International Paper Company · NYSE:IP
International Paper — International Paper Co /New/ — Q4 2002 Earnings Presentation
28 slides from International Paper's earnings presentation, Jan 31, 2003
Slide 1: International Paper
Slide 2: Forward-looking statements
INTERNATIONAL Any statements made during this presentation or in the slides accompanying the presentation that are not historical facts are forward- looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including but not lim
Slide 3: Agenda
> Introduction | > Fourth Quarter Review * Special Charges * Volumes & Pricing > 2002 Review » Outlook
Slide 4: John T. Dillon, Chairman & CEO
John T. Dillon Chairman & CEO
Slide 5: Great operating year for IP
- 2002 » Great operating year for IP + 2002 operating earnings up sharply * Major accomplishment in light of macro-economic environment > Business fundamentals improve * Operating rates . Low customer/mill inventories + Weaker dollar
Slide 6: Operating earnings per share excluding special items
ivrennarionat (B) PAPER Excluding Special Items .75 .60 55 53 46 a 32.33 .24 14 ‘iis 13- il 12 sHlt of ita 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 10 2Q 3a I i 2Q 30 4a 1999 2000 2001 2002 6
Slide 7: John V. Faraci, EVP & CFO
John V. Faraci EVP & CFO
Slide 8: Special charges
Addition to Legal Reserve Debt Retirement Costs Restructuring and Other Charges Reversal of Restructuring Reserves Divestitures Pre-Tax Loss Tax & Minority Interest Impact of above Change in Deferred State Tax Rate Net Loss EPS Impact $MM $(450) (46) (101) 68 10 (629) 193 46 ($290) ($0.60)/share
Slide 9: 4Q'02 vs. 3Q'02 Operating EPS
4002 vs, 3Q’02)- Operating EPS InTeRNATIONAt Gp) PAPER EPS $/Share saas g0.04 $2.03 ($0.03) ‘ ($0.02) = co (60.08) sso $0.04 so} $0.32 el 9033 3002 Price Tex Forests Volume LOO Non-Price FXIOIher 40°02 ‘downtime improverent
Slide 10: Printing Papers
Printin' $ Milkons 4Q°02 3Q02 Sales 1,910 1,965 Earnings 157 180 4Q'02 Change vs 3002: Representative Grades* Volume Realizations/unit Uncoated (10%) +$35 Coated (11%) +$5 Pulp (3%) ($15) Europe +5% +$15 SUS. only except for pulp which is U.S. and Canada ‘Average IP realization (includes the impact
Slide 11: Packaging
4Q'02 3Q'02 $ Milions ‘Sales 1,540 1,565 Earnings 116 128 4Q'02 Change vs 3Q'02: Representative Grades Volume Realizations/unit Containerboard (12%) +$10 U.S. Container (5%) +$5 Bleached Board (2%) ($10) ‘Average IP realization (includes the impact of mix across all grades) 1"
Slide 12: Forest Products
$ Milons Sales 765 745 Earnings 156 164 40702 Change vs 3002: Representative Grades Volume Realizations/unit Lumber (15%) ($20) Plywood (9%) ($5) ‘Average IP realization (includes the impact of mix across all grades) 2
Slide 13: Market-related downtime
INTERNATIONAL) PAPER 430 i 270 Uncoated Containetba 10'01 20°01 3Q'01 40'01 10'02 20°02 30°02 40Q'02 i Containerboard Uncoated papers Pulp Coated papers m Bleached Board m European Papers “Downtime is after rationalization actions, excludes maintenance 18
Slide 14: Price realizations by business
Printing Papers Uncoated Coated Pulp Packaging Containerboard Bleached Board Forest Products — Lumber & Plywood Logs 200% (etude theimpact of i) 4
Slide 15: 2002 vs. 2001 cost and mix improvement
irennarionat ) PAPER 2002 vs. 2001 Cost/Mix Improvement Other 13% Printing Papers Forest Products 30% 13% xpedx 18% Goated Packaging 10% 16% Total $670 MM 6
Slide 16: 2002 vs. 2001 Operating EPS
2002 vs. 2001 - Operating EPS EPS $/ Share 220 s2.00 $1.90 $1.60 $140, $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.44 $0.00 $0.08 ($0.96) = ($0.13) = $1.12 we Nanri grommet 5 tatonatesion of apacty 16
Slide 17: John T. Dillon, Chairman & CEO
John T. Dillon Chairman & CEO
Slide 18: Summary
nmary > Great operating performance » Delivering on our promises 18
Slide 19: Competitors ranking
werennarionas @)raren Competitors Ip 1999 2000 Rank 100f11 8 of 10 19
Slide 20: Outlook: continued improved profitability
> Will continue to deliver improved profitability and returns » Managing what we can control * Not waiting for the economic recovery > Key driver is continued non-price improvement 20
Slide 21: Q&A
Q&A
Slide 22: Appendix
Appendix
Slide 23: 2002 Earnings
2002 Earnings Pretax Tax ML sa Before Specialitems $M in sun ai 129 (40) (31) 58 31% a2 287 (88) (30) 163° 31% a3 284 (88) (43) 153 31% a4 257 (62) __—(35) 160 24% 957__(278) (139) 540 29% ‘Special terns, ai 10 @) - 7 30% 4823 a1 a2 1) 98 a) 46 192% 482.7 40 a3 (16) 3 5 @) 19% 4814 (02) a4 (629)___2
Slide 24: Capital Spending and 2003 items
Capital Spending INTERNATIONAL) PAPER 2002 $1.0B Depreciation & Amort. $1.6B Net Interest Expense $780 MM Effective Tax Rate* 29% Avg. Shares Outstanding * Before special lems and accounting change in 2002 481 MM 2
Slide 25: Year-End Balance Sheet Entries
Year-End Balance Sheet Entries Resulting from Charges & Resulting from Consolidating Washington State Timber SPE 6
Slide 26: Summary of year-end charges and entries
Sumn y InTeRNATionAt GB) PAPER » Exterior Siding Reserve (pre-tax) $450 Million > Goodwill $1.2 Billion » Net Pension Adjustment (after-tax) $1.5 Billion > Washington State Timber SPE on balance sheet + Assets $484 Million + Debt $464 Million + Minority interest $20 Million 26
Slide 27: Washington State Timber SPE
> Previously non-consolidated SPE that was used to monetize installment notes related to timber sales » IP renegotiated the terms in exchange for beneficial terms. As a result the SPE no longer qualifies as an off-balance sheet structure The balance sheet as of Q4 ’02 now includes: + Assets increase
Slide 28: International Paper
INTERNATIONAL (A) PAPER 28
International Paper Co /New/ — Q4 2002 Earnings Presentation on 6ix