-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, NztYSJi26UX9P6SVlMF2LL9fBrhn8Hbn95aYkXSRGtYt/80y1Cxo1WLkgZ4AnQfe lr1B2nJ1/YegMEC6+hHBdg== 0000950115-94-000139.txt : 19940511 0000950115-94-000139.hdr.sgml : 19940511 ACCESSION NUMBER: 0000950115-94-000139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL PAPER CO /NEW/ CENTRAL INDEX KEY: 0000051434 STANDARD INDUSTRIAL CLASSIFICATION: 2631 IRS NUMBER: 130872805 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03157 FILM NUMBER: 94527014 BUSINESS ADDRESS: STREET 1: TWO MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9143971500 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL PAPER & POWER CORP DATE OF NAME CHANGE: 19710527 10-Q 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 ------------ For Quarter Ended March 31, 1994 Commission file number 1-3157 INTERNATIONAL PAPER COMPANY (Exact name of registrant as specified in its charter) New York 13 0872805 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) Two Manhattanville Road, Purchase, NY 10577 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 914-397-1500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / / Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common stock outstanding on April 29, 1994: 124,632,496 shares. INTERNATIONAL PAPER COMPANY INDEX Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statement of Earnings - 4 Three Months Ended March 31, 1994 and 1993. Consolidated Balance Sheet - 5-6 March 31, 1994 and December 31, 1993. Consolidated Statement of Cash Flows - 7 Three Months Ended March 31, 1994 and 1993. Notes to Consolidated Financial 8-9 Statements. Item 2. Management's Discussion and Analysis of 10-11 Financial Condition and Results of Operations. Item 3. Other Financial Information 12 PART II OTHER INFORMATION Item 1. Legal Proceedings * Item 2. Changes in Securities * Item 3. Defaults upon Senior Securities * Item 4. Submission of Matters to a Vote of * Security Holders - 2 - INTERNATIONAL PAPER COMPANY INDEX (Con'd) Page No. -------- Item 5. Other Information * Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 * Omitted since no answer is called for, answer is in the negative or inapplicable. - 3 - ITEM 1. FINANCIAL STATEMENTS INTERNATIONAL PAPER COMPANY Consolidated Statement of Earnings (Unaudited) (In millions, except per-share amounts) Three Months Ended March 31, ----------------- 1994 1993 ------ ------ Net Sales $3,414 $3,362 ------ ------ Costs and Expenses Cost of products sold 2,565 2,543 Depreciation and amortization 225 220 Distribution expenses 154 154 Selling and administrative expenses 244 232 Taxes other than payroll and income taxes 38 39 ------ ------ Total Costs and Expenses 3,226 3,188 ------ ------ Earnings Before Interest and Income Taxes 188 174 Interest expense, net 77 73 ------ ------ Earnings Before Income Taxes 111 101 Provision for income taxes 39 37 ------ ------ Net Earnings $ 72 $ 64 ------ ------ ------ ------ Earnings per Common Share $ .58 $ .52 ------ ------ ------ ------ Average Shares of Common Stock Outstanding 124.2 122.8 ------ ------ ------ ------ Cash Dividends per Common Share $ .42 $ .42 ------ ------ ------ ------ The accompanying notes are an integral part of these financial statements. -4- INTERNATIONAL PAPER COMPANY Consolidated Balance Sheet (Unaudited) (In millions) March 31, December 31, 1994 1993 --------- ------------ ASSETS Current Assets Cash and temporary investments $ 123 $ 242 Accounts and notes receivable, net 1,914 1,856 Inventories 2,078 2,024 Other current assets 278 279 ------- ------- Total Current Assets 4,393 4,401 Plants, Properties and Equipment, net 8,873 8,872 Forestlands 792 786 Investments 949 631 Goodwill 757 754 Deferred Charges and Other Assets 1,271 1,187 ------- ------- Total Assets $17,035 $16,631 ------- ------- ------- ------- The accompanying notes are an integral part of these financial statements. - 5 - INTERNATIONAL PAPER COMPANY Consolidated Balance Sheet (Unaudited) (In millions) March 31, December 31, 1994 1993 --------- ------------ LIABILITIES AND COMMON SHAREHOLDERS' EQUITY Current Liabilities Notes payable and current maturities of long-term debt $ 2,426 $ 2,089 Accounts payable and accrued liabilities 1,955 1,920 ------- ------- Total Current Liabilities 4,381 4,009 Long-Term Debt 3,604 3,601 Deferred Income Taxes 1,627 1,614 Minority Interest and Other Liabilities 1,184 1,182 Common Shareholders' Equity Common stock, $1 par value, issued 1994 - 127.4 shares, 1993 - 127.3 shares 127 127 Paid-in capital 1,670 1,704 Retained earnings 4,572 4,553 ------- ------- 6,369 6,384 Less: Common stock held in treasury, at cost; 1994 - 2.8 shares, 1993 - 3.4 shares 130 159 ------- ------- Total Common Shareholders' Equity 6,239 6,225 ------- ------- Total Liabilities and Common Shareholders' Equity $17,035 $16,631 ------- ------- ------- ------- The accompanying notes are an integral part of these financial statements. - 6 - INTERNATIONAL PAPER COMPANY Consolidated Statement of Cash Flows (Unaudited) (In millions) Three Months Ended March 31, ---------------- 1994 1993 ----- ----- OPERATING ACTIVITIES Net earnings $ 72 $ 64 Noncash items Depreciation and amortization 225 220 Deferred income taxes 5 2 Other, net 2 (9) Changes in current assets and liabilities Accounts and notes receivable (97) (82) Inventories (51) 4 Other current assets (11) (11) Accounts payable and accrued liabilities 28 (29) ----- ----- CASH PROVIDED BY OPERATIONS 173 159 ----- ----- INVESTMENT ACTIVITIES Invested in capital projects (207) (196) Investments in affiliated companies (299) Other (41) 27 ----- ----- CASH USED FOR INVESTMENT ACTIVITIES (547) (169) ----- ----- FINANCING ACTIVITIES Issuance of common stock 41 6 Issuance of debt 609 297 Reduction of debt (298) (221) Change in bank overdrafts (74) (20) Dividends paid (53) (53) Other 29 28 ----- ----- CASH PROVIDED BY FINANCING ACTIVITIES 254 37 ----- ----- EFFECT OF EXCHANGE RATE CHANGES ON CASH 1 (2) ----- ----- CHANGE IN CASH AND TEMPORARY INVESTMENTS (119) 25 CASH AND TEMPORARY INVESTMENTS Beginning of the period 242 225 ----- ----- End of the period $ 123 $ 250 ----- ----- ----- ----- The accompanying notes are an integral part of these financial statements. - 7 - INTERNATIONAL PAPER COMPANY Notes to Consolidated Financial Statements (Unaudited) 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of Management, include all adjustments (consisting only of normal recurring accruals) which are necessary for the fair presentation of results for the interim periods. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto incorporated by reference in the Company's Form 10-K for the year ended December 31, 1993, which has previously been filed with the Commission. 2. In March 1994, the Company acquired from Brierley Investments Limited an additional 8 percent of the outstanding shares of Carter Holt Harvey Limited (Carter Holt), a major New Zealand forest products and paper com- pany with substantial assets in Chile. The purchase increased the Com- pany's ownership of Carter Holt to 24 percent. In April 1993, the Company acquired certain assets of the Los Angeles - based Ingram Paper Company (Ingram). Ingram is a distributor of industrial and fine printing papers. In December, JB Papers, Inc., a paper distribution company located in Union, N.J., was purchased. Also in December, the assets of Monsanto Company's Kentucky-based Fome-Cor division, a manufacturer of polystyrene foam products, were acquired. All of the 1993 acquisitions were accounted for using the purchase method. The effects of these acquisitions, individually or in the aggregate, were not significant to the Company's financial statements. The consolidated balance sheet at March 31, 1994 includes preliminary purchase price allocations for JB Papers and Fome-Cor. The consolidated balance sheet at December 31, 1993 includes preliminary purchase price allocations for Ingram, JB Papers and Fome-Cor. Final allocations for JB Papers and Fome-Cor will be completed in 1994. 3. Inventories by major category include: March 31, December 31, 1994 1993 --------- ------------ (In millions) Raw materials $ 388 $ 380 Finished pulp, paper and packaging products 1,046 1,017 Finished imaging products 169 164 Finished lumber and panel products 81 79 Operating supplies 323 324 Other 71 60 ------ ------ Total $2,078 $2,024 ------ ------ ------ ------ - 8 - 4. Interest payments made during the periods ended March 31, 1994 and 1993 were $88 million and $101 million, respectively. Income tax payments made during the first quarters of 1994 and 1993 were $6 million and $16 million, respectively. 5. Temporary investments with a maturity of three months or less are treated as cash equivalents and are stated at cost. Temporary investments totaled $58 million and $160 million at March 31, 1994 and December 31, 1993, respectively. 6. Certain amounts have been reclassified in the 1993 consolidated statement of cash flows to conform with the current year presentation for changes in bank overdrafts as financing activities. Changes in bank overdrafts were previously presented as operating activities. Bank overdrafts are included in accounts payable and accrued liabilities in the consolidated balance sheet. - 9 - ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS International Paper reported 1994 first-quarter net earnings of $72 million or $.58 per share, a 12% increase over 1993 first- quarter net earnings of $64 million or $.52 per share. First- quarter net sales of $3.4 billion were about even with the prior year. The Company's Forest Products business continued to generate strong results for the quarter which were comparable to the first quarter of 1993 and Specialty Products sales and earnings were higher than a year ago. Packaging volume improved, but price declines for bleached board more than offset improved containerboard prices. Printing Papers volume and pricing were below expectations for the quarter, although losses were less than a year ago. Assisted by higher pulp prices, European and export markets began to show signs of recovery; however, severe winter weather conditions hampered some domestic businesses. Printing Papers first-quarter 1994 net sales of $955 million were below the $1.0 billion reported in the prior year. Although operating losses were less than a year ago, a sharp decline in U.S. uncoated paper prices resulted in a shortfall in earnings compared with the fourth quarter of 1993. Results for pulp were ahead of the prior year due to improved pricing. First-quarter Packaging net sales of $755 million were even with the 1993 first quarter. Operating results were below the first-quarter of 1993 and the prior quarter due to lower prices for bleached board. Improving containerboard demand is expected to favorably impact prices but industry overcapacity for bleached board will continue to depress prices and earnings in this area. Distribution net sales increased to $800 million in the first quarter of 1994, up from $745 million in the 1993 first quarter. Operating profits were comparable with the 1993 fourth and first quarters despite severe weather conditions in the northeastern United States. The acquisitions of Ingram Paper early in the 1993 second quarter and JB Papers in the 1993 fourth quarter contributed to much of the sales increase. Specialty Products net sales of $625 million in the 1994 first quarter exceeded net sales of $605 million a year ago. Operating profit was ahead of the prior quarter and improved significantly over the first quarter of 1993. Strengthened demand for Masonite products was a driving force behind the segment's improved profitability. Reduced production and lower oil prices resulted in lower earnings for the petroleum business compared with the first quarter of 1993. - 10 - Forest Products net sales increased to $425 million for the 1994 first quarter, up from $400 million in the comparable 1993 period. Operating profits, although down from the 1993 fourth quarter due to lower harvest volumes, were comparable to the first quarter of 1993 due to continued strong lumber and timber prices. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operations totaled $173 million for the 1994 first quarter, up from $159 million for the comparable 1993 period. Higher working capital requirements were more than offset by higher earnings and noncash items. Investments in capital projects totaled $207 million for the first quarter of 1994, comparable with $196 million spent a year ago. Investments in affiliated companies totalling $299 million in the first quarter of 1994 reflect the Company's additional investment in Carter Holt Harvey. Dividend payments were $53 million, or $.42 per common share. Debt issued in 1994 consisted primarily of commercial paper borrowings that were used for investment activities and the retirement of short-term bank debt. The Company anticipates that cash flow generated from operations, supplemented as necessary by short- or long-term borrowings, will be adequate to meet capital expenditures which are expected to exceed $1.1 billion for 1994. - 11 - ITEM 3. OTHER FINANCIAL INFORMATION Sales by Industry Segment and Production by Products (Unaudited) Sales by Industry Segment (In millions) Three Months Ended March 31, ----------------- 1994 1993 ------ ------ Printing Papers $ 955 $1,010 Packaging 755 755 Distribution 800 745 Specialty Products 625 605 Forest Products 425 400 Less: Intersegment Sales (146) (153) ------ ------ Net Sales $3,414 $3,362 ------ ------ ------ ------ Certain reclassifications have been made to prior-year amounts to conform with the current-year presentation. Production by Products Three Months Ended March 31, --------------- 1994 1993 ---- ---- Printing Papers (In thousands of tons) White Papers and Bristols 810 714 Coated Papers 256 242 Market Pulp (A) 419 382 Packaging (In thousands of tons) Containerboard 489 495 Bleached Packaging Board 248 263 Industrial Papers 151 138 Industrial and Consumer Packaging (B) 732 690 Wood Products (In millions) Panels (sq. ft. 3/8" basis) (C) 207 185 Lumber (board feet) 233 231 (A) This excludes market pulp purchases of approximately 600,000 tons annually. (B) A significant portion of this tonnage was fabricated from paperboard and paper produced at the Company's own mills and included in the containerboard, bleached packaging board, and industrial papers amounts in this table. (C) Panels include plywood and oriented strand board. - 12 - PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits (11) Statement of Computation of Per Share Earnings (b) Reports on Form 8-K. No Current Reports on Form 8-K have been filed during the first quarter of 1994, except those previously reported in the Annual Report of Form 10-K for the year ended 1993, filed March 31, 1994. - 13 - SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL PAPER COMPANY (Registrant) Date: May 10, 1994 By /s/ ROBERT C. BUTLER --------------------------- Robert C. Butler Senior Vice President and Chief Financial Officer Date: May 10, 1994 By /s/ ANDREW R. LESSIN --------------------------- Andrew R. Lessin Controller and Chief Accounting Officer - 14 - EX-11 2 STATEMENT OF COMPUTATION OF PER SHARE EARNINGS (Exhibit 11) INTERNATIONAL PAPER COMPANY STATEMENT OF COMPUTATION OF PER SHARE EARNINGS (In millions, except per-share amounts) Three Months Ended March 31, ---------------- 1994 1993 ----- ----- Net earnings $ 72 $ 64 Debenture interest savings, net of taxes, assuming conversion of convertible subordinated debentures * * ----- ----- Primary and fully diluted net earnings $ 72 $ 64 ----- ----- ----- ----- Earnings per common share $ .58 $ .52 ----- ----- ----- ----- Primary and fully diluted earnings per share $ .58 $ .52 ----- ----- ----- ----- PRIMARY AND FULLY DILUTED SHARES Average shares outstanding 124.2 122.8 Shares assumed to be repurchased using long-term incentive plan deferred compensation at average market price (.3) (.3) Shares assumed to be issued upon exercise of stock options, net of treasury buyback at average market price .5 .4 Shares assumed to be issued upon conversion of convertible subordinated debentures * * ----- ----- Primary and fully diluted shares 124.4 122.9 ----- ----- ----- ----- - ------- The Company reports earning per common share as the effect of dilutive securities is less than 3%. * Convertible subordinated debentures are antidilutive. -----END PRIVACY-ENHANCED MESSAGE-----