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
July 15, 1999
------------------------------------------------------
Date of Report (Date of Earliest Event Reported)
INTERNATIONAL PAPER COMPANY
------------------------------------------------------
(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
---------------
(Telephone No.)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
N/A
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
N/A
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
N/A
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
N/A
ITEM 5. OTHER EVENTS
Press Release dated July 13, 1999, announcing earnings for second quarter of
1999.
Segment analysis
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
N/A
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
N/A
(b) Pro Forma Financial Information:
N/A
(c) Exhibits
(99.1) Press Release
(99.2) Segment Analysis
ITEM 8. CHANGES IN FISCAL YEAR
N/A
<PAGE>
Signature
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)
/s/ JAMES W. GUEDRY
Date: July 15, 1999 ----------------------------------------
Purchase, NY James W. Guedry
Secretary
================================================================================
INTERNATIONAL [LOGO] PAPER
================================================================================
2 MANHATTANVILLE ROAD
PURCHASE, NY 10577-2196
News Release
Media Contact: Jack Cox, 914-397-1952
Analyst Contacts: Carol Tutundgy, 914-397-1632; Mary Winn Settino, 914-397-1623
International Paper Reports Strong Improvement in Operating Earnings
for Second-Quarter
July 13, 1999
Purchase, N.Y. -- International Paper reported second-quarter 1999 net earnings
of $99 million, or $.24 a share, before special and extraordinary items. This is
an increase of $67 million ($.16 a share) over first-quarter 1999 earnings,
which were $32 million ($.08 per share). Second-quarter 1999 net sales were $6.0
billion, the same as first-quarter 1999. All previous periods have been restated
to include Union Camp Corporation.
International Paper reported a loss of $71 million ($.17 per share) in the
second quarter of 1999 after special and extraordinary items. Special items
amounted to $234 million before tax ($.38 per share) and consisted of charges of
$98 million for Union Camp merger related severance, $59 million for one-time
merger expenses, $113 million for shut down of excess internal capacity and cost
reduction actions and credits of $36 million from the reversal of previously
established reserves that were no longer required. The extraordinary expense of
$13 million after taxes ($.03 per share) was for the refinancing of high
interest Union Camp debt, which International Paper assumed under the merger
agreement. Second-quarter 1998 earnings were $103 million ($.25 per share) on
sales of $5.8 billion.
"Looking forward, market conditions are more favorable than we've seen in some
time," said John Dillon, chairman and chief executive officer. "The improvement,
which began at the end of the first quarter, has strengthened and accelerated
into a clear trend. In most of our paper and packaging businesses as supply and
demand are coming into balance, the negative effects of Asia are moderating, and
the outlook for world economies remains strong. There is very little new
capacity scheduled or announced, and prices for all of our major products are
improving.
"Additionally, our building-products sector remains very strong, although for
International Paper it makes up less than 15 percent of our overall business,"
Dillon said. "As the paper and packaging sectors continue to build similar
momentum, we believe International Paper is ideally situated to capitalize, in
both the domestic and international markets, on what we expect will be a
broad-based rebound in the paper and forest products industry.
"Of course, we're doing much more at International Paper than simply riding the
up cycle," Dillon said. "We're changing our company by more effectively managing
our capacity and production. During the past three years, we've closed down 11
percent of our linerboard capacity and either closed or reallocated another 11
percent of our uncoated paper capacity. Our Gardiner mill is on indefinite
shutdown as is one machine at our Savannah mill, and in June we announced
another three permanent capacity shutdowns totaling 140,000 tons.
<PAGE>
International Paper, Continued.
Page 2.
"Beyond that," Dillon said, "our efficiency and cost-reduction efforts have
racked up record savings during the last two years and are on pace to do so
again in 1999; our capital spending is below depreciation and amortization, with
no plans to add new capacity; and our merger with Union Camp is going not only
well, but well ahead of expectations. The merger was additive to earnings in the
second quarter, and we have increased our merger savings target from $300
million to $425 million, which will be realized within an 18 month time frame."
Within our Packaging segment, Industrial Packaging earnings were up tenfold as
containerboard price increases were realized. Consumer Packaging results
increased nearly a third largely due to improved results in bleached board and
beverage packaging.
In the Forest Products segment, earnings were up slightly. Wood Products
earnings nearly doubled on very strong demand. Panel prices reached record
levels and lumber prices continue to rise. However, earnings from our timber
operations were lower.
Earnings in our Printing and Communications Papers segment improved. Uncoated
free sheet commodity pricing continued to improve and the supply/demand trend in
pulp is favorable.
In the company's distribution business, xpedx, earnings were 13 percent higher
as margins improved and more benefits were realized from the Zellerbach merger.
Chemicals and Petroleum results were up sharply, primarily because of
improvement in demand for chemical products and higher natural gas prices.
Both year-to-date and prior year financial statements have been restated to
include the results of Union Camp Corporation on a pooling of interests basis.
As a result the first quarter, 1999 earnings are now $32 million ($.08 per
share) compared to the previously reported $44 million ($.14 per share); first
half 1998 earnings are now $203 million ($.50 per share) compared to the
previously reported $161 million ($.53 per share) and first quarter 1998
earnings are now $100 million ($.25 per share) as compared to the previously
reported $75 million ($.25 per share).
International Paper (www.internationalpaper.com) is the world's largest paper
and forest products company. Businesses include printing paper, packaging,
building materials, chemical products and distribution. Headquartered in the
United States at Purchase, N.Y., the company has operations in nearly 50
countries, employs nearly 100,000 people and exports its products to more than
130 nations.
# # # #
This news release contains certain forward-looking statements concerning
anticipated savings. Actual results may differ based primarily on whether such
savings from restructuring the merger with Union Camp and other initiatives are
achieved.
<PAGE>
International Paper, Continued.
Page 3.
International Paper
Sales by Business Segment
Preliminary and Unaudited
(In millions)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
Printing & Communications $ 1,405 $ 1,480 $ 2,880 $ 3,065
Papers
Industrial & Consumer Packaging 1,760 1,790 3,435 3,520
Distribution 1,675 1,380 3,375 2,790
Chemicals & Petroleum 360 375 710 740
Forest Products 815 715 1,600 1,430
Carter Holt Harvey 400 365 765 780
Less: Intersegment Sales (419) (272) (737) (486)
-------- -------- -------- --------
$ 5,996 $ 5,833 $ 12,028 $ 11,839
======== ======== ======== ========
<PAGE>
International Paper, Continued.
Page 4.
<TABLE>
<CAPTION>
International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
Three Months Ended Six Months Ended
June 30, (c) June 30, (c)
-------------------- --------------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net Sales (In billions) $ 6.0 $ 5.8 $12.0 $11.8
----- ----- ----- -----
Earnings Before Interest, Income
Taxes and Minority Interest 87(a) 327(b) 324(a) 670(b)
Interest expense, net 123 156 266 314
----- ----- ----- -----
Earnings (Loss) Before Income Taxes
and Minority Interest (36)(a) 171(b) 58(a) 356(b)
Income tax (benefit) provision (18)(a) 49(b) 10(a) 112(b)
Minority interest expense, net of taxes 40 19 74 41
----- ----- ----- -----
Earnings (Loss) Before Extraordinary
Items (58)(a) 103(b) (26)(a) 203(b)
Loss on extinguishment of debt 13 13
----- ----- ----- -----
Net Earnings (Loss) $ (71)(a) $ 103(b) $ (39)(a) $ 203(b)
===== ===== ===== =====
Earnings (Loss) Per Common Share
Before Extraordinary Items $(0.14) $0.25 $(0.06) $0.50
Loss on extinguishment of debt $(0.03) $(0.03)
----- ----- ----- -----
Earnings (Loss) Per Common Share $(0.17) $0.25 $(0.09) $0.50
===== ===== ===== =====
Earnings (Loss) Per Common Share -
Assuming Dilution $(0.17) $0.25 $(0.09) $0.50
===== ===== ===== =====
Average Common Shares Outstanding 413.0 411.8 412.5 409.6
===== ===== ===== =====
</TABLE>
(a) Includes a $157 million pretax charge ($116 million after taxes) for merger
integration costs; $36 million of pretax earnings ($27 million after taxes) from
the reversal of restructuring reserves no longer required; and restrucuring and
other charges totaling $113 million before taxes ($68 million after taxes).
(b) Includes a $6 million pretax charge ($4 million after taxes) to write off
in-process research and development costs related to an acquisition by Scitex, a
13% owned investee company.
(c) Amounts have been restated to reflect the merger with Union Camp.
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
1999 AND 1998 SALES BY INDUSTRY SEGMENT
PRELIMINARY AND UNAUDITED
(In Millions)
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
---------------------- ---------------------- -----------------------
1999 (a) 1998 (a) 1999 1998 (a) 1999 1998 (a)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Printing & Communications Papers $ 1,475 $ 1,585 $ 1,405 $ 1,480 $ 2,880 $ 3,065
Industrial & Consumer Packaging 1,675 1,730 1,760 1,790 3,435 3,520
Distribution 1,700 1,410 1,675 1,380 3,375 2,790
Chemicals & Petroleum 350 365 360 375 710 740
Forest Products 785 715 815 715 1,600 1,430
Carter Holt Harvey 365 415 400 365 765 780
Coporate and Intersegment Sales (318) (214) (419) (272) (737) (486)
-------- -------- -------- -------- -------- --------
Net Sales $ 6,032 $ 6,006 $ 5,996 $ 5,833 $ 12,028 $ 11,839
======== ======== ======== ======== ======== ========
<CAPTION>
Three Months Ended Three Months Ended Twelve Months Ended
September 30, 1998 (a) December 31, 1998 (a) December 31, 1998 (a)
---------------------- --------------------- ---------------------
<S> <C> <C> <C>
Printing & Communications Papers $ 1,455 $ 1,395 $ 5,915
Industrial & Consumer Packaging 1,765 1,725 7,010
Distribution 1,685 1,805 6,280
Chemicals & Petroleum 370 355 1,465
Forest Products 725 775 2,930
Carter Holt Harvey 345 380 1,505
Coporate and Intersegment Sales (313) (327) (1,126)
-------- -------- --------
Net Sales $ 6,032 $ 6,108 $ 23,979
======== ======== ========
</TABLE>
(a) Amounts have been restated to reflect the merger with Union Camp.
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
1999 AND 1998 SEGMENT EARNINGS BEFORE SPECIAL ITEMS
PRELIMINARY AND UNAUDITED
(In Millions)
Three Months Ended Three Months Ended Six Months Ended
March 31, June 30, June 30,
---------------------- ---------------------- -----------------------
1999 (a) 1998 (a) 1999 1998 (a) 1999 1998 (a)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Printing & Communications Papers $ 8 $ 98 $ 22 $ 77 $ 30 $ 175
Industrial & Consumer Packaging 56 90 142 110 198 200
Distribution 24 17 27 20 51 37
Chemicals & Petroleum 19 30 28 31 47 61
Forest Products 174 125 175 136 349 261
Carter Holt Harvey (b) 0 4 11 15
-------- -------- -------- --------
Total From Businesses (c) $ 281 $ 364 $ 385 $ 749
======== ======== ======== ========
<CAPTION>
Three Months Ended Three Months Ended Twelve Months Ended
September 30, 1998 (a) December 31, 1998 (a) December 31, 1998 (a)
---------------------- --------------------- ---------------------
<S> <C> <C> <C>
Printing & Communications Papers $ 34 $ (31) $ 178
Industrial & Consumer Packaging 95 39 334
Distribution 23 26 86
Chemicals & Petroleum 34 42 137
Forest Products 154 207 622
Carter Holt Harvey (1) 6 20
-------- -------- --------
Total From Businesses (c) $ 339 $ 289 $ 1,377
======== ======== ========
</TABLE>
(a) Amounts have been restated to reflect the merger with Union Camp.
(b) Carter Holt Harvey is a publicly traded New Zealand corporation; current
quarter earnings cannot be disclosed until a public release has been made by
Carter Holt Harvey.
(c) Total from businesses represents operating profit before net interest
expense, minority interest adjustment, and net corporate items, and special
items as discussed in the press release dated July 13, 1999, announcing earnings
for second quarter of 1999, and the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
