THE INFORMATION IN THIS PRESS RELEASE IS NO LONGER CURRENT. PLEASE SEE THE 8-K FILED ON FEBRUARY 26, 2009, AND THE 10-K FOR YEAR ENDED DECEMBER 31, 2008, FOR UPDATED FINANCIAL INFORMATION.
MEMPHIS, Tenn., Jan. 29 /PRNewswire-FirstCall/ -- International Paper
(NYSE: IP) preliminary full-year 2008 net earnings totaled $57 million ($0.13
per share) compared with $1.2 billion ($2.70 per share) in 2007. In the fourth
quarter of 2008, the company reported a net loss of $452 million ($1.07 per
share) compared with earnings of $327 million ($0.78 per share) in the fourth
quarter of 2007. Amounts in all periods include special items, including a
$438 million ($1.04 per share) goodwill impairment charge in the 2008 periods.
Diluted Earnings Per Share Summary
Fourth Fourth Full Year Full Year
Quarter Quarter 2008 2007
2008 2007
Net Earnings (Loss) ($1.07) $0.78 $0.13 $2.70
Less - Discontinued
Operations (Gain) Loss (0.01) 0.02 0.03 0.11
Earnings (Loss) from
Continuing Operations (1.08) 0.80 0.16 2.81
Add Back - Net Special
Items Expense (Income) 1.29 (0.11) 1.85 (0.59)
Earnings from Continuing
Operations and Before
Special Items $0.21 $0.69 $2.01 $2.22
Full-year 2008 earnings from continuing operations and before special
items were $855 million ($2.01 per share) compared with $963 million ($2.22
per share) in 2007. Earnings from continuing operations and before special
items in the 2008 fourth quarter totaled $89 million ($0.21 per share),
compared with $294 million ($0.69 per share) in the fourth quarter of 2007.
Quarterly net sales rose to $6.5 billion from $5.8 billion in the fourth
quarter of 2007. Annual sales increased to $24.8 billion compared with $21.9
billion in 2007.
Operating profits in the fourth quarter were $132 million, down from $566
million in the fourth quarter of 2007. Full-year 2008 operating profits were
$1.4 billion compared with $1.9 billion in 2007.
At year end, International Paper had $1.1 billion in cash and $2.5 billion
in committed liquidity facilities, and increased its free cash flow in 2008 to
about $1.7 billion, or about 160 percent over 2007 levels, by reducing capital
spending, focusing on working capital management and reducing overhead
spending. In 2009, the company is taking additional measures to improve its
cash position including continuing to reduce capital spending, suspending 2009
merit raises for U.S. salaried employees and matching company contributions to
the Salaried Savings Plan with shares of company stock rather than with cash.
"International Paper had a solid year overall despite a weak fourth
quarter," said International Paper Chairman and Chief Executive Officer John
Faraci. "Free cash flow for the year was an all-time record and continued to
be strong in the fourth quarter despite a severe contraction of global demand,
particularly in North America. We started to take action early in 2008 and
continued to focus on maintaining solid free cash flow in the current
difficult environment."
SEGMENT INFORMATION
Fourth-quarter 2008 segment operating profits and business trends compared
with the prior-year are as follows:
Printing Papers had an operating loss of $40 million (including charges
totaling $153 million for shutdown costs for the Louisiana Mill and Franklin
#3 paper machine) compared to operating profit of $243 million in the fourth
quarter of 2007 driven by significant demand declines in the global paper and
pulp markets. Pricing was improved in the papers business but declined for
pulp. Strong operations at European paper mills were not enough to offset weak
volume, particularly in the Russian market.
Industrial Packaging operating profits increased to $111 million
(including $34 million of charges for Weyerhaeuser packaging business
integration and the closure of the Ace Packaging business), up from $109
million in the prior-year quarter. Despite the recent significant demand
declines in the containerboard and box businesses, price realizations were
improved over last year's fourth quarter and volume was up due to the
Weyerhaeuser packaging acquisition. Input costs were higher in this year's
quarter. The European box business was able to grow market share even while
encountering lower volumes.
Consumer Packaging had an operating loss of $3 million (including $4
million of costs related to the reorganization of Shorewood's Canadian
operations) compared with operating profits of $15 million in the fourth
quarter of 2007, as price realizations in Foodservice and Coated Paperboard
did not offset input costs and weak demand.
The company's distribution business, xpedx, reported operating profits of
$26 million, lower than the $28 million posted in the fourth quarter of 2007
due to weakened paper and packaging volumes.
Forest Products operating profits totaled $38 million, down from $171
million in the prior-year quarter, as the company's land sales slowed due to
the economic downturn. The company has approximately 200,000 acres of land
remaining for sale, primarily composed of smaller retail and larger
transitional tracts.
Net corporate expense totaled $21 million for the 2008 fourth quarter,
down from $40 million in the 2008 third quarter and $56 million in the 2007
fourth quarter, reflecting lower pension expenses.
EFFECTIVE TAX RATE
The effective tax rate from continuing operations and before special items
for the fourth quarter of 2008 was 23 percent, compared with 31 percent in the
fourth quarter of 2007. The 2008 full-year tax rate was 31.5 percent compared
with 30 percent for the 2007 full year.
EFFECTS OF SPECIAL ITEMS
Special items in the fourth quarter of 2008 included a pre-tax charge of
$244 million ($148 million after taxes) for restructuring and other charges, a
$438 million charge, before and after taxes, for impairment of goodwill for
the company's U.S. and European coated paperboard businesses, 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 cost reduction initiative,
an $8 million pre-tax charge ($5 million after taxes) related to the closure
of the company's Ace Packaging business, a $4 million pre-tax charge ($2
million after taxes) associated with the reorganization of Shorewood
operations in Canada, and a pre-tax charge of $26 million ($16 million after
taxes) for costs related to the integration of the Weyerhaeuser packaging
business. Final detailed goodwill impairment testing will be completed in the
2009 first quarter and could result in an additional impairment charge of up
to $1.3 billion.
Special items in the third quarter of 2008 included a pre-tax charge of
$107 million ($84 million after taxes) to write down the assets of the
Inverurie, Scotland, mill to its estimated fair value, a $155 million pre-tax
charge ($96 million after taxes) for restructuring and other charges, a $3
million pre-tax credit ($2 million after taxes) for adjustments to estimated
transaction costs accrued in connection with 2006 transformation plan
forestland sales, and a $29 million income tax charge relating to estimated
U.S. taxes on a gain in the company's Ilim joint venture. Restructuring and
other charges included a $35 million pre-tax charge ($22 million after taxes)
for costs associated with the company's hardboard siding and roofing legal
settlements, a $53 million pre-tax charge ($33 million after taxes) to write
off supply chain initiative development costs following a decision not to
implement the initiative in the U.S. container business, an $8 million pre-tax
charge ($5 million after taxes) associated with the reorganization of
Shorewood operations in Canada, pretax charges of $39 million ($24 million
after taxes) and $19 million ($12 million after taxes) relating to the
write-up of inventories in connection with the Weyerhaeuser packaging
acquisition and integration costs, and a $1 million pre-tax charge ($0 million
after taxes) for severance costs associated with the company's transformation
plan. The net after-tax effect of these special items is a loss of $207
million, or $0.49 per share.
Special items in the fourth quarter of 2007 include a pre-tax charge of $9
million ($6 million after taxes) for charges relating to the company's
transformation plan and an Ohio tax adjustment, as well as a $13 million
pre-tax gain ($9 million after taxes) for adjustments to estimated
gains/losses of production facilities previously sold. Additionally, a $41
million net income tax benefit was recorded relating to the effective
settlement of certain tax audit issues. The net after-tax effect of these
special items is a gain of $44 million, or $0.11 per share.
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 78316443.
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 "78316443."
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 61,500 people in more than 20 countries and serves customers worldwide.
2008 net sales were approximately $25 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) the company's ability to realize anticipated profit
improvement from its transformation plan, including our ability to realize the
expected benefits of our acquisition of the assets of Weyerhaeuser Company's
containerboard, packaging and recycling business in light of integration
difficulties and other challenges; (ii) increases in interest rates and our
ability to meet our debt service obligations; (iii) industry conditions,
including but not limited to changes in the cost or availability of raw
materials and energy, transportation costs, competition we face, the company's
product mix, demand and pricing for its products; (iv) global economic
conditions and political changes, including but not limited to changes in
currency exchange rates, credit availability, the company's credit ratings
issued by recognized credit rating organizations and pension and health care
costs; (v) unanticipated expenditures related to the cost of compliance with
environmental and other governmental regulations and to actual or potential
litigation; and (vi) whether we experience a material disruption at one of our
manufacturing facilities. 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 Three Months
Ended Ended
December 31, September 30,
2008 2007 2008
Net Sales $6,546 $5,841 $6,808
Costs and Expenses
Cost of products sold 5,022 4,242 5,154 (j)
Selling and administrative expenses 509 (a) 500 507 (k)
Depreciation, amortization and cost
of timber harvested 382 278 374
Distribution expenses 324 269 376
Taxes other than payroll and income
taxes 46 38 48
Restructuring and other charges 218 (b) 9 (f) 97 (l)
Gain on sale of mineral rights - - (261)
Forestland sales - - (3) (m)
Impairment of goodwill 438 (c) - -
Net (gains) losses on sales and
impairments of businesses - (13) (g) 107 (n)
Interest expense, net 186 79 144
Earnings (Loss) From Continuing
Operations Before Income Taxes,
Equity Earnings and Minority
Interest (579) (a-c) 439 (f,g) 265 (j-n)
Income tax provision (benefit) (112) (d) 94 (h) 118
Equity earnings, net of taxes (2) - 5
Minority interest expense, net of
taxes (12) 7 3
Earnings (Loss) From Continuing
Operations (457) (a-d) 338 (f-h) 149 (j-n)
Discontinued operations, net of
taxes and minority interest 5 (e) (11) (i) -
Net Earnings (Loss) $(452) (a-e) $327 (f-i) $149 (j-n)
Basic Earnings Per Common Share
Earnings (loss) from continuing
operations $(1.08)(a-d) $0.80 (f-h) $0.35 (j-n)
Discontinued operations 0.01 (e) (0.02)(i) -
Net earnings (loss) $(1.07)(a-e) $0.78 (f-i) $0.35 (j-n)
Diluted Earnings Per Common Share
Earnings (loss) from continuing
operations $(1.08)(a-d) $0.80 (f-h) $0.35 (j-n)
Discontinued operations 0.01 (e) (0.02)(i) -
Net earnings (loss) $(1.07)(a-e) $0.78 (f-i) $0.35 (j-n)
Average Shares of Common Stock
Outstanding - Diluted 422.3 423.8 423.4
Cash Dividends Per Common Share $0.25 $0.25 $0.25
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)
Twelve Months Ended
December 31,
2008 2007
Net Sales $24,829 $21,890
Costs and Expenses
Cost of products sold 18,742 (j) 16,060
Selling and administrative expenses 1,947 (o) 1,831
Depreciation, amortization and cost
of timber harvested 1,347 1,086
Distribution expenses 1,286 1,034
Taxes other than payroll and income
taxes 182 169
Restructuring and other charges 370 (p) 95 (r)
Gain on sale of mineral rights (261) -
Forestland sales (6) (m) (9) (s)
Impairment of goodwill 438 (c) -
Net (gains) losses on sales and
impairments of businesses 106 (n) (327) (t)
Interest expense, net 492 297
Earnings (Loss) From Continuing
Operations Before Income Taxes,
Equity Earnings and Minority
Interest 186 (c,j,m-p) 1,654 (r-t)
Income tax provision (benefit) 162 (d) 415 (h)
Equity earnings, net of taxes 49 -
Minority interest expense, net of
taxes 3 24
Earnings (Loss) From Continuing
Operations 70 (c,d,j,m-p) 1,215 (h,r-t)
Discontinued operations, net of
taxes and minority interest (13) (q) (47) (u)
Net Earnings (Loss) $57 (c,d,j,m-q) $1,168 (h,r-u)
Basic Earnings Per Common Share
Earnings (loss) from continuing
operations $0.17 (c,d,j,m-p) $2.83 (h,r-t)
Discontinued operations (0.03) (q) (0.11) (u)
Net earnings (loss) $0.14 (c,d,j,m-q) $2.72 (h,r-u)
Diluted Earnings Per Common Share
Earnings (loss) from continuing
operations $0.16 (c,d,j,m-p) $2.81 (h,r-t)
Discontinued operations (0.03) (q) (0.11) (u)
Net earnings (loss) $0.13 (c,d,j,m-q) $2.70 (h,r-u)
Average Shares of Common Stock
Outstanding - Diluted 424.6 433.0
Cash Dividends Per Common Share $1.00 $1.00
The accompanying notes are an integral part of these financial
statements.
(a) Includes a pre-tax charge of $26 million ($16 million after taxes) for
integration costs associated with the acquisition of Weyerhaeuser
Company's Containerboard, Packaging and Recycling Business (CBPR).
(b) 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.
(c) Includes 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.
(d) Includes a $40 million tax benefit for a reduction in deferred taxes
related to the restructuring of the Company's international
operations.
(e) Includes pre-tax gains of $9 million ($5 million after taxes) for
adjustments to reserves associated with the sale of discontinued
businesses.
(f) Includes a pre-tax charge of $4 million ($3 million after taxes) for
asset write-offs at the Pensacola mill, a pre-tax charge of $14
million ($9 million after taxes) for severance and other charges
associated with the Company's Transformation Plan, and a pre-tax gain
of $9 million ($6 million after taxes) for an Ohio Commercial Activity
Tax adjustment.
(g) Includes a pre-tax gain of $7 million ($5 million after taxes) for an
adjustment to the loss on the sale of box plants in the United Kingdom
and Ireland, a pre-tax gain of $5 million ($3 million after taxes) for
an adjustment to the loss on the sale of the Marasquel mill, and a net
pre-tax gain of $1 million ($1 million after taxes) for other items.
(h) Includes a $41 million tax benefit relating to the effective
settlement of certain income tax audit issues.
(i) Includes a pre-tax charge of $9 million ($5 million after taxes) for
the beverage packaging business and a pre-tax gain of $4 million ($3
million after taxes) for the wood products business for adjustments
related to the sale of those businesses, a pre-tax charge of $4
million ($3 million after taxes) for additional taxes associated with
the sale of Weldwood of Canada Limited, and the quarterly operating
results of the wood products business.
(j) 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.
(k) Includes a pre-tax charge of $19 million ($12 million after taxes) for
integration costs associated with the CBPR acquisition.
(l) Includes a pre-tax charge of $35 million ($22 million after taxes) for
an adjustment to legal reserves, a pre-tax charge of $8 million ($5
million after taxes) for costs associated with the reorganization of
the Company's Shorewood operations in Canada, 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, and a pre-tax charge
of $1 million ($0 million after taxes) for severance costs associated
with the Company's Transformation Plan.
(m) Reflects adjustments of estimated transaction costs accrued in
connection with the 2006 Transformation Plan forestland sales.
(n) 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.
(o) Includes a pre-tax charge of $45 million ($28 million after taxes) for
integration costs associated with the CBPR acquisition.
(p) 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 pre-tax gain
of $2 million ($2 million after taxes) for adjustments to previously
recorded reserves and other charges associated with the Company's
Transformation Plan.
(q) 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.
(r) Includes a pre-tax charge of $27 million ($17 million after taxes) of
accelerated depreciation charges for the Terre Haute mill, which has
been closed as part of the Company's Transformation Plan, a pre-tax
charge of $10 million ($6 million after taxes) for environmental costs
associated with this closure, a pre-tax charge of $4 million
($2 million after taxes) for Brazilian restructuring charges,
accelerated depreciation charges of $33 million ($21 million after
taxes) for long-lived assets being removed from service, $30 million
($19 million after taxes) for severance and other charges associated
with the Company's Transformation Plan, and a pre-tax gain of $9
million ($6 million after taxes) for an Ohio Commercial Activity Tax
adjustment.
(s) 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.
(t) 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 pre-tax gain of $5 million
($3 million after taxes) for an adjustment to the loss on the sale of
the Marasquel mill, 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 $1 million net pre-tax loss
($1 million after taxes) for other items.
(u) Includes a pre-tax gain of $20 million ($8 million after taxes)
relating to the sale of the wood products business, a pre-tax loss of
$30 million ($48 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 net $6 million pre-tax credit
($4 million after taxes) relating to the Company's Weldwood of Canada
Limited business, and the year-to-date operating results of the
beverage packaging and wood products businesses.
International Paper Company
Reconciliation of Earnings Before
Special Items to Net Earnings
(In millions except for per share amounts)
Three
Three Months Months Twelve Months
Ended Ended Ended
December 31, September December 31,
30,
2008 2007 2008 2008 2007
Earnings Before Special Items $89 $294 $356 $855 $963
Restructuring and other charges (148) (6) (96) (279) (59)
Net gains (losses) on sales and
impairments of businesses - 9 (84) (83) 267
Forestland sales - - 2 4 5
Impairment of goodwill (438) - (438) -
Interest income - - - - 1
Income tax adjustments 40 41 (29) 11 38
Earnings (Loss) from Continuing
Operations (457) 338 149 70 1,215
Discontinued operations 5 (11) - (13) (47)
Net Earnings (Loss) as Reported $(452) $327 $149 $57 $1,168
Three
Three Months Months Twelve Months
Ended Ended Ended
December 31, September December 31,
30,
2008 2007 2008 2008 2007
Diluted Earnings per Common Share
Earnings Per Share Before Special
Items $0.21 $0.69 $0.84 $2.01 $2.22
Restructuring and other charges (0.35) (0.03) (0.23) (0.66) (0.15)
Net gains (losses) on sales and
impairments of businesses - 0.02 (0.20) (0.19) 0.62
Forestland sales - - - 0.01 0.01
Impairment of goodwill (1.04) - - (1.04) -
Income tax adjustments 0.10 0.12 (0.06) 0.03 0.11
Earnings (Loss) Per Common Share
from Continuing Operations (1.08) 0.80 0.35 0.16 2.81
Discontinued operations 0.01 (0.02) - (0.03) (0.11)
Diluted Earnings (Loss) per Common
Share $(1.07) $0.78 $0.35 $0.13 $2.70
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
Three Months Months Twelve Months
Ended Ended Ended
December 31, September December 31,
30,
2008 2007 2008 2008 2007
Printing Papers $1,505 $1,720 $1,800 $6,810 $6,530
Industrial Packaging 2,455 1,390 2,320 7,690 5,245
Consumer Packaging 800 780 830 3,195 3,015
Distribution 1,940 2,045 2,075 7,970 7,320
Forest Products 65 190 55 200 485
Other Businesses (6) - - - - 135
Corporate and Inter-segment Sales (219) (284) (272) (1,036) (840)
Net Sales $6,546 $5,841 $6,808 $24,829 $21,890
Operating Profit by Industry Segment
Three
Three Months Months Twelve Months
Ended Ended Ended
December 31, September December 31,
30,
2008 2007(2) 2008 2008 2007(2)
Printing Papers $(40)(3) $243 $103(3) $474(3) $839
Industrial Packaging 111 (4) 109 95(4) 390(4) 374
Consumer Packaging (3)(5) 15 (2)(5) 17(5) 112
Distribution 26 28 35 103 108
Forest Products 38 171 305 409 458
Other Businesses (6) - - - - 6
Operating Profit (1) 132 566 536 1,393 1,897
Interest expense, net (186) (79) (144) (492) (297)
Minority interest/
equity earnings
adjustment (7) (14) 4 (1) (3) 19
Corporate items, net (21) (56) (40) (103) (206)
Restructuring and
other charges (52) (9) (89) (178) (95)
Sale of forestlands - - 3 6 9
Impairments of
goodwill (438) - - (438) -
Net gains on sales
and impairments of
businesses - 13 - 1 327
Earnings From
Continuing Operations
Before Income Taxes,
Equity Earnings, and
Minority Interest $(579) $439 $265 $186 $1,654
Equity Earnings in
Ilim Holdings S.A.,
Net of Taxes (1) $- $- $5 $54 $-
(1) In addition to the operating profits shown above, International Paper
recorded equity earnings, net of taxes, of $0 million for the three
months ended December 31, 2008, $5 million for the three months ended
September 30, 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) Prior-year information has been revised to reflect a change in the
allocation of corporate overhead to the Company's industry segments.
(3) Includes charges of $123 million and $30 million for the three 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 three months ended September 30, 2008 to
write down the assets of the Inverurie, Scotland mill to estimated
fair value.
(4) Includes charges of $26 million and $19 million for the three months
ended December 31, 2008 and September 30, 2008, respectively, for CBPR
integration costs, $8 million for the three months ended December 31,
2008 for Ace Packaging closure costs, and $39 million for the three
months ended September 30, 2008 relating to the write-up of inventory
to fair value in connection with the CBPR acquisition.
(5) Includes charges of $4 million for the three months ended December 31,
2008, $8 million for the three months ended September 30, 2008, and
$30 million for the twelve months ended December 31, 2008, related to
the reorganization of the Company's Shorewood operations in Canada.
(6) Includes Arizona Chemical 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 and equity earnings for these subsidiaries are included here
to present consolidated earnings before income taxes, equity earnings,
and minority interest.
International Paper
Sales Volume by Product (1) (2)
Preliminary and Unaudited
International Paper Consolidated
Three
Three Months Months Twelve Months
Ended Ended Ended
December 31, September December 31,
30,
2008 2007 2008 2008 2007
Printing Papers (In thousands of
short tons)
U.S. Uncoated Papers 744 917 875 3,397 3,788
European & Russian Uncoated Papers 360 367 355 1,461 1,448
Brazilian Uncoated Papers 215 227 217 853 794
Asian Uncoated Papers 6 6 6 27 24
Uncoated Papers 1,325 1,517 1,453 5,738 6,054
Market Pulp (3) 386 382 448 1,604 1,402
Industrial Packaging (In thousands
of short tons)
Corrugated Packaging (4) 1,879 895 1,641 5,298 3,578
Containerboard (4) 619 461 686 2,305 1,776
Recycling (4) 569 - 397 966 -
Saturated Kraft 40 43 45 170 167
Bleached Kraft 17 20 24 82 73
European Industrial Packaging 279 294 261 1,123 1,173
Asia Industrial Packaging 125 148 154 568 477
Industrial Packaging 3,528 1,861 3,208 10,512 7,244
Consumer Packaging (In thousands of
short tons)
U.S. Coated Paperboard 389 402 403 1,591 1,602
European Coated Paperboard 76 82 81 311 320
Asia Coated Paperboard 164 125 138 550 496
Other Consumer Packaging 42 39 48 178 164
Consumer Packaging 671 648 670 2,630 2,582
(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
CONSOLIDATED BALANCE SHEET
Preliminary and Unaudited
(In Millions)
December 31, December 31,
2008 2007
Assets
Current Assets
Cash and Temporary Investments $1,144 $905
Accounts and Notes Receivable, Net 3,288 3,152
Inventories 2,495 2,071
Deferred Income Tax Assets 261 213
Other 172 394
Total Current Assets 7,360 6,735
Plants, Properties and Equipment, Net 14,202 10,141
Forestlands 594 770
Investments 1,274 1,276
Goodwill 3,366 3,650
Deferred Charges and Other Assets 1,456 1,587
Total Assets $28,252 $24,159
Liabilities and Common Shareholders'
Equity
Current Liabilities
Notes Payable and Current
Maturities of Long-Term Debt $828 $267
Accounts Payable and Accrued
Liabilities 3,927 3,575
Total Current Liabilities 4,755 3,842
Long-Term Debt 11,246 6,353
Deferred Income Taxes 1,957 2,919
Pension Benefit Obligation 3,255 317
Postretirement and Postemployment
Benefit Obligation 636 682
Other Liabilities 663 1,146
Minority Interest 232 228
Common Shareholders' Equity
Invested Capital 1,508 4,297
Retained Earnings 4,000 4,375
Total Common Shareholders' Equity 5,508 8,672
Total Liabilities and Common
Shareholders' Equity $28,252 $24,159
INTERNATIONAL PAPER
CONSOLIDATED STATEMENT OF CASH FLOWS
Preliminary and Unaudited
(In Millions)
Years Ended
December 31,
2008 2007
Operating Activities
Net earnings $57 $1,168
Discontinued operations, net of taxes
and minority interest 13 47
Earnings from continuing operations 70 1,215
Depreciation, amortization and cost of
timber harvested 1,347 1,086
Deferred income tax (benefit) expense, net (78) 232
Restructuring and other charges 370 95
Payments related to restructuring and legal
reserves (86) (78)
Net losses (gains) on sales and impairments
of businesses 106 (327)
Gains on sales of forestlands (3) (9)
Equity earnings, net (48) -
Periodic pension expense, net 123 210
Impairments of goodwill 438 -
Other, net 141 63
Changes in current assets and liabilities
Accounts and notes receivable 451 (141)
Inventories 48 (82)
Accounts payable and accrued liabilities (317) (212)
Interest payable (31) 122
Other 166 (226)
Cash provided by operations -
continuing operations 2,697 1,948
Cash used for operations -
discontinued operations - (61)
Cash Provided by Operations 2,697 1,887
Investment Activities
Invested in capital projects (1,002) (1,292)
Acquisitions, net of cash received (6,086) (239)
Proceeds from divestitures 14 1,675
Equity investment in Ilim (21) (578)
Other (130) -
Cash (used for) provided by investment
activities - continuing operations (7,225) (434)
Cash used for investment activities -
discontinued operations - (12)
Cash (Used for) Provided by Investment
Activities (7,225) (446)
Financing Activities
Issuance of common stock 1 128
Repurchases of common stock and payments
of restricted stock tax withholding (47) (1,224)
Issuance of debt 6,024 78
Reduction of debt (696) (875)
Change in book overdrafts (36) 77
Dividends paid (428) (436)
Other 41 -
Cash Provided by (Used for) Financing
Activities 4,859 (2,252)
Effect of Exchange Rate Changes on Cash (92) 92
Change in Cash and Temporary Investments 239 (719)
Cash and Temporary Investments
Beginning of the period 905 1,624
End of the period $1,144 $905
SOURCE International Paper
CONTACT:
Media: Kathleen Bark, +1-901-419-4333
Investors: Tom Cleves,
+1-901-419-7566
Ann-Marie Donaldson, +1-901-419-4967
and Emily Nix,
+1-901-419-4987, all of International Paper
Web site: http://www.internationalpaper.com/
