MEMPHIS, Tenn., July 28,
2016 /PRNewswire/ -- International Paper (NYSE: IP) today
reported second quarter 2016 net earnings attributable to
International Paper of $40 million
($0.10 per share) compared with net
earnings of $334 million
($0.81 per share) in the first
quarter of 2016 and net earnings of $227
million ($0.54 per share) in
the second quarter of 2015. Net earnings in all periods include the
impact of special items, if any, non-operating pension expense and
discontinued operations.
|
Diluted Earnings
Per Share Attributable to International Paper
Shareholders
|
|
|
|
|
|
|
|
|
|
Second
Quarter
2016
|
|
First
Quarter
2016
|
|
Second
Quarter
2015
|
|
Net Earnings
|
|
$
|
0.10
|
|
|
$
|
0.81
|
|
|
$
|
0.54
|
|
|
Less – Discontinued
Operations (Gain) Loss
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
0.10
|
|
|
0.82
|
|
|
0.54
|
|
|
Add Back – Net Special
Items Expense (Income)
|
|
0.10
|
|
|
(0.09)
|
|
|
0.36
|
|
|
Add Back –
Non-Operating Pension Expense
|
|
0.72
|
|
|
0.07
|
|
|
0.07
|
|
|
Operating
Earnings*
|
|
$
|
0.92
|
|
|
$
|
0.80
|
|
|
$
|
0.97
|
|
* Operating Earnings is defined as net
earnings from continuing operations attributable to International
Paper Company (GAAP) excluding special items and non-operating
pension expense. Non-operating pension expense in the second
quarter of 2016 included a pre-tax charge of $439 million ($270
million after taxes or $0.65
per share) for a settlement accounting charge associated with
payments under the previously announced term-vested lump sum
buyout.
Operating Earnings in the second quarter of 2016 totaled
$379 million ($0.92 per share) compared with $330 million ($0.80
per share) in the first quarter of 2016 and $409 million ($0.97
per share) in the second quarter of 2015.
Quarterly net sales were $5.3
billion in the second quarter of 2016 compared with
$5.1 billion in the first quarter of
2016 and $5.7 billion in the
second quarter of 2015. The year-over-year revenue
decline was primarily due to the sale of the IP-Sun joint venture
and the sale of the Carolina® Coated Bristols business.
Business segment operating profits in the second quarter of 2016
were $628 million, compared with
$497 million in the first quarter of
2016 and $676 million in the second
quarter of 2015.
Cash from operations was $605
million in the second quarter of 2016. Free cash flow
was $527 million for the quarter.
"International Paper continues to perform very well and we are
taking deliberate and meaningful strategic steps to make the
company stronger. Our second quarter results were driven by
strong execution across our operations around the globe," said
Mark Sutton, Chairman and Chief
Executive Officer. "As we move into the second half of the
year, we remain focused on running our businesses well and closing
the Weyerhaeuser acquisition, which will strengthen our position in
the growing global fluff pulp markets and create additional value
for our shareholders."
SEGMENT INFORMATION
The performance of the Company's business segments is measured
quarter to quarter without variations caused by special items, as
management focuses on business segment operating profits excluding
those items. Second quarter 2016 business segment operating profits
and business trends compared with the prior quarter are as
follows:
Industrial Packaging operating profits in the second
quarter of 2016 were $487 million
($459 million including special
items) compared with $433 million
($396 million including special
items) in the first quarter of 2016. In North America,
earnings increased $58 million driven
by improved operations and higher box shipments due to seasonally
stronger market demand and one more shipping day. This was partly
offset by modestly lower average sales prices for North America boxes and export
containerboard.
Printing Papers operating profits were $101 million ($96
million including special items) in the second quarter of
2016 versus $85 million in the first
quarter of 2016. Earnings in North
America were mixed, as the papers business declined
primarily due to increased planned maintenance outages.
However, pulp improved due to lower conversion and outage costs
associated with the Riegelwood
mill conversion, partially offset by a less favorable product mix
and lower pulp prices. In Brazil, earnings were essentially
flat quarter over quarter, as higher planned maintenance outage
costs offset higher export sales volumes and improved domestic
prices. Earnings in Europe were
impacted by higher planned maintenance outage costs.
Consumer Packaging operating profits were $73 million in the second quarter of 2016
compared with $25 million
($16 million including special items)
in the first quarter of 2016. The earnings increase was
primarily due to no planned maintenance outages in North America, good operational performance,
as well as lower overall manufacturing costs. Foodservice
business earnings increased $7
million, primarily driven by seasonally higher sales volume
and cost improvements.
International Paper recorded Ilim joint venture equity
earnings of $46 million in the second
quarter of 2016 compared with $62
million in the first quarter of 2016. Operational
EBITDA for Ilim was lower than in the first quarter due to higher
planned maintenance outages and input costs, partially offset by
higher sales volumes. Primarily due to Ilim's U.S. dollar
denominated net debt, the Company recognized a non-cash after-tax
foreign exchange gain of $6 million
in the second quarter of 2016 ($0.01
per share), compared with an after-tax gain of $11 million in the first quarter of 2016
($0.03 per share).
CORPORATE EXPENSES
Net corporate expenses, excluding non-operating pension expense,
were $26 million for the second
quarter of 2016, compared with $21
million in the first quarter of 2016.
EFFECTIVE TAX RATE
The effective tax rate before special items and non-operating
pension expense for the second quarter of 2016 was 34%, compared
with an effective tax rate of 33% in the first quarter of
2016. The higher rate in the second quarter is due to changes
to our estimates of non-cash global tax reserves and valuation
allowances.
EFFECTS OF SPECIAL ITEMS
Special items in the second quarter of 2016 included a pre-tax
charge of $28 million ($20 million after taxes) for costs associated
with the sale of our Asia
corrugated packaging business, a pre-tax charge of $5 million ($3
million after taxes) for costs associated with the announced
agreement to purchase the Weyerhaeuser pulp business, a tax expense
of $23 million associated with 2016
cash pension contributions and a tax benefit of $6 million related to an international legal
entity restructuring.
Special items in the first quarter of 2016 included a loss of
$1 million (before and after taxes)
for Restructuring and other charges. Included within Restructuring
and other charges were a pre-tax charge of $9 million ($6
million after taxes) related to costs associated with the
conversion of the Riegelwood, North
Carolina mill to 100% pulp production and a pre-tax gain of
$8 million ($5
million after taxes) for the sale of our remaining
investment in Arizona Chemical. Special items also included a
pre-tax charge of $37 million
($34 million after taxes) for an
impairment of the assets of our Asia corrugated packaging business and costs
associated with the sale of the business, a tax benefit of
$57 million associated with the legal
restructuring of our Brazil Packaging business and a tax benefit of
$14 million related to the closure of
a U.S. federal income tax audit.
Special items in the second quarter of 2015 included a net
pre-tax loss of $194 million
($125 million after taxes) for
Restructuring and other charges. Included within Restructuring and
other charges were a pre-tax charge of $207
million ($133 million after
taxes) for premiums paid on a cash tender offer on outstanding
debt, a net pre-tax gain of $14
million ($9 million after
taxes) related to the sale of the Carolina® Coated Bristols brand
and costs associated with the conversion of the Riegelwood, North Carolina facility to 100%
pulp production, and a charge of $1
million (before and after taxes) for other items. Special
items also included a pre-tax gain of $4
million ($2 million after
taxes) related to state tax credits, a tax expense of $23 million for the tax impact of the 2015 cash
pension contribution of $750 million
and a tax expense of $5 million for
other items.
DISCONTINUED OPERATIONS
Discontinued operations in the first quarter of 2016 included a
pre-tax charge of $8 million
($5 million after taxes) for a legal
settlement related to the xpedx business, which was spun-off in the
third quarter of 2014.
EARNINGS WEBCAST
The Company will hold a webcast to review earnings at
10:00 a.m. ET / 9:00 a.m. CT today. All interested parties are
invited to listen to the webcast live and view the slides to be
presented at the webcast via the Company's Internet site at
http://www.internationalpaper.com by clicking on the
Performance/Investors tab and going to the Presentations and
Events/Webcasts page. A replay of the webcast will also be
available beginning approximately two hours after the call. Parties
who wish to participate in the webcast via teleconference may dial
+1 (706) 679-8242 or, within the U.S. only,
(877) 316-2541, and ask to be connected to the International
Paper second quarter earnings call. The conference ID number is
42952954. Participants should call in no later than
9:45 a.m. ET (8:45 a.m. CT). An
audio-only replay will be available for four weeks following the
call. To access the replay, dial +1 (404) 537-3406 or, within the
U.S. only, (800) 585-8367, and when prompted for the conference ID,
enter 42952954.
ABOUT INTERNATIONAL PAPER
International Paper (NYSE: IP) is a leading global producer of
renewable fiber-based packaging, pulp and paper products with
manufacturing operations in North
America, Latin America,
Europe, North Africa, Asia and Russia. We produce packaging
products that enable world-wide commerce; pulp for diapers, tissue
and other personal hygiene products; papers that drive
communication; paper bags that carry groceries; and paper cups and
food containers. We are headquartered in Memphis, Tenn., and employ 53,000 colleagues
located in more than 24 countries. Net sales for 2015 were
$22 billion. For more
information about International Paper, its products and global
citizenship efforts, please visit internationalpaper.com.
Certain statements in this press release may be considered
forward-looking statements. These statements reflect management's
current views and are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied in these statements. Factors which could cause actual
results to differ include but are not limited to: (i) the level of
our indebtedness and changes in interest rates; (ii) industry
conditions, including but not limited to changes in the cost or
availability of raw materials, energy and transportation costs,
competition we face, cyclicality and changes in consumer
preferences, demand and pricing for our products; (iii) global
economic conditions and political changes, including but not
limited to the impairment of financial institutions, changes in
currency exchange rates, credit ratings issued by recognized credit
rating organizations, the amount of our future pension funding
obligation, changes in tax laws and pension and health care costs;
(iv) unanticipated expenditures related to the cost of compliance
with existing and new environmental and other governmental
regulations and to actual or potential litigation; (v) whether we
experience a material disruption at one of our manufacturing
facilities; (vi) risks inherent in conducting business through
joint ventures; (vii) the receipt of regulatory approvals for our
pending transaction to purchase the pulp business of Weyerhaeuser
Company and the successful fulfillment or waiver of all other
closing conditions without unexpected delays or conditions; (viii)
the successful financing of the Weyerhaeuser transaction; (ix) the
failure to realize the expected synergies and cost-savings from the
Weyerhaeuser transaction or delay in realization thereof; and (x)
our ability to achieve the benefits we expect from all strategic
acquisitions, divestitures and restructurings. These and other
factors that could cause or contribute to actual results differing
materially from such forward-looking statements are discussed in
greater detail in the Company's Securities and Exchange Commission
filings. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
|
INTERNATIONAL
PAPER COMPANY
Consolidated Statement of Operations
Preliminary and
Unaudited
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three
Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
Net
Sales
|
|
$
5,322
|
|
$
5,714
|
|
$
5,110
|
|
$
10,432
|
|
$
11,231
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
|
4,112
|
(a)
|
3,968
|
(e)
|
3,611
|
|
7,723
|
(a)
|
7,812
|
(e)
|
|
Selling and
administrative expenses
|
|
386
|
(b)
|
403
|
|
376
|
|
762
|
(b)
|
809
|
|
|
Depreciation,
amortization and cost of timber harvested
|
|
301
|
|
328
|
|
284
|
|
585
|
|
651
|
|
|
Distribution
expenses
|
|
339
|
|
367
|
|
320
|
|
659
|
|
724
|
|
|
Taxes other than
payroll and income taxes
|
|
41
|
|
44
|
|
41
|
|
82
|
|
88
|
|
|
Restructuring and
other charges
|
|
—
|
|
194
|
(f)
|
1
|
(h)
|
1
|
(h)
|
194
|
(f)
|
|
Net (gains) losses on
sales and impairment of businesses
|
|
28
|
(c)
|
—
|
|
37
|
(i)
|
65
|
(l)
|
—
|
|
|
Interest expense,
net
|
|
129
|
|
144
|
|
123
|
|
252
|
|
281
|
|
|
Earnings (Loss)
From Continuing Operations Before Income Taxes and Equity
Earnings
|
|
(14)
|
(a-c)
|
266
|
(e,f)
|
317
|
(h,i)
|
303
|
(a,b,h,l)
|
672
|
(e,f)
|
|
Income tax provision
(benefit)
|
|
(9)
|
(d)
|
110
|
(g)
|
41
|
(j)
|
32
|
(m)
|
240
|
(g)
|
|
Equity earnings
(loss), net of taxes
|
|
45
|
|
62
|
|
63
|
|
108
|
|
97
|
|
|
Earnings (Loss)
From Continuing Operations
|
|
40
|
(a-d)
|
218
|
(e-g)
|
339
|
(h-j)
|
379
|
(a,b,h,l,m)
|
529
|
(e-g)
|
|
Discontinued
operations, net of taxes
|
|
—
|
|
—
|
|
(5)
|
(k)
|
(5)
|
(k)
|
—
|
|
|
Net Earnings
(Loss)
|
|
40
|
(a-d)
|
218
|
(e-g)
|
334
|
(h-k)
|
374
|
(a,b,h,k-m)
|
529
|
(e-g)
|
|
Less: Net earnings
(loss) attributable to noncontrolling interests
|
|
—
|
|
(9)
|
|
—
|
|
—
|
|
(11)
|
|
|
Net Earnings
(Loss) Attributable to International Paper Company
|
|
$
40
|
(a-d)
|
$
227
|
(e-g)
|
$
334
|
(h-k)
|
$
374
|
(a,b,h,k-m)
|
$
540
|
(e-g)
|
|
Basic Earnings Per
Common Share Attributable to International Paper Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.10
|
(a-d)
|
$
0.54
|
(e-g)
|
$
0.82
|
(h-j)
|
$
0.92
|
(a,b,h,l,m)
|
$
1.28
|
(e-g)
|
|
Discontinued
operations
|
|
—
|
|
—
|
|
(0.01)
|
(k)
|
(0.01)
|
(k)
|
—
|
|
|
Net earnings
(loss)
|
|
$
0.10
|
(a-d)
|
$
0.54
|
(e-g)
|
$
0.81
|
(h-k)
|
$
0.91
|
(a,b,h,k-m)
|
$
1.28
|
(e-g)
|
|
Diluted Earnings
Per Common Share Attributable to International Paper Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
$
0.10
|
(a-d)
|
$
0.54
|
(e-g)
|
$
0.82
|
(h-j)
|
$
0.91
|
(a,b,h,l,m)
|
$
1.28
|
(e-g)
|
|
Discontinued
operations
|
|
—
|
|
—
|
|
(0.01)
|
(k)
|
(0.01)
|
(k)
|
—
|
|
|
Net earnings
(loss)
|
|
$
0.10
|
(a-d)
|
$
0.54
|
(e-g)
|
$
0.81
|
(h-k)
|
$
0.90
|
(a,b,h,k-m)
|
$
1.28
|
(e-g)
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
|
414.7
|
|
421.9
|
|
414.0
|
|
415.1
|
|
423.4
|
|
|
Cash Dividends Per
Common Share
|
|
$
0.4400
|
|
$
0.4000
|
|
$
0.4400
|
|
$
0.8800
|
|
$
0.8000
|
|
|
Amounts
Attributable to International Paper Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations, net of tax
|
|
$
40
|
(a-d)
|
$
227
|
(e-g)
|
$
339
|
(h-j)
|
$
379
|
(a,b,h,l,m)
|
$
540
|
(e-g)
|
|
Discontinued
operations, net of tax
|
|
—
|
|
—
|
|
(5)
|
(k)
|
(5)
|
(k)
|
—
|
|
|
Net
earnings
|
|
$
40
|
(a-d)
|
$
227
|
(e-g)
|
$
334
|
(h-k)
|
$
374
|
(a,b,h,k-m)
|
$
540
|
(e-g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this consolidated statement of
operations.
|
|
|
|
|
|
(a)
|
Includes a pre-tax
charge of $439 million ($270 million after taxes) for a settlement
accounting charge associated with term-vested lump sum pension
payments.
|
|
(b)
|
Includes a pre-tax
charge of $5 million ($3 million after taxes) for costs associated
with the announced agreement to purchase the Weyerhaeuser Pulp
business.
|
|
(c)
|
Includes a pre-tax
charge of $28 million ($20 million after taxes) for costs
associated with the sale of our Asia corrugated packaging
business.
|
|
(d)
|
Includes a tax
expense of $23 million associated with 2016 cash pension
contributions and a tax benefit of $6 million related to an
international legal entity restructuring.
|
|
(e)
|
Includes a pre-tax
gain of $4 million ($2 million after taxes) for the partial
reversal of a 2014 accrual for the repayment of previously claimed
state tax credits.
|
|
(f)
|
Includes a pre-tax
charge of $207 million ($133 million after taxes) for debt premium
costs, a net pre-tax gain of $14 million ($9 million after taxes)
related to the sale of the Carolina Coated Bristols brand and costs
associated with the Riegelwood mill conversion to 100% pulp
production, and a charge of $1 million (before and after taxes) for
costs associated with the Coated Paperboard sheet plant
closures.
|
|
(g)
|
Includes a tax
expense of $23 million for the 2014 tax impact of the 2015 cash
pension contribution of $750 million and a tax expense of $5
million for other items.
|
|
(h)
|
Includes a pre-tax
gain of $8 million ($5 million after taxes) related to the sale of
our investment in Arizona Chemical, and a pre-tax charge of $9
million ($6 million after taxes) for costs associated with the
Riegelwood mill conversion to 100% pulp production.
|
|
(i)
|
Includes a pre-tax
charge of $37 million ($34 million after taxes) for the impairment
of the assets of our Asia corrugated packaging business and costs
associated with the sale of the business.
|
|
(j)
|
Includes a tax
benefit of $57 million related to the legal restructuring of our
Brazil Packaging business and a tax benefit of $14 million related
to the closure of a U.S. federal tax audit.
|
|
(k)
|
Includes a pre-tax
charge of $8 million ($5 million after taxes) for a legal
settlement associated with the xpedx business.
|
|
(l)
|
Includes a pre-tax
charge of $65 million ($54 million after taxes) for the impairment
of the assets of our Asia corrugated packaging business and costs
associated with the sale of that business.
|
|
(m)
|
Includes a tax
benefit of $57 million related to the legal restructuring of our
Brazil Packaging business, a tax expense of $23 million associated
with 2016 cash pension contributions, a tax benefit of $14 million
related to the closure of a U.S. federal tax audit, and a tax
benefit of $6 million related to an international legal entity
restructuring.
|
|
INTERNATIONAL
PAPER COMPANY
Reconciliation of Operating Earnings to Net
Earnings (Loss)
Attributable to International Paper Company
Preliminary and
Unaudited
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
Operating
Earnings
|
|
$
379
|
|
$
409
|
|
$
330
|
|
$
709
|
|
$
766
|
|
|
Non-Operating
Pension
|
|
(299)
|
(a)
|
(31)
|
|
(27)
|
|
(326)
|
(a)
|
(75)
|
|
|
Special
Items
|
|
(40)
|
(b)
|
(151)
|
(c)
|
36
|
(d)
|
(4)
|
(f)
|
(151)
|
(c)
|
|
Earnings (Loss)
from Continuing Operations, including non-controlling
interest
|
|
40
|
|
227
|
|
339
|
|
379
|
|
540
|
|
|
Discontinued
operations
|
|
—
|
|
—
|
|
(5)
|
(e)
|
(5)
|
(e)
|
—
|
|
|
Net Earnings
(Loss) as Reported Attributable to International Paper
Company
|
|
$
40
|
|
$
227
|
|
$
334
|
|
$
374
|
|
$
540
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
Diluted Earnings
per Common Share
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
Operating Earnings
Per Share
|
|
$
0.92
|
|
$
0.97
|
|
$
0.80
|
|
$
1.71
|
|
$
1.81
|
|
|
Non-Operating
Pension
|
|
(0.72)
|
|
(0.07)
|
|
(0.07)
|
|
(0.79)
|
|
(0.17)
|
|
|
Special
Items
|
|
(0.10)
|
|
(0.36)
|
|
0.09
|
|
(0.01)
|
|
(0.36)
|
|
|
Continuing
Operations
|
|
0.10
|
|
0.54
|
|
0.82
|
|
0.91
|
|
1.28
|
|
|
Discontinued
operations
|
|
—
|
|
—
|
|
(0.01)
|
|
(0.01)
|
|
—
|
|
|
Diluted Earnings
per Common Share as Reported
|
|
$
0.10
|
|
$
0.54
|
|
$
0.81
|
|
$
0.90
|
|
$
1.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes a pre-tax
charge of $439 million ($270 million after taxes) for a settlement
accounting charge associated with term-vested lump sum
payments.
|
|
|
(b)
|
See footnotes (b) -
(d) on the Consolidated Statement of Operations
|
|
|
|
|
|
(c)
|
See footnotes (e) -
(g) on the Consolidated Statement of Operations
|
|
|
|
|
|
(d)
|
See footnotes (h) -
(j) on the Consolidated Statement of Operations
|
|
|
|
|
|
(e)
|
See footnotes (k) on
the Consolidated Statement of Operations
|
|
|
|
|
|
(f)
|
See footnotes
(b),(h),(l),(m) on the Consolidated Statement of
Operations
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company
calculates Operating Earnings by excluding the after-tax effect of
non-operating pension expense and items considered by management to
be unusual from the earnings reported under U.S. generally accepted
accounting principles ("GAAP"). Management uses this measure to
focus on on-going operations, and believes that it is useful to
investors because it enables them to perform meaningful comparisons
of past and present operating results. International Paper believes
that using this information, along with net earnings, provides for
a more complete analysis of the results of operations by quarter.
Net earnings is the most directly comparable GAAP
measure.
|
|
|
(2)
|
Since diluted
earnings per share are computed independently for each period,
six-month per share amounts may not equal the sum of the respective
quarters.
|
|
|
INTERNATIONAL
PAPER COMPANY
Sales and Earnings by Industry
Segment
Preliminary and Unaudited
(In millions)
|
|
Sales by Industry
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
Industrial
Packaging
|
|
$
3,597
|
|
$
3,694
|
|
$
3,452
|
|
$
7,049
|
|
$
7,247
|
|
|
Printing
Papers
|
|
1,271
|
|
1,249
|
|
1,184
|
|
2,455
|
|
2,477
|
|
|
Consumer
Packaging
|
|
501
|
|
797
|
|
495
|
|
996
|
|
1,575
|
|
|
Corporate and
Inter-segment Sales
|
|
(47)
|
|
(26)
|
|
(21)
|
|
(68)
|
|
(68)
|
|
|
Net
Sales
|
|
$
5,322
|
|
$
5,714
|
|
$
5,110
|
|
$
10,432
|
|
$
11,231
|
|
|
|
|
Operating Profit
by Industry Segment
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
|
Industrial
Packaging
|
|
$
459
|
(a)
|
$
528
|
|
$
396
|
(a)
|
$
855
|
(a)
|
$
996
|
|
|
Printing
Papers
|
|
96
|
(b)
|
101
|
|
85
|
|
181
|
(b)
|
210
|
|
|
Consumer
Packaging
|
|
73
|
|
47
|
(d)
|
16
|
(c)
|
89
|
(c)
|
93
|
(d)
|
|
Operating
Profit
|
|
628
|
|
676
|
|
497
|
|
1,125
|
|
1,299
|
|
|
Interest expense,
net
|
|
(129)
|
|
(144)
|
|
(123)
|
|
(252)
|
|
(281)
|
|
|
Noncontrolling
interest/equity earnings adjustment (e)
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
(4)
|
|
|
Corporate items,
net
|
|
(26)
|
|
(8)
|
|
(21)
|
|
(47)
|
|
(17)
|
|
|
Restructuring and
other charges
|
|
—
|
|
(203)
|
|
8
|
|
8
|
|
(203)
|
|
|
Non-operating pension
expense
|
|
(487)
|
(f)
|
(50)
|
|
(44)
|
|
(531)
|
(f)
|
(122)
|
|
|
Earnings (Loss)
From Continuing Operations
Before Income Taxes and Equity Earnings
|
|
$
(14)
|
|
$
266
|
|
$
317
|
|
$
303
|
|
$
672
|
|
|
Equity Earnings
(Loss) in Ilim Holdings S.A., Net of Taxes
|
|
$
46
|
|
$
67
|
|
$
62
|
|
$
108
|
|
$
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes charges of
$28 million and $37 million for the three months ended June 30,
2016 and March 31, 2016, respectively, and $65 million for the six
months ended June 30, 2016 for the impairment of the assets of our
Asia corrugated packaging business and costs associated with the
sale of the business.
|
|
|
(b)
|
Includes a charge of
$5 million for the three months and six months ended June 30, 2016
for costs associated with the announced agreement to purchase the
Weyerhaeuser Pulp business.
|
|
|
(c)
|
Includes a charge of
$9 million for the three months ended March 31, 2016 and the six
months ended June 30, 2016 for costs associated with the Riegelwood
mill conversion to 100% pulp production.
|
|
|
(d)
|
Includes a net gain
of $14 million for the three months and six months ended June 30,
2015 related to the sale of the Carolina Coated Bristols brand, and
costs associated with the Riegelwood mill conversion to 100% pulp
production, and a charge of $1 million for the three months and six
months ended June 30, 2015 for costs associated with the Coated
Paperboard sheet plant closures.
|
|
|
(e)
|
Operating profits for
industry segments include each segment's percentage share of the
profits of subsidiaries included in that segment that are less than
wholly owned. The pre-tax noncontrolling interest and equity
earnings for these subsidiaries are adjusted here to present
consolidated earnings before income taxes and equity
earnings.
|
|
|
(f)
|
Includes a charge of
$439 million for the three months and six months ended June 30,
2016 for a settlement accounting charge associated with term-vested
lump sum payments.
|
|
|
INTERNATIONAL
PAPER COMPANY
Reconciliation of Operating Profit to
Operating Profit Before Special Items
Preliminary and
Unaudited
(In millions)
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2016
|
|
|
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Total
|
|
Operating Profit
Before Special Items
|
|
$
487
|
|
$
101
|
|
$
73
|
|
$
661
|
|
Special Items
(a)
|
|
(28)
|
|
(5)
|
|
—
|
|
(33)
|
|
Operating Profit as
Reported
|
|
$
459
|
|
$
96
|
|
$
73
|
|
$
628
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015
|
|
|
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Total
|
|
Operating Profit
Before Special Items
|
|
$
528
|
|
$
101
|
|
$
34
|
|
$
663
|
|
Special Items
(b)
|
|
—
|
|
—
|
|
13
|
|
13
|
|
Operating Profit as
Reported
|
|
$
528
|
|
$
101
|
|
$
47
|
|
$
676
|
|
|
|
|
|
|
Three Months Ended
March 31, 2016
|
|
|
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Total
|
|
Operating Profit
Before Special Items
|
|
$
433
|
|
$
85
|
|
$
25
|
|
$
543
|
|
Special Items
(a)
|
|
(37)
|
|
—
|
|
(9)
|
|
(46)
|
|
Operating Profit as
Reported
|
|
$
396
|
|
$
85
|
|
$
16
|
|
$
497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2016
|
|
|
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Total
|
|
Operating Profit
Before Special Items
|
|
$
920
|
|
$
186
|
|
$
98
|
|
$
1,204
|
|
Special Items
(a)
|
|
(65)
|
|
(5)
|
|
(9)
|
|
(79)
|
|
Operating Profit as
Reported
|
|
$
855
|
|
$
181
|
|
$
89
|
|
$
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2015
|
|
|
|
Industrial
Packaging
|
|
Printing
Papers
|
|
Consumer
Packaging
|
|
Total
|
|
Operating Profit
Before Special Items
|
|
$
996
|
|
$
210
|
|
$
80
|
|
$
1,286
|
|
Special Items
(b)
|
|
—
|
|
—
|
|
13
|
|
13
|
|
Operating Profit as
Reported
|
|
$
996
|
|
$
210
|
|
$
93
|
|
$
1,299
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
See footnotes (a) -
(c) on Sales and Earnings by Industry Segment
|
|
(b)
|
See footnote (d) on
Sales and Earnings by Industry Segment
|
|
(1)
|
The Company
calculates Operating Profit Before Special Items by excluding the
pre-tax effect of items considered by management to be unusual from
the earnings reported under U.S. generally accepted accounting
principles ("GAAP"). Management uses this measure to focus on
on-going operations, and believes that it is useful to investors
because it enables them to perform meaningful comparisons of past
and present operating results. International Paper believes that
using this information, along with net earnings, provides for a
more complete analysis of the results of operations by quarter. Net
earnings is the most directly comparable GAAP measure.
|
|
INTERNATIONAL
PAPER COMPANY
Sales Volume by Product
(a)
Preliminary and Unaudited
|
|
International
Paper Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2016
|
|
2015
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(c)
|
|
2,642
|
|
2,608
|
|
2,519
|
|
5,161
|
|
5,108
|
|
Containerboard
|
|
770
|
|
818
|
|
740
|
|
1,510
|
|
1,592
|
|
Recycling
|
|
592
|
|
610
|
|
607
|
|
1,199
|
|
1,200
|
|
Saturated
Kraft
|
|
44
|
|
38
|
|
47
|
|
91
|
|
75
|
|
Gypsum /Release
Kraft
|
|
47
|
|
43
|
|
46
|
|
93
|
|
79
|
|
Bleached
Kraft
|
|
5
|
|
6
|
|
6
|
|
11
|
|
11
|
|
EMEA Packaging
(c)
|
|
373
|
|
352
|
|
374
|
|
747
|
|
699
|
|
Asian Box
(c)
|
|
105
|
|
95
|
|
103
|
|
208
|
|
197
|
|
Brazilian
Packaging (c)
|
|
74
|
|
91
|
|
77
|
|
151
|
|
172
|
|
Industrial
Packaging
|
|
4,652
|
|
4,661
|
|
4,519
|
|
9,171
|
|
9,133
|
|
Printing Papers (In
thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Uncoated
Papers
|
|
460
|
|
453
|
|
475
|
|
935
|
|
919
|
|
European &
Russian Uncoated Papers
|
|
389
|
|
366
|
|
373
|
|
762
|
|
746
|
|
Brazilian Uncoated
Papers
|
|
272
|
|
254
|
|
254
|
|
526
|
|
489
|
|
Indian Uncoated
Papers
|
|
61
|
|
63
|
|
63
|
|
124
|
|
127
|
|
Uncoated
Papers
|
|
1,182
|
|
1,136
|
|
1,165
|
|
2,347
|
|
2,281
|
|
Market Pulp
(b)
|
|
497
|
|
428
|
|
405
|
|
902
|
|
845
|
|
Consumer Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
|
North American
Consumer Packaging
|
|
306
|
|
371
|
|
308
|
|
614
|
|
709
|
|
European Coated
Paperboard
|
|
99
|
|
89
|
|
94
|
|
193
|
|
188
|
|
Asian Coated
Paperboard (d)
|
|
—
|
|
315
|
|
—
|
|
—
|
|
619
|
|
Consumer
Packaging
|
|
405
|
|
775
|
|
402
|
|
807
|
|
1,516
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Sales volumes include
third party and inter-segment sales and exclude sales of equity
investees.
|
|
(b) Includes North American,
European and Brazilian volumes and internal sales to
mills.
|
|
(c) Volumes for corrugated
box sales reflect consumed tons sold (CTS). Board sales by these
businesses reflect invoiced tons.
|
|
(d) Includes sales volumes
through the date of sale in October 2015.
|
|
INTERNATIONAL
PAPER COMPANY
Consolidated Balance
Sheet
Preliminary and Unaudited
(In millions)
|
|
|
June 30,
2016
|
|
December 31,
2015
|
|
Assets
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
Cash and Temporary
Investments
|
|
$
1,254
|
|
$
1,050
|
|
Accounts and Notes
Receivable, Net
|
|
2,837
|
|
2,675
|
|
Inventories
|
|
2,165
|
|
2,228
|
|
Deferred Income Tax
Assets
|
|
297
|
|
312
|
|
Other
|
|
318
|
|
212
|
|
Total Current
Assets
|
|
6,871
|
|
6,477
|
|
Plants, Properties
and Equipment, Net
|
|
12,233
|
|
11,980
|
|
Forestlands
|
|
450
|
|
366
|
|
Investments
|
|
279
|
|
228
|
|
Financial Assets of
Special Purpose Entities
|
|
7,023
|
|
7,014
|
|
Goodwill
|
|
3,367
|
|
3,335
|
|
Deferred Charges and
Other Assets
|
|
1,169
|
|
1,131
|
|
Total
Assets
|
|
$
31,392
|
|
$
30,531
|
|
Liabilities and
Equity
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
|
$
626
|
|
$
426
|
|
Accounts Payable and
Accrued Liabilities
|
|
3,456
|
|
3,498
|
|
Total Current
Liabilities
|
|
4,082
|
|
3,924
|
|
Long-Term
Debt
|
|
8,820
|
|
8,844
|
|
Nonrecourse Financial
Liabilities of Special Purpose Entities
|
|
6,281
|
|
6,277
|
|
Deferred Income
Taxes
|
|
3,256
|
|
3,231
|
|
Pension Benefit
Obligation
|
|
4,150
|
|
3,548
|
|
Postretirement and
Postemployment Benefit Obligation
|
|
328
|
|
364
|
|
Other
Liabilities
|
|
429
|
|
434
|
|
Equity
|
|
|
|
|
|
Invested
Capital
|
|
(633)
|
|
(765)
|
|
Retained
Earnings
|
|
4,657
|
|
4,649
|
|
Total Shareholders'
Equity
|
|
4,024
|
|
3,884
|
|
Noncontrolling
interests
|
|
22
|
|
25
|
|
Total
Equity
|
|
4,046
|
|
3,909
|
|
Total Liabilities
and Equity
|
|
$
31,392
|
|
$
30,531
|
|
INTERNATIONAL
PAPER COMPANY
Consolidated Statement of Cash
Flows
Preliminary and Unaudited
(In millions)
|
|
|
Six Months
Ended
June 30,
|
|
|
2016
|
|
2015
|
|
Operating
Activities
|
|
|
|
|
|
Net earnings
(loss)
|
|
$
374
|
|
$
529
|
|
Depreciation,
amortization and cost of timber harvested
|
|
585
|
|
651
|
|
Deferred income tax
expense (benefit), net
|
|
22
|
|
36
|
|
Restructuring and
other charges
|
|
1
|
|
194
|
|
Pension plan
contributions
|
|
(250)
|
|
(750)
|
|
Net (gains) losses on
sales and impairments of businesses
|
|
65
|
|
—
|
|
Equity (earnings)
loss, net
|
|
(108)
|
|
(97)
|
|
Periodic pension
expense, net
|
|
624
|
|
224
|
|
Other, net
|
|
123
|
|
110
|
|
Changes in current
assets and liabilities
|
|
|
|
|
|
Accounts and notes
receivable
|
|
(86)
|
|
(133)
|
|
Inventories
|
|
48
|
|
(59)
|
|
Accounts payable and
accrued liabilities
|
|
(76)
|
|
82
|
|
Interest
payable
|
|
13
|
|
(21)
|
|
Other
|
|
(110)
|
|
(13)
|
|
Cash Provided By
(Used For) Operations
|
|
1,225
|
|
753
|
|
Investment
Activities
|
|
|
|
|
|
Invested in capital
projects
|
|
(637)
|
|
(673)
|
|
Acquisitions, net of
cash acquired
|
|
(61)
|
|
—
|
|
Proceeds from
divestitures, net of cash divested
|
|
101
|
|
—
|
|
Proceeds from sale of
fixed assets
|
|
11
|
|
19
|
|
Other
|
|
(106)
|
|
(84)
|
|
Cash Provided By
(Used For) Investment Activities
|
|
(692)
|
|
(738)
|
|
Financing
Activities
|
|
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
|
(132)
|
|
(353)
|
|
Issuance of common
stock
|
|
—
|
|
2
|
|
Issuance of
debt
|
|
1,204
|
|
2,083
|
|
Reduction of
debt
|
|
(1,070)
|
|
(1,494)
|
|
Change in book
overdrafts
|
|
6
|
|
19
|
|
Dividends
paid
|
|
(362)
|
|
(337)
|
|
Debt tender
premiums
|
|
—
|
|
(211)
|
|
Cash Provided By
(Used for) Financing Activities
|
|
(354)
|
|
(291)
|
|
Effect of Exchange
Rate Changes on Cash
|
|
25
|
|
(15)
|
|
Change in Cash and
Temporary Investments
|
|
204
|
|
(291)
|
|
Cash and Temporary
Investments
|
|
|
|
|
|
Beginning of the
period
|
|
1,050
|
|
1,881
|
|
End of the
period
|
|
$
1,254
|
|
$
1,590
|
|
INTERNATIONAL
PAPER COMPANY
Reconciliation of Free Cash
Flow
Preliminary and Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Cash provided by
operations
|
$
605
|
|
$
115
|
|
$
1,225
|
|
$
753
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects
|
(328)
|
|
(354)
|
|
(637)
|
|
(673)
|
|
Cash contribution to
pension plan
|
250
|
|
750
|
|
250
|
|
750
|
|
Free Cash
Flow
|
$
527
|
|
$
511
|
|
$
838
|
|
$
830
|
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SOURCE International Paper