New York | 13-0872805 | |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
6400 Poplar Avenue, Memphis, Tennessee | 38197 | |
(Address of principal executive offices) | (ZIP Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description | |
99.1 | Press Release of International Paper Company dated April 29, 2015. |
International Paper Company | |||
Date: April 29, 2015 | By: | /s/ TERRI L. HERRINGTON | |
Name: | Terri L. Herrington | ||
Title: | Vice President - Finance and Controller |
Exhibit Number | Description | |
99.1 | Press Release of International Paper Company dated April 29, 2015. |
First Quarter 2015 | Fourth Quarter 2014 | First Quarter 2014 | ||||||||||
Net Earnings | $ | 0.74 | $ | 0.32 | $ | (0.21 | ) | |||||
Less – Discontinued Operations (Gain) Loss | — | 0.02 | 0.01 | |||||||||
Net Earnings (Loss) from Continuing Operations | 0.74 | 0.34 | (0.20 | ) | ||||||||
Add Back – Net Special Items Expense | — | 0.12 | 0.74 | |||||||||
Add Back – Non-Operating Pension Expense | 0.10 | 0.07 | 0.06 | |||||||||
Operating Earnings* | $ | 0.84 | $ | 0.53 | $ | 0.60 |
* | Operating Earnings is defined as net earnings from continuing operations attributable to International Paper Company (GAAP) excluding special items and non-operating pension expense. |
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||||||
2015 | 2014 | 2014 | |||||||||||
Net Sales | $ | 5,517 | $ | 5,724 | $ | 5,943 | |||||||
Costs and Expenses | |||||||||||||
Cost of products sold | 3,844 | 4,034 | 4,105 | ||||||||||
Selling and administrative expenses | 406 | 428 | (a) | 462 | (e) | ||||||||
Depreciation, amortization and cost of timber harvested | 323 | 347 | 346 | ||||||||||
Distribution expenses | 357 | 366 | 384 | ||||||||||
Taxes other than payroll and income taxes | 44 | 46 | 43 | ||||||||||
Restructuring and other charges | — | 499 | (b) | 16 | (f) | ||||||||
Net losses on sales and impairment of businesses | — | — | 38 | (g) | |||||||||
Impairment of goodwill and other intangibles | — | — | 100 | (h) | |||||||||
Interest expense, net | 137 | 143 | 142 | ||||||||||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings | 406 | (139 | ) | (a,b) | 307 | (e-h) | |||||||
Income tax provision (benefit) | 130 | (80 | ) | (c) | 34 | (i) | |||||||
Equity earnings (loss), net of taxes | 35 | (33 | ) | (136 | ) | ||||||||
Earnings (Loss) From Continuing Operations | 311 | (92 | ) | (a-c) | 137 | (e-i) | |||||||
Discontinued operations, net of taxes | — | (7 | ) | (d) | (9 | ) | (j) | ||||||
Net Earnings (Loss) | 311 | (99 | ) | (a-d) | 128 | (e-j) | |||||||
Less: Net earnings (loss) attributable to noncontrolling interests | (2 | ) | (4 | ) | (6 | ) | |||||||
Net Earnings (Loss) Attributable to International Paper Company | $ | 313 | $ | (95 | ) | (a-d) | $ | 134 | (e-j) | ||||
Basic Earnings Per Common Share Attributable to International Paper Common Shareholders | |||||||||||||
Earnings (loss) from continuing operations | $ | 0.74 | $ | (0.20 | ) | (a-c) | $ | 0.34 | (e-i) | ||||
Discontinued operations | — | (0.01 | ) | (d) | (0.02 | ) | (j) | ||||||
Net earnings (loss) | $ | 0.74 | $ | (0.21 | ) | (a-d) | $ | 0.32 | (e-j) | ||||
Diluted Earnings Per Common Share Attributable to International Paper Common Shareholders | |||||||||||||
Earnings (loss) from continuing operations | $ | 0.74 | $ | (0.20 | ) | (a-c) | $ | 0.34 | (e-i) | ||||
Discontinued operations | — | (0.01 | ) | (d) | (0.02 | ) | (j) | ||||||
Net earnings (loss) | $ | 0.74 | $ | (0.21 | ) | (a-d) | $ | 0.32 | (e-j) | ||||
Average Shares of Common Stock Outstanding - Diluted | 423.7 | 435.6 | 424.9 | ||||||||||
Cash Dividends Per Common Share | $ | 0.4000 | $ | 0.3500 | $ | 0.4000 | |||||||
Amounts Attributable to International Paper Common Shareholders | |||||||||||||
Earnings (loss) from continuing operations, net of tax | $ | 313 | $ | (88 | ) | (a-c) | $ | 143 | (e-i) | ||||
Discontinued operations, net of tax | — | (7 | ) | (d) | (9 | ) | (j) | ||||||
Net earnings | $ | 313 | $ | (95 | ) | (a-d) | $ | 134 | (e-j) |
(a) | Includes a pre-tax charge of $12 million ($7 million after taxes) for integration costs associated with the acquisition of Temple-Inland. |
(b) | Includes a pre-tax charge of $495 million ($302 million after taxes) for costs associated with the shutdown of our Courtland mill, and a net pre-tax charge of $4 million ($3 million after taxes) for other items. |
(c) | Includes a tax expense of $10 million associated with a state legislative change and a tax benefit of $1 million for other items. |
(d) | Includes the operating earnings of the xpedx business, a pre-tax charge of $16 million ($10 million after taxes) for costs associated with the spin-off of the xpedx operations, a pre-tax charge of $2 million ($0 million after taxes) for costs associated with the restructuring of the xpedx operations, and a charge of $2 million (before and after taxes) associated with the Building Products divestiture. |
(e) | Includes a charge of $1 million (before and after taxes) for integration costs associated with the acquisition of Temple-Inland. |
(f) | Includes a pre-tax charge of $7 million ($4 million after taxes) for costs associated with the shutdown of our Courtland mill, a pre-tax charge of $4 million ($3 million after taxes) for integration costs associated with our Brazil Packaging business, and a net pre-tax charge of $5 million ($3 million after taxes) for other items. |
(g) | Includes a pre-tax charge of $47 million ($36 million after taxes) for a loss on the sale of a business by ASG, in which we hold an investment, and the resulting impairment of our ASG investment, and a pre-tax gain of $9 million ($5 million after taxes) related to the sale of an investment. |
(h) | Includes a charge of $100 million (before and after taxes) for a goodwill impairment charge related to our Asia Industrial Packaging business. |
(i) | Includes a tax benefit of $90 million associated with internal restructuring. |
(j) | Includes a pre-tax loss of $14 million ($9 million after taxes) related to the Building Products divestiture. |
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||||||
2015 | 2014 | 2014 | |||||||||||
Operating Earnings | $ | 357 | $ | 260 | $ | 227 | |||||||
Non-Operating Pension | (44 | ) | (27 | ) | (32 | ) | |||||||
Special Items | — | (321 | ) | (a) | (52 | ) | (b) | ||||||
Earnings (Loss) from Continuing Operations, including non-controlling interest | 313 | (88 | ) | 143 | |||||||||
Discontinued operations | — | (7 | ) | (c) | (9 | ) | (d) | ||||||
Net Earnings (Loss) as Reported Attributable to International Paper Company | $ | 313 | $ | (95 | ) | $ | 134 | ||||||
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||||||
Diluted Earnings per Common Share | 2015 | 2014 | 2014 | ||||||||||
Operating Earnings Per Share | $ | 0.84 | $ | 0.60 | $ | 0.53 | |||||||
Non-Operating Pension | (0.10 | ) | (0.06 | ) | (0.07 | ) | |||||||
Special Items | — | (0.74 | ) | (0.12 | ) | ||||||||
Continuing Operations | 0.74 | (0.20 | ) | 0.34 | |||||||||
Discontinued operations | — | (0.01 | ) | (0.02 | ) | ||||||||
Diluted Earnings per Common Share as Reported | $ | 0.74 | $ | (0.21 | ) | $ | 0.32 |
(a) | See footnotes (a) - (c) on the Consolidated Statement of Operations |
(b) | See footnotes (e) - (i) on the Consolidated Statement of Operations |
(c) | See footnote (d) on the Consolidated Statement of Operations |
(d) | See footnote (j) on the Consolidated Statement of Operations |
(1) | The Company calculates Operating Earnings by excluding the after-tax effect of non-operating pension expense and 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. |
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||||||
2015 | 2014 | 2014 | |||||||||||
Industrial Packaging | $ | 3,553 | $ | 3,693 | $ | 3,697 | |||||||
Printing Papers | 1,228 | 1,406 | 1,440 | ||||||||||
Consumer Packaging | 778 | 829 | 855 | ||||||||||
Corporate and Inter-segment Sales | (42 | ) | (204 | ) | (49 | ) | |||||||
Net Sales | $ | 5,517 | $ | 5,724 | $ | 5,943 | |||||||
Operating Profit by Industry Segment | |||||||||||||
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||||||
2015 | 2014 | 2014 | |||||||||||
Industrial Packaging | $ | 468 | $ | 453 | (a) | $ | 379 | (a) | |||||
Printing Papers | 109 | (410 | ) | (b) | 148 | (b) | |||||||
Consumer Packaging | 46 | 17 | (c) | 51 | (c) | ||||||||
Operating Profit | 623 | 60 | 578 | ||||||||||
Interest expense, net | (137 | ) | (143 | ) | (142 | ) | |||||||
Noncontrolling interest/equity earnings adjustment (d) | 1 | 0 | (2 | ) | |||||||||
Corporate items, net | (9 | ) | (11 | ) | (35 | ) | |||||||
Restructuring and other charges | — | (1 | ) | (1 | ) | ||||||||
Gain (loss) on sales/ impairment of businesses | — | — | (38 | ) | |||||||||
Non-operating pension expense | (72 | ) | (44 | ) | (53 | ) | |||||||
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings | $ | 406 | $ | (139 | ) | $ | 307 | ||||||
Equity Earnings (Loss) in Ilim Holdings S.A., Net of Taxes | $ | 39 | $ | (31 | ) | $ | (136 | ) |
(a) | Includes a charge of $100 million for the three months ended December 31, 2014 for a goodwill impairment related to our Asia Industrial Packaging operations, charges of $12 million and $1 million for the three months ended March 31, 2014 and December 31, 2014, respectively, for integration costs associated with the acquisition of Temple-Inland, charges of $2 million and $4 million for the three months ended March 31, 2014 and December 31, 2014, respectively, associated with our Brazil Packaging business, charges of $1 million and $3 million for the three months ended March 31, 2014 and December 31, 2014, respectively, related to the restructuring of our Asia box operations, and gains of $1 million and $3 million for the three months ended March 31, 2014 and December 31, 2014, respectively, for other items. |
(b) | Includes charges of $495 million and $7 million for the three months ended March 31, 2014 and December 31, 2014, respectively, for costs associated with the shutdown of our Courtland Mill. |
(c) | Includes charges of $1 million and $4 million for the three months ended March 31, 2014 and December 31, 2014, respectively, for costs associated with the Coated Paperboard sheet plant closures. |
(d) | 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. |
Three Months Ended March 31, 2015 | ||||||||||||||||
Industrial Packaging | Printing Papers | Consumer Packaging | Total | |||||||||||||
Operating Profit Before Special Items | $ | 468 | $ | 109 | $ | 46 | $ | 623 | ||||||||
Special Items (a) | — | — | — | — | ||||||||||||
Operating Profit as Reported | $ | 468 | $ | 109 | $ | 46 | $ | 623 | ||||||||
Three Months Ended March, 2014 | ||||||||||||||||
Industrial Packaging | Printing Papers | Consumer Packaging | Total | |||||||||||||
Operating Profit Before Special Items | $ | 467 | $ | 85 | $ | 18 | $ | 570 | ||||||||
Special Items (a) | (14 | ) | (495 | ) | (1 | ) | (510 | ) | ||||||||
Operating Profit as Reported | $ | 453 | $ | (410 | ) | $ | 17 | $ | 60 | |||||||
Three Months Ended December 31, 2014 | ||||||||||||||||
Industrial Packaging | Printing Papers | Consumer Packaging | Total | |||||||||||||
Operating Profit Before Special Items | $ | 484 | $ | 155 | $ | 55 | $ | 694 | ||||||||
Special Items (a) | (105 | ) | (7 | ) | (4 | ) | (116 | ) | ||||||||
Operating Profit as Reported | $ | 379 | $ | 148 | $ | 51 | $ | 578 |
(a) | See footnotes (a) - (c) on Sales and Earnings by Industry Segment |
Three Months Ended March 31, | Three Months Ended December 31, | ||||||||
2015 | 2014 | 2014 | |||||||
Industrial Packaging (In thousands of short tons) | |||||||||
Corrugated Packaging | 2,500 | 2,516 | 2,588 | ||||||
Containerboard | 774 | 746 | 771 | ||||||
Recycling | 590 | 604 | 609 | ||||||
Saturated Kraft | 37 | 47 | 43 | ||||||
Gypsum /Release Kraft | 36 | 37 | 39 | ||||||
Bleached Kraft | 5 | 7 | 5 | ||||||
EMEA Industrial Packaging | 347 | 351 | 356 | ||||||
Asian Box | 86 | 93 | 113 | ||||||
Brazilian Packaging | 72 | 79 | 80 | ||||||
Industrial Packaging | 4,447 | 4,480 | 4,604 | ||||||
Printing Papers (In thousands of short tons) | |||||||||
U.S. Uncoated Papers | 466 | 499 | 489 | ||||||
European & Russian Uncoated Papers | 380 | 375 | 409 | ||||||
Brazilian Uncoated Papers | 235 | 271 | 320 | ||||||
Indian Uncoated Papers | 64 | 58 | 58 | ||||||
Uncoated Papers | 1,145 | 1,203 | 1,276 | ||||||
Market Pulp (b) | 417 | 413 | 464 | ||||||
Consumer Packaging (In thousands of short tons) | |||||||||
North American Consumer Packaging | 338 | 351 | 357 | ||||||
European Coated Paperboard | 99 | 84 | 101 | ||||||
Asian Coated Paperboard | 304 | 350 | 351 | ||||||
Consumer Packaging | 741 | 785 | 809 |
(a) | Sales volumes include third party and inter-segment sales and exclude sales of equity investees. |
(b) | Includes North American, European and Brazilian volumes and internal sales to mills. |
March 31, 2015 | December 31, 2014 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and Temporary Investments | $ | 1,576 | $ | 1,881 | ||||
Accounts and Notes Receivable, Net | 3,074 | 3,083 | ||||||
Inventories | 2,437 | 2,424 | ||||||
Deferred Income Tax Assets | 333 | 331 | ||||||
Other | 240 | 240 | ||||||
Total Current Assets | 7,660 | 7,959 | ||||||
Plants, Properties and Equipment, Net | 12,488 | 12,728 | ||||||
Forestlands | 435 | 507 | ||||||
Investments | 272 | 248 | ||||||
Financial Assets of Special Purpose Entities | 2,150 | 2,145 | ||||||
Goodwill | 3,677 | 3,773 | ||||||
Deferred Charges and Other Assets | 1,285 | 1,324 | ||||||
Total Assets | $ | 27,967 | $ | 28,684 | ||||
Liabilities and Equity | ||||||||
Current Liabilities | ||||||||
Notes Payable and Current Maturities of Long-Term Debt | $ | 664 | $ | 742 | ||||
Accounts Payable and Accrued Liabilities | 4,112 | 4,167 | ||||||
Total Current Liabilities | 4,776 | 4,909 | ||||||
Long-Term Debt | 8,461 | 8,631 | ||||||
Nonrecourse Financial Liabilities of Special Purpose Entities | 2,052 | 2,050 | ||||||
Deferred Income Taxes | 3,000 | 3,063 | ||||||
Pension Benefit Obligation | 3,801 | 3,819 | ||||||
Postretirement and Postemployment Benefit Obligation | 380 | 396 | ||||||
Other Liabilities | 494 | 553 | ||||||
Equity | ||||||||
Invested Capital | 310 | 706 | ||||||
Retained Earnings | 4,548 | 4,409 | ||||||
Total Shareholders’ Equity | 4,858 | 5,115 | ||||||
Noncontrolling interests | 145 | 148 | ||||||
Total Equity | 5,003 | 5,263 | ||||||
Total Liabilities and Equity | $ | 27,967 | $ | 28,684 |
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Operating Activities | ||||||||
Net earnings (loss) | $ | 311 | $ | (99 | ) | |||
Depreciation, amortization and cost of timber harvested | 323 | 352 | ||||||
Deferred income tax expense (benefit), net | (3 | ) | (144 | ) | ||||
Restructuring and other charges | — | 517 | ||||||
Pension plan contributions | — | (58 | ) | |||||
Equity (earnings) loss, net | (35 | ) | 33 | |||||
Periodic pension expense, net | 122 | 90 | ||||||
Other, net | 76 | 6 | ||||||
Changes in current assets and liabilities | ||||||||
Accounts and notes receivable | (76 | ) | (170 | ) | ||||
Inventories | (81 | ) | (3 | ) | ||||
Accounts payable and accrued liabilities | (14 | ) | (91 | ) | ||||
Interest payable | 19 | 37 | ||||||
Other | (4 | ) | 1 | |||||
Cash Provided By (Used For) Operations | 638 | 471 | ||||||
Investment Activities | ||||||||
Invested in capital projects | (319 | ) | (277 | ) | ||||
Proceeds from sale of fixed assets | 9 | — | ||||||
Other | (67 | ) | (93 | ) | ||||
Cash Provided By (Used For) Investment Activities | (377 | ) | (370 | ) | ||||
Financing Activities | ||||||||
Repurchases of common stock and payments of restricted stock tax withholding | (139 | ) | (388 | ) | ||||
Issuance of common stock | 2 | 18 | ||||||
Issuance of debt | 40 | 107 | ||||||
Reduction of debt | (280 | ) | (163 | ) | ||||
Change in book overdrafts | — | 16 | ||||||
Dividends paid | (169 | ) | (153 | ) | ||||
Cash Provided By (Used for) Financing Activities | (546 | ) | (563 | ) | ||||
Effect of Exchange Rate Changes on Cash | (20 | ) | 1 | |||||
Change in Cash and Temporary Investments | (305 | ) | (461 | ) | ||||
Cash and Temporary Investments | ||||||||
Beginning of the period | 1,881 | 1,802 | ||||||
End of the period | $ | 1,576 | $ | 1,341 |
Three Months Ended March 31, 2015 | Three Months Ended March, 2014 | |||||||
Cash provided by operations | $ | 638 | $ | 471 | ||||
Adjustments: | ||||||||
Cash invested in capital projects | (319 | ) | (277 | ) | ||||
Cash contribution to pension plan | — | 58 | ||||||
Free Cash Flow | $ | 319 | $ | 252 |
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