<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
--------------------------------------
For Quarter Ended March 31, 1995 Commission file number 1-3157
INTERNATIONAL PAPER COMPANY
(Exact name of registrant as specified in its charter)
New York 13 0872805
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
Two Manhattanville Road, Purchase, NY 10577
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 914-397-1500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Common stock outstanding on April 28, 1995: 126,680,397 shares.
<PAGE>
INTERNATIONAL PAPER COMPANY
INDEX
Page No.
--------
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Earnings -
Three Months Ended March 31, 1995 and 1994 3
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 4-5
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1995 and 1994 6
Notes to Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
Item 3. Other Financial Information 11
PART II. Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities *
Item 3. Defaults upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
* Omitted since no answer is called for, answer is in the negative or
inapplicable.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Earnings
(Unaudited)
(In millions, except per-share amounts)
Three Months Ended
March 31,
------------------
1995 1994
------ ------
Net Sales $4,492 $3,414
------ ------
Costs and Expenses
Cost of products sold 3,239 2,567
Depreciation and amortization 234 216
Distribution expenses 179 154
Selling and administrative expenses 304 244
Taxes other than payroll and income taxes 41 38
------ ------
Total Costs and Expenses 3,997 3,219
------ ------
Earnings Before Interest, Income Taxes and
Cumulative Effect of Accounting Change 495 195
Interest expense, net 104 77
------ ------
Earnings Before Income Taxes and Cumulative
Effect of Accounting Change 391 118
Provision for income taxes 145 42
------ ------
Earnings Before Cumulative Effect of Accounting Change 246 76
Cumulative effect of change in accounting
for start-up costs (less tax benefit of $50) (75)
------ ------
Net Earnings $ 246 $ 1
====== ======
Earnings per Common Share
Earnings before cumulative effect of accounting change $ 1.95 $ 0.61
Cumulative effect of change in accounting
for start-up costs (0.60)
------ ------
Earnings per Common Share $ 1.95 $ 0.01
====== ======
Average Shares of Common Stock Outstanding 126.4 124.2
====== ======
Cash Dividends per Common Share $ 0.42 $ 0.42
====== ======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
(Unaudited)
(In millions)
March 31, December 31,
1995 1994
--------- ------------
Assets
Current Assets
Cash and temporary investments $ 196 $ 270
Accounts and notes receivable, net 2,567 2,241
Inventories 2,223 2,075
Other current assets 292 244
------- -------
Total Current Assets 5,278 4,830
Plants, Properties and Equipment, Net 9,318 9,139
Forestlands 811 802
Investments 1,066 1,032
Goodwill 805 763
Deferred Charges and Other Assets 1,326 1,270
------- -------
Total Assets $18,604 $17,836
======= =======
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
(Unaudited)
(In millions)
March 31, December 31,
1995 1994
--------- ------------
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of
long-term debt $ 2,340 $ 2,083
Accounts payable and accrued liabilities 2,162 1,951
------- -------
Total Current Liabilities 4,502 4,034
Long-Term Debt 4,411 4,464
Deferred Income Taxes 1,654 1,612
Minority Interest and Other Liabilities 1,200 1,212
Common Shareholders' Equity
Common stock, $1 par value, issued
1995 - 128.7 shares, 1994 - 128.2 shares 129 128
Paid-in capital 1,903 1,786
Retained earnings 4,904 4,711
------- -------
6,936 6,625
Less: Common stock held in treasury, at cost;
1995 - 2.1 shares, 1994 - 2.3 shares 99 111
------- -------
Total Common Shareholders' Equity 6,837 6,514
------- -------
Total Liabilities and
Common Shareholders' Equity $18,604 $17,836
======= =======
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
(Unaudited)
(In millions)
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Operating Activities
Net earnings $246 $ 1
Cumulative effect of accounting change 75
Noncash items
Depreciation and amortization 234 216
Deferred income taxes 35 5
Other, net (15) 4
Changes in current assets and liabilities
Accounts and notes receivable (246) (97)
Inventories (94) (51)
Other current assets (13) (11)
Accounts payable and accrued liabilities 86 31
---- ----
Cash Provided by Operations 233 173
---- ----
Investment Activities
Invested in capital projects (243) (207)
Acquisitions
Other assets and liabilities, net (9)
Investments in affiliated companies (299)
Other (57) (41)
---- ----
Cash Used for Investment Activities (309) (547)
---- ----
Financing Activities
Issuance of common stock 14 41
Issuance of debt 37 320
Reduction of debt (58) (9)
Change in bank overdrafts 80 (74)
Dividends paid (53) (53)
Other (23) 29
---- ----
Cash Provided by (Used for) Financing Activities (3) 254
---- ----
Effect of Exchange Rate Changes on Cash 5 1
---- ----
Change in Cash and Temporary Investments (74) (119)
Cash and Temporary Investments
Beginning of the period 270 242
---- ----
End of the period $196 $123
==== ====
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
INTERNATIONAL PAPER COMPANY
Notes to Consolidated Financial Statements
(Unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, in the
opinion of Management, include all adjustments (consisting only of normal
recurring accruals) which are necessary for the fair presentation of results
for the interim periods. It is suggested that these consolidated financial
statements be read in conjunction with the audited financial statements and
the notes thereto incorporated by reference in the Company's Form 10-K for
the year ended December 31, 1994, which has previously been filed with the
Commission.
2. In January 1995, the Company acquired both Seaman-Patrick Paper Company and
Carpenter Paper Company, two Michigan-based paper distribution
companies by issuing approximately 442,000 shares of Company common stock
for all of the outstanding shares of these companies.
In March 1994, the Company acquired from Brierley Investments Limited an
additional 8% interest in Carter Holt Harvey Limited, a major New
Zealand forest products and paper company. The purchase increased the
Company's ownership of Carter Holt Harvey Limited to 24 percent.
In December 1994, the Company completed a merger with Kirk Paper
Corporation, a California-based paper distribution company. Also
in December, the Company acquired additional stock of Zanders Feinpapiere
AG.
With the exception of Kirk Paper Corporation, which was accounted for as a
pooling-of-interests, all of the 1995 and 1994 acquisitions were accounted
for using the purchase method.
The consolidated balance sheet at March 31, 1995, includes preliminary
purchase price allocations for Seaman-Patrick and Carpenter Paper Companies
and the additional purchase of Zanders. The consolidated balance sheet at
December 31, 1994 includes preliminary purchase price allocations for
Zanders. Final allocations for the above acquisitions will be completed
in 1995.
3. Inventories by major category include:
March 31, December 31,
1995 1994
--------- ------------
(In millions)
Raw materials $ 406 $ 365
Finished pulp, paper and packaging products 1,149 1,067
Finished imaging products 164 152
Finished lumber and panel products 91 77
Operating supplies 331 335
Other 82 79
------ ------
Total $2,223 $2,075
====== ======
4. Interest payments made during the three months ended March 31, 1995
and 1994 were $114 million and $88 million, respectively. Income
tax payments made during each of the three month periods ended March 31,
1995 and 1994 were $6 million.
7
<PAGE>
5. Temporary investments with a maturity of three months or less are treated
as cash equivalents and are stated at cost. Temporary investments totaled
$99 million and $102 million at March 31, 1995 and December 31, 1994,
respectively.
6. Certain reclassifications have been made to prior-year amounts to conform
with the current-year presentation.
7. Subsequent Events
In April 1995, the Company acquired from Brierley Investments Limited, 131.8
million shares of Carter Holt Harvey stock (representing approximately 8% of
the company) for NZ $470 million (approximately $316 million). This
purchase increased the Company's ownership of CHH to 31.3%. Also in April,
an additional 325.8 million CHH shares were acquired through open-market
purchases for NZ $3.80 per share (approximately $834 million) bringing the
Company's total ownership in CHH to 50.2% on a fully diluted basis. All of
the above share purchases, including the acquisition from Brierley, were
financed with additional borrowings totaling approximately $1.1 billion.
Additionally, on April 28, 1995, the Company published a public tender offer
for all of the shares of Holvis AG for 435 Swiss francs per share. This
offer is subject to the Company receiving a majority of Holvis' shares.
Holvis is a Basel-based Swiss holding company with one million registered
shares, of which approximately 886,000 are held by the public. Holvis has
two primary businesses: Fiberweb, an international nonwovens manufacturing
company with operations in the United States, Sweden, France and Italy; and
Muhlebach, a paper distribution company based in Switzerland.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------ RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
International Paper reported 1995 first-quarter net earnings of $246 million or
$1.95 per share, a more than threefold increase over 1994 first-quarter net
earnings of $76 million or $.61 per share (before the cumulative effect of a
change in accounting for start-up costs). The first-quarter performance was
also nearly a 60% increase over 1994 fourth-quarter earnings of $154 million or
$1.23 per share.
First-quarter 1995 net sales were $4.5 billion, a 32% increase over
first-quarter 1994 net sales of $3.4 billion and a 10% increase over
fourth-quarter 1994 net sales of $4.1 billion. Both the sales and operating
earnings totals were a record for any quarter.
Current-period results reflect a dramatic upturn in the paper industry and the
Company is well positioned to take full advantage of it. With growing economies
around the world and limited additional capacity coming on line, the industry
should experience a favorable supply and demand balance for several quarters.
Printing Papers first-quarter 1995 net sales increased 54% to $1.5 billion
compared with $955 million in the first quarter of 1994. Printing Papers
operating profits in the United States and Europe more than doubled compared
with the 1994 fourth quarter and rebounded from the operating loss recorded in
the first quarter of 1994. All paper grades are in tight supply and prices for
most grades have recovered and are increasing.
Packaging net sales for the first quarter of 1995 increased 26% to $955 million,
up from $755 million in the comparable 1994 quarter. Operating earnings were up
approximately 30% from the 1994 fourth quarter and about tripled as compared
with the 1994 first quarter. Industrial packaging turned in the strongest
performance. Higher prices and strong demand more than compensated for the
effects of increased raw material costs.
Distribution first-quarter 1995 net sales increased 49% to $1.2 billion as
compared with $800 million in the first quarter of 1994. Operating profit was
up substantially from the 1994 fourth quarter and was about double as compared
with the first quarter of 1994 due to strong demand and improved prices. Sales
and profit contributions from the Seaman-Patrick and Carpenter Paper
acquisitions and the 1994 merger with Kirk Paper Corporation favorably impacted
results for the 1995 first quarter.
Specialty Products sales for the 1995 first quarter increased 14% to $715
million compared with $625 million in the first quarter of 1994. Operating
profits for the specialty businesses were down slightly from the 1994 fourth
quarter and also declined from 1994 first-quarter levels as some businesses were
affected by lower housing starts and sales volumes.
9
<PAGE>
Forest Products net sales declined 9% to $385 million from $425 million in the
1994 first quarter. Although down from the 1994 first quarter, operating profit
for the 1995 first quarter improved significantly over the fourth quarter of
1994. Extensive rains in the southern United States have made logging
conditions more difficult and put a premium on wood that can be harvested in wet
weather. Prices for sawtimber are at record high levels, but as weather
conditions dry out, prices should retract.
Overall, continued earnings momentum is expected for the next quarter as further
price increases are implemented and wood fiber costs return to more normal
levels. Real sales growth for the entire company is expected to be between 6
and 8 percent for the next two years based on 1995 dollars. This growth will be
the result of additional capacity coming on stream this year and next, and
excludes acquisitions.
LIQUIDITY AND CAPITAL RESOURCES
Operating cash flow totaled $233 million for the first quarter of 1995, up from
$173 million in the comparable 1994 period. Higher earnings and noncash charges
exceeded increased working capital requirements, particularly for accounts
receivable, leading to the increase over the prior year.
Investments in capital projects totaled $243 million for the three months, up
from $207 million in the 1994 first quarter.
Dividend payments were $53 million or $.42 per common share. Net debt
retirements totaled $21 million for the first quarter of 1995. During the
period, $37 million of debt (primarily industrial revenue bonds) was issued and
$58 million of debt (primarily short-term bank borrowings) was retired.
The Company anticipates that cash flow generated by operations, supplemented as
necessary by short- or long-term borrowings, will be adequate to meet capital
expenditures which are expected to be about $1.3 billion for 1995.
10
<PAGE>
ITEM 3. OTHER FINANCIAL INFORMATION
- -----------------------------------
Sales by Industry Segment
and
Production by Products
(Unaudited)
Sales by Industry Segment (In millions)
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Printing Papers $1,475 $ 955
Packaging 955 755
Distribution 1,195 800
Specialty Products 715 625
Forest Products 385 425
Less: Intersegment Sales (233) (146)
------ ------
Net Sales $4,492 $3,414
====== ======
Production by Products
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Printing Papers (In thousands of tons)
White Papers and Bristols 849 810
Coated Papers 322 256
Market Pulp (A) 428 419
Newsprint 21 11
Packaging (In thousands of tons)
Containerboard 543 489
Bleached Packaging Board 265 248
Industrial Papers 160 151
Industrial and Consumer
Packaging (B) 779 732
Forest Products (In millions)
Panels (sq. ft. 3/8" basis) (C) 206 207
Lumber (board feet) 218 233
(A) This excludes market pulp purchases.
(B) A significant portion of this tonnage was fabricated from paperboard and
paper produced at the Company's own mills and included in the
containerboard, bleached packaging board, and industrial papers amounts
in this table.
(C) Panels include plywood and oriented strand board.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
DIOXIN LITIGATION
As reported in the Annual Report of Form 10-K for the year ended December 31,
1994 (the "Annual Report"), the appeal by plaintiff from a ruling of the U.S.
District Court for the Middle District of Louisiana dismissing Dow Chemical and
its employees was argued in the U.S. Fifth Circuit Court of Appeals on April 3,
1995. On April 26, 1995, the Court ruled in the Company's favor. The case will
be returned to the Federal District Court for further proceedings.
The remaining five cases in the U.S. Federal District Court for the Southern
District of Mississippi alleging that the Company polluted and damaged the
Pascagoula and Escatawpa Rivers by releasing dioxin and 40 other chemicals, as
reported in the Annual Report, were set for trial on April 17, 1995. On April
4th, the Federal judge entered a Summary Judgment in favor of the Company in
three of the five cases remaining and Partial Summary Judgment in the other
two. The following morning the plaintiffs in these two cases filed Motions to
Dismiss their remaining claims. The Company has opposed these Motions to
Dismiss. The Court has continued the April 17th trial date pending resolution
of these motions.
The Annual Report referenced 70 cases currently pending in Mississippi State
Court consolidated before one judge, noting that a scheduling order had been
presented requesting that the first trial of these cases be set for November
1995. A Scheduling Order has now been entered setting the first of these cases
for trial on November 27, 1995, in Pascagoula, Mississippi.
The Annual Report reported that there were 70 dioxin cases pending in State
Court and six pending in Federal Court for a total of 76 Mississippi cases as of
February 28, 1995. Based on the dismissals reported above, there are now 70
State Court and three Federal Court cases pending for a total number of
plaintiffs in these cases of 5,087 versus 5,090 as reported in the Annual
Report.
OTHER LITIGATION
The United States Attorney's Office for the Southern District of Mississippi and
EPA Region IV, are investigating through a Federal Grand Jury, Arizona Chemical
Company ("Arizona"), a subsidiary of the Company. Arizona has been
informed that it is a target of the investigation, which relates to
environmental issues at Arizona facilities in Gulfport and Picayune,
Mississippi. Arizona is cooperating with the investigation. EPA investigators
have interviewed some of Arizona's current and former employees with respect to
the foregoing matters and several have testified before the Federal Grand Jury.
The Company and Arizona have also received and are in the process of complying
with Federal Grand Jury subpoenas seeking production of documents relating to
these matters. Although grand jury proceedings are by law secret, we believe
the investigation is in a preliminary stage. While we are unable to predict the
outcome of the investigation, we believe that it will not have a material
adverse effect on the Company's future financial condition and results of
operations.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
(3) By-Laws, as amended April 11, 1995
(11) Statement of Computation of Per Share Earnings
(12) Computation of Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(b) Reports on Form 8-K
Current reports on Form 8-K were filed by the Company on April 11, 1995 and
April 21, 1995, in addition to those previously set forth for the period
covered by this report, in the Annual Report on Form 10-K for the year
ended December 31, 1994.
13
<PAGE>
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: May 5, 1995 By /s/ ROBERT C. BUTLER
Robert C. Butler
Senior Vice President
and Chief Financial Officer
Date: May 5, 1995 By /s/ ANDREW R. LESSIN
Andrew R. Lessin
Controller and Chief
Accounting Officer
14
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Description
- ----------- -------------------
3 By-Laws, as amended April 11, 1995
11 Statement of Computation of Per Share Earnings
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
<PAGE>
EXHIBIT 3
- --------------------------------------------------------------------------------
BY-LAWS
OF
INTERNATIONAL PAPER COMPANY
------------------------------
AS AMENDED APRIL 11, 1995
- --------------------------------------------------------------------------------
INTERNATIONAL [LOGO] PAPER
TWO MANHATTANVILLE ROAD
PURCHASE, NEW YORK 10577
(914) 397-1500
<PAGE>
BY-LAWS
OF
INTERNATIONAL PAPER COMPANY
---------------------------
ARTICLE I
STOCKHOLDERS' MEETINGS
SECTION 1. Annual Meeting. The annual meeting of the Stockholders of the
Corporation for the election of Directors, and for the transaction of such other
business as may come before the meeting, shall be held on such date and at such
place within or without the State of New York as shall have been fixed by the
Board of Directors on a timely basis.
SECTION 2. Special Meetings. Special meetings of the Stockholders, unless
otherwise provided by statute, or by the Certificate of Incorporation or other
certificate filed pursuant to law, at any time may be called or caused to be
called by a majority of the Board of Directors or by the Chairman of the Board,
or by the President. Special meetings shall be held at such place within or
without the State of New York as is specified in the call thereof.
SECTION 3. Notice of Meetings. Unless otherwise required by statute, the
notice of every meeting of the Stockholders shall be in writing and shall state
the place, date and hour of the meeting. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called. A copy of the
notice of any meeting shall be given personally or by mail, not less than ten
nor more than fifty days before the date of the meeting, to each Stockholder
entitled to vote at the meeting and to each Stockholder who, by reason of any
action proposed at such meeting, is entitled by law to notice thereof. If
mailed, it shall be directed to a Stockholder at his address as it appears on
the record of Stockholders or, if he shall have filed with the Secretary of the
Corporation a written request that notices to him be mailed to some other
address, then directed to him at such other address.
SECTION 4. Quorum. Proxies. Voting. Except as otherwise provided by law or
by the Certificate of Incorporation or other certificate filed pursuant to law,
at any meeting of the Stockholders there must be present in person or by proxy
the holders of record of stock representing at least one-third of the number of
votes entitled to be cast upon any question to be considered at the meeting in
order to constitute a quorum for the determination of such question, but a less
interest may adjourn the meeting from time to time without notice other than
announcement at the meeting until a quorum be present, and thereupon any
business may be transacted at the adjourned meeting which might have been
transacted at the meeting as originally called. Except as otherwise provided by
law or by the Certificate of Incorporation or other certificate filed pursuant
to law or by the By-Laws of the Corporation, a majority vote of a quorum at a
meeting shall decide any question brought before such meeting. Every holder of
record of stock of a class entitled to vote at a meeting shall be entitled to
one vote for every share of such stock standing in his name on the books of the
Corporation, and may vote either in person or by proxy.
SECTION 5. Presiding Officer and Secretary. At all meetings of the
Stockholders the Chairman of the Board, or in his absence the President, or in
his absence a Vice Chairman of the Board or a Vice President designated by the
Board of Directors, or if none be present, the appointee of the meeting, shall
preside. The Secretary of the Corporation, or in his absence an Assistant
Secretary, or if none be present, the appointee of the Presiding Officer of the
meeting, shall act as Secretary of the meeting.
SECTION 6. Inspectors. At each meeting of Stockholders at which Directors
are to be elected the Presiding Officer shall appoint two Inspectors of Election
who shall perform the duties required by statute at that meeting and any
adjournment thereof. If any Inspector shall refuse to serve, or neglect to
attend at the election or his office becomes vacant, the Presiding Officer shall
appoint an Inspector in his place.
The Presiding Officer of any meeting may also appoint, at such meeting, two
Inspectors with authority to count and report upon the votes cast at such
meeting upon such questions (other than the election of Directors) as may be
voted upon by ballot.
Inspectors shall be sworn.
1
<PAGE>
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number. Election. Vacancies. Term of Office. Within the limits
provided by the Corporation's Certificate of Incorporation or other certificate
filed pursuant to law, the Board of Directors shall determine from time to time
the number of Directors who shall constitute the entire Board of Directors. Any
such determination made by the Board of Directors shall continue in effect
unless and until changed by the Board of Directors, but no such changes shall
affect the term of any Director then in office and, in case any of the Directors
then in office shall have been elected by holders of the Cumulative $4 Preferred
Stock in accordance with the provisions of the Certificate of the Corporation
filed May 31, 1946 pursuant to Section Thirty-six of the Stock Corporation law
(hereafter in this Section 1 referred to as the "Certificate filed May 31,
1946"), no increase in the number of Directors then in office shall be made
which would reduce the number of Directors then in office elected as aforesaid
to less than one-third (or the nearest whole number thereto) of the total number
of Directors then in office. The Board of Directors shall from time to time make
such determinations pursuant to this Section 1 as shall be necessary or
appropriate in order to ensure that, under any circumstances, the holders of
each series of the Serial Preferred Stock shall be able, giving effect to all
applicable provisions of the Corporation's Certificate of Incorporation, and of
these By-Laws (including, without limitation, the preceding sentence), duly and
effectively to exercise any exclusive right conferred upon them by the
Certificate of Incorporation or any certificate filed pursuant to law to elect
Directors of the Corporation.
Except as otherwise provided in the Certificate of Incorporation or other
certificate filed pursuant to law, at each annual meeting of the Stockholders,
the successors to the class of Directors whose terms shall then expire, up to
the number determined in accordance with the foregoing provisions and with the
provisions of the Certificate of Incorporation or other certificate filed
pursuant to law, shall be elected by ballot or by proxy by the holders of the
Common Stock by a plurality of the votes cast at such election.
Except as otherwise provided by law or in the Certificate of Incorporation
or other certificate filed pursuant to law and except as otherwise provided in
this paragraph, any vacancy in the Board occurring during the year, occurring as
a result of an increase in the number of Directors who shall constitute the
Board or any other vacancy, may be filled only by the vote of the Board provided
that a quorum is then in office and present, or by a majority of the Directors
then in office, if less than a quorum is then in office or by a sole remaining
Director. Any vacancy in the Board occurring during the year with respect to
Directors who may have been elected by holders of the Cumulative $4 Preferred
Stock in accordance with the provisions of the Certificate filed May 31, 1946
may only be filled by the holders of the Cumulative $4 Preferred Stock at a
special meeting of such holders in the same manner as at an annual meeting.
Except as otherwise provided by statute, or in the Certificate of
Incorporation or other certificate filed pursuant to law, the term of office of
each Director heretofore or hereafter elected shall be from the time of his
election and qualification until the third annual meeting next following his
election and until his successor shall have been duly elected and shall have
qualified.
Directors need not be Stockholders.
SECTION 2. Resignations. Any Director may resign his office at any time by
delivering his resignation in writing to the Corporation, and the acceptance of
such resignation, unless required by the terms thereof, shall not be necessary
to make such resignation effective.
SECTION 3. Method of Electing Entirely New Board. In case the entire Board
of Directors shall die or resign, any Stockholder may call a special meeting in
the same manner that the Chairman of the Board may call such meeting, and
Directors for the unexpired terms may be elected at any such special meeting in
the manner provided for their election at annual meetings.
SECTION 4. Powers. Except as provided by law, or by the Certificate of
Incorporation or other certificate of the Corporation filed pursuant to law, or
by these By-Laws, the powers, business and affairs of the Corporation shall be
exercised and managed by the Board of Directors.
2
<PAGE>
SECTION 5. Meetings. Regular meetings of the Board of Directors shall be
held at such regular intervals and at such fixed time and place as from time to
time may be determined by the Board, and no notice of such meetings shall be
required.
Special meetings of the Board of Directors shall be held whenever called by
direction of the Chairman of the Board, or of a Vice Chairman of the Board, or
of the President, or of any two of the Directors for the time being in office.
The Secretary shall give notice of each special meeting by mailing the same
not later than the second day before the meeting, or personally or by
telegraphing or telephoning the same not later than the day before the meeting,
to each Director; but such notice may be waived by any Director.
The Chairman of the Board, or in his absence, the President, or in his
absence, a Vice Chairman (to be designated by the persons present at the meeting
in the event of more than one Vice Chairman being present) shall preside at all
meetings of the Board of Directors. If all of the aforesaid officers be absent
or decline to act, the persons present may choose one of their number to act as
chairman of the meeting.
At the first meeting held after the annual meeting of Stockholders, the
Board of Directors shall elect the Executive Officers of the Corporation, each
of whom shall hold his office until the next annual election of Officers and
until another is elected and qualified in his stead, unless sooner removed.
Any Director may vote or act on behalf of the Corporation in contracting
with any other company, notwithstanding he may be an Officer, Director or
Stockholder therein.
Any one or more members of the Board of Directors or any Committee thereof
may participate in a meeting of the Board of Directors or such Committee by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 6. Quorum. One-third of the total number of Directors determined
pursuant to Section 1 of this Article as constituting the Board of Directors
shall constitute a quorum for the transaction of business, but if there shall be
less than a quorum at any meeting of the Board, a majority of those present (or
if only one be present, then that one) may adjourn the meeting from time to time
and the meeting may be held as adjourned without further notice.
SECTION 7. Committees. The Board of Directors may appoint an Executive
Committee and such other committee or committees as they may determine. Such
committee or committees shall have such powers as shall be specified by
resolution of the Board of Directors. The Executive Committee, so far as
permitted by law, may be vested with all of the powers of the Board of Directors
when the Board of Directors is not in session.
SECTION 8. Compensation of Directors. Directors shall be entitled to
reasonable compensation for their services. They may be paid a fixed salary and
may also receive a fee for attendance at any meeting of the Board of Directors
or of any Committee of the Board. The amount of compensation shall be determined
by resolution of the Board. Nothing herein contained shall preclude any Director
from serving in any other capacity and receiving compensation therefor.
SECTION 9. Nominations. Nominations for election to the Board of Directors
of the Corporation at a meeting of the Stockholders may be made by the Board, or
on behalf of the Board by any nominating committee appointed by the Board, or by
any Stockholder of the Corporation entitled to vote for the election of
Directors at such meeting. Such nominations, other than those made by or on
behalf of the Board, shall be made by notice in writing delivered or mailed by
first class United States mail, postage prepaid, to the Secretary of the
Corporation, and received by him not less than thirty (30) days nor more than
sixty (60) days prior to any meeting of the Stockholders called for the election
of Directors; provided, however, that if less than thirty-five (35) days notice
of the meeting is given to the Stockholders, such nomination shall have been
mailed or delivered to the Secretary of the Corporation not later than the close
of business on the seventh (7th) day following the day on which the notice of
meeting was mailed. Such notice shall set forth as to each proposed nominee who
is not an incumbent Director (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the number of shares of
stock of the Corporation which are beneficially owned by each such nominee and
by the nominating Stockholder, and
3
<PAGE>
(iv) any other information concerning the nominee that must be disclosed of
nominees in proxy solicitations pursuant to Rule 14(a) of the Securities
Exchange Act of 1934. Such notice shall be accompanied by the written consent of
each proposed nominee to serve as a Director of the Corporation. No person shall
be eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth herein.
The Presiding Officer of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
ARTICLE III
OFFICERS AND AGENTS
SECTION 1. General. The Elected Officers of the Corporation shall be
elected by the Board of Directors. The Elected Officers of the Corporation may
include a Chief Executive Officer, a President, one or more Executive Vice
Presidents, Senior Vice Presidents, and Vice Presidents, a Treasurer, a
Secretary and such other Elected Officers as may be deemed necessary or
desirable. Any two or more such offices may be held by the same person, except
the offices of President and Secretary.
The Board of Directors, at any time and from time to time, may appoint or
authorize the Chief Executive Officer to appoint one or more Vice Presidents, a
Controller, an Auditor, a Chief Tax Officer, one or more Assistant Treasurers
and one or more Assistant Secretaries, and such other Officers or agents as may
be deemed necessary or desirable, and may prescribe or authorize the Chief
Executive Officer to prescribe the powers and duties of each, and fill any
vacancy which may occur in any such office.
All Elected Officers shall be subject to removal at any time by the
affirmative vote of a majority of the whole Board of Directors. All other
Officers, and all heads of departments, managers, assistant managers, agents and
employees of the Corporation, may be removed at any time, by vote of the Board
of Directors, or by the Officer appointing them, or by any other superior
Officers or any Committee thereunto authorized by the Board.
SECTION 2. Chairman of the Board. The Chairman of the Board shall preside
at all meetings of the Stockholders and of the Board of Directors. He shall have
such other powers and perform such other duties as may, from time to time, be
specified by the Board of Directors.
SECTION 3. Vice Chairman of the Board. A Vice Chairman of the Board, in the
absence of the Chairman of the Board and the President, shall preside at
meetings of the Stockholders and of the Board of Directors. He shall have such
other powers and perform such other duties as may, from time to time, be
specified by the Board of Directors or by the chief executive officer of the
Corporation. He shall be subject to the control of the Board of Directors and to
the powers of the chief executive officer of the Corporation.
SECTION 4. President. The President, in the absence of the Chairman of the
Board, shall preside at meetings of the Stockholders and of the Board of
Directors. He shall have such other powers and perform such other duties as may,
from time to time, be specified by the Board of Directors or by the chief
executive officer of the Corporation. He shall be subject to the control of the
Board of Directors and to the powers of the chief executive officer of the
Corporation.
SECTION 5. Chief Executive Officer. The chief executive officer shall have
general charge of the business of the Corporation and the power to formulate all
plans and policies in connection therewith, subject to the control of the Board
of Directors. He shall keep the Board of Directors fully informed and shall
freely consult with the Board concerning the business of the Corporation. He
shall have such other powers and perform such other duties as may, from time to
time, be specified by the Board of Directors.
SECTION 6. Vice Presidents. Any Vice President shall have such powers and
perform such duties as may, from time to time, be specified by the Board of
Directors or by the chief executive officer of the Corporation.
SECTION 7. Treasurer. The Treasurer shall have the care and custody of the
funds and securities of the Corporation and shall have such powers and perform
such duties as are incident to the office of Treasurer, or as may, from time to
time, be specified by the Board of Directors or by the chief executive officer
of the
4
<PAGE>
Corporation. He shall be subject to the control of the Board of Directors and to
the powers of the chief executive officer of the Corporation.
SECTION 8. Assistant Treasurers. Any Assistant Treasurer shall perform such
duties as the Treasurer or the chief executive officer of the Corporation or the
Board of Directors may from time to time assign to him.
SECTION 9. Secretary. The Secretary shall have the care and custody of the
seal and minute books of the Corporation and shall have such powers and perform
such duties as are incident to the office of Secretary or as may, from time to
time, be specified by the Board of Directors. He shall be subject to the control
of the Board of Directors.
SECTION 10. Assistant Secretaries. Any Assistant Secretary shall perform
such duties as the Secretary or the chief executive officer of the Corporation
or the Board of Directors may from time to time assign to him.
SECTION 11. Controller. If a Controller shall have been elected, he shall
be the chief accounting officer of the Corporation and shall have such powers
and perform such duties as may, from time to time, be specified by the Board of
Directors or the chief executive officer. He shall be subject to the control of
the Board of Directors and to the powers of the chief executive officer of the
Corporation.
SECTION 12. Auditor. If an Auditor shall have been elected, he shall have
full charge of the auditing of all accounts of every kind, subject to the
control of the Board of Directors, and shall also perform such other duties as
the Board of Directors or the chief executive officer of the Corporation may
from time to time direct.
SECTION 13. Chief Tax Officer. The Chief Tax Officer shall have
responsibility for all tax matters of the Corporation, subject to control of the
Board of Directors, and shall have such powers and perform such other duties as
the Board of Directors or the chief executive officer or the chief financial
officer may from time to time direct.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Certificates of Shares. Certificates of shares of each class of
the capital stock of the Corporation shall be issued in such forms, not
inconsistent with law or with the Certificate of Incorporation or other
certificate filed pursuant to law, as shall be approved by the Board of
Directors.
SECTION 2. Transfers of Shares of Stock. Transfers of shares shall only be
made upon the books of the Corporation by the holder in person, or by power of
attorney duly executed and filed with the Corporation, and on the surrender and
cancellation of the certificate or certificates of such shares properly
assigned.
The Board of Directors shall have power and authority to make all such
rules and regulations as they may deem expedient concerning the issue, transfer
and registration of certificates of shares in the capital stock of the
Corporation.
SECTION 3. Record Dates. For the purpose of determining the Stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or for the purpose of determining Stockholders entitled to
receive payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board may fix, in advance, a date as the record
for any such determination of Stockholders. Such date shall not be more than
fifty nor less than ten days before the date of such meeting, nor more than
fifty days prior to any other action.
SECTION 4. Lost Certificates. No certificate of shares in the capital stock
of the Corporation shall be issued in place of any certificate alleged to have
been lost, stolen or destroyed, except on delivery to the Corporation of a bond
of indemnity, against such lost, stolen or destroyed certificate, with such
surety or security, if any, as shall be approved by the Treasurer or Secretary.
Proper and legal evidence of such loss, theft or destruction shall be produced
to the Treasurer or Secretary, if they require the same. The Treasurer or
Secretary may (except as otherwise provided in any agreement executed and
delivered on behalf of the Corporation and authorized by the Board of Directors)
in their discretion refuse to issue such new certificate, save upon the order of
the court having jurisdiction in such matters.
5
<PAGE>
ARTICLE V
DIVIDENDS
Dividends may be declared and paid out of funds of the Corporation legally
available therefor as often and at such times and to such extent as the Board of
Directors may determine, consistent with the provisions of the Certificate of
Incorporation or other certificate filed pursuant to law.
ARTICLE VI
SEAL
The seal of the Corporation shall consist of a flat-faced circular die with
the name of the Corporation in a circle and the year of its incorporation in the
center.
ARTICLE VII
WAIVER
Any notice required by the By-Laws of the Corporation to be given to
Directors or Stockholders for any meeting may be waived by any Director or
Stockholder in writing, signed by such Director or Stockholder or by his
attorney thereunto authorized, and filed with the Secretary of the Corporation.
ARTICLE VIII
CHECKS, DRAFTS, NOTES, ETC.
Funds of the Corporation on deposit with banks shall be disbursed by checks
or drafts signed by such officer or officers as the Board of Directors from time
to time designate or by such person or persons as shall from time to time be
designated either by the Board of Directors or by such officer or officers as
the Board shall from time to time authorize so to do. Notes, drafts,
acceptances, bills of exchange, or other obligation for the payment of money
(other than checks and drafts on banks with which the Corporation has funds on
deposit) made, accepted, or endorsed, shall be signed by such officer or
officers or person or persons as the Board of Directors shall from time to time
designate.
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify each Officer or Director who is made, or
threatened to be made, a party to any action by reason of the fact that he or
she is or was an Officer or Director of the Corporation, or is or was serving at
the request of the Corporation in any capacity for the Corporation or any other
enterprise, to the fullest extent permitted by applicable law. The Corporation
may, so far as permitted by law, enter into an agreement to indemnify and
advance expenses to any Officer or Director who is made, or threatened to be
made, a party to any such action.
ARTICLE X
AMENDMENTS
These By-Laws, or any of them, may be altered, amended, or repealed, and
new By-Laws may be adopted, at any annual meeting of the Stockholders, or at any
special meeting called for that purpose, by a vote of a majority of the shares
represented and entitled to vote thereat. The Board of Directors shall have the
power, by a majority vote of the whole Board, to alter or amend or repeal these
By-Laws, but any such action of the Board of Directors may be amended or
repealed by the Stockholders at any annual meeting.
6
<PAGE>
I, , a duly appointed Assistant Secretary of International
Paper Company, a corporation duly organized and existing under the laws of the
State of New York, hereby certify that the foregoing comprises a true and
complete copy of the By-Laws of said International Paper Company as amended to
the date hereof, and that the same are in force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate
seal of said International Paper Company this day of , 19 .
_____________________________________________________
Assistant Secretary of International Paper Company
7
(Exhibit 11)
INTERNATIONAL PAPER COMPANY
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(In millions, except per-share amounts)
Three Months Ended
March 31,
------------------
1995 1994
---- ----
Net earnings $ 246 $ 1
Debenture interest savings, net of taxes, assuming
conversion of convertible subordinated debentures 2 *
----- -----
Primary and fully diluted net earnings $ 248 $ 1
===== =====
Earnings per common share $1.95 $0.01
===== =====
Primary and fully diluted earnings per share $1.91 $0.01
===== =====
PRIMARY AND FULLY DILUTED SHARES
Average shares outstanding 126.4 124.2
Shares assumed to be repurchased using long-term
incentive plan deferred compensation at average
market price (0.3) (0.3)
Shares assumed to be issued upon exercise of
stock options, net of treasury buyback at average
market price 0.4 0.5
Shares assumed to be issued upon conversion of
convertible subordinated debentures 2.9 *
----- -----
Primary and fully diluted shares 129.4 124.4
===== =====
Note: The Company reports earnings per common share as the effect of dilutive
securities is less than 3%.
* Convertible subordinated debentures were antidilutive.
(Exhibit 12)
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar amounts in millions)
(Unaudited)
Three Months Ended
For the Years Ended December 31, March 31,
TITLE 1990 1991 1992 1993 1994 1994 1995
- ----------------------------------- -------- -------- ------ ------ -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
A) Earnings before income taxes,
extraordinary item and
accounting changes $ 945.9 $ 637.9 $206.1 $500.0 $ 664.0 $118.0 $390.6
B) Add: Fixed charges excluding
capitalized interest 336.2 380.3 325.3 365.3 412.3 89.6 119.9
C) Add: Amortization of previously
capitalized interest 8.6 9.9 9.9 12.2 12.8 3.0 3.2
D) Less: Equity in undistributed
earnings of affiliates (9.4) (10.8) (19.1) (25.9) (49.1) (10.8) (16.3)
-------- -------- ------ ------ -------- ------ ------
E) Earnings before income taxes,
extraordinary item, accounting
changes and fixed charges $1,281.3 $1,017.3 $522.2 $851.6 $1,040.0 $199.8 $497.4
======== ======== ====== ====== ======== ====== ======
Fixed Charges
F) Interest and amortization of
debt expense $ 309.5 $ 351.1 $297.1 $334.5 $ 371.0 $ 81.4 $110.8
G) Interest factor attributable to
rentals 26.7 29.2 28.2 30.8 41.3 8.2 9.1
H) Capitalized interest 26.3 36.4 42.0 12.2 18.0 2.2 7.6
-------- -------- ------ ------ -------- ------ ------
I) Total fixed charges $ 362.5 $ 416.7 $367.3 $377.5 $ 430.3 $ 91.8 $127.5
======== ======== ====== ====== ======== ====== ======
J) Ratio of earnings to fixed
charges 3.53 2.44 1.42 2.26 2.42 2.18 3.90
======== ======== ====== ====== ======== ====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Exhibit 27)
INTERNATIONAL PAPER COMPANY
FINANCIAL DATA SCHEDULE
(Unaudited)
(In millions, except per-share amounts)
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 196
<SECURITIES> 0
<RECEIVABLES> 2,671
<ALLOWANCES> (104)
<INVENTORY> 2,223
<CURRENT-ASSETS> 5,278
<PP&E> 16,634
<DEPRECIATION> (7,316)
<TOTAL-ASSETS> 18,604
<CURRENT-LIABILITIES> 4,502
<BONDS> 4,411
0
0
<COMMON> 129
<OTHER-SE> 6,708
<TOTAL-LIABILITY-AND-EQUITY> 18,604
<SALES> 4,492
<TOTAL-REVENUES> 4,492
<CGS> 3,239
<TOTAL-COSTS> 3,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 9
<INTEREST-EXPENSE> 104
<INCOME-PRETAX> 391
<INCOME-TAX> 145
<INCOME-CONTINUING> 246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246
<EPS-PRIMARY> 1.91
<EPS-DILUTED> 1.91
</TABLE>
