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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
August 1, 1994
------------------------------------------------
Date of Report (Date of earliest event reported)
INTERNATIONAL PAPER COMPANY
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(Exact name of Registrant as specified in its charter)
New York 1-3157 13-0872805
(State of Commission (IRS Employer
Incorporation) File Identification
Number)
Two Manhattanville Road, Purchase, NY 10577
(Address of principal executive offices)
914-397-1500
(Registrant's telephone No.)
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ITEM I. CHANGES IN CONTROL OF REGISTRANT
N/A
ITEM II. ACQUISITION OR DISPOSITION OF ASSETS
N/A
ITEM III. BANKRUPTCY OR RECEIVERSHIP
N/A
ITEM IV. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
N/A
ITEM V. OTHER EVENTS
N/A
ITEM VI. RESIGNATIONS OF REGISTRANT'S DIRECTORS
N/A
ITEM VII. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
N/A
(b) Pro Forma Financial Information:
N/A
(c) Exhibits:
(13) 1994 Midyear Report to Shareholders
ITEM VIII. CHANGES IN FISCAL YEAR
N/A
2
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Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
INTERNATIONAL PAPER COMPANY
(Registrant)
Date: August 1, 1994 /s/SYVERT E. NERHEIM
Purchase, NY Syvert E. Nerheim
Assistant Secretary
3
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EXHIBIT INDEX
(13) 1994 Midyear Report to Shareholders
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INTERNATIONAL [LOGO] PAPER
Cover Page Photo No. 1
Cover Page Photo No. 2
UPDATE
Cover Page Photo No. 3
Cover Page Photo No. 4
Cover Page Photo No. 5
1994 MIDYEAR REPORT
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FINANCIAL HIGHLIGHTS
(unaudited) 1994 1993
---------------------- ----------------------
Six Six
Months Quarter Months Quarter
In millions, except per share Ended -------------- Ended --------------
amounts June 30 First Second June 30 First Second
------- ------ ------ ------- ------ ------
Net Sales $7,047 $3,414 $3,633 $6,868 $3,362 $3,506
Operating Profit 408 188 220 375 174 201
Earnings Before Income Taxes 245 111 134 223 101 122
Net Earnings 159 72 87 141 64 77
Per Common Share
Net Earnings $ 1.28 $ .58 $ .70 $ 1.14 $ .52 $ .62
Cash Dividends .84 .42 .42 .84 .42 .42
Book Value at June 30 50.62 50.28
CONTENTS
Update and Outlook:
Mid-1994 Review......................... 1
Earnings................................ 6
Balance Sheet........................... 7
Cash Flows.............................. 8
CORPORATE OVERVIEW
International Paper is a global leader in the manufacture of printing and
writing papers, industrial and consumer packaging, and forest products. These
enterprises are complemented by a broad array of specialty products businesses
and an extensive distribution capability, giving us the diversity we need to
enhance the growth and stability of our earnings, achieve substantial economies
of scale, and strengthen our presence in some of the fastest growing segments of
our industry. With an unwavering focus on the needs of our customers,
International Paper reaches markets in more than 130 countries from facilities
in 27 nations.
Inside Front Cover Illustration A
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INTERNATIONAL PAPER: THE BUSINESSES WE'RE IN
PRINTING PAPERS
International Paper is one of the world's largest producers of high-quality
printing and writing papers. We serve growing markets for uncoated papers,
specialty fine papers and nearly 100 different grades of recycled papers. We
are leaders in the manufacture of coated papers used in magazines and catalogs;
heavyweight papers used for folders, tags and tickets; and pulp for
international markets. Our Springhill, Hammermill, Strathmore and Beckett
brands rank among the most popular in the industry. International Paper's
Aussedat Rey, Zanders and Kwidzyn subsidiaries are major producers of printing
and writing papers in Europe.
PACKAGING
Our reputation for exceptional quality and innovative designs has helped
International Paper become a leader in industrial and consumer packaging. Our
operations in the U.S. and overseas make us one of the world's largest producers
of containerboard and corrugated boxes, and the leading provider of agricultural
packaging in Europe. Our kraft division offers the widest array of kraft paper
and packaging in the industry. And our premium Everest line of bleached board
is known for its superior quality and is used worldwide for folding cartons,
liquid containers and food service products.
DISTRIBUTION
International Paper is a leading local, national and internatioal distributor of
paper, industrial products and graphic arts supplies. ResourceNet International
unites more than 260 strategically located regional distribution facilities in
the U.S., Canada and Mexico. And our Aussedat Rey and Scaldia affiliates in
France and the Netherlands give us broad exposure to the growing European
marketplace. Our distribution business has built its success by delivering a
wide range of products and superior customer service in a timely and economical
manner.
SPECIALTY PRODUCTS
Because they share materials, processes or customers with other International
Paper businesses, Specialty Products help us leverage the strengths and
resources of our core enterprises. Our imaging products business serves the
photography and graphic arts markets. Specialty panels produces siding, door
facings, decorative surfaces, foam products and furniture components. Specialty
industrial papers includes products used for laminating, tape and release
applications such as pressure-sensitive labels. Veratec, our nonwovens
producer, is a leading manufacturer of spunbond fabrics used in consumer
disposable products. Arizona Chemical upgrades the natural byproducts of
papermaking into specialty products. And our petroleum operations play an
important role in our energy strategy.
FOREST PRODUCTS
International Paper owns or controls 6.1 million acres of U.S. forestlands,
giving us one of the largest fiber bases in our industry. The sawlogs and
pulpwood yielded by our forestry operations are used in our own plants and mills
and sold to other companies. We are also the fourth largest U.S. producer of
southern pine lumber, and we manufacture a broad range of panel and other wood
products. We take very seriously our responsibility to maintain the health and
vitality of the forests under our stewardship. The environmentally sound,
scientifically based forest management techniques we practice help us ensure
that our precious natural resources will be sustained and renewed for many
generations to come.
CORPORATE RESPONSIBILITY
International Paper puts the safety of its employees, communities and
environment first. We seek balanced solutions to environmental concerns, and
we strive to reduce the environmental impact of our operations. We have met
this challenge through responsible stewardship of our natural and industrial
resources, through conservation of wildlife habitats and by making our
forestlands available to the public for recreational and educational use. In
the same spirit, we dedicate considerable resources to improving safety in our
operations. Our constant focus on teamwork, technology and innovative thinking
helps us fulfill those responsibilities in a way that satisfies the needs of our
customers, the public, our employees, the environment and our shareholders.
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UPDATE AND OUTLOOK: MID-1994 REVIEW
The first half of 1994 saw steady improvement in International Paper's
overall results. Sales for the period totaled $7.0 billion versus $6.9 billion
during the first six months of 1993. Net earnings were $159 million, or $1.28
per share, up from $141 million and $1.14, respectively, one year ago.
Although these increases are relatively modest, we believe that they represent
the beginning of a fundamental turnaround in many of our key markets. As
economic growth, worldwide demand, pricing trends and internal cost-cutting
initiatives all gather strength during the second half of this year, we expect
operating results to improve further.
More specifically, expanding economies in the U.S. and Europe are likely to
benefit many of our businesses. Over the next several years, for example,
demand for most of our paper grades is expected to grow faster than our
industry's capacity-expansion plans. This should lead to higher prices and,
together with the cost-control measures we have implemented, increased company
earnings over time. Similarly, continued strength in our fast-growing specialty
products and distribution businesses should also contribute to higher earnings.
Diverse markets, a strong balance sheet and prudent business strategies
position us to take full advantage of the upturn in the economic cycle that is
under way.
(Photo A)
Caption: Radiata pine, a high-quality, renewable fiber source, grows more
rapidly than many other species. By increasing our ownership of Carter Holt
Harvey from 16 percent to 24 percent in March, we realized a more substantial
interest in radiata pine forests in New Zealand and broader participation in the
growing markets of the Pacific Rim.
UPDATE 1
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PRINTING PAPERS
While our Printing Papers businesses reported a loss during the first six
months of 1994, operating results improved considerably on sales of $2.0
billion. First-half prices for uncoated papers declined slightly compared to a
year ago, but sales began to improve late in the period in response to low
merchant inventories and rising end-user demand. Prices of coated papers have
stabilized, supported by greater U.S. demand, stronger order backlogs, and
growth in the catalog and insert markets.
We are especially encouraged by the improvement of our paper business in
Europe, where pulp prices, paper product prices and sales volume have rebounded
in response to the region's economic recovery. Our refurbished Saillat pulp
mill in France is operating near full capacity, and capital improvements at the
Kwidzyn paper mill in Poland have already had an impact on both quality and
output.
We are optimistic about the prospects for continued improvement in the
printing papers markets during the second half of this year. Price increases
for uncoated papers are being implemented domestically and further increases
are expected in Europe. Over the longer term, we believe that margins in our
uncoated papers business will expand when our new paper machine and wastepaper
deinking facility begin operations next year at our Riverdale mill in Alabama.
This new system will help us reduce costs substantially, enhance our ability to
produce high-grade recycled papers and allow us to use other manufacturing
assets more efficiently.
(Photo B)
Caption: Recycling has become a way of life in communities throughout America,
and International Paper is pleased to provide markets for the nation's
recyclable waste. Springhill Incentive 100 and Hammermill Unity printing papers
are the first in the U.S. to contain 100 percent recycled fiber from old
newspapers and magazines.
2 UPDATE
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PACKAGING
Stronger markets for containerboard helped boost sales in our Packaging
operations to $1.6 billion. Demand for containerboard rose in response to
strong domestic and export markets, enabling us to raise prices late in 1993
and again in the spring and summer of 1994. While bleached board prices
declined compared to first-half 1993 levels, stronger global demand for
consumer packaging should support higher prices in the months ahead.
The outlook for our Packaging businesses is strong as we continue to develop
premium products and solidify partnerships with key customers. To meet rising
demand, we are adding a recycling plant and a lightweight containerboard
machine to our mill in Mansfield, La. When construction is complete in 1996,
the new machine will have an annual capacity of 400,000 tons, giving
International Paper the widest selection of containerboard grades in the
industry, including the fast-growing white-top and mottled-white grades.
Finally, we recently announced plans to increase our penetration of the
important aseptic packaging market. Construction of a new facility in Lyons,
France, and expansion of our Raleigh, N.C., plant will help us strengthen our
position as a manufacturer of aseptic packaging, which keeps juice and other
perishable beverages fresh without refrigeration.
(Photo C)
Caption: Aggressive product development is leading to a number of new products
that provide innovative solutions to customers' needs. Among them is Triton, a
degradable paperboard beverage ring carrier that is an efficient, printable and
environmentally friendly alternative to traditional plastic rings.
UPDATE 3
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DISTRIBUTION
Distribution earnings for the first half of 1994 grew slightly compared to
year-ago results on sales of $1.6 billion. This improvement can be attributed
to better business conditions in our U.S. and European markets.
Greater demand and higher prices for printing papers should boost
Distribution sales further in the months ahead. Moreover, we believe that
results will continue to improve as we complete the process of integrating our
various regional operations into one North American system, ResourceNet
International, and achieve the economies of scale that a more coordinated
organization should produce. Moreover, this structure will enable us to enhance
service and strengthen relationships with customers in new and existing
markets.
SPECIALTY PRODUCTS
Buoyed by sales of $1.3 billion during the first half of this year, operating
earnings in our Specialty Products businesses exceeded those of the same period
last year.
Our specialty panels business led the group in sales growth and operating
profits, supported by the ongoing success of CraftMaster door facings and
robust sales of decorative products. To meet rising demand, a new door facings
line at our Laurel, Miss., plant is scheduled for completion next year. Profits
from our imaging products businesses are also ahead of last year's first-half
levels, due primarily to upgraded products and lower manufacturing costs.
We expect Specialty Products to achieve record sales and earnings for
full-year 1994. Looking forward, several major projects are under way that will
drive growth in these businesses. A rebuilt paper
(Photo D)
Caption: To be a leader in today's global economy, it is no longer enough to
reach markets in just one nation. Our 1994 acquisition of Mexican paper
distributors Ogi Papel and Papelera Kif has helped us expand our position in
paper distribution throughout North America.
4 UPDATE
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machine in our Kaukauna, Wis., specialty industrial papers mill will meet
rising demand for backing papers for pressure-sensitive labels. A second
spunbond line in Toronto, Canada, will help us increase capacity, improve
quality and reduce costs for light- to medium-weight nonwovens. In addition,
higher commodity prices in our chemicals and petroleum operations should lead
to higher earnings in those businesses as well.
FOREST PRODUCTS
Steady demand for curtailed supplies of stumpage and wood products helped
Forest Products produce operating profits only slightly below the record pace
set during the first half of 1993. Sales rose to $870 million as building
activity remained strong in response to still-low interest rates and improved
consumer confidence. Despite some moderation in the second quarter of 1994,
overall pricing levels for stumpage and wood products remained high.
Due in part to higher prices for conventional wood products, which have been
affected by logging restrictions on federal lands in the Pacific Northwest,
demand for engineered wood products such as oriented strand board (OSB) has
increased substantially. To satisfy this growing need, we are building a new
OSB plant in the southern U.S. that will more than double our manufacturing
capacity.
We expect Forest Products to have another good year in 1994. Our harvest and
wood products volumes over the next six months should match first-half levels
in a favorable pricing environment.
(Photo E)
Caption: Modern technology has rendered obsolete many glue-applied, "lick and
stick" labels and envelopes. As a leading manufacturer of the backing papers
used in pressure-sensitive adhesive products, International Paper is well
positioned to capture a larger share of this growing market.
(Photo F)
Caption: Our forestlands provide more than wood fiber for our business
operations; they are also home to a wide variety of wildlife. We are proud to
have received the National Wild Turkey Federation's first Industrial Forestry
Award in recognition of our wildlife preservation programs in company-owned
forests.
UPDATE 5
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CONSOLIDATED STATEMENT OF EARNINGS
(unaudited) Six Months Ended Year Ended
June 30 December 31
In millions-except per share amounts 1994 1993 1993
---- ---- ----
Net Sales $7,047 $6,868 $13,685
------ ------ -------
Costs and Expenses
Cost of products sold 5,277 5,162 10,191
Depreciation and amortization 453 448 898
Distribution expenses 329 319 634
Selling and administrative expenses 502 484 999
Taxes other than payroll and income taxes 78 80 153
------ ------ -------
Total Costs and Expenses 6,639 6,493 12,875
------ ------ -------
Earnings Before Interest and Income Taxes 408 375 810
Interest expense, net 163 152 310
------ ------ -------
Earnings Before Income Taxes 245 223 500
Provision for income taxes 86 82 211
------ ------ -------
Net Earnings $ 159 $ 141 $ 289
------ ------ -------
Earnings per Common Share $ 1.28 $ 1.14 $ 2.34
------ ------ -------
Average Shares of Common
Stock Outstanding 124.4 123.0 123.2
------ ------ -------
6 UPDATE
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CONSOLIDATED BALANCE SHEET
(unaudited) June 30 December 31
In millions 1994 1993
---- ----
Assets
Current Assets
Cash and temporary investments $ 193 $ 242
Accounts and notes receivable, net 2,098 1,856
Inventories 2,072 2,024
Other current assets 274 279
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Total Current Assets 4,637 4,401
Plants, Properties and Equipment, Net 8,909 8,872
Forestlands 796 786
Investments 975 631
Goodwill 763 754
Deferred Charges and Other Assets 1,295 1,187
------- -------
Total Assets $17,375 $16,631
------- -------
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of
long-term debt $ 2,371 $ 2,089
Accounts payable and accrued liabilities 1,871 1,920
------- -------
Total Current Liabilities 4,242 4,009
Long-Term Debt 3,981 3,601
Deferred Income Taxes 1,643 1,614
Minority Interest and Other Liabilities 1,195 1,182
Common Shareholders' Equity 6,314 6,225
------- -------
Total Liabilities and Common Shareholders'
Equity $17,375 $16,631
------- -------
UPDATE 7
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CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) Six Months Ended Year Ended
June 30 December 31
In millions 1994 1993 1993
---- ---- ----
Operating Activities
Net earnings $ 159 $ 141 $ 289
Noncash items
Depreciation and amortization 453 448 898
Deferred income taxes 7 2 54
Other, net (21) (18) (22)
Net change in current assets and liabilities (279) (284) (238)
------- ----- -------
Cash Provided by Operations 319 289 981
------- ----- -------
Investment Activities
Invested in capital projects (418) (373) (954)
Mergers and acquisitions (21) (35)
Investments in affiliated companies (299) (9)
Other (60) (28) (124)
------- ----- -------
Cash Used for Investment Activities (777) (422) (1,122)
------- ----- -------
Financing Activities
Issuance of common stock 52 38 60
Issuance of debt 1,150 430 1,276
Reduction of debt (521) (161) (1,016)
Dividends paid (105) (103) (208)
Other (169) (23) 51
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Cash Provided by Financing Activities 407 181 163
------- ----- -------
Effect of Exchange Rate Changes on Cash 2 (1) (5)
------- ----- -------
Change in Cash and Temporary Investments (49) 47 17
Cash and Temporary Investments
Beginning of the period 242 225 225
------- ----- -------
End of the period $ 193 $ 272 $ 242
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COMPANY INFORMATION
Transfer Agent
For services regarding your account such as change of address, lost
certificates or dividend checks, change in registered ownership,
or the dividend reinvestment program, write or call:
Chemical Bank
Shareholder Services
450 West 33rd Street
New York, New York 10001
800-678-8715
Stock Exchange Listings
Common shares (symbol: IP) are traded on the following exchanges: New York,
Basel, Geneva, Lausanne, Zurich and Amsterdam.
Reports and Publications
Additional copies of this report, annual and environmental reports, SEC
filings and other publications are available by calling or writing to the
investor relations department at corporate headquarters.
Current financial information, position statements and general information
about International Paper are available by facsimile by calling 800-851-4FAX.
This service is available on a 24-hour basis.
Investor Relations
Investors desiring further information about International Paper should contact
the investor relations department at corporate headquarters, 914-397-1625.
8 UPDATE
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Two Manhattanville Road
Purchase, New York 10577
914-397-1500
INTERNATIONAL [LOGO] PAPER
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APPENDIX FOR GRAPHIC AND IMAGE MATERIAL
Pursuant to Rule 304 of Regulation S-T, the following table presents
fair and accurate narrative descriptions of graphic and image material
omitted from this EDGAR filing due to ASCII-incompatibility and
cross-references this material to the location of each occurrence in the
text.
DESCRIPTION OF OMITTED LOCATION OF GRAPHIC
GRAPHIC OR IMAGE OR IMAGE IN TEXT
------------------------ ---------------------
An icon representing the Printing Papers Cover Page Photo No. 1
segment.
An icon representing the Packaging segment. Cover Page Photo No. 2
An icon representing the Distribution segment. Cover Page Photo No. 3
An icon representing the Specialty Products Cover Page Photo No. 4
segment.
An icon representing the Forest Products Cover Page Photo No. 5
segment.
An illustration representing International Inside Front Cover Illus-
Paper's various businesses as described in tration
the text titled "International Paper: The
Businesses We're In".
An illustration of a radiata pine tree. Photo "A" Page 1 UPDATE
A photograph of a bundle of recyclable waste Photo "B" Page 2 UPDATE
(newspapers and magazines) and reams of the
100 percent recycled papers that Interna-
tional Paper manufactures.
A photograph of a paperboard six-pack beverage Photo "C" Page 3 UPDATE
ring carrier.
A photograph of a person pushing a dolly on Photo "D" Page 4 UPDATE
which various products are stacked, with the
Mexican flag in the background.
A photograph of an envelope showing the use of Photo "E" Page 5 UPDATE
pressure-sensitive labels in a traditional
"lick-and-stick" adhesive application.
An illustration of a wild turkey. Photo "F" Page 5 UPDATE
