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
October 12, 1999
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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
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(State of (Commission (IRS Employer
Incorporation) File) Identification Number)
Two Manhattanville Road, Purchase, NY 10577
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(Address of Principal executive offices)
914-397-1500
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(Telephone No.)
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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
The Company announced 1999 third-quarter earnings of $192 million
($.46 per share) before special and extraordinary items. This
represented an increase of $92 million ($.22 per share) over
second-quarter 1999 net earnings, which were $100 million ($.24 per
share). Third quarter 1999 net sales were $6.3 billion, up $300
million from the previous quarter. All previous periods have been
restated to include Union Camp Corporation.
The Company also announced special item pre-tax charges of $50
million for Union Camp merger-related severance, $18 million for
one-time merger expenses and $10 million for environmental reserves
related to former Union Camp facilities. The Company also announced
an extraordinary expense of $3 million after taxes for the
refinancing of high interest Union Camp debt.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
N/A
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
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N/A
(b) Pro Forma Financial Information:
N/A
(c) Exhibits
(99) Press release dated October 12, 1999, announcing earnings for
the third quarter of 1999 and pre-tax charges and extraordinary expense.
ITEM 8. CHANGES IN FISCAL YEAR
N/A
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)
Date: October 14, 1999 /s/ Carol M. Samalin
Purchase, NY --------------------
Carol M. Samalin
Assistant Secretary
2 MANHATTANVILLE ROAD
PURCHASE, NY 10577-2196
News Release
Media Contact: Jack Cox, 914-397-1952
Analyst Contact: Carol Tutundgy, 914-397-1632
International Paper Reports Strong Improvement in Operating Earnings for Third
Quarter
October 12, 1999
Purchase, N.Y. -- International Paper reported third-quarter 1999 earnings of
$192 million ($.46 per share) before special and extraordinary items. This is an
increase of $92 million ($.22 per share) over second-quarter 1999 net earnings,
which were $100 million ($.24 per share). Third-quarter 1998 earnings before
extraordinary items were $81 million ($.20 per share). Third-quarter 1999 net
sales were $6.3 billion, up $300 million from the previous quarter and the
year-earlier period. All previous periods have been restated to include Union
Camp Corporation.
"Our markets have been improving all year and the results we announced today
clearly show that," noted John Dillon, chairman and chief executive officer. "In
each month of the quarter, our earnings increased and we believe the improved
quarterly earnings trend will continue for the next year."
"Not only are our markets getting better, and our internal cost-cutting programs
succeeding, we are also seeing the benefits of our merger with Union Camp
reflected in our earnings, keeping us on track to realize the $425 million in
merger related annualized savings by the end of 2000. In fact, we will achieve
about one-third of that savings by the end of this year. Going forward, we will
continue to manage production in line with our customer orders and not build
inventory."
International Paper reported net earnings of $142 million ($.34 per share) in
the third quarter of 1999 after special and extraordinary items. Special items
amounted to $47 million after tax ($.11 per share) and consisted of pre-tax
charges of $50 million for Union Camp merger related severance, $18 million for
one-time merger expenses and $10 million for environmental reserves related to
former Union Camp facilities. The extraordinary expense of $3 million after
taxes ($.01 per share) was for the refinancing of high interest Union Camp debt,
which International Paper assumed under the merger agreement.
Because International Paper has a large concentration of facilities and
forestlands in the southeastern U.S., this season's Atlantic hurricanes
negatively impacted earnings by about $.03 per share.
"We experienced weather related disruptions caused by Hurricane Floyd in
September," Dillon explained. "Our facilities in the coastal areas of Georgia,
South Carolina, North Carolina, and Virginia shutdown as the storm approached.
Most of the locations resumed production within hours of the storm's passage.
One major exception was our Franklin, Virginia complex, which resumed partial
production last week. As a result, we estimate that the company is losing about
2,000 tons per day of production from the Franklin Mill, one of our largest
Printing and Communications Papers operations."
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International Paper, Continued.
Page 2
During the third quarter, the effective tax rate on operating
earnings decreased from 30 percent to 28 percent. This had a positive impact on
earnings of about $.03 per share.
Looking at the business segments, the largest gains came from the Packaging and
Printing and Communications Papers businesses, which together account for
slightly more than half of International Paper's annual sales. Earnings in the
U.S. papers segment increased more than 400 percent over the previous quarter
due to favorable pricing, internal cost-cutting activities and other benefits
realized as a result of the merger with Union Camp earlier this year.
Earnings in the company's European Papers business also improved substantially
in the third quarter. The company's eastern European operations were
particularly strong, led by its mill in Poland, with the recently acquired mill
in Russia also contributing to the profit improvement.
In the Packaging segment, earnings for Industrial Packaging were up 30 percent
over the second quarter, primarily as a result of favorable pricing and other
benefits from the Union Camp merger. Consumer Packaging earnings were up only
slightly from the prior period, due in part to a slower than anticipated price
recovery for the bleached board system and tight markets for converters.
Earnings within the Petroleum and Chemicals segment improved by 38 percent from
the second quarter, due to higher prices.
Forest Products segment earnings were almost 15 percent above the previous
quarter. Within the segment, Forest Resources' earnings were up about 30 percent
over the previous quarter, in part due to the sale of forestlands in
northeastern Maine. In addition, harvest volumes continued strong, and stumpage
prices for both pine pulpwood and saw timber improved in September. Within
Building Materials gains in the wood products group were offset by a slight
decline in earnings from the Masonite(TM) and decorative products groups.
In the Distribution segment, sales were relatively flat with the previous
quarter, while earnings declined slightly.
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 earnings and cost savings. Actual results may differ based primarily
on pricing levels, the strength of the U.S. and European economies and whether
earnings from merger-related and other cost-cutting initiatives are achieved.
<PAGE>
International Paper, Continued.
Page 3
International Paper
Sales by Industry Segment
Preliminary and Unaudited
(In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
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1999 1998 1999 1998
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Printing & Communications $1,500 $ 1,455 $ 4,380 $ 4,520
Papers
Industrial & Consumer Packaging 1,780 1,765 5,215 5,285
Distribution 1,740 1,685 5,115 4,475
Chemicals & Petroleum 370 370 1,080 1,110
Forest Products 825 725 2,425 2,155
Carter Holt Harvey 410 345 1,175 1,125
Less: Intersegment Sales (374) (293) (1,111) (799)
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$6,251 $ 6,052 $18,279 $17,871
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International Paper, Continued.
Page 4
International Paper
Summary of Consolidated Earnings
Preliminary and Unaudited
(In millions except for net sales and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999(e) 1998(e) 1999(e) 1998(e)
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<S> <C> <C> <C> <C>
Net Sales (In billions) $ 6.3 $ 6.1 $ 18.3 $ 17.9
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Earnings Before Interest, Income
Taxes, Minority Interest and
Extraordinary Items 376(a) 130(c) 700(b) 800(c,d)
Interest expense, net 134 147 400 461
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Earnings (Loss) Before Income Taxes,
Minority Interest and Extraordinary Items 242(a) (17)(c) 300(b) 339(c,d)
Income tax (benefit) provision 54(a) (23)(c) 64(b) 89(c,d)
Minority interest expense, net of taxes 43 8 117 49
-------- -------- -------- --------
Earnings (Loss) Before Extraordinary
Items 145(a) (2)(c) 119(b) 201(c,d)
Loss on extinguishment of debt 3 16
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Net Earnings (Loss) $ 142(a) $ (2)(c) $ 103(b) $ 201(c,d)
======== ======== ======== ========
Earnings (Loss) Per Common Share
Before Extraordinary Items $ 0.35 $ (0.01) $ 0.29 $ 0.49
Loss on extinguishment of debt $ (0.01) $ (0.04)
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Earnings (Loss) Per Common Share $ 0.34 $ (0.01) $ 0.25 $ 0.49
======== ======== ======== ========
Earnings (Loss) Per Common Share -
Assuming Dilution $ 0.34 $ (0.01) $ 0.25 $ 0.49
======== ======== ======== ========
Average Common Shares Outstanding 413.5 412.2 412.9 410.5
======== ======== ======== ========
</TABLE>
(a) Includes a $68 million pretax charge ($41 million after taxes) for merger
integration costs, and a $10 million pretax charge ($6 million after taxes) for
the establishment of additional environmental remediation reserves.
(b) Includes a $225 million pretax charge ($157 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; restructuring and
other charges totaling $113 million before taxes ($68 million after taxes); and
a $10 million pretax charge ($6 million after taxes) for the establishment of
additional environmental remediation reserves.
(c) Includes a $20 million pretax gain ($12 million after taxes) on the sale of
the Veratec nonwovens business, $45 million of pretax earnings ($27 million
after taxes) from the reversal of previously established restructuring and asset
impairment reserves that were no longer required, $55 million of pretax oil and
gas impairment charges ($33 million after taxes), and new restructuring and
other charges totaling $155 million ($88 million after taxes).
<PAGE>
International Paper, Continued.
Page 4
(d) 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.
(e) Amounts have been restated to reflect the merger with Union Camp.
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INTERNATIONAL [LOGO] PAPER
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