International Paper Company (IP) filed Quarterly Report for the period ended 2009-09-30.
International Paper Co. is a global paper and forest products company thatis complemented by an extensive distribution system. The company producesprinting and writing papers pulp tissue paperboard and packaging and wood products. The company also manufacture specialty chemicals and specialty panels and laminated products. Its primary markets and manufacturing and distribution operations are in the United States Europe and the Pacific Rim. International Paper Company has a market cap of $10.32 billion; its shares were traded at around $23.84 with a P/E ratio of 27.6 and P/S ratio of 0.4. The dividend yield of International Paper Company stocks is 0.4%.
Highlight of Business Operations:
Compared with the third quarter of 2008, earnings in the 2009 third quarter benefited from lower operating costs, partially offset by an unfavorable mix of products sold ($64 million), lower mill outage costs ($20 million), lower raw material and freight costs ($196 million), and a lower income tax provision ($6 million). These benefits were offset by lower average price realizations ($132 million), lower sales volumes and higher lack-of-order downtime ($128 million), lower earnings from land and mineral sales ($204 million), higher corporate items and other costs ($2 million), and higher net interest expense ($14 million). Equity earnings, net of taxes, relating to International Paper’s investment in Ilim Holding S.A. were $5 million lower in the 2009 third quarter than in the 2008 third quarter. Net special items were a gain of $214 million in the 2009 third quarter, compared with a loss of $207 million in the 2008 third quarter.
Compared with the second quarter of 2009, earnings from continuing operations benefited from higher sales volumes and lower lack-of-order downtime ($39 million), lower raw material and freight costs ($11 million), lower mill outage costs ($45 million), decreased corporate items and other costs ($6 million), and a lower income tax provision ($8 million) reflecting a lower estimated effective tax rate in 2009. These benefits were partially offset by lower average price realizations ($53 million), a less favorable mix of products sold, partially offset by lower operating costs ($17 million), and slightly lower earnings from land and mineral sales ($1 million). Net interest expense decreased ($3 million). Equity earnings, net of taxes for Ilim Holding, S.A. increased by $30 million versus the second quarter. Net special items were a gain of $214 million in the 2009 third quarter versus a gain of $50 million in the second quarter of 2009.
Industry segment operating profits of $940 million in the 2009 third quarter were higher than both $536 million in the 2008 third quarter and $788 million in the 2009 second quarter. Compared with the third quarter of 2008, earnings in the current quarter benefited from lower operating costs, partially offset by a less favorable mix of products sold ($93 million), lower mill outage costs ($30 million), lower raw material and freight costs ($290 million), and lower corporate items and other costs ($9 million). These benefits were offset by lower average price realizations ($196 million), lower sales volumes and increased lack-of-order downtime ($189 million), and lower gains from land and mineral sales ($303 million). Special items consisted of a gain of $497 million in the 2009 third quarter, including a pre-tax gain of $525 million from alternate fuel mixture credits, compared with a loss of $173 million in the 2008 third quarter.
During the second quarter of 2009, restructuring and other charges totaling $79 million before taxes ($55 million after taxes) were recorded, including a $34 million charge before taxes ($21 million after taxes) for severance and benefit costs associated with the Company’s 2008 overhead reduction program, a $25 million charge before taxes ($16 million after taxes) related to early debt extinguishment costs, a $15 million charge, before and after taxes, for severance and other costs related to the closure of the Company’s Etienne mill in France, and a $5 million charge before taxes ($3 million after taxes) for other closure costs. Additionally, the second quarter income tax provision included a $156 million charge to establish a valuation allowance for deferred tax assets in France, and a $26 million credit related to the settlement of certain tax issues (see Note 10).
During the first quarter of 2009, restructuring and other charges totaling $83 million before taxes ($65 million after taxes) were recorded, including a $52 million charge before taxes ($32 million after taxes) for severance and benefits associated with the Company’s 2008 overhead reduction program, a $23 million charge before taxes ($28 million after taxes) for closure costs related to the Inverurie mill in Scotland, a $6 million charge before taxes ($4 million after taxes) for closure costs for the Franklin, Virginia, lumber mill, sheet converting plant and converting innovations center, and a $2 million pre-tax charge ($1 million after taxes) for costs associated with the reorganization of the Company’s Shorewood Packaging operations. Additionally, a $20 million charge was recorded related to certain tax adjustments (see Note 10).
During the third quarter of 2008, restructuring and other charges totaling $97 million before taxes ($60 million after taxes) were recorded, including $35 million before taxes ($22 million after taxes) for adjustments to legal reserves, $53 million before taxes ($33 million after taxes) to write-off supply chain initiative development costs for U.S. container operations that will not be implemented due to the CBPR acquisition, $8 million before taxes ($5 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations in Canada, and $1 million before taxes ($0 million after taxes) for severance costs associated with the Company’s Transformation Plan.
IP is in the portfolios of Brian Rogers of T Rowe Price Equity Income Fund, PRIMECAP Management, George Soros of Soros Fund Management LLC, Charles Brandes of Brandes Investment, Dodge & Cox.
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