International Paper reports record earnings
Thursday, October 28, 2010
Press release from the issuing company
Memphis, Tenn. - International Paper today reported third -quarter 2010 net earnings attributable to common shareholders totaling $397 million ($0.91 per share) compared with $93 million ($0.21 per share) in the second quarter of 2010 and $371 million ($0.87 per share) in the third quarter of 2009. Amounts include the impact of special items in the second quarter of 2010 and the third quarter of 2009.
Quarterly net sales were $6.7 billion compared with $6.1 billion in the second quarter of 2010 and $5.9 billion in the third quarter of 2009.
Operating profits before special items were $752 million in the third quarter of 2010, up from $466 million in the second quarter of 2010 and $443 million in the third quarter of 2009.
"Our paper and packaging businesses delivered strong results, which led to record earnings," said John Faraci, chairman and chief executive officer. "We continued to realize our announced price increases, realize restructuring benefits, operate well and improve our mix of business which led to strong margin expansion. As a result, free cash flow in the quarter was outstanding. We are well positioned to generate strong results in the fourth quarter and into 2011."
Industrial Packaging operating profits rose to $332 million versus $193 million ($192 million after special items) in the second quarter of 2010. Our North American operations generated record quarterly earnings, reflecting the realization of announced price increases for boxes and linerboard, fewer mill outages, improved input costs, and continued strong mill operations.
Printing Papers operating profits were $278 million versus $158 million ($47 million after special items) in the second quarter of 2010. Earnings for North American printing papers represent the second best quarterly earnings on record. Results were positively impacted by favorable pulp and paper pricing, reduced fixed costs, fewer mill outages, bad debt recovery, and increased shipments in the U.S. and Europe.
Consumer Packaging operating profits increased to $71 million compared with $49 million ($48 million after special items) in the second quarter of 2010. Our North American coated paperboard business generated record quarterly earnings. Results benefited from higher volumes, further realization of announced price increases, and fewer maintenance outages.
xpedx, the company's distribution business, reported operating profits of $22 million, down from $26 million in the second quarter of 2010. Higher sales volumes were offset by lower margins and increased overhead costs.
Forest Products earnings were $49 million, up from $40 million in the second quarter due to the sale of the majority of our remaining land portfolio.
Net corporate expenses totaled $58 million for the 2010 third quarter, essentially in line with the $54 million in the 2010 second quarter.
Effective Tax Rate
Effects of Special Items
Special items in the third quarter of 2009 included a $525 million pre-tax credit ($320 million after taxes) for alternative fuel mixture credits earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce renewable energy to operate their businesses, an $18 million pre-tax charge ($11 million after taxes) for integration costs associated with the Industrial Packaging business integration, and a pre-tax charge of $151 million ($95 million after taxes) for restructuring and other charges. Restructuring and other charges included a pre-tax charge of $102 million ($62 million after taxes) for early debt extinguishment costs, a $39 million pre-tax charge ($24 million after taxes) for severance and benefit costs associated with the company's 2008 overhead reduction program, and a $10 million pre-tax charge ($9 million after taxes) for facility closure costs.
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