Media Contacts: Analyst Contacts:
Jack Cox Carol Tutundgy
(914) 397-1952 (914) 397-1632
Mary Winn Settino
(914) 397-1623
INTERNATIONAL PAPER REPORTS
FIRST-QUARTER RESULTS OF $44 MILLION, OR $.14 A SHARE
April 13, 1999
PURCHASE, N.Y. -- International Paper today reported first-quarter 1999 earnings
of $44 million, or $.14 a share, compared with fourth-quarter 1998 earnings of
$66 million, or $.21 a share, before special items. First-quarter 1999 net sales
were $5.0 billion, the same as fourth-quarter 1998 net sales. First-quarter 1998
earnings were $75 million or $.25 per share on sales of $4.9 billion.
"March was by far the best month of the quarter for us. Prices on several
of our key products have started to move up in the U.S., and some of our major
Asian markets are beginning to recover from the economic problems of last year.
The developing weakness in European economies is, however, a concern," said John
T. Dillon, chairman and chief executive officer. "Our wood products business
realized a very strong quarter and our food service business is doing very well.
We are also seeing improvement in our containerboard and market pulp businesses.
Overall, business has clearly improved, and we are optimistic that the price
increases we announced will be fully implemented during the second quarter."
"We will continue to match our output with customer requirements. At the
same time, we will increase profitability by looking at our costs in a different
way than we have traditionally done," Dillon said. "By employing tools such as
cost and revenue curves for each facility, we are now better able to meet
customer orders without building inventories, or adversely impacting our cost
structure."
Regarding the pending merger with Union Camp Corporation, Dillon said "we
are very pleased with the progress we are making on the integration of the two
companies. We are ahead of schedule in almost every area, especially in our
people decisions, and each week are releasing further details on the future for
our businesses."
"With the tremendous resources Union Camp brings -- from people to
operations to customer focus -- International Paper is positioned for even
greater success in the global market place because we will be more efficient in
providing the very best products and services to our customers," Dillon said.
"We look forward to a successful shareowner vote and merger closure on April
30."
The reduction in earnings compared to last year's first quarter was
primarily the result of sharply lower paper prices. Interest expense is lower
because of the issuance of preferred securities of subsidiaries, whose dividends
are included in minority interest expense.
Compared to last year's fourth quarter, operating earnings in 1999's first
quarter fell short by 10 percent. After a slow start, however, conditions in
each of the business segments performed considerably better in the latter part
of the quarter.
The U.S. and European papers segment reported higher results compared to
the previous quarter primarily because of high volume and lower costs at our
U.S. mills. Results in each of the other segments were lower. In our Forest
Products segment, building materials' earnings doubled in the first quarter
compared to fourth-quarter 1998; however, this improvement was offset by lower
earnings in timberlands, which had near record earnings in the fourth quarter.
In the Industrial and Consumer Packaging segment, Industrial Packaging results
were better as volume increased but this was offset by a weaker mix in Consumer
Packaging. However, the announced domestic price increases for containerboard
that we announced were in place by March and we expect favorable conditions to
continue into the next quarter.
Also, a higher effective tax rate in the first quarter resulted in $.06 a
share lower earnings compared to fourth-quarter 1998 earnings. The first-quarter
1999 effective tax rate was 30 percent. The fourth-quarter 1998 rate was 16
percent as that quarter included an adjustment to reduce the full year 1998 rate
to 25 percent.
Fourth-quarter 1998 net earnings were $54 million, or $.17 per share. This
includes a non-cash charge for impairment of oil and gas properties of $35
million after tax, or $.11 per share, and a non-cash credit of $23 million, or
$.07 per share, from the reversal of previously established restructuring
reserves that were no longer required.
International Paper (www.internationalpaper.com) is a worldwide producer
of printing paper, packaging and forest products. The company also operates
specialty businesses in global markets as well as a broadly based distribution
network. Headquartered in the United States at Purchase, N.Y., the company has
operations in 31 countries, employs approximately 80,000 people and exports its
products to more than 130 nations.
# # #
International Paper Company
Sales by Segment
Preliminary and Unaudited
(in millions of dollars)
Three Months Ended
March 31,
1999 1998
----------------------
U.S. and European Papers $ 1,235 $ 1,325
Industrial and Consumer Packaging 1,100 1,100
Distribution 1,530 1,225
Specialty Products 310 345
Forest Products 685 615
Carter Holt Harvey 365 415
Less: Corporate and Intersegment Sales (263) (157)
----------------------
Net Sales $ 4,962 $ 4,868
======================
International Paper Company
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended
March 31,
1999 1998
----------------------
Net Sales (In billions) $ 5.0 $ 4.9
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Earnings Before Interest, Income
Taxes and Minority Interest 223 268
Interest expense, net 114 127
------- -------
Earnings Before Income Taxes
and Minority Interest 109 141
Income tax provision 33 46
Minority interest expense, net of taxes 32 20
------- -------
Net Earnings $ 44 $ 75
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Earnings Per Common Share $ 0.14 $ 0.25
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Earnings Per Common Share -
Assuming Dilution $ 0.14 $ 0.25
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Average Common Shares Outstanding 307.0 302.3
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