International Paper Reports 1Q Earnings: xpedx Earns $18 Million
Press release from the issuing company
STAMFORD, Conn., April 19 -- International Paper today reported 2002 first-quarter earnings of $58 million ($0.12 per share), compared with $24 million ($0.05 per share) in the first quarter 2001 and $58 million ($0.12 per share) in the fourth quarter 2001. All figures are before special and extraordinary items.
First-quarter net sales were $6 billion compared with $6.9 billion for the same period in 2001 and $6.3 billion in the fourth quarter of 2001.
"We completed the first quarter with strong momentum, and we continue to improve our underlying cost structure in a difficult macro environment," said John Dillon, International Paper chairman and chief executive officer. "Our internal programs are having a major impact on our earnings, we have continued to match our production with our customers' demand, and we have delivered on our commitment to sell businesses that do not meet our long-term goals. Our inventories have been significantly reduced from last year's levels, and we have now divested more than $3 billion worth of assets. When the economic rebound does occur, we are very well positioned to take advantage of it."
After special items, International Paper reported 2002 first-quarter net earnings of $65 million ($0.13 per share), compared with a net loss of $44 million ($0.09 per share) in the 2001 first quarter after special and extraordinary items. In the fourth quarter of 2001, the company reported a net loss of $572 million ($1.19 per share) after special items.
Special items in the first quarter consisted of a $10 million pre-tax credit ($7 million after taxes) for the reversal of reserves no longer required. First-quarter 2001 special items included a $10 million pre-tax charge ($6 million after taxes) for Champion merger integration costs, an extraordinary pre-tax charge of $73 million ($46 million after taxes) related to the impairment of the Masonite business and the divestiture of the Petroleum and Minerals assets, and a $25 million charge before taxes and minority interest ($16 million after taxes and minority interest) for the cumulative effect of a change in accounting for derivatives and hedging activities. Special items in the 2001 fourth quarter totaled a pre-tax loss of $745 million ($630 million after taxes), including charges for asset shutdowns of excess internal capacity and cost reduction actions, losses related to dispositions and asset impairments of businesses held for sale, and a credit for the reversal of reserves no longer required.
First quarter 2002 results also reflect new accounting requirements that eliminated goodwill amortization effective January 1, 2002. Goodwill amortization totaled approximately $46 million (or $0.10 per share) in each quarter of 2001. The favorable effect of this accounting change on 2002 first quarter results was offset by a higher effective tax rate that reduced earnings by $0.06 per share, and a reduction in pension income primarily due to the assumed return on assets that reduced earnings by $0.04 per share, both compared with the fourth quarter of 2001.
Compared to first quarter 2001, operating profit was slightly lower as weak demand and pricing in the Printing Papers segment offset strong performances in Packaging and Forest Products.
First-quarter 2002 segment earnings and business trends compared with the fourth quarter of 2001 are as follows.
First-quarter earnings for Printing Papers were $76 million, down from fourth-quarter 2001 earnings of $119 million as demand continued to weaken and prices remained under pressure for market pulp. The strong U.S. dollar and the start up of offshore coated paper capacity further hampered a weak U.S. market for coated papers during the quarter.
Industrial and Consumer Packaging earnings were $128 million in the first quarter, down slightly from $129 million in the fourth quarter 2001. Despite soft market conditions, results were primarily influenced by rationalization programs, cost improvement initiatives and lower energy and material costs within the Consumer Packaging business.
Earnings in the company's distribution business, xpedx, rose to $18 million for the first quarter 2002 compared with a $10 million loss in the 2001 fourth quarter, due to aggressive internal cost reduction programs and lower bad debt charges.
First-quarter Forest Products earnings of $176 million were up from $153 million in the fourth quarter 2001 due to higher lumber and plywood prices.
Earnings at Carter Holt Harvey, International Paper's 50.4 percent owned subsidiary in New Zealand, rose slightly to $10 million in the first quarter compared with fourth-quarter 2001 earnings of $8 million. Internal cost control programs and stronger volumes in the New Zealand building supplies business favorably impacted results.
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