International Paper Reports Second Quarter 2020 Results
International Paper (NYSE: IP) reported second quarter 2020 financial results, achieving net earnings of $266 million ($0.67 per diluted share), a recovery from a loss of $(141) million in Q1 2020. Adjusted operating earnings were $305 million ($0.77 per diluted share), below $460 million in Q2 2019. Net sales decreased to $4.87 billion from $5.35 billion in Q1 2020. The liquidity position improved slightly to $3.6 billion. Business segments showed varied performance, with industrial packaging profits down, cellulose fibers improving, and printing papers significantly impacted by COVID-19. The company emphasizes strong cash generation amid economic uncertainty.
- Net earnings increased to $266 million in Q2 2020 from $(141) million in Q1 2020.
- Adjusted operating earnings rose to $305 million in Q2 2020, exceeding Q1 2020 results.
- Cash provided by operations reached $890 million in Q2 2020.
- Liquidity position improved to $3.6 billion at the end of Q2.
- Net sales declined to $4.87 billion in Q2 2020, down from $5.35 billion in Q1.
- Industrial packaging profits fell to $449 million from $470 million in Q1 2020.
- Global Cellulose Fibers reported losses of $(10) million, although improved from $(54) million in Q1.
- Printing Papers operating profits significantly decreased to $(11) million from $96 million in Q1, mainly due to lower sales volumes.
MEMPHIS, Tenn., July 30, 2020 /PRNewswire/ -- International Paper (NYSE: IP) today reported second quarter 2020 financial results.
SECOND QUARTER 2020 HIGHLIGHTS
- Second quarter net earnings (loss) attributable to International Paper of
$266 million ($0.67 per diluted share), compared with$(141) million ($(0.36) per diluted share) in the first quarter of 2020 and$292 million ($0.73 per diluted share) in the second quarter of 2019. First quarter 2020 net earnings included an after-tax charge of$337 million ($0.85 per diluted share) for the impairment of the net assets and write-off of foreign currency translation adjustment following the announcement of the sale of our Brazil Packaging business. - Second quarter adjusted operating earnings* (non-GAAP) of
$305 million ($0.77 per diluted share) compared with$226 million ($0.57 per diluted share) in the first quarter of 2020 and$460 million ($1.15 per diluted share) in the second quarter of 2019 - Second quarter cash provided by operations of
$890 million and year-to-date of$1.5 billion compared with$1.8 billion year-to-date in the same period of 2019 - Liquidity position of
$3.6 billion at the end of the second quarter compared with$3.5 billion at the end of the first quarter, which reflects cash and unused committed facilities
"International Paper delivered solid earnings and generated strong cash from operations while navigating the COVID-19 pandemic and its significant economic impact," said Mark Sutton, Chairman and Chief Executive Officer. "Our performance demonstrates the strength and resilience of our employees, our diverse customer base and our world-class manufacturing and supply chain capabilities. Looking ahead, we will continue to focus on cash generation to reinforce the company's financial strength as we manage through ongoing uncertainty."
Sutton added, "The health and safety of our employees remain our most important responsibility. I am proud of their ongoing commitment to take care of each other and our customers."
Diluted Net EPS Attributable to International Paper Shareholders and Adjusted Operating EPS | ||||||||||||
Second | First | Second | ||||||||||
Net Earnings (Loss) Attributable to International Paper | $ | 0.67 | $ | (0.36) | $ | 0.73 | ||||||
Add Back – Non-Operating Pension Expense (Income) | (0.03) | (0.01) | 0.01 | |||||||||
Add Back – Net Special Items Expense (Income) | 0.13 | 0.94 | 0.41 | |||||||||
Adjusted Operating Earnings* | $ | 0.77 | $ | 0.57 | $ | 1.15 | ||||||
* | Adjusted operating earnings (non-GAAP) is defined as net earnings attributable to International Paper Company (GAAP) excluding net special items and non-operating pension expense (income). 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 net special items and non-operating pension expense (income), see the Consolidated Statement of Operations and related notes included later in this release. |
Select Financial Measures | |||||||||||||
(In millions) | Second | First | Second | ||||||||||
Net Sales | $ | 4,866 | $ | 5,352 | $ | 5,667 | |||||||
Net Earnings (Loss) Attributable to International Paper | 266 | (141) | 292 | ||||||||||
Business Segment Operating Profit | 428 | 512 | 629 | ||||||||||
Adjusted Operating Earnings | 305 | 226 | 460 | ||||||||||
Cash Provided By (Used For) Operations | 890 | 649 | 1,067 | ||||||||||
Free Cash Flow* | 638 | 363 | 732 | ||||||||||
* | 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 and is calculated as set forth in footnote (h) below under "Sales and Earnings by Business Segment." Second quarter 2020 net sales by business segment and operating profit (loss) by business segment compared with the first quarter of 2020 and the second quarter of 2019 are as follows:
Business Segment Results | ||||||||||||
(In millions) | Second | First | Second | |||||||||
Net Sales by Business Segment | ||||||||||||
Industrial Packaging | $ | 3,633 | $ | 3,819 | $ | 3,864 | ||||||
Global Cellulose Fibers | 605 | 568 | 661 | |||||||||
Printing Papers | 583 | 908 | 1,088 | |||||||||
Corporate and Inter-segment Sales | 45 | 57 | 54 | |||||||||
Net Sales | $ | 4,866 | $ | 5,352 | $ | 5,667 | ||||||
Operating Profit (Loss) by Business Segment | ||||||||||||
Industrial Packaging | $ | 449 | $ | 470 | $ | 515 | ||||||
Global Cellulose Fibers | (10) | (54) | — | |||||||||
Printing Papers | (11) | 96 | 114 | |||||||||
Total Business Segment Operating Profit | $ | 428 | $ | 512 | $ | 629 | ||||||
Industrial Packaging operating profits in the second quarter of 2020 were
Global Cellulose Fibers operating profits (losses) in the second quarter of 2020 were
Printing Papers operating profits (losses) in the second quarter of 2020 were
EQUITY METHOD INVESTMENTS
Ilim joint venture equity earnings (loss) were
Graphic Packaging equity earnings on our
CORPORATE EXPENSES
Corporate expenses (income) were
EFFECTIVE TAX RATE
The reported effective tax rate for the second quarter of 2020 was
Excluding net special items and non-operating pension expense, the operational effective tax rate for the second quarter of 2020 was
EFFECTS OF NET SPECIAL ITEMS
Net special items in the second quarter of 2020 amount to a net after-tax charge of
Second Quarter 2020 | First Quarter 2020 | Second Quarter 2019 | ||||||||||||||||||||||
(In millions) | Before Tax | After Tax | Before Tax | After Tax | Before Tax | After Tax | ||||||||||||||||||
Restructuring and other charges, net: | ||||||||||||||||||||||||
Debt extinguishment costs | $ | 18 | $ | 13 | $ | 8 | $ | 6 | $ | — | $ | — | ||||||||||||
Total restructuring and other charges, net | 18 | 13 | 8 | 6 | — | — | ||||||||||||||||||
Asbestos litigation reserve adjustment (a) | 43 | 33 | — | — | — | — | ||||||||||||||||||
Brazil Packaging impairment | 8 | 6 | 344 | 337 | — | — | ||||||||||||||||||
Abandoned property removal | 5 | 4 | 9 | 7 | 11 | 8 | ||||||||||||||||||
Gain on sale of portion of investment in India | (6) | (6) | — | — | — | — | ||||||||||||||||||
India investment fair value adjustment | — | — | 17 | 17 | — | — | ||||||||||||||||||
Environmental remediation reserve adjustment | — | — | 41 | 31 | — | — | ||||||||||||||||||
Gain on sale of portion of equity investment in Graphic | — | — | (33) | (25) | — | — | ||||||||||||||||||
Foreign value-added tax refund accrual | — | — | (3) | (2) | — | — | ||||||||||||||||||
India Papers impairment | — | — | — | — | 145 | 143 | ||||||||||||||||||
Other | — | — | 1 | 1 | 2 | 2 | ||||||||||||||||||
Other tax expense, net | — | — | — | — | — | 9 | ||||||||||||||||||
Total net special items | $ | 68 | $ | 50 | $ | 384 | $ | 372 | $ | 158 | $ | 162 | ||||||||||||
(a) | During the quarter ended June 30, 2020, we adjusted our estimated net liability associated with asbestos-related litigation concerning products sold by Champion International Corporation prior to our acquisition of Champion in 2000 to revise the time horizon associated with anticipated future claims to forty years. This adjustment of |
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 second quarter earnings call. The conference ID number is 8077936. 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 8077936.
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
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) developments related to the COVID-19 pandemic, including the severity, magnitude and duration of the pandemic, negative global economic conditions arising from the pandemic, impacts of governments' responses to the pandemic on our operations, impacts of the pandemic on commercial activity, our customers and business partners and consumer preferences and demand, supply chain disruptions, and disruptions in the credit or financial markets; (ii) the level of indebtedness and changes in interest rates; (iii) 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 (including changes resulting from the COVID-19 pandemic); (iv) domestic and global economic conditions and political changes, 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, (v) the amount of International Paper's future pension funding obligations, and pension and health care costs; (vi) 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 (including new legal requirements arising from the COVID-19 pandemic); (vii) any material disruption at any of International Paper's manufacturing facilities (including as the result of the COVID-19 pandemic); (viii) risks inherent in conducting business through joint ventures; (ix) International Paper's ability to achieve the benefits expected from, and other risks associated with, acquisitions, joint ventures, divestitures and other corporate transactions, (x) information technology risks, and (xi) 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 | ||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | ||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | ||||||||
Net Sales | $ 4,866 | $ 5,667 | $ 5,352 | $ 10,218 | $ 11,310 | |||||||
Costs and Expenses | ||||||||||||
Cost of products sold | 3,427 | (a) | 3,901 | (g) | 3,746 | (a) | 7,173 | (a) | 7,830 | (g) | ||
Selling and administrative expenses | 332 | 402 | 418 | 750 | 815 | |||||||
Depreciation, amortization and cost of timber harvested | 312 | 321 | (h) | 323 | (b) | 635 | (b) | 636 | (h) | |||
Distribution expenses | 365 | 384 | 407 | 772 | 773 | |||||||
Taxes other than payroll and income taxes | 41 | 43 | 44 | 85 | 86 | |||||||
Restructuring and other charges, net | 18 | (c) | — | 8 | (c) | 26 | (c) | — | ||||
Net (gains) losses on sales and impairments of businesses | 8 | (d) | 152 | (i) | 344 | (d) | 352 | (d) | 145 | (i) | ||
Net (gains) losses on sales of equity method investments | — | — | (33) | (e) | (33) | (e) | — | |||||
Interest expense, net | 116 | 122 | (j) | 117 | (f) | 233 | (f) | 255 | (j) | |||
Non-operating pension expense(income) | (14) | 8 | (6) | (20) | 18 | |||||||
Earnings (Loss) Before Income Taxes and Equity Earnings | 261 | 334 | (16) | 245 | 752 | |||||||
Income tax provision (benefit) | 67 | 128 | (k) | 94 | 161 | 234 | (k) | |||||
Equity earnings (loss), net of taxes | 72 | 80 | (31) | 41 | 194 | |||||||
Net Earnings (Loss) | 266 | 286 | (141) | 125 | 712 | |||||||
Less: Net earnings (loss) attributable to noncontrolling interests | — | (6) | (l) | — | — | (4) | (l) | |||||
Net Earnings (Loss) Attributable to International Paper Company | $ 266 | $ 292 | $ (141) | $ 125 | $ 716 | |||||||
Basic Earnings Per Common Share Attributable to International Paper Common | ||||||||||||
Net earnings (loss) | $ 0.67 | $ 0.74 | $ (0.36) | $ 0.32 | $ 1.80 | |||||||
Diluted Earnings Per Common Share Attributable to International Paper | ||||||||||||
Net earnings (loss) | $ 0.67 | $ 0.73 | $ (0.36) | $ 0.32 | $ 1.78 | |||||||
Average Shares of Common Stock Outstanding - Diluted | 393.1 | 398.2 | 392.6 | 394.0 | 401.4 | |||||||
The accompanying notes are an integral part of this consolidated statement of operations. | ||||||||||||
(a) | Includes a pre-tax charge of | |||||||||||
(b) | Includes a charge of | |||||||||||
(c) | Includes pre-tax charges of | |||||||||||
(d) | Includes a pre-tax loss of | |||||||||||
(e) | Includes a pre-tax gain of | |||||||||||
(f) | Includes income of | |||||||||||
(g) | Includes pre-tax charges of | |||||||||||
(h) | Includes charges of | |||||||||||
(i) | Includes a loss of | |||||||||||
(j) | Includes a charge of | |||||||||||
(k) | Includes tax expense of | |||||||||||
(l) | Includes the allocation of loss to noncontrolling interest of | |||||||||||
INTERNATIONAL PAPER COMPANY | |||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | |||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||
Net Earnings (Loss) Attributable to International Paper Company | $ 266 | $ 292 | $ (141) | $ 125 | $ 716 | ||||||
Add back: Non-operating pension expense (income) | (11) | 6 | (5) | (16) | 14 | ||||||
Add back: Net special items expense (income) | 50 | 162 | 372 | 422 | 177 | ||||||
Adjusted Operating Earnings | $ 305 | $ 460 | $ 226 | $ 531 | $ 907 | ||||||
Three Months Ended | Three Months Ended | Six Months Ended | |||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||
Diluted Earnings per Common Share as Reported | $ 0.67 | $ 0.73 | $ (0.36) | $ 0.32 | $ 1.78 | ||||||
Add back: Non-operating pension expense (income) | (0.03) | 0.01 | (0.01) | (0.04) | 0.03 | ||||||
Add back: Net special items expense (income) | 0.13 | 0.41 | 0.94 | 1.07 | 0.45 | ||||||
Adjusted Operating Earnings per Share | $ 0.77 | $ 1.15 | $ 0.57 | $ 1.35 | $ 2.26 | ||||||
Notes: | |||||||||||
The Company calculates Adjusted Operating Earnings (non-GAAP) by excluding the after-tax effect of non-operating pension expense (income) and items considered by management to be unusual (net special items) as reflected in the Consolidated Statement of Operations and related notes included in this release 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 (loss) attributable to International Paper is the most directly comparable GAAP measure. | |||||||||||
Since diluted earnings per share are computed independently for each period, six-month per share amounts may not equal the sum of respective quarters. | |||||||||||
INTERNATIONAL PAPER COMPANY | |||||||||||
Net Sales by Business Segment | |||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | |||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||
Industrial Packaging | $ 3,633 | $ 3,864 | $ 3,819 | $ 7,452 | $ 7,696 | ||||||
Global Cellulose Fibers | 605 | 661 | 568 | 1,173 | 1,350 | ||||||
Printing Papers | 583 | 1,088 | 908 | 1,491 | 2,153 | ||||||
Corporate and Inter-segment Sales | 45 | 54 | 57 | 102 | 111 | ||||||
Net Sales | $ 4,866 | $ 5,667 | $ 5,352 | $ 10,218 | |||||||
Operating Profit by Business Segment | Three Months Ended | Three Months Ended | Six Months Ended | ||||||||
2020 | 2019 | 2020 | 2020 | 2019 | |||||||
Industrial Packaging | $ 449 | $ 515 | $ 470 | $ 919 | $ 936 | ||||||
Global Cellulose Fibers | (10) | — | (54) | (64) | 35 | ||||||
Printing Papers | (11) | 114 | 96 | 85 | 258 | ||||||
Total Business Segment Operating Profit | $ 428 | $ 629 | $ 512 | $ 940 | $ 1,229 | ||||||
Earnings (Loss) Before Income Taxes and Equity Earnings | $ 261 | $ 334 | $ (16) | $ 245 | $ 752 | ||||||
Interest expense, net | 116 | 122 | (d) | 117 | (a) | 233 | (a) | 255 | (d) | ||
Noncontrolling interest adjustment (g) | — | 5 | (e) | — | — | 2 | (e) | ||||
Corporate expenses, net | (3) | 3 | 32 | 29 | 24 | ||||||
Corporate net special items | 54 | (b) | — | 33 | (b) | 87 | (b) | — | |||
Business net special items | 14 | (c) | 157 | (f) | 352 | (c) | 366 | (c) | 178 | (f) | |
Non-operating pension expense (income) | (14) | 8 | (6) | (20) | 18 | ||||||
Business Segment Operating Profit (h) | $ 428 | $ 629 | $ 512 | $ 940 | $ 1,229 | ||||||
Equity Earnings (Loss) in Ilim S.A., Net of Taxes | $ 63 | $ 67 | $ (35) | $ 28 | $ 168 | ||||||
Equity Earnings (Loss) in Graphic Packaging International Partners, LLC | $ 11 | $ 14 | $ 7 | $ 18 | $ 27 | ||||||
(a) | Includes income of | ||||||||||
(b) | Includes a charge of | ||||||||||
(c) | Related to Industrial Packaging, includes charges of | ||||||||||
Related to Global Cellulose Fibers, includes charges of | |||||||||||
Related to Printing Papers, includes a charge of | |||||||||||
(d) | Includes a charge of | ||||||||||
(e) | Includes the allocation of loss to noncontrolling interest of | ||||||||||
(f) | Related to Industrial Packaging, includes charges of | ||||||||||
Related to Global Cellulose Fibers, includes charges of | |||||||||||
Related to Printing Papers, includes a loss of | |||||||||||
(g) | 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 for these subsidiaries is adjusted here to present consolidated earnings before income taxes and equity earnings. | ||||||||||
(h) | As set forth in the chart above, business segment operating profit is defined as earnings (loss) before income taxes and equity earnings, but including the impact of noncontrolling interests, and excluding interest expense, net, corporate expenses, net, corporate net special items, business net special items and non-operating pension expense. Business segment operating profit is a measure reported to our management for purposes of making decisions about allocating resources to our business segments and assessing the performance of our business segments and is presented in our financial statement footnotes in accordance with ASC 280. | ||||||||||
INTERNATIONAL PAPER COMPANY | ||||||||||
International Paper Consolidated | ||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | ||||||||
2020 | 2019 | 2020 | 2020 | 2019 | ||||||
Industrial Packaging (In thousands of short tons) | ||||||||||
Corrugated Packaging (b) | 2,571 | 2,624 | 2,624 | 5,195 | 5,159 | |||||
Containerboard | 783 | 707 | 827 | 1,610 | 1,404 | |||||
Recycling | 512 | 625 | 416 | 928 | 1,234 | |||||
Saturated Kraft | 39 | 52 | 48 | 87 | 93 | |||||
Gypsum /Release Kraft | 48 | 49 | 56 | 104 | 100 | |||||
Bleached Kraft | 8 | 5 | 7 | 15 | 12 | |||||
EMEA Packaging (b) | 375 | 379 | 441 | 816 | 749 | |||||
Brazilian Packaging (b) | 83 | 91 | 90 | 173 | 176 | |||||
European Coated Paperboard | 95 | 102 | 111 | 206 | 206 | |||||
Industrial Packaging | 4,514 | 4,634 | 4,620 | 9,134 | 9,133 | |||||
Global Cellulose Fibers (In thousands of metric tons) (c) | 965 | 869 | 901 | 1,866 | 1,728 | |||||
Printing Papers (In thousands of short tons) | ||||||||||
U.S. Uncoated Papers | 247 | 441 | 415 | 662 | 889 | |||||
European & Russian Uncoated Papers | 271 | 367 | 360 | 631 | 721 | |||||
Brazilian Uncoated Papers | 150 | 283 | 240 | 390 | 527 | |||||
Indian Uncoated Papers | — | 66 | — | — | 134 | |||||
Printing Papers | 668 | 1,157 | 1,015 | 1,683 | 2,271 | |||||
(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 | |||
June 30, 2020 | December 31, 2019 | ||
Assets | |||
Current Assets | |||
Cash and Temporary Investments | $ 847 | $ 511 | |
Accounts and Notes Receivable, Net | 3,060 | 3,280 | |
Contract Assets | 401 | 393 | |
Inventories | 2,010 | 2,208 | |
Assets Held for Sale | 112 | — | |
Other | 169 | 247 | |
Total Current Assets | 6,599 | 6,639 | |
Plants, Properties and Equipment, Net | 12,586 | 13,004 | |
Forestlands | 293 | 391 | |
Investments | 1,407 | 1,721 | |
Financial Assets of Variable Interest Entities | 7,098 | 7,088 | |
Goodwill | 3,304 | 3,347 | |
Right of Use Assets | 425 | 434 | |
Deferred Charges and Other Assets | 807 | 847 | |
Total Assets | $ 32,519 | $ 33,471 | |
Liabilities and Equity | |||
Current Liabilities | |||
Notes Payable and Current Maturities of Long-Term Debt | $ 33 | $ 168 | |
Current Nonrecourse Financial Liabilities of Variable Interest Entities | 4,220 | 4,220 | |
Accounts Payable and Other Current Liabilities | 3,709 | 4,258 | |
Liabilities Held for Sale | 368 | — | |
Total Current Liabilities | 8,330 | 8,646 | |
Long-Term Debt | 9,432 | 9,597 | |
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities | 2,089 | 2,085 | |
Deferred Income Taxes | 2,654 | 2,633 | |
Pension Benefit Obligation | 1,472 | 1,578 | |
Postretirement and Postemployment Benefit Obligation | 249 | 270 | |
Long-Term Lease Obligations | 294 | 304 | |
Other Liabilities | 939 | 640 | |
Equity | |||
Invested Capital, Net of Treasury Stock | (1,066) | (695) | |
Retained Earnings | 8,123 | 8,408 | |
Total International Paper Shareholders' Equity | 7,057 | 7,713 | |
Noncontrolling interests | 3 | 5 | |
Total Equity | 7,060 | 7,718 | |
Total Liabilities and Equity | $ 32,519 | $ 33,471 | |
INTERNATIONAL PAPER COMPANY | |||
Six Months Ended June 30, | |||
2020 | 2019 | ||
Operating Activities | |||
Net earnings (loss) | $ 125 | $ 712 | |
Depreciation, amortization and cost of timber harvested | 635 | 636 | |
Deferred income tax expense (benefit), net | 12 | 50 | |
Restructuring and other charges, net | 26 | — | |
Net (gains) losses on sales of equity method investments | (33) | — | |
Net (gains) losses on sales and impairments of businesses | 352 | 145 | |
Equity method dividends received | 151 | 251 | |
Equity (earnings) losses, net | (41) | (194) | |
Periodic pension expense, net | 16 | 47 | |
Other, net | 109 | 55 | |
Changes in current assets and liabilities | |||
Accounts and notes receivable | 74 | 48 | |
Contract assets | (11) | (4) | |
Inventories | 65 | 48 | |
Accounts payable and accrued liabilities | (37) | 2 | |
Interest payable | — | 1 | |
Other | 96 | 3 | |
Cash Provided By (Used For) Operating Activities | 1,539 | 1,800 | |
Investment Activities | |||
Invested in capital projects, net of insurance recoveries | (538) | (628) | |
Acquisitions, net of cash acquired | (64) | (99) | |
Proceeds from sales of equity method investments | 250 | — | |
Proceeds from sales of businesses, net of cash divested | — | 17 | |
Proceeds from sale of fixed assets | 3 | 4 | |
Other | 15 | (9) | |
Cash Provided By (Used For) Investment Activities | (334) | (715) | |
Financing Activities | |||
Repurchases of common stock and payments of restricted stock tax withholding | (41) | (460) | |
Issuance of debt | 579 | 444 | |
Reduction of debt | (917) | (452) | |
Change in book overdrafts | (10) | (14) | |
Dividends paid | (403) | (398) | |
Other | (25) | 4 | |
Cash Provided By (Used for) Financing Activities | (817) | (876) | |
Cash Included in Assets Held for Sale | (13) | (21) | |
Effect of Exchange Rate Changes on Cash | (39) | 10 | |
Change in Cash and Temporary Investments | 336 | 198 | |
Cash and Temporary Investments | |||
Beginning of the period | 511 | 589 | |
End of the period | $ 847 | $ 787 | |
INTERNATIONAL PAPER COMPANY | |||||||
Three Months Ended | Six Months Ended | ||||||
2020 | 2019 | 2020 | 2019 | ||||
Cash Provided By (Used For) Operating Activities | $ 890 | $ 1,067 | $ 1,539 | $ 1,800 | |||
Adjustments: | |||||||
Cash invested in capital projects, net of insurance recoveries | (252) | (335) | (538) | (628) | |||
Free Cash Flow | $ 638 | $ 732 | $ 1,001 | $ 1,172 | |||
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
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