International Paper Reports Fourth-Quarter and 2010 Earnings
MEMPHIS, Tenn., Feb. 3, 2011 /PRNewswire/ – International Paper (NYSE: IP) reported preliminary full-year 2010 net earnings attributable to common shareholders totaling $644 million ($1.48 per share) compared with $663 million ($1.55 per share) in full-year 2009. In the fourth quarter of 2010, the company reported net earnings of $316 million ($0.73 per share) compared with a net loss of $101 million ($0.24 per share) in the fourth quarter of 2009. Amounts in all periods include special items.
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Diluted Earnings Per Share Attributable to International Paper
Shareholders
--------------------------------------------------------------
Fourth Fourth Full
Quarter Quarter Full Year Year
2010 2009 2010 2009
------- ------- --------- -----
Net Earnings (Loss) $0.73 ($0.24) $1.48 $1.55
Add Back - Net Special
Items Expense (Income) (0.05) 0.48 0.57 (0.67)
----- ---- ---- -----
Earnings from Continuing
Operations and Before
Special Items $0.68 $0.24 $2.05 $0.88
===== ===== ===== =====
Full-year 2010 earnings from continuing operations and before special items were $890 million ($2.05 per share) compared with $378 million ($0.88 per share) in 2009. Earnings from continuing operations and before special items in the 2010 fourth quarter totaled $296 million ($0.68 per share), compared with $101 million ($0.24 per share) in the fourth quarter of 2009.
Quarterly net sales were $6.5 billion compared with $6.0 billion in the fourth quarter of 2009. Annual sales totaled $25.2 billion compared with $23.4 billion in 2009.
Operating profits in the fourth quarter were $561 million compared with a loss of $147 million in 2009, both of which included special items. Full-year 2010 operating profits were $1.7 billion compared with $2.4 billion in 2009.
The company repaid $350 million of debt during 2010 and contributed $1.2 billion toward its pension plan. At year end, the company had $2.1 billion in cash.
“Our year-over-year fourth quarter operating business earnings were strong with solid revenue growth and margin expansion across IP business segments. We also continued to generate strong cash flow,” said Chairman and Chief Executive Officer John Faraci. “International Paper performed well during 2010, a year of transition from recession to global economic growth. We expect to further build on our strong earnings and free cash flow momentum in 2011.”
SEGMENT INFORMATION
To measure the performance of the company’s business segments from quarter to quarter without variations caused by special items, management focuses on business segment operating profits excluding those items. Fourth-quarter 2010 segment operating profits and business trends, excluding special items, compared with the prior quarter are as follows (special items were immaterial in the 2010 third quarter).
Industrial Packaging had an operating profit of $274 million ($261 million including special items) compared to an operating profit of $332 million in the third quarter of 2010. Quarterly earnings drivers included modestly higher box prices, offset by seasonally lower box demand, higher mill and fiber costs.
Printing Papers had an operating profit of $236 million ($234 million including special items) compared to an operating profit of $278 million in the third quarter of 2010. Included in the 2010 third quarter was $16 million from the recovery of bad debt. The segment was impacted by seasonally higher energy usage and seasonally lower uncoated freesheet and market pulp demand in North America, partly offset by seasonally higher demand in Brazil.
Consumer Packaging had an operating profit of $64 million ($60 million including special items) compared to an operating profit of $71 million in the third quarter of 2010. Fourth quarter performance was lower than in the third quarter due to seasonally lower sales volumes and higher planned maintenance outages in Coated Paperboard partially offset by increased selling prices. Foodservice reported strong earnings.
xpedx, the company’s distribution business, reported operating profits of $9 million for the fourth quarter of 2010, compared to $22 million posted in the third quarter of 2010. Fourth quarter performance includes one-time costs of exiting certain retail store and printing equipment segments and year-end inventory valuation adjustments.
Forest Products earnings were not meaningful since we sold our remaining land portfolio in North America during the third quarter of 2010. Beginning in 2011, Forest Products will no longer be reported as a separate industry segment.
Net corporate expenses for the 2010 fourth quarter totaled $63 million, compared with $58 million in the 2010 third quarter and $40 million in the fourth quarter of 2009. The increase from the 2009 fourth quarter reflects higher supply chain initiative and pension expenses in 2010.
EFFECTIVE TAX RATE
The effective tax rate from continuing operations and before special items for the fourth quarter of 2010 was 28 percent, compared with 31 percent in the third quarter of 2010. The lower fourth quarter rate is a result of the passage on December 17, 2010, of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This extended the research and development tax credit and the non-taxability of certain dividend payments between related controlled foreign corporations. The 2010 full year tax rate was 30 percent compared with 30 percent for the 2009 full year.
EFFECTS OF SPECIAL ITEMS
Special items in the fourth quarter of 2010 included pre-tax charges of $35 million ($22 million after taxes) for restructuring and other charges, a pre-tax gain of $25 million ($15 million after taxes) related to the partial redemption of the Company’s interests in Arizona Chemical, an $18 million pre-tax charge ($11 million after taxes) for an environmental reserve related to the Company’s property in Cass Lake, Minnesota , a charge of $2 million (before and after taxes) for asset impairment costs associated with the Inverurie, Scotland mill which was closed in 2009 and a net $40 million tax benefit related to cellulosic bio-fuel tax credits. Restructuring and other charges included pre-tax charges of $12 million ($7 million after taxes) for closure costs for the Bellevue, Washington and Spartanburg, South Carolina box plant closures, a pre-tax charge of $13 million ($8 million after taxes) for early debt extinguishment costs, a pre-tax charge of $5 million ($3 million after taxes) for severance and benefit costs associated with the Company’s 2008 overhead cost reduction initiative, a pre-tax charge of $4 million ($3 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations, a pre-tax charge of $3 million ($2 million after taxes) for closure costs for three box plants in Asia and a pre-tax gain of $2 million ($1 million after taxes) for other items.
Special items in the third quarter of 2010 were immaterial.
Special items in the fourth quarter of 2009 included a $516 million pre-tax credit ($469 million after taxes) for alternative fuel mixture credits earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce renewable energy to operate their businesses, a $15 million pre-tax charge ($10 million after taxes) for costs associated with the Industrial Packaging business integration, a pre-tax charge of $1.0 billion ($638 million after taxes) for restructuring and other charges, and an $11 million pre-tax charge ($8 million after taxes) for net losses on sales and impairments of businesses. Restructuring and other charges included a pre-tax charge of $861 million ($525 million after taxes) for shutdown costs for the closures of the Albany, Oregon, Franklin, Virginia and Pineville, Louisiana mills announced in the fourth quarter of 2009; a pre-tax charge of $82 million ($50 million after taxes) for the shutdown of a paper machine at the Valliant, Oklahoma mill; a pre-tax charge of $58 million ($35 million after taxes) for early debt extinguishment costs; a pre-tax charge of $23 million ($15 million after taxes) for severance and benefit costs associated with the company’s 2008 overhead reduction program; a $9 million charge, before and after taxes, for severance and other costs associated with the planned closure of the Etienne mill in France; and pre-tax charges of $7 million ($4 million after taxes) for costs associated with the reorganizations of the company’s Shorewood and xpedx operations. Additionally, a $15 million income tax expense was recorded to write off a deferred tax asset for a recycling credit in the state of Louisiana. The net after-tax effect of these special items is a loss of $202 million, or $0.48 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 34891863. 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 34891863.
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 59,500 people in more than 20 countries and serves customers worldwide. 2010 net sales were more than $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) increases in interest rates; (ii) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality and changes in consumer preferences, demand and pricing for its products; (iii) global economic conditions and political changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit ratings issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and pension and health care costs; (iv) unanticipated expenditures related to the cost of compliance with existing and new environmental and other governmental regulations and to actual or potential litigation; and (v) whether we experience a material disruption at one of our manufacturing facilities and risks inherent in conducting business through a joint venture. 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 Ended
December 31,
------------
2010 2009
---- ----
Net Sales $6,531 $5,977
------ ------
Costs and Expenses
Cost of products sold 4,770 (a) 3,950 (e)
Selling and administrative
expenses 533 496 (f)
Depreciation, amortization and
cost of timber harvested 360 384
Distribution expenses 332 318
Taxes other than payroll and
income taxes 42 43
Restructuring and other charges 35 (b) 1,040 (g)
Net losses on sales and
impairments of businesses (23) (c) 11 (h)
Interest expense, net 150 163
--- ---
Earnings (Loss) From Continuing
Operations Before Income Taxes
and Equity Earnings 332 (428) (e-h)
Income tax provision (benefit) 50 (d) (321) (i)
Equity earnings (losses), net of
taxes 37 10
--- ---
Net Earnings (Loss) $319 (a-d) $(97) (e-i)
Less: Net earnings attributable to
noncontrolling interests 3 4
--- ---
Net Earnings (Loss) Attributable
to International Paper Company $316 (a-d) $(101) (e-i)
==== =====
Basic Earnings (Loss) Per Common
Share Attributable to
International Paper Common
Shareholders $0.74 (a-d) $(0.24) (e-i)
===== ======
Diluted Earnings (Loss) Per Common
Share Attributable to
International Paper Common
Shareholders $0.73 (a-d) $(0.24) (e-i)
===== ======
Average Shares of Common Stock
Outstanding -Diluted 434.7 426.7
===== =====
Cash Dividends Per Common Share $0.125 $0.025
====== ======
Three Months
Ended
September 30,
2010
----
Net Sales $6,720
------
Costs and Expenses
Cost of products sold 4,758
Selling and administrative expenses 504
Depreciation, amortization and cost of timber
harvested 362
Distribution expenses 339
Taxes other than payroll and income taxes 58
Restructuring and other charges -
Net losses on sales and impairments of businesses -
Interest expense, net 152
---
Earnings (Loss) From Continuing Operations Before
Income Taxes and Equity Earnings 547
Income tax provision (benefit) 170
Equity earnings (losses), net of taxes 22
---
Net Earnings (Loss) $399
Less: Net earnings attributable to noncontrolling
interests 2
---
Net Earnings (Loss) Attributable to International
Paper Company $397
====
Basic Earnings (Loss) Per Common Share
Attributable to International Paper Common
Shareholders $0.92
=====
Diluted Earnings (Loss) Per Common Share
Attributable to International Paper Common
Shareholders $0.91
=====
Average Shares of Common Stock Outstanding -
Diluted 433.8
=====
Cash Dividends Per Common Share $0.125
======
Twelve Months Ended
December 31,
------------
2010 2009
---- ----
Net Sales $25,179 $23,366
------- -------
Costs and Expenses
Cost of products sold 18,482 (a) 15,220 (l)
Selling and administrative
expenses 1,930 2,031 (m)
Depreciation, amortization and
cost of timber harvested 1,456 1,472
Distribution expenses 1,318 1,175
Taxes other than payroll and
income taxes 192 188
Restructuring and other charges 394 (j) 1,353 (n)
Net losses on sales and
impairments of businesses (23) (c) 59 (o)
Interest expense, net 608 669
--- ---
Earnings (Loss) From Continuing
Operations Before Income Taxes (l-
and Equity Earnings 822 (a,c,j) 1,199 o)
Income tax provision (benefit) 221 (k) 469 (p)
Equity earnings (losses), net of
taxes 64 (49)
--- ---
(l-
Net Earnings (Loss) $665 (a,c,j,k) $681 p)
Less: Net earnings attributable
to noncontrolling interests 21 18
--- ---
Net Earnings (Loss) Attributable (l-
to International Paper Company $644 (a,c,j,k) $663 p)
==== ====
Basic Earnings (Loss) Per Common
Share Attributable to
International Paper Common (l-
Shareholders $1.50 (a,c,d,j,k) $1.56 p)
===== =====
Diluted Earnings (Loss) Per
Common Share Attributable to
International Paper Common (l-
Shareholders $1.48 (a,c,d,j,k) $1.55 p)
===== =====
Average Shares of Common Stock
Outstanding -Diluted 434.2 428.0
===== =====
Cash Dividends Per Common Share $0.400 $0.325
====== ======
The accompanying notes are an integral part of this consolidated
statement of operations.
(a) Includes a pre-tax charge of $18 million ($11 million after
taxes) for an environmental reserve related to the Company's
property in Cass Lake, Minnesota.
(b) Includes a pre-tax charge of $12 million ($7 million after
taxes) for closure costs for the Bellevue and Spartanburg box
plants, a pre-tax charge of $13 million ($8 million after taxes)
for early debt extinguishment costs, a pre-tax charge of $5 million
($3 million after taxes) for severance and benefit costs associated
with the Company's 2008 overhead cost reduction initiative, a pre-
tax charge of $4 million ($3 million after taxes) for costs
associated with the reorganization of the Company's Shorewood
operations, a pre-tax charge of $3 million ($2 million after taxes)
for costs associated with the shutdown of three box plants in Asia
and a net pre-tax gain of $2 million ($1 million after taxes) for
other items.
(c) Includes a pre-tax gain of $25 million ($15 million after
taxes) related to the partial redemption of the Company's interests
in Arizona Chemicals and a charge of $2 million (before and after
taxes) for asset impairment costs associated with the Inverurie,
Scotland mill which was closed in 2009.
(d) Includes a tax benefit of $40 million related to cellulosic bio-
fuel tax credits.
(e) Includes a pre-tax gain of $516 million ($469 million after
taxes) related to alternative fuel mixture credits.
(f) Includes a pre-tax charge of $15 million ($10 million after
taxes) for integration costs associated with the acquisition of the
Containerboard, Packaging and Recycling business (CBPR) in August
2008.
(g) Includes pre-tax charges of $469 million ($286 million after
taxes), $290 million ($177 million after taxes), and $102 million
($62 million after taxes) for shutdown costs for the Albany,
Franklin, and Pineville mills, respectively, a pre-tax charge of
$82 million ($50 million after taxes) for costs related to the
shutdown of a paper machine at the Valliant mill, a pre-tax charge
of $23 million ($15 million after taxes) for severance and benefit
costs associated with the Company's 2008 overhead cost reduction
initiative, a pre-tax charge of $58 million ($35 million after
taxes) for early debt extinguishment costs, a charge of $9 million
(before and after taxes) for severance and other costs associated
with the planned closure of the Etienne mill in France, and pre-tax
charges of $5 million ($3 million after taxes) and $2 million ($1
million after taxes) for costs associated with the reorganization of
the Company's xpedx and Shorewood operations, respectively.
(h) Includes a charge of $8 million (before and after taxes) related
to the Etienne mill in France.
(i) Includes a $15 million write-off of a deferred tax asset for a
recycling tax credit in the state of Louisiana.
(j) Includes a pre-tax charge of $315 million ($192 million after
taxes) for shutdown costs for the Franklin mill (including $236
million of accelerated depreciation and $36 million of environmental
closure costs), a pre-tax charge of $35 million ($21 million after
taxes) for early debt extinguishment costs, pre-tax charges of $12
million ($7 million after taxes) for the closure costs for the
Bellevue and Spartanburg box plants, a pre-tax charge of $11
million ($7 million after taxes) for an Ohio Commercial Activity tax
adjustment, a pre-tax charge of $6 million ($4 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 costs associated with the
reorganization of the Company's Shorewood operations, a pre-tax
charge of $3 million ($2 million after taxes) for costs associated
with the closure of three box plants in Asia and charges of $4
million (before and after taxes) for other items.
(k) Includes a $14 million tax expense and a $32 million tax expense
for incentive compensation and Medicare Part D deferred tax write-
offs, respectively and a $40 million tax benefit related to
cellulosic bio-fuel tax credits.
(l) Includes a pre-tax gain of $2.1 billion ($1.4 billion after
taxes) related to alternative fuel mixture credits.
(m) Includes a pre-tax charge of $87 million ($54 million after
taxes) for integration costs associated with the acquisition of the
CBPR business.
(n) Includes pre-tax charges of $469 million ($286 million after
taxes), $290 million ($177 million after taxes), and $102 million
($62 million after taxes) for shutdown costs for the Albany,
Franklin, and Pineville mills, respectively, a pre-tax charge of
$82 million ($50 million after taxes) for costs related to the
shutdown of a paper machine at the Valliant mill, a pre-tax charge
of $148 million ($92 million after taxes) for severance and benefit
costs associated with the Company's 2008 overhead cost reduction
initiative, a pre-tax charge of $185 million ($113 million after
taxes) for early debt extinguishment costs, a pre-tax charge of $23
million ($28 million after taxes) for closure costs associated with
the Inverurie, Scotland mill, a charge of $31 million (before and
after taxes) for severance and other costs associated with the
planned closure of the Etienne mill in France, and a pre-tax charge
of $23 million ($14 million after taxes) for other items.
(o) Includes a charge of $56 million (before and after taxes)
related to the Etienne mill.
(p) Includes a $156 million tax expense for the write off of
deferred tax assets in France, a $15 million write-off of a
deferred tax asset for a recycling tax credit in the state of
Louisiana, and a $26 million tax benefit related to the settlement
of the 2004 and 2005 U.S. federal income tax audit.
International Paper Company
Reconciliation of Earnings Before Special Items to Net Earnings
Attributable to International Paper Company
Preliminary and Unaudited
(In millions except for per share amounts)
Three Months Three Months
Ended Ended
December 31, September 30,
------------
2010 2009 2010
---- ---- ----
Earnings Before Special Items $296 $101 $397
Restructuring and other charges (33) (638) -
CBPR business integration costs - (10) -
Alternative fuel mixture
credits - 469 -
Net losses on sales and
impairments of businesses 13 (8) -
Income tax adjustments 40 (15) -
Net Earnings as Reported $316 $(101) $397
==== ===== ====
Three Months Three Months
Ended Ended
December 31, September 30,
------------
Diluted Earnings per Common
Share 2010 2009 2010
---- ---- ----
Earnings Per Share Before
Special Items $0.68 $0.24 $0.91
Restructuring and other charges (0.07) (1.52) -
CBPR business integration costs - (0.02) -
Alternative fuel mixture
credits - 1.11 -
Net gain (losses) on sales and
impairments of businesses 0.03 (0.02) -
Income tax adjustments 0.09 (0.03) -
Diluted Earnings per Common
Share as Reported $0.73 $(0.24) $0.91
===== ====== =====
Twelve Months
Ended
December 31,
------------
2010 2009
---- ----
Earnings Before Special Items $890 $378
Restructuring and other charges (253) (853)
CBPR business integration costs - (54)
Alternative fuel mixture credits - 1,413
Net losses on sales and impairments of
businesses 13 (56)
Income tax adjustments (6) (165)
Net Earnings as Reported $644 $663
==== ====
Twelve Months
Ended
December 31,
------------
Diluted Earnings per Common Share 2010 2009
---- ----
Earnings Per Share Before Special Items $2.05 $0.88
Restructuring and other charges (0.59) (2.00)
CBPR business integration costs - (0.13)
Alternative fuel mixture credits - 3.32
Net gain (losses) on sales and impairments
of businesses 0.03 (0.13)
Income tax adjustments (0.01) (0.39)
Diluted Earnings per Common Share as
Reported $1.48 $1.55
===== =====
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) 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 Months
Ended
December 31,
------------
2010 2009
---- ----
Industrial Packaging $2,570 $2,210
Printing Papers 1,540 1,525
Consumer Packaging 880 785
Distribution 1,770 1,675
Forest Products - 25
Corporate and Inter-segment Sales (229) (243)
---- ----
Net Sales $6,531 $5,977
====== ======
Operating Profit by Industry Segment
Three Months
Ended
December 31,
------------
2010 2009
---- ----
Industrial Packaging $261 (2) $(391) (5,6,7)
Printing Papers 234 (3) 137 (5,8)
Consumer Packaging 60 (4) 63 (4,5)
Distribution 9 26 (9)
Forest Products (3) 18
--- ---
Operating Profit (1) 561 (147)
Interest expense, net (150) (163)
Noncontrolling interest/equity
earnings adjustment (10) (5) 4
Corporate items, net (63) (40)
Restructuring and other charges (36) (81)
Net gains (losses) on sales and
impairments of
businesses 25 (1)
--- ---
Earnings (Loss) From Continuing
Operations
Before Income Taxes and Equity
Earnings $332 $(428)
==== =====
Equity Earnings (Loss) in Ilim
Holdings S.A.,
Net of Taxes (1) $31 $6
=== ===
Sales by Industry Segment
Three Months
Ended
September 30,
2010
----
Industrial Packaging $2,610
Printing Papers 1,550
Consumer Packaging 870
Distribution 1,755
Forest Products 205
Corporate and Inter-segment Sales (270)
----
Net Sales $6,720
======
Operating Profit by Industry Segment
Three Months
Ended
September 30,
2010
----
Industrial Packaging $332
Printing Papers 278
Consumer Packaging 71
Distribution 22
Forest Products 49
---
Operating Profit (1) 752
Interest expense, net (152)
Noncontrolling interest/equity
earnings adjustment (10) 5
Corporate items, net (58)
Restructuring and other charges -
Net gains (losses) on sales and
impairments of
businesses -
---
Earnings (Loss) From Continuing
Operations
Before Income Taxes and Equity
Earnings $547
====
Equity Earnings (Loss) in Ilim
Holdings S.A.,
Net of Taxes (1) $22
===
Sales by Industry Segment
Twelve Months
Ended
December 31,
------------
2010 2009
---- ----
Industrial Packaging $9,840 $8,890
Printing Papers 5,940 5,680
Consumer Packaging 3,400 3,060
Distribution 6,735 6,525
Forest Products 220 45
Corporate and Inter-segment Sales (956) (834)
---- ----
Net Sales $25,179 $23,366
======= =======
Operating Profit by Industry Segment
Twelve Months
Ended
December 31,
------------
2010 2009
---- ----
Industrial Packaging $826 (2) $761 (5,6,7)
Printing Papers 481 (3) 1,091 (5,8)
Consumer Packaging 207 (4) 433 (4,5)
Distribution 78 50 (9)
Forest Products 94 25
--- ---
Operating Profit (1) 1,686 2,360
Interest expense, net (608) (669)
Noncontrolling interest/equity
earnings adjustment (10) 15 23
Corporate items, net (226) (181)
Restructuring and other charges (70) (333)
Net gains (losses) on sales and
impairments of
businesses 25 (1)
--- ---
Earnings (Loss) From Continuing
Operations
Before Income Taxes and Equity
Earnings $822 $1,199
==== ======
Equity Earnings (Loss) in Ilim
Holdings S.A.,
Net of Taxes (1) $55 $(50)
=== ====
(1) In addition to the operating profits shown above, International
Paper recorded equity earnings, net of taxes, of $31 million, $6
million and $22 million for the three months ended December 31,
2010, December 31, 2009 and September 30, 2010, respectively, and
$55 million for the twelve months ended December 31, 2010; and
equity losses, net of taxes, of $50 million for the twelve months
ended December 31, 2009, related to the equity investment in Ilim
Holdings S.A., a separate reportable industry segment.
(2) Includes charges of $12 million for closure costs for the
Bellevue and Spartanburg box plants for the three and twelve months
ended December 31, 2010, a gain of $2 million and a net charge of $1
million for the three and twelve months ended December 31, 2010,
respectively, related to closure costs for U.S. mills closed in
2009, charges of $3 million for additional closure costs for the
Etienne mill in France for the twelve months ended December 31,
2010, and charges of $3 million for closure costs for three Asian
box plants for the three and twelve months ended December 31, 2010.
(3) Includes charges of $2 million for asset impairment costs
associated with the Inverurie mill for the 3 months and twelve
months ended December 31, 2010 and charges of $315 million for the
twelve months ended December 31, 2010, for shutdown costs for the
Franklin mill.
(4) Includes a charge of $67 million for the three months and twelve
months ended December 31, 2009 related to the closure of the
Franklin paper mill, charges of $4 million and $2 million for the
three months ended December 31, 2010 and December 31, 2009,
respectively, and $8 million and $7 million for the twelve months
ended December 31, 2010 and December 31, 2009, respectively, related
to the reorganization of the Company's Shorewood operations.
(5) Includes gains of $212 million in the Industrial Packaging
segment, $221 million in the Printing Papers segment, and $83
million in the Consumer Packaging segment for the three months ended
December 31, 2009, and gains of $849 million in the Industrial
Packaging segment, $884 million in the Printing Papers segment, and
$330 million in the Consumer Packaging segment for the twelve months
ended December 31, 2009, relating to alternative fuel mixture
credits.
(6) Includes charges of $15 million for the three months ended
December 31, 2009, and $87 million for the twelve months ended
December 31, 2009, for CBPR integration costs.
(7) Includes charges of $469 million, $102 million and $82 million
for the three months and twelve months ended December 31, 2009 for
shutdown costs for the Albany mill, Pineville mill and a paper
machine at the Valliant mill, respectively, charges of $8 million
and $56 million for the three months and twelve months ended
December 31, 2009, respectively, to write down the assets at the
Etienne mill in France to estimated fair value, and charges of $9
million for the three months ended December 31, 2009 , and $31
million for the twelve months ended December 31,2009 for severance
and other costs related to the planned closure of the Etienne mill,
and $2 million for the three months and twelve months ended December
31, 2009 for the impairment of an investment in Asia.
(8) Includes charges of $223 million for the three months and twelve
months ended December 31, 2009 for shutdown costs for the Franklin
mill; $11 million for the twelve months ended December 31, 2009,
related to the shutdown of a paper machine at the Franklin paper
mill, the shutdown of the Franklin lumber mill, sheet converting
plant and converting innovations center and the Louisiana mill; and
a charge of $23 million for the twelve months ended December 31,
2009 for the closure of the Inverurie, Scotland mill.
(9) Includes a charge of $5 million for the three months and twelve
months ended December 31, 2009 related to the reorganization of the
Company's xpedx operations.
(10) Operating profits for industry segments include each segment's
percentage share of the profits of subsidiaries included in that
segment that are less than wholly owned. The pre-tax
noncontrolling interest and equity earnings for these subsidiaries
are adjusted here to present consolidated earnings before income
taxes and equity earnings.
International Paper Company
Reconciliation of Operating Profit to Operating Profit Before Special
Items
(In millions)
Three Months Ended December 31, 2010
------------------------------------
Industrial Printing Consumer
Packaging Papers Packaging
--------- ------ ---------
Operating Profit as Reported 261 234 60
Restructuring and other charges 13 - 4
Net losses on sales and
impairments of businesses 2 -
Operating Profit Before Special
Items 274 236 64
=== === ===
Three Months Ended September 30, 2010
-------------------------------------
Industrial Printing Consumer
Packaging Papers Packaging
--------- ------ ---------
Operating Profit as Reported 332 278 71
Restructuring and other charges* - - -
Operating Profit Before Special
Items 332 278 71
=== === ===
*Note: Special items were
immaterial in the third quarter
of 2010.
Three Months Ended December 31, 2009
------------------------------------
Industrial Printing Consumer
Packaging Papers Packaging
--------- ------ ---------
Operating Profit as Reported (391) 137 63
Restructuring and other charges 662 223 69
Alternative fuel mixture credits (212) (221) (83)
CBPR business integration costs 15
Net losses on sales and
impairments of businesses 10
Operating Profit Before Special
Items 84 139 49
=== === ===
Three Months Ended December 31, 2010
------------------------------------
Forest
Distribution Products Total
------------ -------- -----
Operating Profit as Reported 9 (3) 561
Restructuring and other charges - - 17
Net losses on sales and
impairments of businesses - - 2
Operating Profit Before Special
Items 9 (3) 580
=== === ===
Three Months Ended September 30, 2010
-------------------------------------
Forest
Distribution Products Total
------------ -------- -----
Operating Profit as Reported 22 49 752
Restructuring and other charges* - - -
Operating Profit Before Special
Items 22 49 752
=== === ===
*Note: Special items were
immaterial in the third quarter
of 2010.
Three Months Ended December 31, 2009
------------------------------------
Forest
Distribution Products Total
------------ -------- -----
Operating Profit as Reported 26 18 (147)
Restructuring and other charges 5 - 959
Alternative fuel mixture credits (516)
CBPR business integration costs 15
Net losses on sales and
impairments of businesses 10
Operating Profit Before Special
Items 31 18 321
=== === ===
International Paper
Sales Volume by Product (1)
Preliminary and Unaudited
International Paper
Consolidated
Three
Three Months Months
Ended Ended
September
December 31, 30,
------------
2010 2009 2010
---- ---- ----
Industrial Packaging (In
thousands of short tons)
Corrugated Packaging 1,832 1,782 1,928
Containerboard 591 677 634
Recycling 626 521 636
Saturated Kraft 40 43 45
Bleached Kraft 19 20 23
European Industrial Packaging 272 256 251
Asian Box 110 40 114
Asian Distribution 90 147 87
--- --- ---
Industrial Packaging 3,580 3,486 3,718
----- ----- -----
Printing Papers (In thousands
of short tons)
U.S. Uncoated Papers 644 734 684
European & Russian Uncoated
Papers 306 330 311
Brazilian Uncoated Papers 289 311 262
Asian Uncoated Papers 21 41 24
--- --- ---
Uncoated Papers 1,260 1,416 1,281
----- ----- -----
Market Pulp (2) 369 410 385
--- --- ---
Consumer Packaging (In
thousands of short tons)
U.S. Coated Paperboard 341 310 364
European Coated Paperboard 87 89 88
Asian Coated Paperboard 219 231 213
Other Consumer Packaging 45 39 45
--- --- ---
Consumer Packaging 692 669 710
--- --- ---
International Paper
Consolidated
Twelve Months
Ended
December 31,
------------
2010 2009
---- ----
Industrial Packaging (In
thousands of short tons)
Corrugated Packaging 7,525 7,313
Containerboard 2,458 2,258
Recycling 2,486 2,280
Saturated Kraft 176 126
Bleached Kraft 85 72
European Industrial Packaging 1,040 1,046
Asian Box 307 149
Asian Distribution 360 465
--- ---
Industrial Packaging 14,437 13,709
------ ------
Printing Papers (In thousands
of short tons)
U.S. Uncoated Papers 2,695 2,882
European & Russian Uncoated
Papers 1,235 1,336
Brazilian Uncoated Papers 1,081 1,007
Asian Uncoated Papers 96 81
--- ---
Uncoated Papers 5,107 5,306
----- -----
Market Pulp (2) 1,422 1,524
----- -----
Consumer Packaging (In
thousands of short tons)
U.S. Coated Paperboard 1,398 1,242
European Coated Paperboard 351 354
Asian Coated Paperboard 870 859
Other Consumer Packaging 174 169
--- ---
Consumer Packaging 2,793 2,624
----- -----
(1) Sales volumes include third party and inter-segment sales and
exclude sales of equity investees.
(2) Includes internal sales to mills.
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
December December
31, 31,
2010 2009
---- ----
Assets
Current Assets
Cash and Temporary Investments $2,073 $1,892
Accounts and Notes Receivable, Net 3,039 2,695
Inventories 2,347 2,179
Deferred Income Tax Assets 339 368
Other 230 417
--- ---
Total Current Assets 8,028 7,551
----- -----
Plants, Properties and Equipment, Net 12,002 12,688
Forestlands 747 757
Investments 1,092 1,077
Goodwill 2,308 2,290
Deferred Charges and Other Assets 1,191 1,185
----- -----
Total Assets $25,368 $25,548
======= =======
Liabilities and Equity
Current Liabilities
Notes Payable and Current Maturities
of Long-Term Debt $313 $304
Accounts Payable and Accrued Liabilities 4,190 3,708
----- -----
Total Current Liabilities 4,503 4,012
----- -----
Long-Term Debt 8,358 8,729
Deferred Income Taxes 2,793 2,425
Pension Benefit Obligation 1,482 2,765
Postretirement and Postemployment
Benefit Obligation 499 538
Other Liabilities 649 824
Equity
Invested Capital 4,418 4,074
Retained Earnings 2,416 1,949
----- -----
Total Shareholders' Equity 6,834 6,023
----- -----
Noncontrolling interests 250 232
--- ---
Total Equity 7,084 6,255
----- -----
Total Liabilities and Equity $25,368 $25,548
======= =======
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In Millions)
Twelve Months Ended
December 31,
------------
2010 2009
---- ----
Operating Activities
Net Earnings 665 681
Depreciation, amortization and cost of timber
harvested 1,456 1,472
Deferred income tax expense (benefit), net 422 160
Restructuring and other charges 394 1,353
Payments related to restructuring and legal
reserves (2) (38)
Pension plan contribution (1,150) -
Net losses on sales and impairments of businesses (23) 59
Cost of timberlands sold 143 -
Equity (earnings) loss, net (64) 49
Periodic pension expense, net 231 213
Other, net 17 227
Changes in current assets and liabilities
Accounts and notes receivable (327) 604
Inventories (186) 316
Accounts payable and accrued liabilities (52) (321)
Interest payable 3 (8)
Other 104 (112)
--- ----
Cash Provided by Operations 1,631 4,655
----- -----
Investment Activities
Invested in capital projects (775) (534)
Acquisitions, net of cash received (152) (17)
Other 93 (42)
--- ---
Cash Used for Investment Activities (834) (593)
---- ----
Financing Activities
Repurchases of common stock and payments of
restricted stock tax withholding (26) (10)
Issuance of debt 193 3,229
Reduction of debt (576) (6,318)
Change in book overdrafts 38 20
Dividends paid (175) (140)
Other (42) (157)
--- ----
Cash Used for Financing Activities (588) (3,376)
Effect of Exchange Rate Changes on Cash (28) 62
--- ---
Change in Cash and Temporary Investments 181 748
Cash and Temporary Investments
Beginning of the period 1,892 1,144
----- -----
End of the period $2,073 $1,892
====== ======
SOURCE International Paper