International Paper Reports First-Quarter 2001 Earnings

Apr 18, 2001, 01:00 ET from International Paper

    PURCHASE, N.Y., April 18 /PRNewswire/ -- International Paper (NYSE:   IP)
 today reported first-quarter 2001 earnings of $24 million ($.05 per share)
 before special and extraordinary items. Earnings for the same period a year
 earlier were $249 million ($.60 per share) before special and extraordinary
 items. First-quarter 2001 net sales were $6.9 billion, compared to
 $6.4 billion in the first-quarter 2000. Fourth-quarter 2000 earnings before
 special and extraordinary items were $145 million ($.28 per share) and sales
 were $7.2 billion. First-quarter 2000 figures do not include Champion
 International Corporation, which International Paper acquired in June of last
 year.
     "While we can't change the economy, we are changing the company. We are
 taking actions that we are convinced are benefiting shareholders in the short
 term and are positioning the company to win in the long term," said John
 Dillon, chairman and chief executive officer. "We are matching our production
 to our orders, which has led to reductions in inventories. We are focusing on
 our three core businesses -- paper, packaging and forest products -- and are
 reinforcing relationships with our customers. And our continuing internal
 improvement effort will give International Paper a superior competitive
 position when the business outlook improves."
     The continuation of a dramatic slow down of orders due to a very weak U.S.
 economy and strong U.S. dollar hammered domestic profitability and export
 competitiveness. Also influencing earnings this quarter were higher energy
 costs, lower volumes and downward pressure on pricing. In addition, several of
 the company's larger facilities did not operate well early in the quarter. The
 company does not expect those operating issues to have a significant impact on
 performance in the second quarter.
     During the quarter, International Paper took approximately 490,000 tons of
 market-related downtime.
     The company's divestiture program is moving ahead as planned. In the first
 quarter, International Paper received proceeds from the sale of its west coast
 forestlands, oil & gas properties and Zanders, a European coated paper
 business. In March, the company announced the sale of its Curtis/Palmer
 hydroelectric project in Corinth, New York. Including all of these sales, the
 company will have generated nearly $2 billion in proceeds from divestitures
 since the acquisition of Champion last June.
     In the Coated and Supercalendered Papers business, sales were weakened by
 a significant reduction in corporate and general business advertising.
 Printing and Communications Papers earnings reflect weak overall demand but
 somewhat better conditions in the converting markets. Pulp prices remained
 under increasing pressure.
     In the European Papers business, markets remained stable with the
 exception of weak pulp demand and pricing.
     The company's distribution business, xpedx, experienced lower sales
 volumes in commercial printing. To offset slow business conditions, xpedx is
 consolidating facilities and reducing some jobs while pursuing sales growth
 initiatives.
     Earnings in Consumer Packaging were affected by weakened bleached board
 demand and an increasingly competitive marketplace. Prices, however, remained
 steady. Industrial Packaging earnings were affected by taking significant
 downtime -- about 270,000 tons, or 20 percent of our system capacity -- to
 match our production with our customer orders. In addition, prices for
 containerboard were down slightly.
     In the Forest Products segment, our Wood Products businesses improved
 performance from the fourth-quarter 2000 but continue to be impacted by
 depressed prices in lumber and panels. Over supply in the market has prices
 running near 10-year lows.
     The company will hold a webcast to discuss earnings and current market
 conditions at 11:30 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. A replay of the webcast will also be available on
 the web-site beginning at 2:30 p.m. (EDT) this afternoon.
     After special and extraordinary items, International Paper reported a net
 loss of $44 million ($.09 per share) in the first quarter of 2001, compared
 with net earnings of $378 million ($.91 per share) in the first-quarter of
 2000 after special and extraordinary items. The company reported a net loss of
 $371 million ($.85 per share) in the fourth quarter of 2000 after special and
 extraordinary items.
     Special and extraordinary items in the first quarter represented the
 cumulative impact of adopting the new accounting standard for derivative and
 hedging transactions ($25 million before taxes and minority interest), an
 extraordinary item for additional anticipated losses on dispositions
 ($73 million before taxes) and a special item for additional Champion merger
 integration costs ($10 million before taxes). The total pre-tax charge was
 $108 million or $68 million after taxes and minority interest ($.14 per
 share).
     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 (SFIsm ) 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, employs
 more than 113,000 people 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
 whether our efforts relating to capacity rationalization and realignment
 initiatives will positively impact earnings, whether anticipated merger
 benefits will continue to be realized, and whether the divestiture process
 will move ahead as expected. In view of such uncertainties, investors are
 cautioned not to place undue reliance on these forward-looking statements.
 
                              International Paper
                        Summary of Consolidated Earnings
                           Preliminary and Unaudited
            (In millions except for net sales and per share amounts)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001           2000
 
     Net Sales (In billions)                             $6.9           $6.4
 
     Earnings Before Interest, Income Taxes,
       Minority Interest , Extraordinary Items
       and Cumulative Effect of Accounting Change      335(a)         566(c)
 
     Interest expense, net                                248            131
 
 
     Earnings Before Income Taxes, Minority Interest ,
       Extraordinary Items and Cumulative Effect
       of Accounting Change                             87(a)         435(c)
 
     Income tax provision                               27(a)         136(c)
 
     Minority interest expense, net of taxes               42             55
 
     Earnings Before Extraordinary Items and
       Cumulative Effect of Accounting Change           18(a)         244(c)
 
     Gains (losses) on sales of investments and
       businesses, net of taxes                       (46)(b)         134(d)
 
     Cumulative effect of change in accounting for
       derivatives and hedging activities,
       net of taxes                                      (16)             --
 
     Net Earnings (Loss)                           $(44)(a,b)      $378(c,d)
 
     Earnings Per Common Share Before Extraordinary
       Items and Cumulative Effect of
       Accounting Change                             $0.04(a)       $0.59(c)
 
     Earnings (Loss) Per Common Share -
       Extraordinary Items                         $(0.10)(b)       $0.32(d)
     Cumulative Effect of Accounting Change            (0.03)             --
 
     Earnings (Loss) Per Common Share            $(0.09)(a,b)     $0.91(c,d)
 
     Earnings (Loss) Per Common Share -
       Assuming Dilution                         $(0.09)(a,b)     $0.91(c,d)
 
     Average Shares of Common Stock Outstanding         482.7          413.5
 
     (a) Includes $10 million of pre-tax charges ($6 million after taxes) for
         Champion merger integration costs.
 
     (b) 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.
 
     (c) Includes $8 million of pre-tax charges ($5 million after taxes) for
         Union Camp merger integration costs.
 
     (d) 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
                                                             March 31,
 
                                                         2001        2000(1)
 
     Printing Papers                                   $2,025         $1,400
 
     Industrial and Consumer Packaging                  1,710          1,665
 
     Distribution                                       1,800          1,750
 
     Forest Products                                      685            500
 
     Carter Holt Harvey                                   395            410
 
     Other Businesses(2)                                  655          1,015
 
     Less: Intersegment Sales                           (376)          (369)
 
                                                       $6,894         $6,371
 
     (1) Certain reclassifications and adjustments have been made to prior year
         amounts.
     (2) Includes businesses identified in the company's divestiture program.
 
                              International Paper
                          Earnings by Industry Segment
                           Preliminary and Unaudited
                                 (In Millions)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001        2000(1)
 
     Printing Papers                                     $150           $166
 
     Industrial and Consumer Packaging                    116            192
 
     Distribution                                          14             30
 
     Forest Products                                      136            132
 
     Carter Holt Harvey(2)                                  1             17
 
     Other Businesses(3)                                    9             66
 
     Operating Profit                                     426            603
 
     Interest expense, net                              (248)          (131)
 
     Minority interest adjustment                           3             24
 
     Corporate items, net                                (84)           (53)
 
     Merger integration costs                            (10)            (8)
 
     Earnings before income taxes, minority
       interest, extraordinary items and cumulative
       effect of accounting change                        $87           $435
 
     (1) Certain reclassifications and adjustments have been made to prior year
         amounts.
     (2) Includes equity earnings (in millions) of $1 in 2001 and $4 in 2000.
         Half of these equity earnings amounts are in the Carter Holt Harvey
         segment and half are in the minority interest adjustment.
     (3) Includes businesses identified in the company's divestiture program.
 
                              INTERNATIONAL PAPER
                             PRODUCTION BY PRODUCT
                                  (UNAUDITED)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001           2000
 
     Printing Papers (In thousands of tons)
       White Papers and Bristols(a)                     1,641          1,380
       Coated Papers                                      698            325
       Market Pulp(b)                                     676            522
       Newsprint                                           28             27
 
     Packaging
       Containerboard(a)                                1,047          1,203
       Bleached Packaging Board                           492            532
       Industrial Papers                                  221            241
       Industrial and Consumer Packaging(a)(c)          1,208          1,322
 
     Specialty Products (In thousands of tons)
       Tissue                                              41             41
 
     Forest Products (In millions)
       Panels(d)                                          649            493
       Lumber                                             948            715
       MDF                                                 94             60
       Particleboard                                      101             49
 
     (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)
 
                                                    March 31,   December 31,
                                                         2001           2000
 
     Assets
     Current Assets
       Cash and temporary investments                  $1,119         $1,198
       Accounts and notes receivable, net               3,433          3,433
       Inventories                                      3,154          3,182
       Assets of businesses held for sale               1,315          1,890
       Other current assets                               786            752
         Total Current Assets                           9,807         10,455
 
     Plants, Properties and Equipment, net             15,662         16,011
     Forestlands                                        5,127          5,966
     Investments                                          318            269
     Goodwill                                           6,530          6,310
     Deferred Charges and Other Assets                  3,071          3,098
     Total Assets                                     $40,515        $42,109
 
     Liabilities and Common Shareholders' Equity
     Current Liabilities
       Notes payable and current maturities
         of long-term debt                             $2,009         $2,115
       Liabilities of businesses held for sale            281            541
       Accounts payable and accrued liabilities         4,368          4,757
         Total Current Liabilities                      6,658          7,413
 
     Long-Term Debt                                    12,115         12,648
     Deferred Income Taxes                              4,667          4,699
     Other Liabilities                                  2,125          2,155
     Minority Interest                                  1,332          1,355
     Preferred Securities                               1,805          1,805
 
     Common Shareholders' Equity
       Invested capital                                 5,668          5,726
       Retained earnings                                6,145          6,308
         Total Common Shareholders' Equity             11,813         12,034
 
     Total Liabilities and Common
       Shareholders' Equity                           $40,515        $42,109
 
 

SOURCE International Paper
    PURCHASE, N.Y., April 18 /PRNewswire/ -- International Paper (NYSE:   IP)
 today reported first-quarter 2001 earnings of $24 million ($.05 per share)
 before special and extraordinary items. Earnings for the same period a year
 earlier were $249 million ($.60 per share) before special and extraordinary
 items. First-quarter 2001 net sales were $6.9 billion, compared to
 $6.4 billion in the first-quarter 2000. Fourth-quarter 2000 earnings before
 special and extraordinary items were $145 million ($.28 per share) and sales
 were $7.2 billion. First-quarter 2000 figures do not include Champion
 International Corporation, which International Paper acquired in June of last
 year.
     "While we can't change the economy, we are changing the company. We are
 taking actions that we are convinced are benefiting shareholders in the short
 term and are positioning the company to win in the long term," said John
 Dillon, chairman and chief executive officer. "We are matching our production
 to our orders, which has led to reductions in inventories. We are focusing on
 our three core businesses -- paper, packaging and forest products -- and are
 reinforcing relationships with our customers. And our continuing internal
 improvement effort will give International Paper a superior competitive
 position when the business outlook improves."
     The continuation of a dramatic slow down of orders due to a very weak U.S.
 economy and strong U.S. dollar hammered domestic profitability and export
 competitiveness. Also influencing earnings this quarter were higher energy
 costs, lower volumes and downward pressure on pricing. In addition, several of
 the company's larger facilities did not operate well early in the quarter. The
 company does not expect those operating issues to have a significant impact on
 performance in the second quarter.
     During the quarter, International Paper took approximately 490,000 tons of
 market-related downtime.
     The company's divestiture program is moving ahead as planned. In the first
 quarter, International Paper received proceeds from the sale of its west coast
 forestlands, oil & gas properties and Zanders, a European coated paper
 business. In March, the company announced the sale of its Curtis/Palmer
 hydroelectric project in Corinth, New York. Including all of these sales, the
 company will have generated nearly $2 billion in proceeds from divestitures
 since the acquisition of Champion last June.
     In the Coated and Supercalendered Papers business, sales were weakened by
 a significant reduction in corporate and general business advertising.
 Printing and Communications Papers earnings reflect weak overall demand but
 somewhat better conditions in the converting markets. Pulp prices remained
 under increasing pressure.
     In the European Papers business, markets remained stable with the
 exception of weak pulp demand and pricing.
     The company's distribution business, xpedx, experienced lower sales
 volumes in commercial printing. To offset slow business conditions, xpedx is
 consolidating facilities and reducing some jobs while pursuing sales growth
 initiatives.
     Earnings in Consumer Packaging were affected by weakened bleached board
 demand and an increasingly competitive marketplace. Prices, however, remained
 steady. Industrial Packaging earnings were affected by taking significant
 downtime -- about 270,000 tons, or 20 percent of our system capacity -- to
 match our production with our customer orders. In addition, prices for
 containerboard were down slightly.
     In the Forest Products segment, our Wood Products businesses improved
 performance from the fourth-quarter 2000 but continue to be impacted by
 depressed prices in lumber and panels. Over supply in the market has prices
 running near 10-year lows.
     The company will hold a webcast to discuss earnings and current market
 conditions at 11:30 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. A replay of the webcast will also be available on
 the web-site beginning at 2:30 p.m. (EDT) this afternoon.
     After special and extraordinary items, International Paper reported a net
 loss of $44 million ($.09 per share) in the first quarter of 2001, compared
 with net earnings of $378 million ($.91 per share) in the first-quarter of
 2000 after special and extraordinary items. The company reported a net loss of
 $371 million ($.85 per share) in the fourth quarter of 2000 after special and
 extraordinary items.
     Special and extraordinary items in the first quarter represented the
 cumulative impact of adopting the new accounting standard for derivative and
 hedging transactions ($25 million before taxes and minority interest), an
 extraordinary item for additional anticipated losses on dispositions
 ($73 million before taxes) and a special item for additional Champion merger
 integration costs ($10 million before taxes). The total pre-tax charge was
 $108 million or $68 million after taxes and minority interest ($.14 per
 share).
     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 (SFIsm ) 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, employs
 more than 113,000 people 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
 whether our efforts relating to capacity rationalization and realignment
 initiatives will positively impact earnings, whether anticipated merger
 benefits will continue to be realized, and whether the divestiture process
 will move ahead as expected. In view of such uncertainties, investors are
 cautioned not to place undue reliance on these forward-looking statements.
 
                              International Paper
                        Summary of Consolidated Earnings
                           Preliminary and Unaudited
            (In millions except for net sales and per share amounts)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001           2000
 
     Net Sales (In billions)                             $6.9           $6.4
 
     Earnings Before Interest, Income Taxes,
       Minority Interest , Extraordinary Items
       and Cumulative Effect of Accounting Change      335(a)         566(c)
 
     Interest expense, net                                248            131
 
 
     Earnings Before Income Taxes, Minority Interest ,
       Extraordinary Items and Cumulative Effect
       of Accounting Change                             87(a)         435(c)
 
     Income tax provision                               27(a)         136(c)
 
     Minority interest expense, net of taxes               42             55
 
     Earnings Before Extraordinary Items and
       Cumulative Effect of Accounting Change           18(a)         244(c)
 
     Gains (losses) on sales of investments and
       businesses, net of taxes                       (46)(b)         134(d)
 
     Cumulative effect of change in accounting for
       derivatives and hedging activities,
       net of taxes                                      (16)             --
 
     Net Earnings (Loss)                           $(44)(a,b)      $378(c,d)
 
     Earnings Per Common Share Before Extraordinary
       Items and Cumulative Effect of
       Accounting Change                             $0.04(a)       $0.59(c)
 
     Earnings (Loss) Per Common Share -
       Extraordinary Items                         $(0.10)(b)       $0.32(d)
     Cumulative Effect of Accounting Change            (0.03)             --
 
     Earnings (Loss) Per Common Share            $(0.09)(a,b)     $0.91(c,d)
 
     Earnings (Loss) Per Common Share -
       Assuming Dilution                         $(0.09)(a,b)     $0.91(c,d)
 
     Average Shares of Common Stock Outstanding         482.7          413.5
 
     (a) Includes $10 million of pre-tax charges ($6 million after taxes) for
         Champion merger integration costs.
 
     (b) 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.
 
     (c) Includes $8 million of pre-tax charges ($5 million after taxes) for
         Union Camp merger integration costs.
 
     (d) 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
                                                             March 31,
 
                                                         2001        2000(1)
 
     Printing Papers                                   $2,025         $1,400
 
     Industrial and Consumer Packaging                  1,710          1,665
 
     Distribution                                       1,800          1,750
 
     Forest Products                                      685            500
 
     Carter Holt Harvey                                   395            410
 
     Other Businesses(2)                                  655          1,015
 
     Less: Intersegment Sales                           (376)          (369)
 
                                                       $6,894         $6,371
 
     (1) Certain reclassifications and adjustments have been made to prior year
         amounts.
     (2) Includes businesses identified in the company's divestiture program.
 
                              International Paper
                          Earnings by Industry Segment
                           Preliminary and Unaudited
                                 (In Millions)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001        2000(1)
 
     Printing Papers                                     $150           $166
 
     Industrial and Consumer Packaging                    116            192
 
     Distribution                                          14             30
 
     Forest Products                                      136            132
 
     Carter Holt Harvey(2)                                  1             17
 
     Other Businesses(3)                                    9             66
 
     Operating Profit                                     426            603
 
     Interest expense, net                              (248)          (131)
 
     Minority interest adjustment                           3             24
 
     Corporate items, net                                (84)           (53)
 
     Merger integration costs                            (10)            (8)
 
     Earnings before income taxes, minority
       interest, extraordinary items and cumulative
       effect of accounting change                        $87           $435
 
     (1) Certain reclassifications and adjustments have been made to prior year
         amounts.
     (2) Includes equity earnings (in millions) of $1 in 2001 and $4 in 2000.
         Half of these equity earnings amounts are in the Carter Holt Harvey
         segment and half are in the minority interest adjustment.
     (3) Includes businesses identified in the company's divestiture program.
 
                              INTERNATIONAL PAPER
                             PRODUCTION BY PRODUCT
                                  (UNAUDITED)
 
                                                        Three Months Ended
                                                             March 31,
 
                                                         2001           2000
 
     Printing Papers (In thousands of tons)
       White Papers and Bristols(a)                     1,641          1,380
       Coated Papers                                      698            325
       Market Pulp(b)                                     676            522
       Newsprint                                           28             27
 
     Packaging
       Containerboard(a)                                1,047          1,203
       Bleached Packaging Board                           492            532
       Industrial Papers                                  221            241
       Industrial and Consumer Packaging(a)(c)          1,208          1,322
 
     Specialty Products (In thousands of tons)
       Tissue                                              41             41
 
     Forest Products (In millions)
       Panels(d)                                          649            493
       Lumber                                             948            715
       MDF                                                 94             60
       Particleboard                                      101             49
 
     (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)
 
                                                    March 31,   December 31,
                                                         2001           2000
 
     Assets
     Current Assets
       Cash and temporary investments                  $1,119         $1,198
       Accounts and notes receivable, net               3,433          3,433
       Inventories                                      3,154          3,182
       Assets of businesses held for sale               1,315          1,890
       Other current assets                               786            752
         Total Current Assets                           9,807         10,455
 
     Plants, Properties and Equipment, net             15,662         16,011
     Forestlands                                        5,127          5,966
     Investments                                          318            269
     Goodwill                                           6,530          6,310
     Deferred Charges and Other Assets                  3,071          3,098
     Total Assets                                     $40,515        $42,109
 
     Liabilities and Common Shareholders' Equity
     Current Liabilities
       Notes payable and current maturities
         of long-term debt                             $2,009         $2,115
       Liabilities of businesses held for sale            281            541
       Accounts payable and accrued liabilities         4,368          4,757
         Total Current Liabilities                      6,658          7,413
 
     Long-Term Debt                                    12,115         12,648
     Deferred Income Taxes                              4,667          4,699
     Other Liabilities                                  2,125          2,155
     Minority Interest                                  1,332          1,355
     Preferred Securities                               1,805          1,805
 
     Common Shareholders' Equity
       Invested capital                                 5,668          5,726
       Retained earnings                                6,145          6,308
         Total Common Shareholders' Equity             11,813         12,034
 
     Total Liabilities and Common
       Shareholders' Equity                           $40,515        $42,109
 
 SOURCE  International Paper