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Earnings from Continuing Operations Before Special Items Reach $0.57 Per Share
- Earnings per share from continuing operations and before special items
rose to $0.57 from $0.52 in the second quarter of 2007 and $0.45 in the
2006 third quarter.
- Third-quarter 2007 net earnings totaled $0.51 per share, compared with
net earnings of $0.44 per share in the prior quarter and $0.46 per share
in the third quarter of 2006.
- Net sales for the quarter were $5.5 billion, versus $5.3 billion in the
second quarter and $5.4 billion in the third quarter of 2006.
MEMPHIS, Tenn., Nov. 2 /PRNewswire-FirstCall/ -- International Paper
(NYSE: IP) today reported preliminary third-quarter 2007 net earnings of $217
million ($0.51 per share) compared with net earnings of $190 million ($0.44
per share) in the 2007 second quarter and $224 million ($0.46 per share) in
the third quarter of 2006. Amounts in all periods include special items, most
notably a gain of $185 million ($0.38 per share) in the third quarter of 2006
from sales of U.S. forestlands included in the transformation plan.
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Diluted Earnings Per Share Summary
Third Second Third
Quarter Quarter Quarter
2007 2007 2006
Net Earnings $0.51 $0.44 $0.46
Discontinued Operations:
Loss on sale or impairment - 0.02 0.34
Loss from Operations 0.01 - -
0.01 0.02 0.34
Earnings from Continuing Operations 0.52 0.46 0.80
Net Special Items Expense (Income) 0.05 0.06 (0.35)
Earnings from Continuing Operations
and Before Special Items $0.57 $0.52 $0.45
Earnings from continuing operations and before special items in the third
quarter of 2007 were $243 million ($0.57 per share), compared with $223
million ($0.52 per share) in the second quarter and $216 million ($0.45 per
share) in the third quarter of 2006.
Quarterly net sales were $5.5 billion, up slightly from $5.3 billion in
the second quarter and $5.4 billion in the third quarter of 2006.
Industry segment operating profits rose to $610 million for the 2007 third
quarter versus $572 million in the prior quarter and $686 million in the third
quarter of 2006. The quarter-to-quarter increase reflects fewer planned
maintenance outages as well as improved price realizations in North America,
Europe and Brazil, offset somewhat by higher input costs.
"We had a solid third quarter," said International Paper Chairman and
Chief Executive Officer John Faraci. "We continue to improve paper and
packaging business earnings and expand margins, and we continue to improve
earnings capacity from non-U.S. operations. Volumes were flat quarter-to-
quarter, but we saw overall price improvement, which more than offset some
increases in raw material and distribution costs."
Commenting on the fourth quarter of 2007, Faraci said, "We expect slightly
higher earnings from continuing operations. Volumes will slow seasonally in
most segments. We expect modest overall improvement in pricing with the
realization of previously announced price increases. Costs for wood, energy
and transportation will continue to increase, and other costs will remain
high."
SEGMENT INFORMATION
Third-quarter 2007 segment operating profits and business trends compared
with the previous quarter are as follows:
Operating profits for Printing Papers reached $307 million, up from
second-quarter operating profits of $249 million, propelled by a 45 percent
increase in U.S. uncoated papers, largely because of continuing price
improvement and lower planned maintenance spending, as well as volume, price
and mix improvements in Brazilian papers. Pulp earnings were about flat, and
European papers profits declined slightly, largely resulting from increased
planned maintenance spending.
Industrial Packaging operating profits were $115 million, down from $139
million in the prior quarter. The Pensacola linerboard machine start-up and
one-time restructuring costs contributed to the decline, along with seasonal
slowdown in European container, lower U.S. box volumes and higher converting
costs. Results were favorably impacted by fewer planned maintenance outages in
the quarter.
Consumer Packaging operating profits were about flat at $49 million
compared with $48 million in the second quarter. The U.S. coated paperboard
business experienced strong volumes, price and operations, and reduced planned
maintenance spending, somewhat offset by higher input costs. Foodservice
business profits declined slightly from seasonally strong second-quarter
performance, and Shorewood Packaging results were flat.
The company's distribution business, xpedx, again reported strong
quarterly sales and earnings, with operating profits of $40 million, a 4
percent increase from prior-quarter results of $38 million and a 16 percent
increase year over year. Volumes and margins increased, in part because of the
addition of Central Lewmar to xpedx near the end of the quarter.
Forest Products operating profits were $99 million, even with second-
quarter operating profits of $98 million. While land sales are difficult to
forecast within a quarter, the company expects full-year 2007 earnings from
land sales of approximately $450 million. The company's objective in selling
its remaining 390,000 acres of forestland is to obtain maximum value for
shareowners.
Net corporate expense totaled $188 million for the quarter, compared with
$179 million in the second quarter and $221 million in the 2006 third quarter.
The increase compared with the 2007 second quarter reflects small increases in
various expense categories. The decrease from the 2006 third quarter primarily
reflects benefits from lower pension expenses.
EFFECTIVE TAX RATE
The effective tax rate from continuing operations and before special items
for the third quarter of 2007 was 29 percent, even with the second quarter,
and up slightly from 28 percent in the third quarter of 2006.
EFFECTS OF SPECIAL ITEMS
Special items in the third quarter of 2007 included restructuring and
other charges totaling $42 million before taxes ($26 million after taxes),
including $37 million of pre-tax charges ($23 million after taxes) related to
the closure of the company's Terre Haute, Ind., mill. Additionally, net pre-
tax gains of $8 million ($6 million after taxes) were recorded, principally to
reduce estimated transaction costs accrued in connection with the
transformation plan forestland sales in 2006, and a $3 million increase to the
income tax provision was recorded related to the settlement of a prior-year
tax audit.
Special items in the second quarter of 2007 consisted of a $26 million
pre-tax charge ($16 million after taxes) for organizational restructuring
programs associated with the company's transformation plan, including $17
million ($11 million after taxes) of accelerated depreciation expense for
long-lived assets being removed from service, and a pre-tax gain of $1 million
(a loss of $7 million after taxes) for adjustments to estimated losses on
sales of businesses previously sold.
Special items in the third quarter of 2006 included restructuring and
other charges totaling $92 million before taxes ($56 million after taxes),
including costs associated with the company's transformation plan and charges
for adjustments to legal reserves; pre-tax credits of $304 million ($185
million after taxes) from sales of U.S. forestlands; and net pre-tax gains on
sales and impairments of businesses totaling $74 million ($44 million after
taxes), including a $110 million pre-tax gain ($68 million after taxes)
related to a previous forestland sale in Maine and a $38 million pre-tax
charge ($23 million after taxes) upon the completion of the sale of the
company's U.S. coated and supercalendered papers business.
DISCONTINUED OPERATIONS
The company completed the sale of the remainder of its beverage packaging
business in the third quarter of 2007.
Discontinued operations for the second quarter of 2007 included pre-tax
charges of $6 million ($4 million after taxes) and $5 million ($3 million
after taxes) relating to adjustments to estimated losses on the sales of its
wood products and beverage packaging businesses, respectively.
Discontinued operations for the third quarter of 2006 included a pre-tax
credit of $101 million ($80 million after taxes) for the gain on the sale of
the Brazilian coated papers business, pre-tax losses of $115 million and $165
million ($82 million and $165 million after taxes) to adjust the carrying
values of the beverage packaging and wood products businesses to their
estimated fair values, a net $12 million pre-tax gain ($3 million after taxes)
related to other smaller items, and the operating results of these businesses
and the kraft papers business for the quarter.
EARNINGS WEBCAST
The company will hold a webcast to review earnings at 10 a.m. Eastern
Daylight Time / 9 a.m. Central Daylight Time 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 at noon today. Parties who wish to participate in the
webcast via teleconference may dial (706) 679-8242 or, within the U.S. only,
(877) 316-2541 and ask to be connected to the International Paper 3Q 2007
Earnings Call. The conference ID number is 15371359. Participants should call
in no later than 9:45 a.m. EDT/8:45 CDT. An audio-only replay will be
available for four weeks following the call. To access the replay, dial (706)
645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the
conference ID, enter "15371359."
International Paper (NYSE: IP), founded in 1898, is a global uncoated
paper and packaging company with primary markets and manufacturing operations
in North America, Europe, Russia, Latin America, Asia and North Africa. Its
uncoated papers and packaging businesses are complemented by xpedx, North
America's largest distributor of printing papers and graphics supplies and
equipment. Headquartered in the United States, International Paper employs
approximately 54,000 people in more than 20 countries, and serves customers
worldwide. Annual sales are about $22 billion. International Paper partners
with customers and environmental, academic, civic and governmental
organizations, as well as landowners and harvesting professionals, to
encourage responsible forest stewardship, to improve the health and
productivity of forestlands and to increase recovery of our recyclable
products. The company has a long-standing policy of using no wood from
endangered forests. To learn more about International Paper, its products and
commitment to economic, social and environmental sustainability, visit
www.internationalpaper.com.
This 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) industry conditions, including but not limited to
changes in the cost or availability of raw materials and energy,
transportation costs, the company's product mix, demand and pricing for its
products; (ii) global economic conditions and political changes, particularly
in Latin America, Russia, Europe and Asia, including but not limited to
changes in currency exchange rates, credit availability, and the company's
credit ratings issued by recognized credit rating organizations; (iii) natural
disasters, such as hurricanes and earthquakes; (iv) the company's ability to
realize anticipated profit improvement from its transformation plan, and (v)
unanticipated expenditures related to the cost of compliance with
environmental and other governmental regulations and to actual or potential
litigation. 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 Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
Three Months Ended Three Months Ended
September 30, June 30,
2007 2006 2007
Net Sales $5,541 $5,429 $5,291
Costs and Expenses
Cost of products sold 4,086 3,906 3,881
Selling and administrative
expenses 455 465 441
Depreciation, amortization
and cost of timber
harvested 277 287 269
Distribution expenses 255 267 254
Taxes other than
payroll and income taxes 42 52 47
Restructuring and other
charges 42(a) 92(c) 26(g)
Insurance recoveries - - -
Forestland sales (9)(b) (304)(d) -
Impairment of goodwill - - -
Net losses (gains)
on sales and
impairments of
businesses 1 (74)(e) (1)
Reversal of reserves
no longer required, net - - -
Interest expense, net 77 144 80
Earnings (Loss) From
Continuing Operations
Before Income Taxes and - - -
Minority Interest 315(a,b) 594(c-e) 294(g)
Income tax provision 89 204 89
Minority interest
expense, net of taxes 6 5 5
Earnings (Loss)
From Continuing Operations 220(a,b) 385 (c-e) 200(g)
Discontinued Operations,
net of taxes and
minority interest (3) (161)(f) (10)(h)
Net Earnings (Loss) $217(a,b) $224(c-f) $190(g,h)
Basic Earnings Per
Common Share
Earnings (loss)
from continuing
operations $0.52(a,b) $0.81(c-e) $0.46 (g)
Discontinued operations (0.01) (0.34)(f) (0.02)(h)
Net earnings (loss) $0.51(a,b) $0.47(c-f) $0.44(g,h)
Diluted Earnings Per
Common Share
Earnings (loss)
from continuing
operations $0.52(a,b) $0.80(c-e) $0.46(g)
Discontinued operations (0.01) (0.34)(f) (0.02)(h)
Net earnings (loss) $0.51(a,b) $0.46(c-f) $0.44(g,h)
Average Shares of Common
Stock Outstanding - Diluted 425.6 484.9 431.2
Cash Dividends Per
Common Share $0.25 $0.25 $0.25
Nine Months Ended
September 30,
2007 2006
Net Sales $16,049 $16,671
Costs and Expenses
Cost of products sold 11,818 12,345
Selling and administrative expenses 1,331 1,394
Depreciation, amortization
and cost of timber harvested 808 883
Distribution expenses 765 828
Taxes other than payroll
and income taxes 131 160
Restructuring and other charges 86(i) 189(l)
Insurance recoveries - (19)
Forestland sales (9)(b) (366)(m)
Impairment of goodwill - -
Net losses (gains) on sales and
impairments of businesses (314)(j) 1,346(n)
Reversal of reserves no longer
required, net - -
Interest expense, net 218 441
Earnings (Loss) From Continuing
Operations Before Income Taxes and
Minority Interest 1,215(b,i,j) (530)(l,m,n)
Income tax provision 321 221
Minority interest expense,
net of taxes 17 14
Earnings (Loss) From Continuing
Operations 877(b,i,j) (765)(l,m,n)
Discontinued Operations, net
of taxes and minority interest (36)(k) (164)(o)
Net Earnings (Loss) $841(b,i-k) $(929)(l-o)
Basic Earnings Per Common Share
Earnings (loss) from
continuing operations $2.03(b,i,j) $(1.57)(l,m,n)
Discontinued operations (0.08)(k) (0.34)(p)
Net earnings (loss) $1.95(b,i-k) $(1.91)(l-o)
Diluted Earnings Per Common Share
Earnings (loss) from
continuing operations $2.01(b,i,j) $(1.57)(l,m,n)
Discontinued operations (0.08)(k) (0.34)(p)
Net earnings (loss) $1.93(b,i-k) $(1.91)(l-o)
Average Shares of Common
Stock Outstanding - Diluted 435.7 485.2
Cash Dividends Per Common Share $0.75 $0.75
The accompanying notes are an integral part of these financial statements.
Certain 2006 amounts have been revised to reflect the retrospective
application of a change in accounting for planned major maintenance
activities.
(a) Includes a pre-tax charge of $27 million ($17 million after taxes) of
accelerated depreciation charges for the Terre Haute, IN mill, which
has been closed as part of the Company's Transformation Plan, and a
pre-tax charge of $10 million ($6 million after taxes) for
environmental costs associated with this closure, a pre-tax charge of
$3 million ($2 million after taxes) for Brazilian restructuring
charges, and a pre-tax charge of $2 million ($1 million after taxes)
for severance and other charges associated with the Company's
Transformation Plan.
(b) Includes a pre-tax gain of $9 million ($5 million after taxes) to
reduce estimated transaction costs accrued in connection with the 2006
sale of U.S. Forestlands included in the Company's Transformation
Plan.
(c) Includes a pre-tax charge of $57 million ($35 million after taxes) for
severance and other charges associated with the Company's
Transformation Plan and a pre-tax charge of $35 million ($21 million
after taxes) for legal reserves.
(d) Includes a pre-tax gain of $304 million ($185 million after taxes)
from sales of U.S. forestlands included in the Company's
Transformation Plan.
(e) Includes the recognition of a previously deferred $110 million pre-tax
gain ($68 million after taxes) related to a 2004 sale of forestlands
in Maine, a pre-tax charge of $38 million ($23 million after taxes) to
reflect the completion of the sales of the Company's U.S. coated and
supercalendered papers business, and a net pre-tax gain of $2 million
(a loss of $1 million after taxes) related to other smaller items.
(f) Includes a pre-tax credit of $101 million ($80 million after taxes)
for the gain on the sale of the Company's Brazilian coated papers
business, pre-tax losses of $115 million and $165 million ($82 million
and $165 million after taxes) to adjust the carrying values of the
Company's beverage packaging and wood products businesses to estimated
fair values, a net $12 million pre-tax gain ($3 million after taxes)
related to smaller items, and the operating results of the kraft
papers, Brazilian coated papers, wood products and beverage packaging
businesses.
(g) Includes $17 million ($11 million after taxes) of accelerated
depreciation charges for long-lived assets being removed from service,
and $9 million ($5 million after taxes) of other charges, associated
with the Company's Transformation Plan.
(h) Includes a pre-tax charge of $6 million ($4 million after taxes) for
adjustments relating to the sale of the wood products business, a pre-
tax charge of $5 million ($3 million after taxes) for adjustments
relating to the sale of the beverage packaging business, and the
operating results of these businesses.
(i) Includes a pre-tax charge of $27 million ($17 million after taxes) of
accelerated depreciation charges for the Terre Haute, IN mill, which
has been closed as part of the Company's Transformation Plan, and a
pre-tax charge of $10 million ($6 million after taxes) for
environmental costs associated with this closure, a pre-tax charge of
$3 million ($2 million after taxes) for Brazilian restructuring
charges, accelerated depreciation charges of $29 million ($18 million
after taxes) for long-lived assets being removed from service, and $17
million ($10 million after taxes) for severance and other charges,
associated with the Company's Transformation Plan.
(j) Includes a pre-tax gain of $113 million ($102 million after taxes) on
the sale of the Arizona Chemical business, a pre-tax gain of $205
million ($159 million after taxes) related to the asset exchange for
the Luiz Antonio mill in Brazil, a $6 million pre-tax loss ($4 million
after taxes) for adjustments to the loss on the sale of UK and Ireland
box plants, a $5 million pre-tax credit ($4 million after taxes) for
adjustments to the loss on the sale of the coated and supercalendered
papers business, and a $3 million pre-tax loss ($3 million after
taxes) for other small items.
(k) Includes a pre-tax gain of $16 million ($6 million after taxes)
relating to the sale of the wood products business, a pre-tax loss of
$21 million ($43 million after taxes) for adjustments to the loss on
the sale of the beverage packaging business, a pre-tax gain of $6
million ($4 million after taxes) for adjustments to the loss on the
sale of the kraft papers business, a $10 million pre-tax credit ($6
million after taxes) for additional refunds received from the Canadian
government of duties paid by the Company's Weldwood of Canada Limited
business, and the year-to-date operating results of the beverage
packaging and wood products businesses.
(l) Includes a pre-tax charge of $124 million ($75 million after taxes)
for severance and other charges associated with the Company's
Transformation Plan, a pre-tax charge of $8 million ($5 million after
taxes) for losses on early debt extinguishment, and a pre-tax charge
of $57 million ($35 million after taxes) for legal reserves.
(m) Includes a pre-tax gain of $366 million ($224 million after taxes)
from sales of U.S. forestlands included in the Company's
Transformation Plan.
(n) Includes a pre-tax charge of $1.4 billion ($1.3 billion after taxes)
to reduce the carrying value of the net assets of the coated and
supercalendered papers business to their estimated fair value, a pre-
tax charge of $52 million ($37 million after taxes) to write down the
carrying value of certain assets in Brazil to their estimated fair
value, the recognition of a previously deferred $110 million pre-tax
gain ($68 million after taxes) related to a 2004 sale of forestlands
in Maine, a pre-tax charge of $38 million ($23 million after taxes) to
reflect the completion of the sales of the Company's U.S. coated and
supercalendered papers business, and a net pre-tax gain of $2 million
(a loss of $5 million after taxes) related to other smaller items.
(o) Includes a pre-tax credit of $101 million ($80 million after taxes)
for the gain on the sale of the Company's Brazilian coated papers
business, pre-tax losses of $115 million and $165 million ($82 million
and $165 million after taxes) to adjust the carrying values of the
Company's beverage packaging and wood products businesses to their
estimated fair values, a pre-tax charge of $116 million ($72 million
after taxes) to reduce the carrying value of the net assets of the
kraft papers business to their estimated fair value, a net $12 million
pre-tax credit ($3 million after taxes) related to smaller items, and
the operating results of the company's kraft papers, Brazilian coated
papers, wood products and beverage packaging businesses.
INTERNATIONAL PAPER COMPANY
Reconciliation of Earnings Before
Special Items to Net Earnings
(In millions except for per share amounts)
Three Months Three Months Nine Months
Ended Ended Ended
September 30, June 30, September 30,
2007 2006 2007 2007 2006
Earnings Before Special Items $243 $216 $223 $669 $419
Restructuring and other charges (26) (56) (16) (53) (115)
Insurance recoveries - - - - 12
Reversals of reserves no longer
required - - - - -
Net gains (losses) on sales and
impairments of businesses 1 44 (7) 258 (1,298)
Forestland sales 5 185 - 5 224
Impairment of goodwill - - - -
Interest income - - - 1 -
Income tax adjustments (3) (4) - (3) (7)
Earnings (Loss) Per Common Share from
Continuing Operations 220 385 200 877 (765)
Discontinued operations (3) (161) (10) (36) (164)
Net Earnings (Loss) as Reported $217 $224 $190 $841 $(929)
Three Months Three Months Nine Months
Ended Ended Ended
Diluted Earnings per Common Share September 30, June 30, September 30,
2007 2006 2007 2007 2006
Earnings Per Share Before Special
Items $0.57 $0.45 $0.52 $1.54 $0.87
Restructuring and other charges (0.05) (0.12) (0.04) (0.11) (0.24)
Insurance recoveries - - - - 0.02
Reversals of reserves no longer
required - - - - -
Net gains (losses) on sales and
impairments of businesses - 0.09 (0.02) 0.58 (2.67)
Forestland sales 0.01 0.38 - 0.01 0.46
Impairment of goodwill - - -
Interest Income - - - - -
Income tax adjustments (0.01) - - (0.01) (0.01)
Earnings (Loss) Per Common Share from
Continuing Operations 0.52 0.80 0.46 2.01 (1.57)
Discontinued operations (0.01) (0.34) (0.02) (0.08) (0.34)
Diluted Earnings (Loss) per Common
Share $0.51 $0.46 $0.44 $1.93 $(1.91)
Notes:
(1) The Company calculates Earnings Before Special Items by excluding the
after-tax effect of the adoption of new accounting standards and items
considered by management to be unusual from the net earnings (loss)
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 (loss) provides for a more complete analysis of the
results of operations by quarter. Net earnings (loss) is the most
directly comparable GAAP measure.
(2) Diluted earnings per common share reflect the inclusion of
contingently convertible securities in the computation.
(3) Certain 2006 amounts have been revised to reflect the retrospective
application of a change in accounting for planned major maintenance
activities.
(4) Since diluted earnings per share are computed independently for each
period, nine-month per share amounts may not equal the sum of the
respective quarters.
INTERNATIONAL PAPER COMPANY
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
Sales by Industry Segment
Three Months Three Months Nine Months
Ended Ended Ended
September 30, June 30, September 30,
2007 2006 2007 2007 2006
Printing Papers (2) $1,660 $1,610 (3) $1,610 $4,810 $5,225 (3)
Industrial Packaging 1,305 1,250 1,315 3,855 3,665
Consumer Packaging (2) 775 705 790 2,315 1,950
Distribution 1,880 1,730 1,720 5,275 5,070
Forest Products 120 135 90 295 575
Other Businesses (6) - 245 - 135 705
Corporate and Inter-
segment Sales (199) (246) (234) (636) (519)
Net Sales $5,541 $5,429 $5,291 $16,049 $16,671
Operating Profit by Industry Segment
Three Months Three Months Nine Months
Ended Ended Ended
September 30, June 30, September 30,
2007 2006(1) 2007 2007 2006(1)
Printing Papers (2) $307 $251 $249 $787 $573 (5)
Industrial Packaging 115 152 (4) 139 357 267 (4)
Consumer Packaging (2) 49 62 48 158 145 (5)
Distribution 40 34 38 107 97
Forest Products 99 166 98 297 516
Other Businesses (6) - 21 - 6 51
Operating Profit 610 686 572 1,712 1,649
Interest expense, net (77) (144) (80) (218) (441)
Minority interest (7) 4 - 6 15 5
Corporate items, net (188) (221) (179) (531) (580)
Restructuring and other
charges (42) (92) (26) (86) (189)
Insurance recoveries - - - - 19
Forestland sales 9 304 - 9 366
Net gains (losses) on sales
and impairments of
businesses (1) 61 1 314 (1,359)
Earnings (Loss) From
Continuing Operations Before
Income Taxes and Minority
Interest $315 $594 $294 $1,215 $(530)
(1) Prior-period information has been revised to reflect the retrospective
application of a change in accounting for planned major maintenance
activities.
(2) Reflects the reclassification of the European coated paperboard
business from Printing Papers to Consumer Packaging.
(3) Includes $140 million and $920 million for the three months and nine
months ended September 30, 2006, respectively, from the coated and
supercalendered paper business sold in 2006.
(4) Includes a 2006 third-quarter gain of $13 million before taxes related
to a sale of property in Spain.
(5) Includes a 2006 second-quarter credit of $8 million before taxes in
the Printing Papers segment for a tax settlement in Brazil and a
special charge of $8 million before taxes in the Consumer Packaging
segment for asset write-offs.
(6) Includes Arizona Chemical, European Distribution and certain smaller
businesses.
(7) 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 and minority interest.
INTERNATIONAL PAPER COMPANY
Sales Volume by Product (1) (2)
Preliminary and Unaudited
International Paper Consolidated
Three Months Three Months Nine Months
Ended Ended Ended
September 30, June 30, September 30,
2007 2006 2007 2007 2006
Printing Papers (In
thousands of short tons)
U.S. Uncoated Papers 940 1,002 949 2,871 3,019
European & Russian
Uncoated Papers 351 353 354 1,081 1,072
Brazilian Uncoated
Papers 225 (4) 121 198 (4) 567 (4) 353
Asian Uncoated Papers 6 4 7 18 12
Uncoated Papers 1,522 1,480 1,508 4,537 4,456
Coated Papers - 175 - - 1,168
Market Pulp (3) 348 282 337 1,020 856
Packaging (In thousands
of short tons)
Container of the
Americas 896 902 905 2,683 2,733
European Container
(Boxes) 274 293 298 879 939
Other Industrial and
Consumer Packaging 158 124 165 454 401
Industrial and Consumer
Packaging 1,328 1,319 1,368 4,016 4,073
Containerboard 466 451 457 1,315 1,385
Bleached Packaging
Board 514 (5) 369 496 (5) 1,501 (5) 1,065
Coated Bristols 105 101 103 308 311
Saturated and Bleached
Kraft Papers 61 62 63 177 196
Wood Products (In millions)
Panels (sq. ft. 3/8" -
basis) 0 0 0 0 0
Lumber (board feet) 0 0 0 0 0
(1) Sales volumes include third party and inter-segment sales.
(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 sales for the Luiz Antonio mill acquired in February 2007.
(5) Includes sales for International Paper & Sun Cartonboard Co., Ltd.
(in which International Paper acquired a 50% interest in the fourth
quarter of 2006).
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
September 30, December 31,
2007 2006
Assets
Current Assets
Cash and Temporary Investments $1,702 $1,624
Accounts and Notes Receivable, Net 3,080 2,704
Inventories 2,030 1,909
Assets of Businesses Held for Sale 21 1,778
Deferred Income Tax Assets 516 490
Other 156 132
Total Current Assets 7,505 8,637
Plants, Properties and Equipment, Net 9,842 8,993
Forestlands 735 259
Investments 608 641
Goodwill 3,652 2,929
Assets Held for Exchange - 1,324
Deferred Charges and Other Assets 1,373 1,251
Total Assets $23,715 $24,034
Liabilities and Common Shareholders'
Equity
Current Liabilities
Notes Payable and Current Maturities
of Long-Term Debt $586 $692
Liabilities of Businesses Held for Sale 5 333
Accounts Payable and Accrued Liabilities 3,438 3,616
Total Current Liabilities 4,029 4,641
Long-Term Debt 6,191 6,531
Deferred Income Taxes 2,751 2,233
Other Liabilities 2,567 2,453
Minority Interest 221 213
Common Shareholders' Equity
Invested Capital 3,802 4,226
Retained Earnings 4,154 3,737
Total Common Shareholders' Equity 7,956 7,963
Total Liabilities and Common
Shareholders' Equity $23,715 $24,034
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In Millions)
Nine Months Ended
September 30,
2007 2006
Operating Activities
Net earnings (loss) $841 $(929)
Discontinued operations, net of
taxes and minority interest 36 164
Earnings (loss) from
continuing operations 877 (765)
Depreciation, amortization and cost
of timber harvested 808 883
Deferred income tax expense, net 125 133
Restructuring and other charges 86 189
Payments related to restructuring
and legal reserves (60) (65)
Insurance recoveries - (19)
Net (gains) losses on sales and
impairments of businesses (314) 1,346
Gains on sales of forestlands (9) (366)
Periodic pension expense, net 158 283
Other, net 143 184
Changes in current assets and
liabilities
Accounts and notes receivable (6) (249)
Inventories (95) (32)
Accounts payable and accrued
liabilities (318) 152
Other 1 (182)
Cash provided by operations -
continuing operations 1,396 1,492
Cash (used for) provided by
operations - discontinued operations (56) 146
Cash Provided by Operations 1,340 1,638
Investment Activities
Invested in capital projects (804) (764)
Acquisitions, net of cash acquired (216) -
Proceeds from divestititures 1,675 2,163
Other (135) (241)
Cash provided by investment
activities - continuing operations 520 1,158
Cash used for investment activities -
discontinued operations (12) (57)
Cash Provided by Investment
Activities 508 1,101
Financing Activities
Repurchases of common stock (1,124) (1,385)
Issuance of common stock 122 26
Issuance of debt 15 1,258
Reduction of debt (528) (3,156)
Change in book overdrafts (3) (50)
Dividends paid (330) (372)
Other - (2)
Cash used for financing activities -
continuing operations (1,848) (3,681)
Cash provided by financing activities
- discontinued operations - 22
Cash Used for Financing Activities (1,848) (3,659)
Effect of Exchange Rate Changes on
Cash 78 15
Change in Cash and Temporary
Investments 78 (905)
Cash and Temporary Investments
Beginning of the period 1,624 1,641
End of the period $1,702 $736
SOURCE International Paper
CONTACT:
Media, Amy Sawyer,
+1-901-419-4312,
or
Investors,
Tom Cleves,
+1-901-419-7566,
or
Ann-Marie Donaldson,
+1-901-419-4967,
all of International
Paper
