Ex-99
Media Contacts: Analyst Contacts:
----------------- -------------------
Phillip Giaramita Carol Tutundgy
(914) 397-1665 (914) 397-1632
Molly Sullivan Mary Winn Settino
(914) 397-1652 (914) 397-1623
INTERNATIONAL PAPER REPORTS THIRD-QUARTER RESULTS
OF $77 MILLION, OR $.25 A SHARE, BEFORE SPECIAL ITEMS
October 13, 1998
PURCHASE, N.Y. -- International Paper today reported third-quarter 1998 net
earnings of $77 million, or $.25 a share, before special items. This represents
a 14-percent decrease from second-quarter 1998 earnings of $90 million, or $.29
a share, before special items. Third-quarter 1998 net sales were $4.9 billion,
compared with second-quarter 1998 net sales of $4.7 billion.
International Paper's third-quarter 1998 earnings after special items
were $21 million, or $.07 per share. The third-quarter special items amounted to
a net loss of $56 million, or $.18 per share, after taxes and minority interest.
The special items included: a $20 million pre-tax gain ($12 million
after taxes, or $.04 per share) on the sale of the company's Veratec business; a
$45 million pre-tax gain ($27 million after taxes, or $.09 per share) from the
reversal of previously established reserves that are no longer required; and a
$55 million pre-tax charge ($33 million after taxes, or $.11 per share) for the
impairment of oil and gas reserves due to low prices.
The special items also included a $115 million pre-tax charge ($62
million after taxes and minority interest, or $.20 per share) to cover various
costs, primarily associated with the following:
- A continuation of the program in the printing papers segment
to improve alignment of its businesses with customers, as well
as to improve operational efficiencies;
- The indefinite shutdown of the Gardiner, Ore., linerboard mill;
- The closure of certain Carter Holt Harvey facilities;
- Other severance and systems costs, primarily for the
reorganization of the company's forest resources and distribution
businesses.
As a result of these actions, International Paper expects to achieve
annualized savings of $85 million and reduce its overall headcount by about
1,500 positions. These actions will be completed by early next year.
"Economic conditions around the world continue to affect our
performance, and we've taken downtime in all of our paper and packaging
businesses to control inventories. In the short-term, we expect that the strong
dollar and uncertain economic conditions worldwide will result in continued weak
demand," said John T. Dillon, chairman and chief executive officer. "While we
can have little impact on macro-economic activities, our restructuring measures
and cost-reduction programs will enable us to strengthen our performance and
improve our businesses, even in this environment."
In 1998's third quarter, earnings for the printing papers segment were
down from the second quarter, as lower prices primarily in uncoated papers, pulp
and in Europe more than offset a moderate increase in sales volume. Earnings
from the company's packaging segment also were down from the previous quarter
mainly due to lower prices.
Earnings for the forest products segment were up from the previous
quarter, primarily as a result of higher prices for the company's oriented
strand board. Earnings for the company's distribution business, xpedx, also were
up from the second quarter mainly due to cost-reduction efforts, a focus on
account profitability, and the continued smooth integration of Zellerbach into
the company's distribution system.
International Paper, in its 100th year of operation, is a worldwide
producer of printing papers, packaging and forest products. The company also
operates specialty businesses in global markets as well as a broadly based
distribution network. Headquartered in Purchase, N.Y., the company has
operations in 31 countries, employs more than 80,000 people and exports its
products to more than 130 nations.
# # #
International Paper Company
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,
1998 1997 1998 1997
-------- -------- -------- --------
Net Sales (In billions) ............... $4.9 $5.1 $14.5 $15.0
-------- -------- -------- --------
Earnings Before Interest, Income
Taxes and Minority Interest ......... 130 (a) 328 666(a,b) 134 (c)
Interest expense, net ............... 119 120 374 375
-------- -------- -------- --------
Earnings (Loss) Before Income Taxes
and Minority Interest ............... 11 (a) 208 292(a,b) (241)(c)
Income tax provision (benefit) ...... (15)(a) 71 69(a,b) (56)(c)
Minority interest expense, net of
taxes ............................. 5(a) 35 41(a) 98
-------- -------- -------- --------
Net Earnings (Loss) ................... $21 (a) $102 $182(a,b) $(283)(c)
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (Loss) Per Common Share ...... $0.07 (a) $0.34 $0.60(a,b) $(0.94)(c)
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (Loss) Per Common Share -
Assuming Dilution ................... $0.07 (a) $0.34 $0.60(a,b) $(0.94)(c)
-------- -------- -------- --------
-------- -------- -------- --------
Average Common Shares Outstanding ..... 307.2 302.3 305.4 301.4
-------- -------- -------- --------
-------- -------- -------- --------
(a) Includes a $20 million pretax gain on the sale of the Veratec nonwovens
business ($12 million after taxes or $.04 per share), $45 million of
pretax earnings ($27 million after taxes or $.09 per share) from the
reversal of restructuring and asset impairment reserves no longer
required, a $55 million pretax oil and gas impairment charge ($33 million
after taxes or $.11 per share), and new restructuring and asset
impairment charges totaling $115 million before taxes ($62 million after
taxes and minority interest expense or $.20 per share).
(b) Includes a $6 million pretax charge ($4 million after taxes or $.01 per
share) to write off in-process research and development costs acquired by
an investee company.
(c) Includes a $535 million pretax business improvement charge ($385 million
after taxes or $1.28 per share) and a $150 million pretax provision for
legal reserve ($93 million after taxes or $.31 per share).
INTERNATIONAL PAPER
SALES BY BUSINESS SEGMENT
Preliminary and Unaudited
(In Millions)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
1998 1997 1998 1997
---------- ------------- ------------- ------------
Printing Papers ............................... $ 1,220 $ 1,415 $ 3,855 $ 4,135
Packaging ..................................... 1,300 1,235 3,785 3,680
Distribution .................................. 1,495 1,170 3,925 3,385
Specialty Products ............................ 565 860 1,940 2,610
Forest Products ............................... 565 720 1,730 2,005
Less: Intersegment Sales ...................... (206) (281) (721) (800)
---------- ------------- ------------- ------------
$ 4,939 $ 5,119 $ 14,514 $ 15,015
---------- ------------- ------------- ------------
---------- ------------- ------------- ------------
The above amounts include Carter Holt Harvey net sales of $345 million and $480
million for the three months ended September 30, 1998 and 1997, respectively,
and $1.1 billion and $1.5 billion for the nine months ended September 30, 1998
and 1997, respectively.