International Paper Reports Fourth-Quarter and 2009 Earnings
MEMPHIS, Tenn., Feb. 3 /PRNewswire-FirstCall/ -- International Paper (NYSE: IP) reported preliminary full-year 2009 net earnings attributable to common shareholders totaling $663 million ($1.55 per share) compared with a loss of $1.3 billion ($3.05 per share) in 2008. In the fourth quarter of 2009, the company reported a net loss of $101 million ($0.24 per share) compared with a net loss of $1.8 billion ($4.25 per share) in the fourth quarter of 2008. Amounts in all periods include special items. Full-year 2008 results of operations include the acquisition of Weyerhaeuser Company's packaging business since August 2008.
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Diluted Earnings Per Share Attributable to International Paper Shareholders
Fourth Fourth Full Full
Quarter Quarter Year Year
2009 2008 2009 2008
------- ------- ----- -----
Net Earnings (Loss) ($0.24) ($4.25) $1.55 ($3.05)
Less – Discontinued
Operations (Gain) Loss - (0.01) - 0.03
------- ------ ------ ------
Earnings (Loss) from
Continuing Operations (0.24) (4.26) 1.55 (3.02)
Add Back – Net Special
Items Expense (Income) 0.48 4.47 (0.67) 5.03
------- ------ ------ ------
Earnings from Continuing
Operations and Before $0.24 $0.21 $0.88 $2.01
Special Items ======= ====== ====== ======
Full-year 2009 earnings from continuing operations and before special items were $378 million ($0.88 per share) compared with $855 million ($2.01 per share) in 2008. Earnings from continuing operations and before special items in the 2009 fourth quarter totaled $101 million ($0.24 per share), compared with $89 million ($0.21 per share) in the fourth quarter of 2008.
Quarterly net sales were $6.0 billion compared with $6.5 billion in the fourth quarter of 2008. Annual sales totaled $23.4 billion compared with $24.8 billion in 2008.
Operating profits in the fourth quarter were a loss of $147 million, including special items, down from profits of $132 million in the fourth quarter of 2008. Full-year 2009 operating profits were $2.4 billion compared with $1.4 billion in 2008.
During 2009, International Paper generated $4.1 billion of free cash flow (cash provided by operations less capital expenditures), compared with $1.7 billion in 2008, reflecting reduced capital spending and continued focus on working capital management and overhead spending control, as well as $1.7 billion received from alternative fuel mixture credits. The company also repaid $3.1 billion of debt during 2009. At year end, the company had $1.9 billion in cash and $2.5 billion in committed liquidity facilities.
"Despite all the uncertainties we faced at the beginning of 2009 and throughout the year, plus the challenge of rising input costs in the fourth quarter, International Paper overall has delivered solid results," said John Faraci, chairman and chief executive officer. "Our focus on reducing overhead costs, matching our supply with our customer demand and realizing Industrial Packaging synergies gave us the ability to generate record free cash flow and pay down a significant amount of debt while positioning ourselves for 2010."
SEGMENT INFORMATION
To measure the performance of the company's business segments from quarter to quarter without variations caused by special items, management focuses on business segment operating profits excluding those items. Fourth-quarter 2009 segment operating profits and business trends, excluding special items, compared with the prior quarter are as follows:
Industrial Packaging had an operating profit of $84 million compared to an operating profit of $214 million in the third quarter of 2009 due to higher-cost manufacturing operations, higher freight, unfavorable input costs and higher annual maintenance outages. Results were also negatively impacted by lower prices and lower margins from increased export sales.
Printing Papers had an operating profit of $139 million compared to an operating profit of $138 million in the third quarter. While operations were solid, lower annual maintenance outage costs were largely offset by higher input costs and lower margins from increased export sales. Pulp prices increased but paper prices were lower before starting to see improvement late in the quarter.
Consumer Packaging had an operating profit of $49 million compared to an operating profit of $68 million in the third quarter. In Coated Paperboard, results were negatively impacted by higher annual outages and operations costs. Improved operations in Shorewood Packaging and Foodservice were offset by lower volume and unfavorable mix.
The company's distribution business, xpedx, reported operating profits of $31 million, higher than the $21 million posted in the third quarter of 2009 reflecting a $17 million favorable inventory valuation adjustment. Volumes improved and while overhead reduction efforts continued, higher costs were incurred for commissions, advertising and freight.
Forest Products operating profits totaled $18 million, up from $2 million in the prior quarter due to two land sales. Our previously announced agreement to sell approximately 143,000 acres has expired in accordance with its terms and will not be completed. The company has nearly 200,000 acres of land remaining for sale, primarily composed of smaller retail and larger transitional tracts.
Net corporate expenses totaled $40 million for the 2009 fourth quarter compared with $46 million in the 2009 third quarter and $21 million in the fourth quarter of 2008. The increase from the 2008 fourth quarter reflects higher pension expense in 2009.
EFFECTIVE TAX RATE
The effective tax rate from continuing operations and before special items for the fourth quarter of 2009 was 22 percent, compared with 30 percent in the third quarter of 2009. The lower fourth-quarter rate is a result of non-U.S. tax incentives and adjustments of tax estimates upon the filing of the company's 2008 non-U.S. income tax returns. The 2009 full-year tax rate was 30 percent compared with 31.5 percent for the 2008 full year.
EFFECTS OF SPECIAL ITEMS
Special items in the fourth quarter of 2009 included a $516 million pre-tax credit ($469 million after taxes) for alternative fuel mixture credits earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce renewable energy to operate their businesses, a $15 million pre-tax charge ($10 million after taxes) for costs associated with the Industrial Packaging business integration, a pre-tax charge of $1.0 billion ($638 million after taxes) for restructuring and other charges, and an $11 million pre-tax charge ($8 million after taxes) for net losses on sales and impairments of businesses. Restructuring and other charges included a pre-tax charge of $861 million ($525 million after taxes) for shutdown costs for the closures of the Albany, Franklin and Pineville mills announced in the fourth quarter of 2009; a pre-tax charge of $82 million ($50 million after taxes) for the shutdown of a paper machine at the Valliant mill; a pre-tax charge of $58 million ($35 million after taxes) for early debt extinguishment costs; a pre-tax charge of $23 million ($15 million after taxes) for severance and benefit costs associated with the company's 2008 overhead reduction program; a $9 million charge, before and after taxes, for severance and other costs associated with the planned closure of the Etienne mill in France; and pre-tax charges of $7 million ($4 million after taxes) for costs associated with the reorganizations of the company's Shorewood and xpedx operations. Additionally, a $15 million income tax expense was recorded to write off a deferred tax asset for a recycling credit in the state of Louisiana. The net after-tax effect of these special items is a loss of $202 million, or $0.48 per share.
Special items in the third quarter of 2009 included a $525 million pre-tax credit ($320 million after taxes) for alternative fuel mixture credits, an $18 million pre-tax charge ($11 million after taxes) for costs associated with the Industrial Packaging business integration, and a pre-tax charge of $151 million ($95 million after taxes) for restructuring and other charges. Restructuring and other charges included a pre-tax charge of $102 million ($62 million after taxes) for early debt extinguishment costs, a $39 million pre-tax charge ($24 million after taxes) for severance and benefits costs associated with the company's 2008 overhead reduction program, and a $10 million pre-tax charge ($9 million after taxes) for facility closure costs.
Special items in the fourth quarter of 2008 included a pre-tax charge of $218 million ($132 million after taxes) for restructuring and other charges, a $1.8 billion charge, before and after taxes, for impairments of goodwill for the company's U.S. Printing Papers and U.S. and European Coated Paperboard businesses, a pre-tax charge of $26 million ($16 million after taxes) for costs associated with the Industrial Packaging business integration, and a $40 million after-tax benefit for a reduction in deferred taxes related to the restructuring of the company's international operations. Restructuring and other charges included a $123 million pre-tax charge ($75 million after taxes) associated with the closure of the Louisiana mill, a $30 million pre-tax charge ($18 million after taxes) for the shutdown of a paper machine at the Franklin mill, a $53 million pre-tax charge ($32 million after taxes) for costs associated with the company's 2008 overhead reduction program, an $8 million pre-tax charge ($5 million after taxes) related to the closure of the company's Ace Packaging business, and a $4 million pre-tax charge ($2 million after taxes) associated with the reorganization of Shorewood operations.
EARNINGS WEBCAST
The company will hold a webcast to review earnings at 10 a.m. EST / 9 a.m. CST 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 Investors tab and going to the Presentations page. A replay of the webcast will also be available on the Web site beginning approximately two hours after the call. Parties who wish to participate in the webcast via teleconference may dial +1 (706) 679-8242 or, within the U.S. only, (877) 316-2541 and ask to be connected to the International Paper Fourth-Quarter Earnings Call. The conference ID number is 48748739. Participants should call in no later than 9:45 a.m. EST/8:45 a.m. CST. An audio-only replay will be available for four weeks following the call. To access the replay, dial +1 (706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the conference ID, enter 48748739.
International Paper (NYSE: IP) is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, complemented by xpedx, the company's North American distribution company. Headquartered in Memphis, Tenn., the company employs about 56,000 people in more than 20 countries and serves customers worldwide. 2009 net sales were more than $23 billion. For more information about International Paper, its products and stewardship efforts, visit internationalpaper.com.
This press release contains forward-looking statements. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ relate to: (i) increases in interest rates; (ii) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality and changes in consumer preferences, demand and pricing for its products; (iii) global economic conditions and political changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit ratings issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and pension and health care costs; (iv) unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and to actual or potential litigation; and (v) whether we experience a material disruption at one of our manufacturing facilities and risks inherent in conducting business through a joint venture. 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 COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)
Three Months Ended Three Months Ended
December 31, September 30,
------------------ ------------------
2009 2008 2009
---- ---- ----
Net Sales $5,977 $6,546 $5,919
------ ------ ------
Costs and Expenses
Cost of products sold 3,950 (a) 5,022 3,758 (k)
Selling and
administrative expenses 496 (b) 509 (f) 527 (l)
Depreciation,
amortization and cost of
timber harvested 384 382 378
Distribution expenses 318 324 299
Taxes other than payroll
and income taxes 43 46 48
Restructuring and other
charges 1,040 (c) 218 (g) 151 (m)
Gain on sale of mineral
rights - - -
Forestland sales - - -
Impairment of goodwill - 1,777 (h) -
Net losses on sales and
impairments of
businesses 11 (d) - -
Interest expense, net 163 186 169
--- --- ---
Earnings (Loss) From
Continuing Operations
Before Income Taxes and
Equity Earnings (428) (a-d) (1,918)(f-h) 589 (k-m)
Income tax provision
(benefit) (321) (e) (112)(i) 212
Equity earnings (losses),
net of taxes 10 (2) -
--- --- ---
Earnings (Loss) From
Continuing Operations (97) (a-e) (1,808) (f-i) 377 (k-m)
Discontinued operations,
net of taxes - 5 (j) -
--- --- ---
Net Earnings (Loss) $(97) (a-e) $(1,803) (f-j) $377 (k-m)
Less: Net earnings
attributable to
noncontrolling interests 4 (12) 6
--- --- ---
Net Earnings (Loss)
Attributable to
International Paper
Company $(101) (a-e) $(1,791) (f-j) $371 (k-m)
===== ======= ====
Basic Earnings Per Common
Share Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations $(0.24) (a-e) $(4.26) (f-i) $0.87 (k-m)
Discontinued operations - 0.01 (j) -
--- ---- ---
Net earnings (loss) $(0.24) (a-e) $(4.25) (f-j) $0.87 (k-m)
====== ====== =====
Diluted Earnings Per
Common Share
Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations $(0.24) (a-e) $(4.26) (f-i) $0.87 (k-m)
Discontinued operations - 0.01 (j) -
--- ---- ---
Net earnings(loss) $(0.24) (a-e) $(4.25) (f-j) $0.87 (k-m)
====== ====== =====
Average Shares of Common
Stock Outstanding -
Diluted 426.7 421.2 428.7
===== ===== =====
Cash Dividends Per Common
Share $0.025 $0.25 $0.025
====== ===== ======
Amounts Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations,
net of tax $(101) $(1,796) $371
Discontinued operations,
net of tax - $5 $-
--- --- ---
Net Earnings (loss) $(101) $(1,791) $371
===== ======= ====
Twelve Months Ended
December 31,
------------
2009 2008
---- ----
Net Sales $23,366 $24,829
------- -------
Costs and Expenses
Cost of products sold 15,220 (n) 18,742 (s)
Selling and
administrative expenses 2,031 (o) 1,947 (t)
Depreciation,
amortization and cost of
timber harvested 1,472 1,347
Distribution expenses 1,175 1,286
Taxes other than payroll
and income taxes 188 182
Restructuring and other
charges 1,353 (p) 370 (u)
Gain on sale of mineral
rights - (261)
Forestland sales - (6) (v)
Impairment of goodwill - 1,777 (h)
Net losses on sales and
impairments of
businesses 59 (q) 106 (w)
Interest expense, net 669 492
--- ---
Earnings (Loss) From
Continuing Operations
Before Income Taxes and
Equity Earnings 1,199 (n-q) (1,153) (h,s-w)
Income tax provision
(benefit) 469 (r) 162 (i)
Equity earnings (losses),
net of taxes (49) 49
--- ---
Earnings (Loss) From
Continuing Operations 681 (n-r) (1,266) (h,i, s-w)
Discontinued operations,
net of taxes - (13) (x)
--- ---
Net Earnings (Loss) $681 (n-r) $(1,279) (h,i, s-x)
Less: Net earnings
attributable to
noncontrolling interests 18 3
--- ---
Net Earnings (Loss)
Attributable to
International Paper
Company $663 (n-r) $(1,282) (h,i, s-x)
==== =======
Basic Earnings Per Common
Share Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations $1.56 (n-r) $(3.02) (h,i, s-w)
Discontinued operations - (0.03) (x)
--- -----
Net earnings (loss) $1.56 (n-r) $(3.05) (h,i, s-x)
===== ======
Diluted Earnings Per
Common Share
Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations $1.55 (n-r) $(3.02) (h,i, s-w)
Discontinued operations - (0.03) (x)
--- -----
Net earnings(loss) $1.55 (n-r) $(3.05) (h,i, s-x)
===== ======
Average Shares of Common
Stock Outstanding -
Diluted 428.0 421.0
===== =====
Cash Dividends Per Common
Share $0.325 $1.00
====== =====
Amounts Attributable to
International Paper
Common Shareholders
Earnings (loss) from
continuing operations,
net of tax $663 $(1,269)
Discontinued operations,
net of tax - (13)
--- ---
Net Earnings (loss) $663 $(1,282)
==== =======
The accompanying notes are an integral part of this consolidated
statement of operations.
(a) Includes a pre-tax gain of $516 million ($469 million after
taxes) related to alternative fuel mixture credits.
(b) Includes a pre-tax charge of $15 million ($10 million after
taxes) for integration costs associated with the acquisition of the
Containerboard, Packaging and Recycling business (CBPR) in August
2008.
(c) Includes pre-tax charges of $469 million ($286 million after
taxes), $290 million ($177 million after taxes), and $102 million
($62 million after taxes) for shutdown costs for the Albany,
Franklin, and Pineville mills, respectively, a pre-tax charge of
$82 million ($50 million after taxes) for costs related to the
shutdown of a paper machine at the Valliant mill, a pre-tax charge
of $23 million ($15 million after taxes) for severance and benefit
costs associated with the Company's 2008 overhead cost reduction
initiative, a pre-tax charge of $58 million ($35 million after
taxes) for early debt extinguishment costs, a charge of $9 million
(before and after taxes) for severance and other costs associated
with the planned closure of the Etienne mill in France, and pre-tax
charges of $5 million ($3 million after taxes) and $2 million ($1
million after taxes) for costs associated with the reorganization of
the Company's xpedx and Shorewood operations, respectively.
(d) Includes a pre-tax charge of $8 million (before and after
taxes) to write down the assets at the Etienne mill in France to
estimated fair value.
(e) Includes a $15 million write-off of a deferred tax asset for a
recycling tax credit in the state of Louisiana.
(f) Includes a pre-tax charge of $26 million ($16 million after
taxes) for integration costs associated with the acquisition of the
CBPR business.
(g) Includes a pre-tax charge of $123 million ($75 million after
taxes) for shutdown costs for the Louisiana mill, a pre-tax charge
of $30 million ($18 million after taxes) for the shutdown of a paper
machine at the Franklin mill, a pre-tax charge of $53 million ($32
million after taxes) for severance and benefit costs associated with
the Company's 2008 overhead cost reduction initiative, a pre-tax
charge of $8 million ($5 million after taxes) for closure costs
associated with the Ace Packaging business, and a pre-tax charge of
$4 million ($2 million after taxes) for costs associated with the
reorganization of the Company's Shorewood operations.
(h) Includes a charge of $1.3 billion (before and after taxes) for
the impairment of goodwill in the Company's U.S. printing papers
business and charges of $379 million and $59 million (before and
after taxes) for the impairment of goodwill in the Company's U.S.
and European coated paperboard businesses.
(i) Includes a $40 million tax benefit for a reduction in deferred
taxes related to the restructuring of the Company's international
operations.
(j) Includes pre-tax gains of $9 million ($5 million after taxes)
for adjustments to reserves associated with the sale of discontinued
businesses.
(k) Includes a pre-tax gain of $525 million ($320 million after
taxes) related to alternative fuel mixture credits.
(l) Includes a pre-tax charge of $18 million ($11 million after
taxes) for integration costs associated with the acquisition of the
CBPR business.
(m) Includes a pre-tax charge of $39 million ($24 million after
taxes) for severance and benefit costs associated with the Company's
2008 overhead cost reduction initiative, a pre-tax charge of $102
million ($62 million after taxes) for early debt extinguishment
costs, a charge of $7 million (before and after taxes) for costs
associated with the planned closure of the Etienne mill in France,
and a pre-tax charge of $3 million ($2 million after taxes) for
other items.
(n) Includes a pre-tax gain of $2.1 billion ($1.4 billion after
taxes) related to alternative fuel mixture credits.
(o) Includes a pre-tax charge of $87 million ($54 million after
taxes) for integration costs associated with the acquisition of the
CBPR business.
(p) Includes pre-tax charges of $469 million ($286 million after
taxes), $290 million ($177 million after taxes), and $102 million
($62 million after taxes) for shutdown costs for the Albany,
Franklin, and Pineville mills, respectively, a pre-tax charge of
$82 million ($50 million after taxes) for costs related to the
shutdown of a paper machine at the Valliant mill, a pre-tax charge
of $148 million ($92 million after taxes) for severance and benefit
costs associated with the Company's 2008 overhead cost reduction
initiative, a pre-tax charge of $185 million ($113 million after
taxes) for early debt extinguishment costs, a pre-tax charge of $23
million ($28 million after taxes) for closure costs associated with
the Inverurie, Scotland mill, a charge of $31 million (before and
after taxes) for severance and other costs associated with the
planned closure of the Etienne mill in France, and a pre-tax charge
of $23 million ($14 million after taxes) for other items.
(q) Includes a charge of $56 million (before and after taxes) to
write down the assets at the Etienne mill to estimated fair value.
(r) Includes a $156 million tax expense for the write off of
deferred tax assets in France, a $15 million write-off of a
deferred tax asset for a recycling tax credit in the state of
Louisiana, and a $26 million tax benefit related to the settlement
of the 2004 and 2005 U.S. federal income tax audit.
(s) Includes a pre-tax charge of $39 million ($24 million after
taxes) relating to the write-up of inventory to fair value in
connection with the CBPR acquisition.
(t) Includes a pre-tax charge of $45 million ($28 million after
taxes) for integration costs associated with the acquisition of the
CBPR business.
(u) Includes a pre-tax charge of $123 million ($75 million after
taxes) for shutdown costs for the Louisiana mill, a pre-tax charge
of $30 million ($18 million after taxes) for the shutdown of a paper
machine at the Franklin mill, a pre-tax charge of $53 million ($32
million after taxes) for severance costs associated with the
Company's 2008 overhead cost reduction initiative, a $75 million
pre-tax charge ($47 million after taxes) for adjustments to legal
reserves, a pre-tax charge of $30 million ($19 million after taxes)
for costs associated with the reorganization of the Company's
Shorewood operations, a pre-tax charge of $53 million ($33 million
after taxes) to write off deferred supply chain initiative
development costs for U.S. container operations that will not be
implemented due to the CBPR acquisition, a pre-tax charge of $8
million ($5 million after taxes) for closure costs associated with
the Ace Packaging business, and a gain of $2 million (before and
after taxes) for adjustments to previously recorded reserves and
other charges associated with the Company's Transformation Plan.
(v) Reflects adjustments of estimated transaction costs accrued in
connection with the 2006 Transformation Plan forestland sales.
(w) Includes a pre-tax charge of $107 million ($84 million after
taxes) to write down the assets of the Inverurie, Scotland mill to
estimated fair value.
(x) Includes a pre-tax charge of $25 million ($16 million after
taxes) for the settlement of a post-closing adjustment on the sale
of the beverage packaging business, pre-tax gains of $9 million ($5
million after taxes) for adjustments to reserves associated with the
sale of discontinued businesses, and the operating results of
certain wood products facilities.
International Paper Company
Reconciliation of Earnings Before Special Items to Net Earnings
Attributable to International Paper Company
(In millions except for per share amounts)
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, September 30, December 31,
------------ ------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Earnings Before
Special Items $101 $89 $157 $378 $855
Restructuring and
other charges (638) (132) (95) (853) (227)
CBPR business
integration costs (10) (16) (11) (54) (52)
Alternative fuel
mixture credits 469 - 320 1,413 -
Forestland sales - - - - 4
Impairments of
goodwill - (1,777) - - (1,777)
Net losses on sales
and impairments
of businesses (8) - - (56) (83)
Income tax adjustments (15) 40 - (165) 11
--- --- --- --- ---
Earnings (Loss) from
Continuing Operations (101) (1,796) 371 663 (1,269)
Discontinued operations - 5 - - (13)
--- --- --- --- ---
Net Earnings (Loss)
as Reported $(101) $(1,791) $371 $663 $(1,282)
====== ======== ==== ==== ========
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, September 30, December 31,
------------ ------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Diluted Earnings
per Common Share
Earnings Per Share
Before Special
Items $0.24 $0.21 $0.37 $0.88 $2.01
Restructuring
and other charges (1.52) (0.35) (0.22) (2.00) (0.54)
CBPR business
integration costs (0.02) - (0.03) (0.13) (0.12)
Alternative fuel
mixture credits 1.11 - 0.75 3.32 -
Forestland sales - - - - 0.01
Impairments of
goodwill - (4.22) - - (4.22)
Net losses on sales
and impairments
of businesses (0.02) - - (0.13) (0.19)
Income tax adjustments (0.03) 0.10 - (0.39) 0.03
--- --- --- --- ---
Earnings (Loss) Per Common
Share from Continuing
Operations (0.24) (4.26) 0.87 1.55 (3.02)
Discontinued
operations - 0.01 - - (0.03)
--- --- --- --- ---
Diluted Earnings (Loss)
per Common Share $(0.24) $(4.25) $0.87 $1.55 $(3.05)
======= ======= ===== ===== =======
Notes:
(1) The Company calculates Earnings Before Special Items by excluding
the after-tax effect of items considered by management to be
unusual from the earnings reported under U.S. 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.
(2) Diluted earnings per common share reflect the inclusion of
contingently convertible securities in the computation.
(3) Since diluted earnings per share are computed independently for
each period, twelve-month per share amounts may not equal the sum
of the respective quarters.
International Paper
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Sales by
Industry Segment
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, September 30, December 31,
------------ -------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial
Packaging $2,210 $2,455 $2,230 $8,890 $7,690
Printing
Papers 1,525 1,505 1,470 5,680 6,810
Consumer
Packaging 785 800 790 3,060 3,195
Distribution 1,675 1,940 1,665 6,525 7,970
Forest
Products 25 65 5 45 200
Corporate and
Inter-segment
Sales (243) (219) (241) (834) (1,036)
--- --- --- --- -----
Net Sales $5,977 $6,546 $5,919 $23,366 $24,829
===== ===== ===== ====== ======
Operating Profit
by Industry Segment
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, September 30, December 31,
----------- -----------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial
Packaging $(391) (2,3,4) $111 (5) $410 (2,3,4) $761 (2,3,4) $390 (5)
Printing
Papers 137 (2,6) (40)(7) 363 (2,6) 1,091 (2,6) 474 (7)
Consumer
Packaging 63 (2,8) (3)(8) 144 (2,8) 433 (2,8) 17 (8)
Distribution 26 (9) 26 21 50 (9) 103
Forest
Products 18 38 2 25 409
-- -- - -- ---
Operating
Profit
(Loss)
(1) (147) 132 940 2,360 1,393
Interest
expense,
net (163) (186) (169) (669) (492)
Noncontrolling
interest/equity
earnings
adjustment
(10) 4 (13) 5 23 (2)
Corporate
items, net (40) (21) (46) (181) (103)
Restructuring
and other
charges (81) (53) (141) (333) (179)
Sale of
forestlands - - - - 6
Impairments of
goodwill - (1,777) - - (1,777)
Net gains
(losses)
on sales
and impairments
of businesses (1) - - (1) 1
-- -- -- -- --
Earnings (Loss)
From Continuing
Operations
Before Income
Taxes and
Equity
Earnings $(428) $(1,918) $589 $1,199 $(1,153)
=== ===== === ===== =====
Equity Earnings
(Loss) in
Ilim Holdings
S.A., Net of
Taxes (1) $6 $- $- $(50) $54
== == == == ==
(1) In addition to the operating profits shown above, International Paper
recorded equity earnings, net of taxes, of $6 million for the three months
ended December 31, 2009 and $0 million for the three months ended
September 30, 2009, equity losses, net of taxes, of $50 million for the
twelve months ended December 31, 2009, and equity earnings, net of taxes,
of $0 million for the three months ended December 31, 2008 and $54 million
for the twelve months ended December 31, 2008, related to its equity
investment in Ilim Holdings S.A., a separate reportable industry segment.
(2) Includes gains of $212 million and $221 million in the Industrial
Packaging segment, $221 million and $226 million in the Printing Papers
segment, and $83 million and $78 million in the Consumer Packaging segment
for the three months ended December 31, 2009 and September 30, 2009,
respectively, and gains of $849 million in the Industrial Packaging
segment, $884 million in the Printing Papers segment, and $330 million in
the Consumer Packaging segment for the twelve months ended December 31,
2009, relating to alternative fuel mixture credits.
(3) Includes charges of $15 million and $18 million for the three months
ended December 31, 2009 and September 30, 2009, and $87 million for the
twelve months ended December 31, 2009, for CBPR integration costs.
(4) Includes charges of $469 million, $102 million and $82 million for
the three months and twelve months ended December 31, 2009 for shutdown
costs for the Albany mill, Pineville mill and a paper machine at the
Valliant mill, respectively, charges of $8 million and $56 million for the
three months and twelve months ended December 31, 2009, respectively, to
write down the assets at the Etienne mill in France to estimated fair
value, and charges of $9 million and $7 million for the three months ended
December 31, 2009 and September 30, 2009, respectively, and $31 million
for the twelve months ended December 31,2009 for severance and other costs
related to the planned closure of the Etienne mill, and $2 million for the
three months and twelve months ended December 31, 2009 for other items.
(5) Includes charges of $26 million and $45 million for the three months
and twelve months ended December 31, 2008, respectively, for CBPR
integration costs, $8 million for the three months and twelve months ended
December 31, 2008 for Ace Packaging closure costs, and $39 million for the
twelve months ended December 31, 2008 relating to the write-up of
inventory to fair value in connection with the CBPR acquisition.
(6) Includes charges of $223 million for the three months and twelve
months ended December 31, 2009 for shutdown costs for the Franklin mill;
$1 million and $11 million for the three months ended September 30, 2009
and the twelve months ended December 31, 2009, respectively, related to
the shutdown of a paper machine at the Franklin paper mill, the shutdown
of the Franklin lumber mill, sheet converting plant and converting
innovations center and the Louisiana mill; and a charge of $23 million for
the twelve months ended December 31, 2009 for the closure of the
Inverurie, Scotland mill.
(7) Includes charges of $123 million and $30 million for the three and
twelve months ended December 31, 2008 for the shutdown of the Louisiana
mill and for the shutdown of a paper machine at the Franklin mill,
respectively, and $107 million for the twelve months ended December 31,
2008 to write down the assets of the Inverurie, Scotland mill to estimated
fair value.
(8) Includes a charge of $67 million for the three months and twelve
months ended December 31, 2009 related to the closure of the Franklin
paper mill, charges of $2 million, $4 million, and $2 million for the
three months ended December 31, 2009, December 31, 2008 and September 30,
2009, respectively, and $7 million and $30 million for the twelve months
ended December 31, 2009 and 2008, respectively, related to the
reorganization of the Company's Shorewood operations.
(9) Includes a charge of $5 million for the three months and twelve
months ended December 31, 2009 related to the reorganization of the
Company's xpedx operations.
(10) 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 noncontrolling interest and
equity earnings for these subsidiaries are adjusted here to present
consolidated earnings before income taxes and equity earnings.
International Paper
Sales Volume by Product (1) (2)
Preliminary and Unaudited
International
Paper
Consolidated
Three Months Three Months Twelve Months
Ended Ended Ended
December 31, September 30, December 31,
------------ ------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial
Packaging (In
thousands of
short tons)
Corrugated
Packaging (4) 1,782 1,879 1,856 7,313 5,298
Containerboard
(4) 677 619 580 2,258 2,305
Recycling (4) 521 569 566 2,280 966
Saturated Kraft 43 40 33 126 170
Bleached Kraft 20 17 22 72 82
European
Industrial
Packaging 256 279 252 1,046 1,123
Asian Industrial
Packaging 187 125 200 614 568
--- --- --- --- ---
Industrial
Packaging 3,486 3,528 3,509 13,709 10,512
----- ----- ----- ------ ------
Printing Papers
(In thousands
of short tons)
U.S. Uncoated
Papers 734 744 753 2,882 3,397
European &
Russian
Uncoated Papers 330 360 304 1,336 1,461
Brazilian
Uncoated Papers 311 215 282 1,007 853
Asian Uncoated
Papers 41 6 25 81 27
--- --- --- --- ---
Uncoated Papers 1,416 1,325 1,364 5,306 5,738
----- ----- ----- ----- -----
Market Pulp (3) 410 386 422 1,524 1,604
--- --- --- ----- -----
Consumer
Packaging (In
thousands of
short tons)
U.S. Coated
Paperboard 310 389 324 1,242 1,591
European Coated
Paperboard 89 76 86 354 311
Asian Coated
Paperboard 231 164 221 859 550
Other Consumer
Packaging 39 42 42 169 178
--- --- --- --- ---
Consumer
Packaging 669 671 673 2,624 2,630
--- --- --- ----- -----
(1) Sales volumes include third party and inter-segment sales and
exclude sales of equity investees.
(2) Sales volumes for divested businesses are included through the date
of sale, except for discontinued operations.
(3) Includes internal sales to mills.
(4) Includes CBPR volumes from date of acquisition.
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
December 31, December 31,
2009 2008
------------ ------------
Assets
Current Assets
Cash and Temporary Investments $1,892 $1,144
Accounts and Notes Receivable, Net 2,695 3,288
Inventories 2,179 2,495
Deferred Income Tax Assets 368 261
Other 417 172
------- -------
Total Current Assets 7,551 7,360
------- -------
Plants, Properties and Equipment, Net 12,688 14,202
Forestlands 757 594
Investments 1,077 1,274
Goodwill 2,290 2,027
Deferred Charges and Other Assets 1,185 1,456
------- -------
Total Assets $25,548 $26,913
======= =======
Liabilities and Equity
Current Liabilities
Notes Payable and Current Maturities
of Long-Term Debt $304 $828
Accounts Payable and Accrued Liabilities 3,708 3,927
------- -------
Total Current Liabilities 4,012 4,755
------- -------
Long-Term Debt 8,729 11,246
Deferred Income Taxes 2,425 1,957
Pension Benefit Obligation 2,765 3,260
Postretirement and Postemployment
Benefit Obligation 538 663
Other Liabilities 824 631
Equity
Invested Capital 4,074 2,739
Retained Earnings 1,949 1,430
------- -------
Total Shareholders' Equity 6,023 4,169
------- -------
Noncontrolling interests 232 232
------- -------
Total Equity 6,255 4,401
------- -------
Total Liabilities and Equity $25,548 $26,913
======= =======
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In Millions)
Twelve Months Ended
December 31,
------------
2009 2008
---- ----
Operating Activities
Net earnings (loss) attributable
to International
Paper Company $663 $(1,282)
Noncontrolling interests 18 3
Discontinued operations,
net of taxes and
noncontrolling interests - 13
------- -------
Earnings (loss) from continuing
operations 681 (1,266)
Depreciation, amortization
and cost of timber harvested 1,472 1,347
Deferred income tax expense
(benefit), net 160 (81)
Restructuring and other
charges 1,353 370
Payments related to restructuring
and legal reserves (38) (87)
Net losses on sales and
impairments of businesses 59 106
Gains on sales of
forestlands - (3)
Equity loss (earnings), net 49 (49)
Periodic pension expense, net 213 123
Impairment of goodwill - 1,777
Other, net 227 115
Changes in current assets and
liabilities
Accounts and notes receivable 604 451
Inventories 316 48
Accounts payable and accrued
liabilities (321) (317)
Interest payable (8) (31)
Other (112) 166
------- -------
Cash Provided by Operations 4,655 2,669
------- -------
Investment Activities
Invested in capital projects (534) (1,002)
Acquisitions, net of cash
received (17) (6,086)
Proceeds from divestitures - 14
Equity investment in Ilim - (21)
Other (42) (102)
------- -------
Cash Used for Investment
Activities (593) (7,197)
------- -------
Financing Activities
Repurchases of common stock and
payments of restricted stock tax
withholding (10) (47)
Issuance of common stock - 1
Issuance of debt 3,229 6,024
Reduction of debt (6,318) (696)
Change in book overdrafts 20 (36)
Dividends paid (140) (428)
Other (157) 41
------- -------
Cash (Used for) Provided by
Financing Activities (3,376) 4,859
------- -------
Effect of Exchange Rate Changes on
Cash 62 (92)
------- -------
Change in Cash and Temporary
Investments 748 239
Cash and Temporary Investments
Beginning of the period 1,144 905
------- -------
End of the period $1,892 $1,144
======= =======
SOURCE International Paper
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