MEMPHIS, Tenn., Jan. 30, 2020 /PRNewswire/ -- International
Paper (NYSE: IP) today reported full-year and fourth quarter 2019
financial results.
HIGHLIGHTS
- Full-year and fourth quarter net earnings attributable to
International Paper of $1.2 billion
($3.07 per diluted share) and
$165 million ($0.42 per diluted share), respectively, compared
with $2.0 billion ($4.85 per diluted share) for full-year 2018,
$344 million ($0.87 per diluted share) in the third quarter of
2019 and $316 million ($0.78 per diluted share) in the fourth quarter of
2018
- Full-year and fourth quarter adjusted operating earnings*
(non-GAAP) of $1.8 billion
($4.43 per diluted share) and
$430 million ($1.09 per diluted share), respectively, compared
with $2.2 billion ($5.32 per diluted share) for full-year 2018,
$431 million ($1.09 per diluted share) in the third quarter of
2019 and $670 million ($1.65 per diluted share) in the fourth quarter of
2018
- Fourth quarter cash provided by operations of $928 million, bringing full-year 2019 to
$3.6 billion compared with
$3.2 billion for full-year
2018
- Fourth quarter debt reduction of $582
million, bringing full-year 2019 to $973 million
- Returned $1.3 billion to
shareholders in 2019 through dividends of $796 million and share repurchases of
$485 million
"International Paper delivered solid earnings and outstanding
cash generation in the fourth quarter and full-year 2019," said
Mark Sutton, Chairman and Chief
Executive Officer. "We again demonstrated our flexibility to
navigate through challenging market conditions by optimizing our
full value chain. In 2019, we returned $1.3
billion to shareholders and reduced debt by $1.0 billion, while continuing to strengthen our
packaging business through targeted investments. We are delivering
commercial wins and will continue to tightly manage costs, capital
spending and working capital to generate strong cash flows in 2020,
despite earnings headwinds. Additionally, we will continue to
make choices consistent with our capital allocation framework to
drive long-term value creation."
|
Diluted Net EPS
Attributable to International Paper Shareholders and Adjusted
Operating EPS
|
|
|
|
Fourth
Quarter
2019
|
|
Third
Quarter
2019
|
|
Fourth
Quarter
2018
|
|
Full-
Year
2019
|
|
Full-
Year
2018
|
|
Net
Earnings
|
|
$
|
0.42
|
|
|
$
|
0.87
|
|
|
$
|
0.78
|
|
|
$
|
3.07
|
|
|
$
|
4.85
|
|
|
Less – Discontinued
Operations (Gain) Loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.83)
|
|
|
Net Earnings (Loss)
from Continuing Operations
|
|
0.42
|
|
|
0.87
|
|
|
0.78
|
|
|
3.07
|
|
|
4.02
|
|
|
Add Back –
Non-Operating Pension Expense
|
|
0.02
|
|
|
0.02
|
|
|
0.79
|
|
|
0.07
|
|
|
0.90
|
|
|
Add Back – Net
Special Items Expense (Income)
|
|
0.65
|
|
|
0.20
|
|
|
0.08
|
|
|
1.29
|
|
|
0.40
|
|
|
Adjusted Operating
Earnings*
|
|
$
|
1.09
|
|
|
$
|
1.09
|
|
|
$
|
1.65
|
|
|
$
|
4.43
|
|
|
$
|
5.32
|
|
|
|
*
|
Adjusted operating
earnings (non-GAAP) is defined as net earnings from continuing
operations attributable to International Paper Company (GAAP)
excluding special items and non-operating pension expense.
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 consolidated
operating results. For discussion of special items, net and
non-operating pension expense, see the Consolidated Statement of
Operations and related notes.
|
|
Key Financial
Measures
|
|
|
(In
millions)
|
|
Fourth
Quarter
2019
|
|
Third
Quarter
2019
|
|
Fourth
Quarter
2018
|
|
Full-
Year
2019
|
|
Full-
Year
2018
|
|
Net Sales
|
|
$
|
5,498
|
|
|
$
|
5,568
|
|
|
$
|
5,951
|
|
|
$
|
22,376
|
|
|
$
|
23,306
|
|
|
Net Earnings
Attributable to International Paper
|
|
165
|
|
|
344
|
|
|
316
|
|
|
1,225
|
|
|
2,012
|
|
|
Business Segment
Operating Profit
|
|
669
|
|
|
701
|
|
|
936
|
|
|
2,599
|
|
|
3,082
|
|
|
Adjusted
Operating Earnings
|
|
430
|
|
|
431
|
|
|
670
|
|
|
1,768
|
|
|
2,204
|
|
|
Cash Provided By
(Used For) Operations
|
|
928
|
|
|
882
|
|
|
821
|
|
|
3,610
|
|
|
3,226
|
|
|
Free Cash
Flow*
|
|
565
|
|
|
597
|
|
|
535
|
|
|
2,334
|
|
|
1,654
|
|
|
|
*
|
Free cash flow is a
non-GAAP financial measure. A reconciliation of free cash
flow to the most comparable GAAP measure, cash provided by (used
for) operations, and disclosure regarding why we believe that free
cash flow provides useful information to investors, is included
later in this release.
|
SEGMENT INFORMATION
Business segment operating profits
are used by International Paper's management to measure the
earnings performance of its businesses. Full-year and fourth
quarter 2019 business segment net sales and operating profits
compared with the full-year 2018, the third quarter of 2019 and the
fourth quarter of 2018 are as follows:
|
Business Segment
Results
|
|
|
(In
millions)
|
|
Fourth
Quarter
2019
|
|
Third
Quarter
2019
|
|
Fourth
Quarter
2018
|
|
Full-
Year
2019
|
|
Full-
Year
2018
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
|
3,810
|
|
|
$
|
3,820
|
|
|
$
|
4,017
|
|
|
$
|
15,326
|
|
|
$
|
15,900
|
|
|
Global Cellulose
Fibers
|
|
577
|
|
|
624
|
|
|
736
|
|
|
2,551
|
|
|
2,819
|
|
|
Printing
Papers
|
|
1,067
|
|
|
1,071
|
|
|
1,160
|
|
|
4,291
|
|
|
4,375
|
|
|
Corporate and
Inter-segment Sales
|
|
44
|
|
|
53
|
|
|
38
|
|
|
208
|
|
|
212
|
|
|
Net
Sales
|
|
$
|
5,498
|
|
|
$
|
5,568
|
|
|
$
|
5,951
|
|
|
$
|
22,376
|
|
|
$
|
23,306
|
|
|
Operating Profit
by Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
Packaging
|
|
$
|
605
|
|
|
$
|
535
|
|
|
$
|
646
|
|
|
$
|
2,076
|
|
|
$
|
2,277
|
|
|
Global Cellulose
Fibers
|
|
(45)
|
|
|
4
|
|
|
93
|
|
|
(6)
|
|
|
262
|
|
|
Printing
Papers
|
|
109
|
|
|
162
|
|
|
197
|
|
|
529
|
|
|
543
|
|
|
Total Business
Segment Operating Profit
|
|
$
|
669
|
|
|
$
|
701
|
|
|
$
|
936
|
|
|
$
|
2,599
|
|
|
$
|
3,082
|
|
Industrial Packaging operating profits in the fourth
quarter of 2019 were $605 million
compared with $535 million in the
third quarter of 2019. In North
America, earnings increased due to improved demand for
export containerboard, lower planned maintenance outage expenses
and lower input costs, primarily for wood. Earnings were negatively
impacted by lower average sales prices for export containerboard
and boxes. Earnings benefited from a favorable inventory valuation
adjustment in the fourth quarter of 2019. In Europe, earnings
improved driven by seasonally higher volumes, primarily in
Morocco, improved margins and
continued performance improvements at the Madrid, Spain mill, slightly offset by
unfavorable foreign currency impacts, primarily in Turkey.
Global Cellulose Fibers operating profits in the fourth
quarter of 2019 were $(45) million
compared with $4 million in the third
quarter of 2019. Fourth quarter results were impacted by lower
prices across all regions on very challenging supply and demand
conditions.
Printing Papers operating profits in the fourth
quarter of 2019 were $109 million
compared with $162 million in the
third quarter of 2019. In North
America, earnings decreased due to lower average sale
prices, an unfavorable geographic mix and increased operating costs
partially offset by lower planned maintenance outage expenses and
input costs, primarily for wood. Earnings were negatively
impacted by an unfavorable inventory valuation adjustment in the
fourth quarter of 2019. In Brazil, earnings decreased slightly due to
lower average sales prices in export markets and increased
operating costs mostly offset by seasonally stronger domestic
demand and lower input costs. In Europe and Russia, earnings decreased primarily due to
higher planned maintenance outages in Europe and lower average sales margins in both
regions.
EQUITY METHOD INVESTMENTS
Ilim joint
venture equity earnings were $21
million in the fourth quarter of 2019 compared with
$18 million in the third quarter of
2019. Operationally, earnings increased slightly as improved
sales volumes were mostly offset by lower export sales prices for
hardwood pulp, softwood pulp and containerboard to China and other export markets. The Company
recognized a non-cash after-tax foreign exchange gain of
$8 million in the fourth quarter of
2019 ($0.02 per diluted share),
compared with a loss of $4 million in
the third quarter of 2019 ($0.01 per
diluted share), primarily due to Ilim's U.S. dollar denominated net
debt.
Graphic Packaging equity earnings on our then 21.6%
ownership position were $9 million in
the fourth quarter of 2019, compared with $10 million in the third quarter of 2019.
CORPORATE EXPENSES
Corporate expenses were
$9 million for the fourth quarter of
2019, compared with $21 million in
the third quarter of 2019.
EFFECTIVE TAX RATE
The reported effective tax rate for
the fourth quarter of 2019 was 66%, compared to a 2019 third
quarter reported effective tax rate of 30%. The higher tax rate in
the fourth quarter reflects tax expense related to a foreign
deferred tax valuation allowance, that was partially offset by a
tax benefit from internal investment restructuring, both of which
are included as special items. This non-cash valuation allowance
was recorded as a result of tax law changes in foreign
jurisdictions impacting future utilization of deferred tax assets
of $203 million.
Excluding special items and non-operating pension expense, the
operational effective tax rate for the fourth quarter of 2019 was
26%, compared with 27% for the third quarter of 2019. The lower
operational effective tax rate in the fourth quarter is primarily
due to the U.S. taxation of foreign earnings and related tax
adjustments to the U.S. Federal tax provision recorded in the third
quarter.
EFFECTS OF SPECIAL ITEMS
Special items in the fourth
quarter of 2019 amount to a net after-tax charge of
$258 million ($0.65 per diluted
share) compared with $80 million
($0.20 per diluted share) in the
third quarter of 2019 and $32 million
($0.08 per diluted share) in the
fourth quarter of 2018. Special items in all periods include
the following charges (gains):
|
|
Fourth Quarter
2019
|
|
Third Quarter
2019
|
|
Fourth Quarter
2018
|
|
(In
millions)
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Before
Tax
|
|
After
Tax
|
|
Restructuring
and other charges, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
costs
|
|
$
|
21
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
7
|
|
|
EMEA Packaging
business optimization
|
|
15
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
Overhead cost
reduction initiative
|
|
—
|
|
|
—
|
|
|
21
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of
investment in Liaison Technologies
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31)
|
|
|
(23)
|
|
|
Riverdale mill
conversion severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
2
|
|
|
Total
restructuring and other charges, net
|
|
36
|
|
|
28
|
|
|
21
|
|
|
16
|
|
|
(19)
|
|
|
(15)
|
|
|
Global Cellulose
Fibers goodwill impairment
|
|
52
|
|
|
42
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Litigation
reserves
|
|
19
|
|
|
14
|
|
|
22
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
Environmental
remediation reserve adjustment
|
|
10
|
|
|
8
|
|
|
15
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
Abandoned property
removal
|
|
15
|
|
|
12
|
|
|
13
|
|
|
10
|
|
|
8
|
|
|
6
|
|
|
India
transaction
|
|
5
|
|
|
4
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
Foreign value-added
tax refund accrual
|
|
(6)
|
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Italian antitrust
fine
|
|
—
|
|
|
—
|
|
|
32
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of
previously closed Oregon mill site
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
(7)
|
|
|
—
|
|
|
—
|
|
|
Multi-employer
pension plan exit liability adjustment
|
|
—
|
|
|
—
|
|
|
(7)
|
|
|
(6)
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
5
|
|
|
4
|
|
|
1
|
|
|
1
|
|
|
(4)
|
|
|
(3)
|
|
|
Foreign deferred tax
valuation allowance
|
|
—
|
|
|
203
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Tax expense (benefit)
related to internal investment
restructuring
|
|
—
|
|
|
(53)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
Tax expense related
to foreign tax audits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
Total
special items, net
|
|
$
|
136
|
|
|
$
|
258
|
|
|
$
|
94
|
|
|
$
|
80
|
|
|
$
|
(15)
|
|
|
$
|
32
|
|
EARNINGS WEBCAST
The company will host a webcast
today to discuss earnings and current market conditions, beginning
at 10 a.m. ET (9 a.m. CT). All interested parties are invited to
listen to the webcast via the company's website at
internationalpaper.com by clicking on the Performance tab and going
to the Presentations and Events/Webcasts page. A replay of the
webcast will also be on the website 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 fourth quarter earnings call. The conference ID
number is 7981547. 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 ninety days following the call. To access the
replay, dial +1 (404) 537-3406 or, within the U.S. only, (855)
859-2056 or (800) 585-8367, and when prompted for the conference
ID, enter 7981547.
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 and Russia. We
produce corrugated packaging products that protect and promote
goods, and enable world-wide commerce; pulp for diapers, tissue and
other personal hygiene products that promote health and wellness;
and papers that facilitate education and communication. We are
headquartered in Memphis, Tenn.,
employ more than 50,000 colleagues and serve more than 25,000
customers in 150 countries. Net sales for 2019 were $22 billion. For more information about
International Paper, our products and global citizenship efforts,
please visit internationalpaper.com.
Certain statements in this press release that are not historical
in nature may be considered "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Words such as "expects", "anticipates", "believes", "estimates" and
similar expressions identify forward-looking statements. These
statements are not guarantees of future performance and 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 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 International Paper faces,
cyclicality and changes in consumer preferences, demand and pricing
for International Paper products; (iii) domestic and global
economic conditions and political changes, including but not
limited to changes in currency exchange rates, trade protectionist
policies, downgrades in International Paper's credit ratings,
and/or the credit ratings of banks issuing certain letters of
credit, issued by recognized credit rating organizations, (iv) the
amount of International Paper's future pension funding
obligations, and pension and health care costs; (v)
unanticipated expenditures or other adverse developments related to
the cost of compliance with existing and new environmental, tax,
labor and employment, privacy, and other U.S. and non-U.S.
governmental laws and regulations; (vi) whether International Paper
experiences a material disruption at one of its manufacturing
facilities; (vii) risks inherent in conducting business through
joint ventures; (viii) International Paper's ability to achieve the
benefits expected from, and other risks associated with,
acquisitions, joint ventures, divestitures and other corporate
transactions, (ix) information technology risks, and (x) loss
contingencies and pending, threatened or future litigation,
including with respect to environmental related matters.
These and other factors that could cause or contribute to actual
results differing materially from such forward-looking statements
can be found in International Paper's press releases and U.S.
Securities and Exchange Commission filings. In addition,
other risks and uncertainties not presently known to us or that we
currently believe to be immaterial could affect the accuracy of any
forward-looking statements. 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
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
|
Net
Sales
|
$
5,498
|
|
$
5,951
|
|
$
5,568
|
|
$
22,376
|
|
$
23,306
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products
sold
|
3,666
|
(a)
|
3,798
|
(j)
|
3,772
|
(a)
|
15,268
|
(a)
|
15,555
|
(j)
|
|
Selling and
administrative expenses
|
445
|
(b)
|
446
|
|
387
|
|
1,647
|
(b)
|
1,723
|
(k)
|
|
Depreciation,
amortization and cost of timber
harvested
|
343
|
(c)
|
338
|
(l)
|
327
|
(c)
|
1,306
|
(c)
|
1,328
|
(l)
|
|
Distribution
expenses
|
392
|
|
401
|
|
395
|
|
1,560
|
|
1,567
|
|
|
Taxes other than
payroll and income taxes
|
42
|
|
41
|
|
42
|
|
170
|
|
171
|
|
|
Restructuring and
other charges, net
|
36
|
(d)
|
(19)
|
(m)
|
21
|
(d)
|
57
|
(d)
|
29
|
(m)
|
|
Net (gains) losses on
sales and impairments of businesses
|
52
|
(e)
|
—
|
|
8
|
(e)
|
205
|
(e)
|
122
|
(n)
|
|
Antitrust
fines
|
—
|
|
—
|
|
32
|
(f)
|
32
|
(f)
|
—
|
|
|
Interest expense,
net
|
113
|
(g)
|
135
|
|
123
|
|
491
|
(g)
|
536
|
|
|
Non-operating pension
expense
|
9
|
|
429
|
(o)
|
9
|
|
36
|
|
494
|
(o)
|
|
Earnings (Loss)
From Continuing Operations Before Income Taxes and Equity
Earnings
|
400
|
|
382
|
|
452
|
|
1,604
|
|
1,781
|
|
|
Income tax provision
(benefit)
|
263
|
(h)
|
143
|
(p)
|
137
|
|
634
|
(h)
|
445
|
(p)
|
|
Equity earnings
(loss), net of taxes
|
29
|
|
79
|
|
27
|
|
250
|
|
336
|
|
|
Earnings (Loss)
From Continuing Operations
|
166
|
|
318
|
|
342
|
|
1,220
|
|
1,672
|
|
|
Discontinued
operations, net of taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
345
|
(q)
|
|
Net Earnings
(Loss)
|
166
|
|
318
|
|
342
|
|
1,220
|
|
2,017
|
|
|
Less: Net earnings
(loss) attributable to noncontrolling interests
|
1
|
|
2
|
|
(2)
|
(i)
|
(5)
|
(i)
|
5
|
|
|
Net Earnings
(Loss) Attributable to International Paper Company
|
$
165
|
|
$
316
|
|
$
344
|
|
$
1,225
|
|
$
2,012
|
|
|
Basic Earnings Per
Common Share Attributable to International Paper
Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
0.42
|
|
$
0.79
|
|
$
0.88
|
|
$
3.10
|
|
$
4.07
|
|
|
Discontinued
operations
|
—
|
|
—
|
|
—
|
|
—
|
|
0.84
|
|
|
Net earnings
(loss)
|
$
0.42
|
|
$
0.79
|
|
$
0.88
|
|
$
3.10
|
|
$
4.91
|
|
|
Diluted Earnings
Per Common Share Attributable to International Paper
Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
$
0.42
|
|
$
0.78
|
|
$
0.87
|
|
$
3.07
|
|
$
4.02
|
|
|
Discontinued
operations
|
—
|
|
—
|
|
—
|
|
—
|
|
0.83
|
|
|
Net earnings
(loss)
|
$
0.42
|
|
$
0.78
|
|
$
0.87
|
|
$
3.07
|
|
$
4.85
|
|
|
Average Shares of
Common Stock Outstanding - Diluted
|
395.6
|
|
406.6
|
|
395.4
|
|
398.8
|
|
414.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of this consolidated statement of
operations.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes pre-tax
charges of $15 million ($12 million after taxes), $13 million ($10
million after taxes) and $50 million ($38 million after taxes) for
three months ended December 31, 2019 and September 30, 2019 and the
twelve months ended December 31, 2019, respectively, for the
removal of abandoned property at our mills, pre-tax charges of $19
million ($14 million after taxes), $22 million ($17 million after
taxes) and $41 million ($31 million after taxes) for the three
months ended December 31, 2019 and September 30, 2019 and the
twelve months ended December 31, 2019, respectively, for litigation
reserves, pre-tax charges of $10 million ($8 million after taxes),
$15 million ($11 million after taxes) and $25 million ($19 million
after taxes) for the three months ended December 31, 2019 and
September 30, 2019 and the twelve months ended December 31, 2019,
respectively, for environmental remediation reserve adjustments, a
pre-tax charge of $3 million (before and after taxes) for the three
months and twelve months ended December 31, 2019 for the fair value
adjustment of our remaining investment in India, pre-tax income of
$3 million ($2 million after taxes) for the three months and twelve
months ended December 31, 2019 for the accrual of a foreign
value-added tax refund, a pre-tax charge of $2 million (before and
after taxes) for the three months and twelve months ended December
31, 2019 for the write-off of inventory related to the optimization
of our EMEA Packaging business, pre-tax income of $7 million ($6
million after taxes) and a pre-tax charge of $9 million ($6 million
after taxes) for the three months ended September 30, 2019 and the
twelve months ended December 31, 2019, respectively, for costs
associated with a multi-employer pension plan exit liability and a
pre-tax gain of $9 million ($7 million after taxes) for the three
months ended September 30, 2019 and the twelve months ended
December 31, 2019 for the sale of a previously closed Oregon mill
site.
|
|
|
|
(b)
|
Includes a pre-tax
charge of $3 million ($2 million after taxes) for the three months
and twelve months ended December 31, 2019 for transaction costs
associated with the divestiture of our India Papers
business.
|
|
|
|
(c)
|
Includes a pre-tax
charge of $2 million ($1 million after taxes), $1 million (before
and after taxes) and $5 million ($4 million after taxes) for the
three months ended December 31, 2019 and September 30, 2019 and the
twelve months ended December 31, 2019, respectively, for
accelerated depreciation associated with the announced conversion
of a paper machine at our Riverdale mill to containerboard
production.
|
|
|
|
(d)
|
Includes a pre-tax
charge of $21 million ($16 million after taxes) for the three
months and twelve months ended December 31, 2019 for debt
extinguishment costs, a pre-tax charge of $15 million ($12 million
after taxes) for the three months and twelve months ended December
31, 2019 primarily for severance related to the optimization of our
EMEA Packaging business and a pre-tax charge of $21 million ($16
million after taxes) for the three months ended September 30, 2019
and the twelve months ended December 31, 2019 related to an
overhead cost reduction initiative.
|
|
|
|
(e)
|
Includes a pre-tax
loss of $52 million ($42 million after taxes) for the three months
and twelve months ended December 31, 2019 related to the impairment
of goodwill in our Global Cellulose Fibers business, a loss of $2
million (before and after taxes) and $97 million (before and after
taxes) for the three months ended September 30, 2019 and the twelve
months ended December 31, 2019, respectively, related to the
foreign currency cumulative translation adjustment resulting from
the classification of the assets and liabilities of our India
Papers business as held for sale, a gain of $1 million (before and
after taxes), a loss of $6 million (before and after taxes) and a
pre-tax loss of $62 million ($60 million after taxes) for the three
months ended December 31, 2019 and September 30, 2019 and the
twelve months ended December 31, 2019, respectively, for the
impairment of the net assets of our India Papers business and a
loss of $1 million (before and after taxes) and a pre-tax gain of
$6 million ($5 million after taxes) for the three months and twelve
months ended December 31, 2019 related to the sale of a box plant
in our EMEA Packaging business.
|
|
|
|
(f)
|
Includes a charge of
$32 million (before and after taxes) for the three months ended
September 30, 2019 and the twelve months ended December 31, 2019
related to an Italian antitrust fine.
|
|
|
|
(g)
|
Includes pre-tax
income of $3 million ($2 million after taxes) for the three months
and twelve months ended December 31, 2019 for interest income
associated with the accrual of a foreign value-added tax refund and
a charge of $1 million (before and after taxes) for the twelve
months ended December 31, 2019 for interest expense associated with
foreign tax audits.
|
|
|
|
(h)
|
Includes tax expense
of $203 million for the three months and twelve months ended
December 31, 2019 related to a foreign deferred tax valuation
allowance, a tax benefit of $53 million for the three months and
twelve months ended December 31, 2019 related to an internal
investment restructuring, tax expense of $9 million for the twelve
months ended December 31, 2019 related to a tax rate change in
Luxembourg, tax expense of $3 million for the twelve months ended
December 31, 2019 related to foreign tax audits and a tax benefit
of $3 million for the twelve months ended December 31, 2019 related
to state income tax legislative changes.
|
|
|
|
(i)
|
Includes the
allocation of loss to noncontrolling interest of $2 million (before
and after taxes) and $9 million (before and after taxes) for the
three months ended September 30, 2019 and the twelve months ended
December 31, 2019, respectively, associated with the impairment of
the net assets of our India Papers business.
|
|
|
|
(j)
|
Includes pre-tax
charges of $8 million ($6 million after taxes) and $32 million ($24
million after taxes) for the three months and twelve months ended
December 31, 2018, respectively, for the removal of abandoned
property at our mills, pre-tax income of $5 million ($4 million
after taxes) for the three months and twelve months ended December
31, 2018 for a litigation settlement recovery, a pre-tax charge of
$9 million ($7 million after taxes) for the twelve months ended
December 31, 2018 for an environmental remediation reserve
adjustment and a pre-tax charge of $9 million ($7 million after
taxes) for the twelve months ended December 31, 2018 for a legal
settlement.
|
|
|
|
(k)
|
Includes a pre-tax
charge of $12 million ($9 million after taxes) for the twelve
months ended December 31, 2018 for costs associated with our
proposal to acquire Smurfit Kappa.
|
|
|
|
(l)
|
Includes a pre-tax
charge of $1 million (before and after taxes) and $6 million ($5
million after taxes) for the three months and twelve months ended
December 31, 2018, respectively, for accelerated depreciation
associated with the announced conversion of a paper machine at our
Riverdale mill to containerboard production.
|
|
|
|
(m)
|
Includes a pre-tax
gain of $31 million ($23 million after taxes) for the three months
and twelve months ended December 31, 2018 related to the sale of
our investment in Liaison Technologies, a pre-tax charge of $10
million ($7 million after taxes) for the three months and twelve
months ended December 31, 2018 for debt extinguishment costs, a
pre-tax charge of $3 million ($2 million after taxes) for the three
months and twelve months ended December 31, 2018 for severance
associated with the Riverdale conversion and income of $1 million
(before and after taxes) and a pre-tax charge of $47 million ($34
million after taxes) for the three months and twelve months ended
December 31, 2018, respectively, related to the optimization of our
EMEA Packaging business.
|
|
|
|
(n)
|
Includes a pre-tax
charge of $122 million ($81 million after taxes) for the twelve
months ended December 31, 2018 related to the impairment of fixed
assets and an intangible asset in our Brazil Packaging
business.
|
|
|
|
(o)
|
Includes a pre-tax
charge of $424 million ($318 million after taxes) for the three
months and twelve months ended December 31, 2018 for a settlement
accounting charge associated with an annuity purchase and transfer
of pension obligations for approximately 23,000
retirees.
|
|
|
|
(p)
|
Includes tax expense
of $19 million for the three months and twelve months ended
December 31, 2018 related to international investment
restructuring, tax expense of $25 million for the three months and
twelve months ended December 31, 2018 related to foreign tax
audits, a tax benefit of $36 million for the twelve months ended
December 31, 2018 related to the Tax Cuts and Jobs Act and tax
expense of $9 million for the twelve months ended December 31, 2018
related to state income tax legislative changes.
|
|
|
|
(q)
|
Includes pre-tax
income of $488 million ($364 million after taxes) for the twelve
months ended December 31, 2018 for the gain on the transfer of the
North American Consumer Packaging business and pre-tax charges of
$25 million ($19 million after taxes) for the twelve months ended
December 31, 2018 for transaction costs to transfer the North
American Consumer Packaging business.
|
|
INTERNATIONAL
PAPER COMPANY
Reconciliation of Net Earnings (Loss)
Attributable to International Paper Company to Adjusted Operating
Earnings
Preliminary and Unaudited
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
|
Net Earnings
(Loss) Attributable to International Paper Company
|
$
165
|
|
$
316
|
|
$
344
|
|
$
1,225
|
|
$
2,012
|
|
|
Less: Discontinued
operations (gain) loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(345)
|
|
|
Earnings (Loss)
from Continuing Operations, including non-controlling
interest
|
165
|
|
316
|
|
344
|
|
1,225
|
|
1,667
|
|
|
Add back:
Non-operating pension expense
|
7
|
|
322
|
|
7
|
|
28
|
|
371
|
|
|
Add back: Special
items expense (income)
|
258
|
|
32
|
|
80
|
|
515
|
|
166
|
|
|
Adjusted Operating
Earnings
|
$
430
|
|
$
670
|
|
$
431
|
|
$
1,768
|
|
$
2,204
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
|
Diluted Earnings
per Common Share as Reported
|
$
0.42
|
|
$
0.78
|
|
$
0.87
|
|
$
3.07
|
|
$
4.85
|
|
|
Less: Discontinued
operations (gain) loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.83)
|
|
|
Continuing
Operations
|
0.42
|
|
0.78
|
|
0.87
|
|
3.07
|
|
4.02
|
|
|
Add back:
Non-operating pension expense
|
0.02
|
|
0.79
|
|
0.02
|
|
0.07
|
|
0.90
|
|
|
Add back: Special
items expense (income)
|
0.65
|
|
0.08
|
|
0.20
|
|
1.29
|
|
0.40
|
|
|
Adjusted Operating
Earnings per Share
|
$
1.09
|
|
$
1.65
|
|
$
1.09
|
|
$
4.43
|
|
$
5.32
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
calculates Adjusted Operating Earnings (non-GAAP) by excluding the
after-tax effect of non-operating pension expense, items considered
by management to be unusual (special items) as reflected in the
notes to the Consolidated Statement of Operations and discontinued
operations 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 consolidated 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 attributable to International
Paper is the most directly comparable GAAP measure.
|
|
|
|
|
|
Since diluted
earnings per share are computed independently for each period,
twelve-month per share amounts may not equal the sum of respective
quarters.
|
|
|
INTERNATIONAL
PAPER COMPANY
Sales and Earnings by Business
Segment
Preliminary and Unaudited
(In millions)
|
|
|
|
Net Sales by
Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
|
Industrial
Packaging
|
$
3,810
|
|
$
4,017
|
|
$
3,820
|
|
$
15,326
|
|
$
15,900
|
|
|
Global Cellulose
Fibers
|
577
|
|
736
|
|
624
|
|
2,551
|
|
2,819
|
|
|
Printing
Papers
|
1,067
|
|
1,160
|
|
1,071
|
|
4,291
|
|
4,375
|
|
|
Corporate and
Inter-segment Sales
|
44
|
|
38
|
|
53
|
|
208
|
|
212
|
|
|
Net
Sales
|
$
5,498
|
|
$
5,951
|
|
$
5,568
|
|
$
22,376
|
|
$
23,306
|
|
|
Operating Profit
by Business Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
|
Industrial
Packaging
|
$
605
|
|
$
646
|
|
$
535
|
|
$
2,076
|
|
$
2,277
|
|
|
Global Cellulose
Fibers
|
(45)
|
|
93
|
|
4
|
|
(6)
|
|
262
|
|
|
Printing
Papers
|
109
|
|
197
|
|
162
|
|
529
|
|
543
|
|
|
Total Business
Segment Operating Profit
|
$
669
|
|
$
936
|
|
$
701
|
|
$
2,599
|
|
$
3,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
From Continuing Operations Before Income Taxes and
Equity Earnings
|
$
400
|
|
$
382
|
|
$
452
|
|
$
1,604
|
|
$
1,781
|
|
|
Interest expense,
net
|
113
|
(a)
|
135
|
|
123
|
|
491
|
(a)
|
536
|
|
|
Noncontrolling
interest/equity earnings adjustment (h)
|
(1)
|
|
(3)
|
|
2
|
(b)
|
3
|
(b)
|
(10)
|
|
|
Corporate expenses,
net
|
9
|
|
8
|
|
21
|
|
54
|
|
67
|
|
|
Corporate special
items, net
|
56
|
(c)
|
(21)
|
(e)
|
48
|
(c)
|
104
|
(c)
|
9
|
(e)
|
|
Business special
items, net
|
83
|
(d)
|
6
|
(f)
|
46
|
(d)
|
307
|
(d)
|
205
|
(f)
|
|
Non-operating pension
expense
|
9
|
|
429
|
(g)
|
9
|
|
36
|
|
494
|
(g)
|
|
Adjusted Operating
Profit
|
$
669
|
|
$
936
|
|
$
701
|
|
$
2,599
|
|
$
3,082
|
|
|
Equity Earnings
(Loss) in Ilim S.A., Net of Taxes
|
$
21
|
|
$
67
|
|
$
18
|
|
$
207
|
|
$
290
|
|
|
Equity Earnings
(Loss) in Graphic Packaging International Partners,
LLC
|
$
9
|
|
$
10
|
|
$
10
|
|
$
46
|
|
$
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes income of $3
million for the three months and twelve months ended December 31,
2019 for interest income associated with the accrual of a foreign
value-added tax refund and a charge of $1 million for the twelve
months ended December 31, 2019 for interest expense associated with
foreign tax audits.
|
|
|
|
(b)
|
Includes the
allocation of loss to noncontrolling interest of $2 million and $9
million for the three months ended September 30, 2019 and the
twelve months ended December 31, 2019, respectively, associated
with the impairment of the net assets of our India Papers
business.
|
|
|
|
(c)
|
Includes charges of
$19 million, $22 million and $41 million for the three months ended
December 31, 2019 and September 30, 2019 and the twelve months
ended December 31, 2019, respectively, for litigation reserves,
charges of $10 million,$15 million and $25 million for the three
months ended December 31, 2019 and September 30, 2019 and the
twelve months ended December 31, 2019, respectively,for
environmental remediation reserve adjustments, a charge of $3
million for the three months and twelve months ended December 31,
2019 for the fair value adjustment of our remaining investment in
India, a charge of $3 million for the three months and twelve
months ended December 31, 2019 for the transaction costs associated
with the divestiture of our India Papers business, a charge of $21
million for the three and twelve months ended December 31, 2019 for
debt extinguishment costs and a charge of $11 million for the three
months ended September 30, 2019 and the twelve months ended
December 31, 2019 related to an overhead cost reduction
initiative.
|
|
|
|
(d)
|
Related to Industrial
Packaging, includes charges of $10 million, $9 million, and $35
million for the three months ended December 31, 2019 and September
30, 2019 and the twelve months ended December 31, 2019,
respectively, for the removal of abandoned property at our mills,
income of $7 million for the three months ended September 30, 2019
and a charge of $9 million for the twelve months ended December 31,
2019 for costs associated with a multi-employer pension plan exit
liability, a gain of $9 million for the three months ended
September 30, 2019 and the twelve months ended December 31, 2019
for the sale of a previously closed Oregon mill site, a charge of
$32 million for the three months ended September 30, 2019 and the
twelve months ended December 31, 2019 related to an Italian
antitrust fine, a loss of $1 million for the three months ended
December 31, 2019 and a gain of $6 million for the twelve months
ended December 31, 2019 related to the sale of a box plant in our
EMEA Packaging business and a charge of $17 million for the three
months and twelve months ended December 31, 2019 related to the
optimization of our EMEA Packaging business.
|
|
|
|
Related to Global
Cellulose Fibers, includes charges of $4 million, $3 million, $12
million for the three months ended December 31, 2019 and September
30, 2019 and the twelve months ended December 31, 2019,
respectively, for the removal of abandoned property at our mills, a
charge of $4 million for the three months ended September 30, 2019
and the twelve months ended December 31, 2019 related to an
overhead cost reduction initiative and a charge of $52 million for
the three months and twelve months ended December 31, 2019 related
to the impairment of goodwill.
|
|
|
|
Related to Printing
Papers, includes a loss of $2 million and $97 million for the three
months ended September 30, 2019 and the twelve months ended
December 31, 2019, respectively, related to the foreign currency
cumulative translation adjustment resulting from the classification
of the assets and liabilities of our India Papers business as held
for sale, a gain of $1 million, a loss of $6 million and a loss of
$62 million for the three months ended December 31, 2019 and
September 30, 2019 and the twelve months ended December 31, 2019,
respectively, partially offset by the allocation of loss to
noncontrolling interest of $2 million and $9 million for the three
months ended September 30, 2019 and the twelve months ended
December 31, 2019, respectively, for the impairment of the net
assets of our India Papers business, a charge of $2 million, $1
million and $5 million for the three months ended December 31, 2019
and September 30, 2019 and the twelve months ended December 31,
2019, respectively, for accelerated depreciation associated with
the announced conversion of a paper machine at our Riverdale mill
to containerboard production, a charge of $1 million for each of
the three months ended December 31, 2019 and September 30, 2019 and
$3 million for the twelve months ended December 31, 2019 for the
removal of abandoned property at our mills, a charge of $6 million
for the three months ended September 30, 2019 and the twelve months
ended December 31, 2019 related to an overhead cost reduction
initiative and income of $3 million for the three months and twelve
months ended December 31, 2019 for the accrual of a foreign
value-added tax refund.
|
|
|
|
(e)
|
Includes a gain of
$31 million for the three months and twelve months ended December
31, 2018 related to the sale of our investment in Liaison
Technologies, a charge of $12 million for the twelve months ended
December 31, 2018 for costs associated with our proposal to acquire
Smurfit Kappa, a charge of $10 million for the three months and
twelve months ended December 31, 2018 for debt extinguishment
costs, a charge of $9 million for the twelve months ended December
31, 2018 for a legal settlement and a charge of $9 million for the
twelve months ended December 31, 2018 for an environmental
remediation reserve adjustment.
|
|
|
|
(f)
|
Related to Industrial
Packaging, includes a charge of $122 million for the twelve months
ended December 31, 2018 for the impairment of fixed assets and an
intangible asset in our Brazil Packaging business, income of $1
million and a charge of $47 million for the three months and twelve
months ended December 31, 2018, respectively, related to the
optimization of our EMEA Packaging business, income of $5 million
for the three months and twelve months ended December 31, 2018 for
a litigation settlement recovery and charges of $5 million and $20
million for the three months and twelve months ended December 31,
2018, respectively, for the removal of abandoned property at our
mills.
|
|
|
|
Related to Global
Cellulose Fibers, includes charges of $2 million and $11 million
for the three months and twelve months ended December 31, 2018,
respectively, for the removal of abandoned property at our
mills.
|
|
|
|
Related to Printing
Papers, includes charges of $4 million and $9 million for the three
months and twelve months ended December 31, 2018, respectively, for
accelerated depreciation and severance charges associated with the
announced conversion of a paper machine at our Riverdale mill to
containerboard production and a charge of $1 million for the three
months and twelve months ended December 31, 2018 for the removal of
abandoned property at our mills.
|
|
|
|
(g)
|
Includes a charge of
$424 million for the three months and twelve months ended December
31, 2018 for a settlement accounting charge associated with an
annuity purchase and transfer of pension obligations for
approximately 23,000 retirees.
|
|
|
|
(h)
|
Operating profits for
business 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.
|
|
INTERNATIONAL
PAPER COMPANY
Sales Volume by Product (a)
Preliminary and
Unaudited
|
|
International
Paper Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Three Months
Ended
September 30,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
|
Industrial Packaging
(In thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
Corrugated Packaging
(b)
|
2,644
|
|
2,655
|
|
2,651
|
|
10,454
|
|
10,624
|
|
Containerboard
|
769
|
|
793
|
|
736
|
|
2,909
|
|
3,229
|
|
Recycling
|
598
|
|
582
|
|
556
|
|
2,388
|
|
2,282
|
|
Saturated
Kraft
|
34
|
|
47
|
|
47
|
|
174
|
|
196
|
|
Gypsum /Release
Kraft
|
50
|
|
51
|
|
49
|
|
199
|
|
227
|
|
Bleached
Kraft
|
5
|
|
7
|
|
5
|
|
22
|
|
31
|
|
EMEA Packaging
(b)
|
414
|
|
363
|
|
375
|
|
1,538
|
|
1,476
|
|
Brazilian
Packaging (b)
|
94
|
|
88
|
|
96
|
|
366
|
|
351
|
|
European Coated
Paperboard
|
105
|
|
106
|
|
106
|
|
417
|
|
390
|
|
Industrial
Packaging
|
4,713
|
|
4,692
|
|
4,621
|
|
18,467
|
|
18,806
|
|
Global Cellulose
Fibers (In thousands of metric tons) (c)
|
895
|
|
908
|
|
878
|
|
3,501
|
|
3,573
|
|
Printing Papers (In
thousands of short tons)
|
|
|
|
|
|
|
|
|
|
|
U.S. Uncoated
Papers
|
459
|
|
471
|
|
451
|
|
1,799
|
|
1,886
|
|
European &
Russian Uncoated Papers
|
383
|
|
374
|
|
352
|
|
1,456
|
|
1,440
|
|
Brazilian Uncoated
Papers
|
344
|
|
307
|
|
301
|
|
1,172
|
|
1,125
|
|
Indian Uncoated
Papers
|
23
|
|
68
|
|
49
|
|
206
|
|
263
|
|
Printing
Papers
|
1,209
|
|
1,220
|
|
1,153
|
|
4,633
|
|
4,714
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Sales volumes include
third party and inter-segment sales and exclude sales of equity
investees.
|
|
|
|
(b)
|
Volumes for
corrugated box sales reflect consumed tons sold (CTS). Board sales
by these businesses reflect invoiced tons.
|
|
|
|
(c)
|
Includes North
American, European and Brazilian volumes and internal sales to
mills.
|
|
INTERNATIONAL
PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In millions)
|
|
December 31,
2019
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and Temporary
Investments
|
$
511
|
|
$
589
|
|
Accounts and Notes
Receivable, Net
|
3,280
|
|
3,521
|
|
Contract
Assets
|
393
|
|
395
|
|
Inventories
|
2,208
|
|
2,241
|
|
Other
|
247
|
|
250
|
|
Total Current
Assets
|
6,639
|
|
6,996
|
|
Plants, Properties
and Equipment, Net
|
13,004
|
|
13,067
|
|
Forestlands
|
391
|
|
402
|
|
Investments
|
1,721
|
|
1,648
|
|
Financial Assets of
Variable Interest Entities
|
7,088
|
|
7,070
|
|
Goodwill
|
3,347
|
|
3,374
|
|
Right of Use
Assets
|
434
|
|
—
|
|
Deferred Charges and
Other Assets
|
847
|
|
1,019
|
|
Total
Assets
|
$
33,471
|
|
$
33,576
|
|
Liabilities and
Equity
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Notes Payable and
Current Maturities of Long-Term Debt
|
$
168
|
|
$
639
|
|
Current Nonrecourse
Financial Liabilities of Variable Interest Entities
|
4,220
|
|
—
|
|
Accounts Payable and
Other Current Liabilities
|
4,258
|
|
4,055
|
|
Total Current
Liabilities
|
8,646
|
|
4,694
|
|
Long-Term
Debt
|
9,597
|
|
10,015
|
|
Long-Term Nonrecourse
Financial Liabilities of Variable Interest Entities
|
2,085
|
|
6,298
|
|
Deferred Income
Taxes
|
2,633
|
|
2,600
|
|
Pension Benefit
Obligation
|
1,578
|
|
1,762
|
|
Postretirement and
Postemployment Benefit Obligation
|
270
|
|
264
|
|
Long-Term Lease
Obligations
|
304
|
|
—
|
|
Other
Liabilities
|
640
|
|
560
|
|
Equity
|
|
|
|
|
Invested Capital, Net
of Treasury Stock
|
(695)
|
|
(103)
|
|
Retained
Earnings
|
8,408
|
|
7,465
|
|
Total International
Paper Shareholders' Equity
|
7,713
|
|
7,362
|
|
Noncontrolling
interests
|
5
|
|
21
|
|
Total
Equity
|
7,718
|
|
7,383
|
|
Total Liabilities
and Equity
|
$
33,471
|
|
$
33,576
|
|
INTERNATIONAL
PAPER COMPANY
Consolidated Statement of Cash
Flows
Preliminary and Unaudited
(In millions)
|
|
Twelve Months
Ended December 31,
|
|
2019
|
|
2018
|
|
Operating
Activities
|
|
|
|
|
Net earnings
(loss)
|
$
1,220
|
|
$
2,017
|
|
Depreciation,
amortization and cost of timber harvested
|
1,306
|
|
1,328
|
|
Deferred income tax
expense (benefit), net
|
212
|
|
133
|
|
Restructuring and
other charges, net
|
57
|
|
29
|
|
Net gain on transfer
of North American Consumer Packaging business
|
—
|
|
(488)
|
|
Net (gains) losses on
sales and impairments of businesses
|
205
|
|
122
|
|
Antitrust
fines
|
32
|
|
—
|
|
Equity method
dividends received
|
273
|
|
153
|
|
Equity (earnings)
losses, net
|
(250)
|
|
(336)
|
|
Periodic pension
expense, net
|
93
|
|
632
|
|
Other, net
|
120
|
|
75
|
|
Changes in current
assets and liabilities
|
|
|
|
|
Accounts and notes
receivable
|
246
|
|
(342)
|
|
Contract
assets
|
2
|
|
(32)
|
|
Inventories
|
(1)
|
|
(236)
|
|
Accounts payable and
accrued liabilities
|
139
|
|
151
|
|
Interest
payable
|
(19)
|
|
(8)
|
|
Other
|
(25)
|
|
28
|
|
Cash Provided By
(Used For) Operating Activities
|
3,610
|
|
3,226
|
|
Investment
Activities
|
|
|
|
|
Invested in capital
projects
|
(1,276)
|
|
(1,572)
|
|
Acquisitions, net of
cash acquired
|
(103)
|
|
(8)
|
|
Net settlement on
transfer of North American Consumer Packaging business
|
—
|
|
(40)
|
|
Proceeds from
divestitures, net of cash divested
|
81
|
|
—
|
|
Proceeds from sale of
fixed assets
|
18
|
|
23
|
|
Other
|
(20)
|
|
28
|
|
Cash Provided By
(Used For) Investment Activities
|
(1,300)
|
|
(1,569)
|
|
Financing
Activities
|
|
|
|
|
Repurchases of common
stock and payments of restricted stock tax withholding
|
(535)
|
|
(732)
|
|
Issuance of
debt
|
534
|
|
490
|
|
Reduction of
debt
|
(1,507)
|
|
(1,008)
|
|
Change in book
overdrafts
|
(66)
|
|
(1)
|
|
Dividends
paid
|
(796)
|
|
(789)
|
|
Net debt tender
premiums paid
|
(18)
|
|
(6)
|
|
Other
|
(1)
|
|
—
|
|
Cash Provided By
(Used for) Financing Activities
|
(2,389)
|
|
(2,046)
|
|
Effect of Exchange
Rate Changes on Cash
|
1
|
|
(40)
|
|
Change in Cash and
Temporary Investments
|
(78)
|
|
(429)
|
|
Cash and Temporary
Investments
|
|
|
|
|
Beginning of the
period
|
589
|
|
1,018
|
|
End of the
period
|
$
511
|
|
$
589
|
|
INTERNATIONAL
PAPER COMPANY
Reconciliation of Cash Provided by
Operations to Free Cash Flow
Preliminary and Unaudited
(In millions)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Cash Provided By
(Used For) Operating Activities
|
$
928
|
|
$
821
|
|
$
3,610
|
|
$
3,226
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Cash invested in
capital projects
|
(363)
|
|
(286)
|
|
(1,276)
|
|
(1,572)
|
|
Free Cash
Flow
|
$
565
|
|
$
535
|
|
$
2,334
|
|
$
1,654
|
|
|
|
|
|
|
|
|
|
Free cash flow is a
non-GAAP measure and the most directly comparable GAAP measure is
cash provided by operations. Management believes that free cash
flow is useful to investors as a liquidity measure because it
measures the amount of cash generated that is available, after
reinvesting in the business, to maintain a strong balance sheet,
pay dividends, repurchase stock, service debt and make investments
for future growth. It should not be inferred that the entire free
cash flow amount is available for discretionary expenditures. By
adjusting for certain items that are not indicative of the
Company's ongoing performance, free cash flow also enables
investors to perform meaningful comparisons between past and
present periods.
|
|
|
|
|
|
|
|
|
|
The non-GAAP
financial measures presented in this release have limitations as
analytical tools and should not be considered in isolation or as a
substitute for an analysis of our results calculated in accordance
with GAAP. In addition, because not all companies use identical
calculations, the Company's presentation of non-GAAP measures in
this release may not be comparable to similarly titled measures
disclosed by other companies, including companies in the same
industry as International Paper.
|
|
|
Management believes
certain non-U.S. GAAP financial measures, when used in conjunction
with information presented in accordance with U.S. GAAP, can
facilitate a better understanding of the impact of various factors
and trends on the Company's financial condition and results of
operations. Management also uses these non-U.S. GAAP
financial measures in making financial, operating and planning
decisions and in evaluating the Company's performance.
|
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SOURCE International Paper