)
Income tax provision 43(a) 27(b)
Minority interest expense, net of taxes 31 42
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Earnings Before Extraordinary Items and
Cumulative Effect of Accounting Change 65(a) 18(b)
Net losses on sales and impairments of
investments and businesses held for sale, net of
taxes and minority interest - (46)(c)
Cumulative effect of change in
accounting for derivatives and hedging
activities, net of taxes - (16)
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Net Earnings (Loss) $65(a) $(44)(b,c)
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Earnings Per Common Share Before
Extraordinary Items and Cumulative
Effect of Accounting Change $0.13(a) $0.04(b)
Earnings (Loss) Per Common Share -
Extraordinary Items - (0.10)(c)
Cumulative Effect of Accounting Change - (0.03)
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Earnings (Loss) Per Common Share $0.13(a) $(0.09)(b,c)
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Earnings (Loss) Per Common Share -
Assuming Dilution $0.13(a) $(0.09)(b,c)
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Average Shares of Common Stock Outstanding 482.3 482.7
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(a) Includes a $10 million pre-tax credit ($7 million after taxes) for the
reversal of reserves no longer required.
(b) Includes a $10 million pre-tax charge ($6 million after taxes) for Champion
merger integration costs.
(c) Includes an extraordinary pre-tax charge of $73 million ($46 million after
taxes) related to the impairment of the Masonite business and the
divestiture of the Petroleum and Minerals assets.
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International Paper
Sales by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended
March 31,
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2002 2001
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Printing Papers $1,820 $ 2,085
Industrial and Consumer Packaging 1,460 1,590
Distribution 1,535 1,800
Forest Products 765 685
Carter Holt Harvey 410 395
Other Businesses (1) 420 715
Less: Intersegment Sales (372) (376)
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$6,038 $6,894
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(1) Principally includes businesses identified in our divestiture program.
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International Paper
Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Three Months Ended
March 31,
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2002 2001
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Printing Papers $ 76 $154
Industrial and Consumer Packaging 128 113
Distribution 18 14
Forest Products 176 136
Carter Holt Harvey 10 1
Other Businesses (1) 10 8
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Operating Profit 418 426
Interest expense, net (205) (248)
Minority interest adjustment 10 3
Corporate items, net (94) (84)
Merger integration costs - (10)
Reversal of reserves no longer required 10 -
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Earnings before income taxes, minority interest,
extraordinary items and cumulative effect of
accounting change $139 $ 87
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(1) Principally includes businesses identified in our divestiture program.
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INTERNATIONAL PAPER
SALES VOLUMES BY PRODUCT (a) (b)
(UNAUDITED)
Three Months Ended
March 31,
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2002 2001
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Printing Papers (In thousands of short tons)
Uncoated Papers and Bristols 1,621 1,653
Coated Papers 509 533
Market Pulp 611 536
Packaging (In thousands of short tons)
Containerboard 504 524
Bleached Packaging Board 314 307
Kraft 173 153
Industrial and Consumer Packaging 1,113 1,203
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis) 779 688
Lumber (board feet) 1,005 976
MDF and Particleboard (sq. ft. 3/4" - basis) 179 156
(a) Includes third party and inter-segment sales.
(b) Sales Volumes for divested businesses are included through the date of
sale.
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INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
March 31, December 31,
2002 2001
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Assets
Current Assets
Cash and temporary investments $ 967 $ 1,224
Accounts and notes receivable, net 2,829 2,650
Inventories 2,740 2,733
Assets of businesses held for sale 875 648
Other current assets 1,110 1,057
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Total Current Assets 8,521 8,312
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Plants, Properties and Equipment, net 14,130 14,461
Forestlands 4,014 4,197
Investments 240 239
Goodwill 6,560 6,543
Deferred Charges and Other Assets 3,411 3,406
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Total Assets $36,876 $37,158
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Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 709 $ 957
Liabilities of businesses held for sale 184 215
Accounts payable and accrued liabilities 4,085 4,202
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Total Current Liabilities 4,978 5,374
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Long-Term Debt 12,421 12,457
Deferred Income Taxes 3,990 3,977
Other Liabilities 2,023 1,980
Minority Interest 1,301 1,274
Preferred Securities 1,805 1,805
Common Shareholders' Equity
Invested capital 5,792 5,669
Retained earnings 4,566 4,622
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Total Common Shareholders' Equity 10,358 10,291
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Total Liabilities and Common Shareholders' Equity $36,876 $37,158
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