Exhibit 99.1
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[INTERNATIONAL PAPER LOGO]
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INTERNATIONAL PAPER PLAZA
400 ATLANTIC STREET
STAMFORD, CT 06921
News Release
Media Contacts: Jennifer Boardman, 203-541-8407
Kathleen Bark, 203-541-8418
Investor Contacts: Darial Sneed, 203-541-8541
Brian Turcotte, 203-541-8632
International Paper Reports Higher First-Quarter 2004 Earnings on Stronger
Demand
o Net earnings of $73 million up 66 percent from 2003 first-quarter
earnings of $44 million.
o Net sales increased to $6.4 billion from first-quarter 2003 net sales
of $6.0 billion.
STAMFORD, Conn. - April 23, 2004 - International Paper (NYSE: IP) today reported
first-quarter 2004 net earnings of $73 million ($0.15 per share), compared with
$44 million ($0.09 per share) in the first quarter of 2003 and $48 million
($0.10 per share) in the fourth quarter of 2003. Amounts include the effects of
special items and discontinued operations in all periods and accounting changes
in the first and fourth quarters of 2003.
Earnings Per Share Summary
First First Fourth
Quarter Quarter Quarter
2004 2003 2003
------- ------- -------
Net Earnings $ 0.15 $ 0.09 $ 0.10
Less -- Earnings from Discontinued Operations
(CHH Tissue) (0.01) (0.01) (0.01)
Plus -- Cumulative Effect of Accounting Changes - 0.02 0.01
------ ------ ------
Earnings from Continuing Operations 0.14 0.10 0.10
Add Back - Special Items 0.02 0.03 0.12
------ ------ ------
Earnings from Continuing Operations and Before
Special Items $ 0.16 $ 0.13 $ 0.22
Earnings from continuing operations were $70 million ($0.14 per share) in the
2004 first quarter, compared with 2003 first-quarter earnings of $51 million
($0.10 per share) and 2003 fourth-quarter earnings of $48 million ($0.10 per
share). Amounts in all periods have been restated to
exclude as a discontinued operation the earnings of the tissue business of
Carter Holt Harvey that is expected to be sold in May 2004.
Earnings from continuing operations and before special items in the 2004 first
quarter were $79 million ($0.16 per share), compared with $65 million ($0.13 per
share) in the first quarter of 2003 and $107 million ($0.22 per share) in the
fourth quarter of 2003.
First-quarter 2004 net sales were $6.4 billion, compared with first-quarter 2003
net sales of $6.0 billion and 2003 fourth-quarter sales of $6.3 billion.
"I'm pleased that we were able to more than offset the continued high costs of
wood and energy with a better operational performance and higher sales volumes
for the quarter, particularly in uncoated free sheet, bleached board and
containerboard," said John Faraci, International Paper chairman and chief
executive officer. "Our focus on customers is having an impact, despite the
seasonally slow demand we typically experience in the winter months. Overall
average pricing for the quarter was down from the first quarter of last year;
but in March, we began to see the impact of previously announced price increases
in industrial packaging, uncoated free sheet, pulp and some of our bleached
board grades."
Commenting on the outlook for the second quarter, Faraci said, "We're seeing a
pick-up in demand for our products in most regions of the world, and average
price realizations in the second quarter should be higher. This upturn, combined
with lower wood costs and our continued focus on cost control, should position
us to deliver a stronger second quarter."
Effects of Special Items
Special items in the 2004 first quarter included a pre-tax charge of $30 million
before taxes ($19 million after taxes) for restructuring and other costs, a
pre-tax credit of $9 million ($6 million after taxes) to adjust previous
estimated gains/losses of businesses sold and a $7 million credit ($4 million
after taxes) for the net reversal of restructuring and realignment reserves no
longer required. The $30 million charge for restructuring and other costs
included $14 million ($9 million after taxes) for organizational restructuring
programs and $16 million ($10 million after taxes) for losses on early
extinguishment of debt. The net after-tax effect of these special items was an
expense of $0.02 per share.
Special items in the 2003 fourth quarter included a pre-tax charge of $101
million ($61 million after taxes and minority interest) for restructuring and
other costs, $21 million ($26 million after taxes) of net losses on sales and
impairments of businesses held for sale and a $23 million credit ($15 million
after taxes) for the net reversal of restructuring and realignment reserves no
longer required. In addition, a $13 million decrease in the income tax
provision, after minority interest, was recorded in the fourth quarter
reflecting a favorable settlement with Australian tax authorities of net
operating loss carryforward credits. The $101 million charge for restructuring
and other costs included $91 million ($55 million after taxes and minority
interest) for facility closures and organizational restructuring programs, $29
million ($18 million after taxes) for additional legal reserves, and a credit of
$19 million ($12 million after taxes) for gains on early extinguishment of debt.
The net after-tax effect of these special items was an expense of $0.12 per
share. Additionally, an after-tax charge of $3 million ($0.01 per share) was
recorded for the cumulative effect of an accounting change for the adoption of
the provisions of Financial
Interpretation No. 46, "Consolidation of Variable Interest Entities," resulting
in a total expense of $0.13 per share in the quarter from special items and
accounting changes.
Special items in the 2003 first quarter included a net charge of $23 million
before taxes and minority interest ($14 million after taxes and minority
interest, or $0.03 per share) for costs related to facility closures and
organizational restructuring programs. Also in the quarter, the company adopted
Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for
Asset Retirement Obligations," resulting in a $10 million after-tax charge
($0.02 per share) for the cumulative effect of a change in accounting.
Segment Information
Operating profits of $432 million for the first quarter were down from the
fourth-quarter 2003 operating profits of $447 million due to lower average price
realizations, lower levels of land sales and higher energy costs, all of which
more than offset higher volumes and improved operations. Operating profits were
higher than first-quarter 2003 operating profits of $406 million, due to
improved costs and higher volumes, which were partially offset by lower average
sales prices and higher raw material costs.
First-quarter segment operating profits and business trends compared with the
fourth quarter of 2003 are as follows:
First-quarter operating profits for Printing Papers were $83 million compared
with fourth-quarter 2003 operating profits of $65 million. Higher average pulp
price realization, stronger volumes for uncoated free sheet and strong results
from Europe and Brazil were somewhat offset by lower average price realization
on uncoated free sheet. The coated business continues to be impacted by import
pressures, and coated volumes were flat in a seasonally slow period.
Industrial and Consumer Packaging operating profits were $79 million in the
first quarter, compared with $111 million in the fourth quarter, due to lower
average price realizations that more than offset better operational performance.
The company's distribution business, xpedx, reported operating profits of $17
million for the first quarter compared with operating profits in the fourth
quarter of $18 million, on somewhat seasonally lower volumes.
First-quarter Forest Products operating profits were $232 million, compared with
earnings of $236 million in the fourth quarter of 2003 as higher wood products
results were offset by lower gains from forestland sales and slightly lower
harvest volumes.
Operating profits at Carter Holt Harvey, International Paper's 50.5 percent
owned subsidiary in New Zealand, were $11 million in the first quarter, compared
with fourth-quarter operating profits of $8 million as a result of higher prices
and lower operating costs.
Corporate expenses, net, of $110 million in the 2004 first quarter were lower
than 2003 fourth-quarter net expenses of $144 million, but were higher than net
expenses of $88 million in the first quarter of 2003. The decrease compared with
the fourth quarter was principally due to lower overhead and inventory-related
costs. Higher pension and other benefit-related costs were the major factors in
the increase from the 2003 first quarter.
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 'r' (SFI) 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 over 40 countries and sells its products in more than 120 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 but not limited to, the strength of
demand for the company's products and changes in overall demand, the effects of
competition from foreign and domestic producers, the level of housing starts,
changes in the cost or availability of raw materials, unanticipated expenditures
related to the cost of compliance with environmental and other governmental
regulations, the ability of the company to continue to realize anticipated cost
savings, performance of the company's manufacturing operations, results of legal
proceedings, changes related to international economic conditions, changes in
currency exchange rates, particularly the relative value of the U.S. dollar to
the Euro, economic conditions in developing countries, specifically Brazil and
Russia, the current military action in Iraq and the war on terrorism. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise. These and
other factors that could cause or contribute to actual results differing
materially from such forward looking statements are discussed in greater detail
in the company's Securities and Exchange Commission filings.
International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended
March 31,
------------------
2004 2003(a)
------ -------
Net Sales (In billions) $ 6.4 $ 6.0
------ ------
Earnings From Continuing Operations Before
Interest, Income Taxes, and Minority Interest 321(b) 309(d)
Interest expense, net 196 184
------ ------
Earnings From Continuing Operations Before
Income Taxes and Minority Interest 125(b) 125(d)
Income tax provision 41(b) 37(d)
Minority interest expense, net of taxes 14 37(d)
------ ------
Earnings From Continuing Operations 70(b) 51(d)
Discontinued Operation, net of taxes and minority
interest 3(c) 3(c)
Cumulative Effect of Accounting Change -
Asset Retirement Obligations (SFAS 143), net of
taxes - (10)
------ ------
Net Earnings $ 73(b) $ 44(d)
====== ======
Earnings Per Common Share From Continuing
Operations $ 0.14(b) $ 0.10(d)
Discontinued Operation, net of taxes and minority
interest 0.01(c) 0.01(c)
Cumulative Effect of Accounting Change -
Asset Retirement Obligations (SFAS 143), net of
taxes - (0.02)
------ ------
Earnings Per Common Share $ 0.15(b) $ 0.09(d)
====== ======
Earnings Per Common Share -
Assuming Dilution $ 0.15(b) $ 0.09(d)
====== ======
Average Shares of Common Stock Outstanding 484.4 479.0
====== ======
(a) Restated to reflect the operating results of the Carter Holt Harvey tissue
business as a discontinued operation.
(b) Includes a $30 million charge before taxes ($19 million after taxes) for
organizational restructuring actions and losses on early debt
extinguishment, a pre-tax credit of $9 million ($6 million after taxes) to
adjust previous estimated gains/losses of businesses sold, and a credit of
$7 million before taxes ($4 million after taxes) for the net reversal of
restructuring reserves no longer required.
(c) Includes net income of the discontinued operations of the Carter Holt
Harvey tissue business held for sale which is expected to be sold in the
second quarter of 2004.
(d) Includes a $23 million charge before taxes and minority interest ($14
million after taxes and minority interest) for asset shutdowns of excess
internal capacity and cost reduction actions.
International Paper
Reconciliation of Earnings Before
Special Items to Net Earnings
Preliminary and Unaudited
(In millions except for per share amounts)
Three Months Ended
March 31,
------------------
2004 2003
----- ----
Earnings Before Special Items (1) $ 79 $ 65
Restructuring and other charges (19) (14)
Reversal of reserves no longer required 4 -
Net gains on sales and impairments
of businesses held for sale 6 -
Discontinued Operation 3 3
Cumulative effect of change in accounting - (10)
---- ----
Net Earnings as Reported $ 73 $ 44
==== ====
Three Months Ended
March 31,
------------------
2004 2003
------ ------
Earnings Per Common Share
Before Special Items (1) $ 0.16 $ 0.13
Restructuring and other charges (0.04) (0.03)
Reversal of reserves no longer required 0.01 -
Net gains on sales and impairments
of businesses held for sale 0.01 -
Discontinued Operation 0.01 0.01
Cumulative effect of change in accounting - (0.02)
------ ------
Earnings Per Common Share as Reported $ 0.15 $ 0.09
====== ======
(1) The company calculates Earnings Before Special Items by excluding the
after-tax effect of the adoption of new accounting standards, after-tax
earnings of discontinued operations and items considered by management to
be unusual from the net earnings reported under generally accepted
accounting principles ("GAAP"). Management uses this measure to focus on
on-going operations, and believes that it is useful to investors because it
enables them to perform meaningful comparisons of past and present
operating results. International Paper believes that using this information
along with net earnings provides for a more complete analysis of the
results of operations by quarter. Net earnings is the most directly
comparable GAAP measure.
International Paper
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Sales by Industry Segment
Three Months Ended
Three Months Ended ----------------------------
March 31, June 30 Sept. 30 Dec. 31 Full
------------------ ------- -------- ------- Year
2004 2003(1) 2003(1) 2003(1) 2003(1) 2003(1)
------ --------- ------- -------- ------- -------
Printing Papers $1,970 $1,875 $1,860 $1,910 $1,875 $ 7,520
Industrial and Consumer Packaging 1,700 1,620 1,680 1,655 1,715 6,670
Distribution 1,465 1,430 1,475 1,485 1,470 5,860
Forest Products 790 675 740 800 810 3,025
Carter Holt Harvey 515 405 420 480 515 1,820
Other Businesses (2) 295 345 335 280 275 1,235
Less: Intersegment Sales (371) (371) (352) (347) (314) (1,384)
------ ------ ------ ------ ------ -------
$6,364 $5,979 $6,158 $6,263 $6,346 $24,746
====== ====== ====== ====== ====== =======
Earnings by Industry Segment
Three Months Ended
Three Months Ended ----------------------------
March 31, June 30 Sept. 30 Dec. 31 Full
------------------ ------- -------- ------- Year
2004 2003(1) 2003(1) 2003(1) 2003(1) 2003(1)
----- ---------- ------- -------- ------- -------
Printing Papers $ 83 $ 121 $ 142 $ 119 $ 65 $ 447
Industrial and Consumer Packaging 79 98 126 116 111 451
Distribution 17 15 23 24 18 80
Forest Products 232 161 143 201 236 741
Carter Holt Harvey 11 12 4 14 8 38
Other Businesses (2) 10 (1) 5 10 9 23
----- ----- ----- ----- ----- ------
Operating Profit 432 406 443 484 447 1,780
Interest expense, net (196) (184) (194) (203) (185) (766)
Minority interest (3) 13 14 9 17 8 48
Corporate items, net (110) (88) (96) (138) (144) (466)
Restructuring and other charges (30) (23) (81) (93) (101) (298)
Net gains (losses) on sales and
impairments of businesses held for sale 9 - (10) (1) (21) (32)
Reversal of reserves no longer required
7 - 9 8 23 40
----- ----- ----- ----- ----- ------
Earnings from continuing operations
before income taxes and minority
interest $ 125 $ 125 $ 80 $ 74 $ 27 $ 306
===== ===== ===== ===== ===== ======
(1) Prior-year industry segment information has been reclassified to conform
with minor changes in the 2004 operational structure, as well as to reflect
the Carter Holt Harvey tissue business as a discontinued operation.
(2) Includes Arizona Chemical, Chemical Cellulose Pulp (closed in 2003) and
businesses identified in our divestiture program.
(3) Operating profits for industry segments include each segment's percentage
share of the profits of subsidiaries included in that segment that are less
than wholly owned. The pre-tax minority interest for these subsidiaries is
added here to present consolidated earnings before income taxes, minority
interest, extraordinary items, and cumulative effect of accounting changes.
International Paper
Sales Volumes by Product (1,2)
Preliminary and Unaudited
International Paper Consolidated (excluding Carter Holt Harvey)
Three Months
Ended Three Months Ended
March 31, ------------------------------- Full
------------- June 30, Sept. 30, Dec. 31, Year
2004 2003 2003 2003 2003 2003
----- ----- -------- --------- -------- -----
Printing Papers
(In thousands of short tons)
Uncoated Papers and Bristols 1,658 1,571 1,532 1.572 1,563 6,238
Coated Papers 526 506 500 575 532 2,113
Market Pulp 556 510 456 500 546 2,012
Packaging
(In thousands of short tons)
Containerboard 541 485 497 460 504 1,946
Bleached Packaging Board 379 317 340 340 351 1,348
Kraft 148 150 157 148 151 606
Industrial and Consumer
Packaging 1,125 1,077 1,091 1,103 1,112 4,383
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis) 509 460 551 553 473 2,037
Lumber (board feet) 878 842 934 915 882 3,573
Particleboard
(sq. ft. 3/4" - basis) - - - - - -
Three Months Ended
------------------------------------------ Full
March 31, June 30, Sept. 30, Dec. 31 Year
2002 2002 2002 2002 2002
--------- -------- --------- ------- -----
Printing Papers
(In thousands of short tons)
Uncoated Papers and Bristols 1,589 1,580 1,628 1,535 6,332
Coated Papers 509 533 615 555 2,212
Market Pulp 497 436 535 545 2,013
Packaging
(In thousands of short tons)
Containerboard 408 475 520 459 1,862
Bleached Packaging Board 292 314 320 321 1,247
Kraft 173 140 159 154 626
Industrial and Consumer
Packaging 1,068 1,129 1,089 1,086 4,372
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis) 730 494 532 477 2,233
Lumber (board feet) 884 979 954 864 3,681
Particleboard
(sq. ft. 3/4" - basis) 62 67 - - 129
1. Includes third party and inter-segment sales.
2. Sales volumes for divested businesses are included through the date of sale.
Carter Holt Harvey (3)
Three Months
Ended Three Months Ended
March 31, ------------------------------- Full
------------ June 30, Sept. 30, Dec. 31, Year
2004 2003 2003 2003 2003 2003
---- ---- -------- --------- -------- ----
Printing Papers (In thousands of
short tons)
Tissue 32 33 33 33 33 132
Market Pulp 147 121 93 130 155 499
Packaging (In thousands of short tons)
Containerboard 119 101 53 100 107 361
Bleached Packaging Board 20 23 21 21 19 84
Industrial and Consumer Packaging 39 40 41 34 38 153
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis) 43 46 42 47 44 179
Lumber (board feet) 118 122 121 132 128 503
MDF & Particleboard (sq. ft. 3/4"
basis) 139 147 139 155 141 582
Three Months Ended
------------------------------------------- Full
March 31, June 30, Sept. 30, Dec. 31, Year
2002 2002 2002 2002 2002
--------- -------- --------- -------- ----
Printing Papers (In thousands of
short tons)
Tissue 32 34 36 35 137
Market Pulp 114 152 119 127 512
Packaging (In thousands of short tons)
Containerboard 96 105 91 108 400
Bleached Packaging Board 22 23 23 21 89
Industrial and Consumer Packaging 45 39 33 37 154
Forest Products (In millions)
Panels (sq. ft. 3/8" - basis) 49 47 53 51 200
Lumber (board feet) 121 139 145 141 546
MDF & Particleboard (sq. ft. 3/4"
basis) 117 124 130 123 494
3. Includes 100 percent of volumes sold.
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
March 31, December 31,
2004 2003
--------- ------------
Assets
Current Assets
Cash and temporary investments $ 2,010 $ 2,363
Accounts and notes receivable, net 2,996 2,851
Inventories 2,813 2,896
Assets of business held for sale 414 424
Other current assets 968 1,096
------- -------
Total Current Assets 9,201 9,630
------- -------
Plants, Properties and Equipment, net 13,834 13,998
Forestlands 4,032 4,069
Investments 733 764
Goodwill 5,340 5,341
Deferred Charges and Other Assets 1,889 1,723
------- -------
Total Assets $35,029 $35,525
======= =======
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 1,757 $ 2,087
Liabilities of business held for sale 255 248
Accounts payable and accrued liabilities 4,292 4,641
------- -------
Total Current Liabilities 6,304 6,976
------- -------
Long-Term Debt 13,806 13,450
Deferred Income Taxes 1,425 1,598
Other Liabilities 3,623 3,637
Minority Interest 1,624 1,627
Common Shareholders' Equity
Invested capital 5,213 5,155
Retained earnings 3,034 3,082
------- -------
Total Common Shareholders' Equity 8,247 8,237
------- -------
Total Liabilities and Common Shareholders' Equity $35,029 $35,525
======= =======
Note: December 31, 2003 balances have been restated to reflect the assets and
liabilities of the Carter Holt Harvey tissue business as a business held
for sale.