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International Paper Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 10, 2005
Period End
December 31, 2004
Securities
IPINPAP
In the record · 2016–202610-K1110-Q328-K153

IP filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 153 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’18Mar ’18
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Apr ’22Apr ’22
  4. Impairment8-K · Aug ’25Aug ’25

01—Abstract

Summary

Summary of the 10-K filed March 10, 2005. Cited figures are marked; the original filing is the authoritative source.

International Paper Company's 2004 Form 10-K, filed March 10, 2005, reports net sales of $25.5 billiona for 2004, up from $24.0 billion in 2003, and a net loss of $35 million ($0.07 per share), compared with net earnings of $302 million in 2003.

Earnings from continuing operations rose to $478 millionb from $294 million. The net loss reflects a $513 million loss from discontinued operations, mainly the $711 million after-tax charge tied to the sale of Weldwood of Canada Limited. Industry segment operating profit increased to $2.1 billion from $1.8 billion, driven by higher sales volumes, higher average prices, and cost reduction initiatives, partly offset by higher energy and raw material costs.

Cash provided by operations was $2.4 billionc, up from $1.8 billion. Capital spending from continuing operations was $1.3 billion, and the company reduced debt by approximately $900 million in 2004, with a further $750 million repaid as of February 2005. Management targets consolidated debt of about $12 billion by the end of 2006 and expects 2005 capital expenditures of about $1.4 billion.

The company reports approximately $3.2 billiond of committed liquidity and holds long-term credit ratings of BBB (negative outlook) from Standard & Poor's and Baa2 (negative outlook) from Moody's. Management expects a seasonally slow first quarter of 2005, with improving price realizations and demand, while wood, chemical, and energy costs are expected to remain high.

Pension expense is projected to rise to approximately $210 million for U.S. plans in 2005, and the 2005 effective income tax rate is estimated at about 33%. Ongoing litigation includes the exterior siding and roofing matters, with net reserves of $259 million at year-end 2004, and a pending judgment in the insurance indemnification lawsuit.

02—Key points

Key Highlights

  1. Net sales of $25.5 billion in 2004, up from $24.0 billion in 2003 and $23.9 billion in 2002.
  2. Net loss of $35 million ($0.07 per share) in 2004, versus net earnings of $302 million in 2003, driven by a $513 million loss from discontinued operations.
  3. Earnings from continuing operations of $478 million, up from $294 million in 2003.
  4. Industry segment operating profit of $2.1 billion, up from $1.8 billion, on higher volumes, higher average prices, and cost reductions.
  5. Cash provided by operations of $2.4 billion, up from $1.8 billion; net debt reduction of approximately $900 million in 2004.
  6. Target to reduce consolidated debt to approximately $12 billion by the end of 2006; committed liquidity of approximately $3.2 billion.
  7. Expected 2005 capital expenditures of about $1.4 billion, below depreciation and amortization, and U.S. pension expense projected at about $210 million.

03—Questions

Frequently Asked Questions

  1. Why did International Paper report a net loss in 2004 despite higher earnings from continuing operations?

    The net loss of $35 million was driven by a $513 million loss from discontinued operations, principally the sale of Weldwood of Canada Limited, which included a $323 million pre-tax loss ($711 million after taxes). Earnings from continuing operations were $478 million.

  2. What drove the improvement in industry segment operating profit?

    Segment operating profit rose to $2.1 billion from $1.8 billion, principally due to improved sales volumes ($263 million), higher average sales prices ($201 million), and cost reduction initiatives and product mix ($186 million), partly offset by higher energy and raw material costs ($192 million) and lower earnings from land sales ($95 million).

  3. How is the company managing its debt and liquidity?

    In 2004 the company reduced debt by approximately $900 million, with a further $750 million repaid by February 2005. It targets consolidated debt of about $12 billion by the end of 2006, and reports approximately $3.2 billion of committed liquidity and an intent to maintain an investment-grade credit rating.

  4. What are the main outlook items for 2005?

    Management expects a seasonally slow first quarter with improving price realizations and demand, higher wood, chemical, and polyethylene costs, and higher pension expense of about $210 million for U.S. plans. Interest costs are expected to decline, and the 2005 effective tax rate is estimated at about 33%.

  5. What litigation risks does the filing highlight?

    The company has net reserves of $259 million at December 31, 2004 for exterior siding and roofing class actions. In the insurance indemnification lawsuit, a jury found $383 million of payments covered by insurance, but a judgment has not been entered and the company cannot estimate the amount it may ultimately recover. Antitrust class actions, including publication papers, are also pending.

04—Continue

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