EX-99 3 ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 -------------------------------------------------------------------------------- [INTERNATIONAL PAPER LOGO] -------------------------------------------------------------------------------- INTERNATIONAL PAPER PLAZA 400 ATLANTIC STREET STAMFORD, CT 06921 News Release Media Contacts: Jennifer Boardman, 203-541-8407 Kathleen Bark, 203-541-8418 Investor Contacts: Darial Sneed, 203-541-8541 Brian Turcotte, 203-541-8632 International Paper Reports Higher First-Quarter 2004 Earnings on Stronger Demand o Net earnings of $73 million up 66 percent from 2003 first-quarter earnings of $44 million. o Net sales increased to $6.4 billion from first-quarter 2003 net sales of $6.0 billion. STAMFORD, Conn. - April 23, 2004 - International Paper (NYSE: IP) today reported first-quarter 2004 net earnings of $73 million ($0.15 per share), compared with $44 million ($0.09 per share) in the first quarter of 2003 and $48 million ($0.10 per share) in the fourth quarter of 2003. Amounts include the effects of special items and discontinued operations in all periods and accounting changes in the first and fourth quarters of 2003. Earnings Per Share Summary
First First Fourth Quarter Quarter Quarter 2004 2003 2003 ------- ------- ------- Net Earnings $ 0.15 $ 0.09 $ 0.10 Less -- Earnings from Discontinued Operations (CHH Tissue) (0.01) (0.01) (0.01) Plus -- Cumulative Effect of Accounting Changes - 0.02 0.01 ------ ------ ------ Earnings from Continuing Operations 0.14 0.10 0.10 Add Back - Special Items 0.02 0.03 0.12 ------ ------ ------ Earnings from Continuing Operations and Before Special Items $ 0.16 $ 0.13 $ 0.22
Earnings from continuing operations were $70 million ($0.14 per share) in the 2004 first quarter, compared with 2003 first-quarter earnings of $51 million ($0.10 per share) and 2003 fourth-quarter earnings of $48 million ($0.10 per share). Amounts in all periods have been restated to exclude as a discontinued operation the earnings of the tissue business of Carter Holt Harvey that is expected to be sold in May 2004. Earnings from continuing operations and before special items in the 2004 first quarter were $79 million ($0.16 per share), compared with $65 million ($0.13 per share) in the first quarter of 2003 and $107 million ($0.22 per share) in the fourth quarter of 2003. First-quarter 2004 net sales were $6.4 billion, compared with first-quarter 2003 net sales of $6.0 billion and 2003 fourth-quarter sales of $6.3 billion. "I'm pleased that we were able to more than offset the continued high costs of wood and energy with a better operational performance and higher sales volumes for the quarter, particularly in uncoated free sheet, bleached board and containerboard," said John Faraci, International Paper chairman and chief executive officer. "Our focus on customers is having an impact, despite the seasonally slow demand we typically experience in the winter months. Overall average pricing for the quarter was down from the first quarter of last year; but in March, we began to see the impact of previously announced price increases in industrial packaging, uncoated free sheet, pulp and some of our bleached board grades." Commenting on the outlook for the second quarter, Faraci said, "We're seeing a pick-up in demand for our products in most regions of the world, and average price realizations in the second quarter should be higher. This upturn, combined with lower wood costs and our continued focus on cost control, should position us to deliver a stronger second quarter." Effects of Special Items Special items in the 2004 first quarter included a pre-tax charge of $30 million before taxes ($19 million after taxes) for restructuring and other costs, a pre-tax credit of $9 million ($6 million after taxes) to adjust previous estimated gains/losses of businesses sold and a $7 million credit ($4 million after taxes) for the net reversal of restructuring and realignment reserves no longer required. The $30 million charge for restructuring and other costs included $14 million ($9 million after taxes) for organizational restructuring programs and $16 million ($10 million after taxes) for losses on early extinguishment of debt. The net after-tax effect of these special items was an expense of $0.02 per share. Special items in the 2003 fourth quarter included a pre-tax charge of $101 million ($61 million after taxes and minority interest) for restructuring and other costs, $21 million ($26 million after taxes) of net losses on sales and impairments of businesses held for sale and a $23 million credit ($15 million after taxes) for the net reversal of restructuring and realignment reserves no longer required. In addition, a $13 million decrease in the income tax provision, after minority interest, was recorded in the fourth quarter reflecting a favorable settlement with Australian tax authorities of net operating loss carryforward credits. The $101 million charge for restructuring and other costs included $91 million ($55 million after taxes and minority interest) for facility closures and organizational restructuring programs, $29 million ($18 million after taxes) for additional legal reserves, and a credit of $19 million ($12 million after taxes) for gains on early extinguishment of debt. The net after-tax effect of these special items was an expense of $0.12 per share. Additionally, an after-tax charge of $3 million ($0.01 per share) was recorded for the cumulative effect of an accounting change for the adoption of the provisions of Financial Interpretation No. 46, "Consolidation of Variable Interest Entities," resulting in a total expense of $0.13 per share in the quarter from special items and accounting changes. Special items in the 2003 first quarter included a net charge of $23 million before taxes and minority interest ($14 million after taxes and minority interest, or $0.03 per share) for costs related to facility closures and organizational restructuring programs. Also in the quarter, the company adopted Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations," resulting in a $10 million after-tax charge ($0.02 per share) for the cumulative effect of a change in accounting. Segment Information Operating profits of $432 million for the first quarter were down from the fourth-quarter 2003 operating profits of $447 million due to lower average price realizations, lower levels of land sales and higher energy costs, all of which more than offset higher volumes and improved operations. Operating profits were higher than first-quarter 2003 operating profits of $406 million, due to improved costs and higher volumes, which were partially offset by lower average sales prices and higher raw material costs. First-quarter segment operating profits and business trends compared with the fourth quarter of 2003 are as follows: First-quarter operating profits for Printing Papers were $83 million compared with fourth-quarter 2003 operating profits of $65 million. Higher average pulp price realization, stronger volumes for uncoated free sheet and strong results from Europe and Brazil were somewhat offset by lower average price realization on uncoated free sheet. The coated business continues to be impacted by import pressures, and coated volumes were flat in a seasonally slow period. Industrial and Consumer Packaging operating profits were $79 million in the first quarter, compared with $111 million in the fourth quarter, due to lower average price realizations that more than offset better operational performance. The company's distribution business, xpedx, reported operating profits of $17 million for the first quarter compared with operating profits in the fourth quarter of $18 million, on somewhat seasonally lower volumes. First-quarter Forest Products operating profits were $232 million, compared with earnings of $236 million in the fourth quarter of 2003 as higher wood products results were offset by lower gains from forestland sales and slightly lower harvest volumes. Operating profits at Carter Holt Harvey, International Paper's 50.5 percent owned subsidiary in New Zealand, were $11 million in the first quarter, compared with fourth-quarter operating profits of $8 million as a result of higher prices and lower operating costs. Corporate expenses, net, of $110 million in the 2004 first quarter were lower than 2003 fourth-quarter net expenses of $144 million, but were higher than net expenses of $88 million in the first quarter of 2003. The decrease compared with the fourth quarter was principally due to lower overhead and inventory-related costs. Higher pension and other benefit-related costs were the major factors in the increase from the 2003 first quarter. The company will hold a webcast to discuss earnings and current market conditions at 11 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 prior to the webcast. A replay of the webcast will also be available on the Web site beginning at 1 p.m. (EDT) this afternoon. 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 'r' (SFI) program, a system that ensures the continual 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 over 40 countries and sells its products in more than 120 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 but not limited to, the strength of demand for the company's products and changes in overall demand, the effects of competition from foreign and domestic producers, the level of housing starts, changes in the cost or availability of raw materials, unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations, the ability of the company to continue to realize anticipated cost savings, performance of the company's manufacturing operations, results of legal proceedings, changes related to international economic conditions, changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Euro, economic conditions in developing countries, specifically Brazil and Russia, the current military action in Iraq and the war on terrorism. 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 Summary of Consolidated Earnings Preliminary and Unaudited (In millions except for net sales and per share amounts)
Three Months Ended March 31, ------------------ 2004 2003(a) ------ ------- Net Sales (In billions) $ 6.4 $ 6.0 ------ ------ Earnings From Continuing Operations Before Interest, Income Taxes, and Minority Interest 321(b) 309(d) Interest expense, net 196 184 ------ ------ Earnings From Continuing Operations Before Income Taxes and Minority Interest 125(b) 125(d) Income tax provision 41(b) 37(d) Minority interest expense, net of taxes 14 37(d) ------ ------ Earnings From Continuing Operations 70(b) 51(d) Discontinued Operation, net of taxes and minority interest 3(c) 3(c) Cumulative Effect of Accounting Change - Asset Retirement Obligations (SFAS 143), net of taxes - (10) ------ ------ Net Earnings $ 73(b) $ 44(d) ====== ====== Earnings Per Common Share From Continuing Operations $ 0.14(b) $ 0.10(d) Discontinued Operation, net of taxes and minority interest 0.01(c) 0.01(c) Cumulative Effect of Accounting Change - Asset Retirement Obligations (SFAS 143), net of taxes - (0.02) ------ ------ Earnings Per Common Share $ 0.15(b) $ 0.09(d) ====== ====== Earnings Per Common Share - Assuming Dilution $ 0.15(b) $ 0.09(d) ====== ====== Average Shares of Common Stock Outstanding 484.4 479.0 ====== ======
(a) Restated to reflect the operating results of the Carter Holt Harvey tissue business as a discontinued operation. (b) Includes a $30 million charge before taxes ($19 million after taxes) for organizational restructuring actions and losses on early debt extinguishment, a pre-tax credit of $9 million ($6 million after taxes) to adjust previous estimated gains/losses of businesses sold, and a credit of $7 million before taxes ($4 million after taxes) for the net reversal of restructuring reserves no longer required. (c) Includes net income of the discontinued operations of the Carter Holt Harvey tissue business held for sale which is expected to be sold in the second quarter of 2004. (d) Includes a $23 million charge before taxes and minority interest ($14 million after taxes and minority interest) for asset shutdowns of excess internal capacity and cost reduction actions. International Paper Reconciliation of Earnings Before Special Items to Net Earnings Preliminary and Unaudited (In millions except for per share amounts)
Three Months Ended March 31, ------------------ 2004 2003 ----- ---- Earnings Before Special Items (1) $ 79 $ 65 Restructuring and other charges (19) (14) Reversal of reserves no longer required 4 - Net gains on sales and impairments of businesses held for sale 6 - Discontinued Operation 3 3 Cumulative effect of change in accounting - (10) ---- ---- Net Earnings as Reported $ 73 $ 44 ==== ====
Three Months Ended March 31, ------------------ 2004 2003 ------ ------ Earnings Per Common Share Before Special Items (1) $ 0.16 $ 0.13 Restructuring and other charges (0.04) (0.03) Reversal of reserves no longer required 0.01 - Net gains on sales and impairments of businesses held for sale 0.01 - Discontinued Operation 0.01 0.01 Cumulative effect of change in accounting - (0.02) ------ ------ Earnings Per Common Share as Reported $ 0.15 $ 0.09 ====== ======
(1) The company calculates Earnings Before Special Items by excluding the after-tax effect of the adoption of new accounting standards, after-tax earnings of discontinued operations and items considered by management to be unusual from the net earnings reported under 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. International Paper Sales and Earnings by Industry Segment Preliminary and Unaudited (In Millions) Sales by Industry Segment
Three Months Ended Three Months Ended ---------------------------- March 31, June 30 Sept. 30 Dec. 31 Full ------------------ ------- -------- ------- Year 2004 2003(1) 2003(1) 2003(1) 2003(1) 2003(1) ------ --------- ------- -------- ------- ------- Printing Papers $1,970 $1,875 $1,860 $1,910 $1,875 $ 7,520 Industrial and Consumer Packaging 1,700 1,620 1,680 1,655 1,715 6,670 Distribution 1,465 1,430 1,475 1,485 1,470 5,860 Forest Products 790 675 740 800 810 3,025 Carter Holt Harvey 515 405 420 480 515 1,820 Other Businesses (2) 295 345 335 280 275 1,235 Less: Intersegment Sales (371) (371) (352) (347) (314) (1,384) ------ ------ ------ ------ ------ ------- $6,364 $5,979 $6,158 $6,263 $6,346 $24,746 ====== ====== ====== ====== ====== =======
Earnings by Industry Segment
Three Months Ended Three Months Ended ---------------------------- March 31, June 30 Sept. 30 Dec. 31 Full ------------------ ------- -------- ------- Year 2004 2003(1) 2003(1) 2003(1) 2003(1) 2003(1) ----- ---------- ------- -------- ------- ------- Printing Papers $ 83 $ 121 $ 142 $ 119 $ 65 $ 447 Industrial and Consumer Packaging 79 98 126 116 111 451 Distribution 17 15 23 24 18 80 Forest Products 232 161 143 201 236 741 Carter Holt Harvey 11 12 4 14 8 38 Other Businesses (2) 10 (1) 5 10 9 23 ----- ----- ----- ----- ----- ------ Operating Profit 432 406 443 484 447 1,780 Interest expense, net (196) (184) (194) (203) (185) (766) Minority interest (3) 13 14 9 17 8 48 Corporate items, net (110) (88) (96) (138) (144) (466) Restructuring and other charges (30) (23) (81) (93) (101) (298) Net gains (losses) on sales and impairments of businesses held for sale 9 - (10) (1) (21) (32) Reversal of reserves no longer required 7 - 9 8 23 40 ----- ----- ----- ----- ----- ------ Earnings from continuing operations before income taxes and minority interest $ 125 $ 125 $ 80 $ 74 $ 27 $ 306 ===== ===== ===== ===== ===== ======
(1) Prior-year industry segment information has been reclassified to conform with minor changes in the 2004 operational structure, as well as to reflect the Carter Holt Harvey tissue business as a discontinued operation. (2) Includes Arizona Chemical, Chemical Cellulose Pulp (closed in 2003) and businesses identified in our divestiture program. (3) 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 minority interest for these subsidiaries is added here to present consolidated earnings before income taxes, minority interest, extraordinary items, and cumulative effect of accounting changes. International Paper Sales Volumes by Product (1,2) Preliminary and Unaudited International Paper Consolidated (excluding Carter Holt Harvey)
Three Months Ended Three Months Ended March 31, ------------------------------- Full ------------- June 30, Sept. 30, Dec. 31, Year 2004 2003 2003 2003 2003 2003 ----- ----- -------- --------- -------- ----- Printing Papers (In thousands of short tons) Uncoated Papers and Bristols 1,658 1,571 1,532 1.572 1,563 6,238 Coated Papers 526 506 500 575 532 2,113 Market Pulp 556 510 456 500 546 2,012 Packaging (In thousands of short tons) Containerboard 541 485 497 460 504 1,946 Bleached Packaging Board 379 317 340 340 351 1,348 Kraft 148 150 157 148 151 606 Industrial and Consumer Packaging 1,125 1,077 1,091 1,103 1,112 4,383 Forest Products (In millions) Panels (sq. ft. 3/8" - basis) 509 460 551 553 473 2,037 Lumber (board feet) 878 842 934 915 882 3,573 Particleboard (sq. ft. 3/4" - basis) - - - - - - Three Months Ended ------------------------------------------ Full March 31, June 30, Sept. 30, Dec. 31 Year 2002 2002 2002 2002 2002 --------- -------- --------- ------- ----- Printing Papers (In thousands of short tons) Uncoated Papers and Bristols 1,589 1,580 1,628 1,535 6,332 Coated Papers 509 533 615 555 2,212 Market Pulp 497 436 535 545 2,013 Packaging (In thousands of short tons) Containerboard 408 475 520 459 1,862 Bleached Packaging Board 292 314 320 321 1,247 Kraft 173 140 159 154 626 Industrial and Consumer Packaging 1,068 1,129 1,089 1,086 4,372 Forest Products (In millions) Panels (sq. ft. 3/8" - basis) 730 494 532 477 2,233 Lumber (board feet) 884 979 954 864 3,681 Particleboard (sq. ft. 3/4" - basis) 62 67 - - 129
1. Includes third party and inter-segment sales. 2. Sales volumes for divested businesses are included through the date of sale. Carter Holt Harvey (3)
Three Months Ended Three Months Ended March 31, ------------------------------- Full ------------ June 30, Sept. 30, Dec. 31, Year 2004 2003 2003 2003 2003 2003 ---- ---- -------- --------- -------- ---- Printing Papers (In thousands of short tons) Tissue 32 33 33 33 33 132 Market Pulp 147 121 93 130 155 499 Packaging (In thousands of short tons) Containerboard 119 101 53 100 107 361 Bleached Packaging Board 20 23 21 21 19 84 Industrial and Consumer Packaging 39 40 41 34 38 153 Forest Products (In millions) Panels (sq. ft. 3/8" - basis) 43 46 42 47 44 179 Lumber (board feet) 118 122 121 132 128 503 MDF & Particleboard (sq. ft. 3/4" basis) 139 147 139 155 141 582 Three Months Ended ------------------------------------------- Full March 31, June 30, Sept. 30, Dec. 31, Year 2002 2002 2002 2002 2002 --------- -------- --------- -------- ---- Printing Papers (In thousands of short tons) Tissue 32 34 36 35 137 Market Pulp 114 152 119 127 512 Packaging (In thousands of short tons) Containerboard 96 105 91 108 400 Bleached Packaging Board 22 23 23 21 89 Industrial and Consumer Packaging 45 39 33 37 154 Forest Products (In millions) Panels (sq. ft. 3/8" - basis) 49 47 53 51 200 Lumber (board feet) 121 139 145 141 546 MDF & Particleboard (sq. ft. 3/4" basis) 117 124 130 123 494
3. Includes 100 percent of volumes sold. INTERNATIONAL PAPER COMPANY Consolidated Balance Sheet Preliminary and Unaudited (In Millions)
March 31, December 31, 2004 2003 --------- ------------ Assets Current Assets Cash and temporary investments $ 2,010 $ 2,363 Accounts and notes receivable, net 2,996 2,851 Inventories 2,813 2,896 Assets of business held for sale 414 424 Other current assets 968 1,096 ------- ------- Total Current Assets 9,201 9,630 ------- ------- Plants, Properties and Equipment, net 13,834 13,998 Forestlands 4,032 4,069 Investments 733 764 Goodwill 5,340 5,341 Deferred Charges and Other Assets 1,889 1,723 ------- ------- Total Assets $35,029 $35,525 ======= ======= Liabilities and Common Shareholders' Equity Current Liabilities Notes payable and current maturities of long-term debt $ 1,757 $ 2,087 Liabilities of business held for sale 255 248 Accounts payable and accrued liabilities 4,292 4,641 ------- ------- Total Current Liabilities 6,304 6,976 ------- ------- Long-Term Debt 13,806 13,450 Deferred Income Taxes 1,425 1,598 Other Liabilities 3,623 3,637 Minority Interest 1,624 1,627 Common Shareholders' Equity Invested capital 5,213 5,155 Retained earnings 3,034 3,082 ------- ------- Total Common Shareholders' Equity 8,247 8,237 ------- ------- Total Liabilities and Common Shareholders' Equity $35,029 $35,525 ======= =======
Note: December 31, 2003 balances have been restated to reflect the assets and liabilities of the Carter Holt Harvey tissue business as a business held for sale.