International Paper 2012 Annual Report Download - page 113

recognition purposes, also provides for awards of
restricted stock to key employees.
The following summarizes the activity of the Execu-
tive Continuity Award program and RSA program for
the three years ending December 31, 2012 :
Shares
Weighted
Average
Grant Date
Fair Value
Outstanding at December 31, 2009 83,000 $33.93
Granted 177,000 25.63
Shares issued (92,500) 30.69
Outstanding at December 31, 2010 167,500 26.95
Granted 21,500 27.01
Shares issued (55,083) 24.84
Forfeited (5,000) 26.78
Outstanding at December 31, 2011 128,917 27.86
Granted 88,715 31.91
Shares issued (61,083) 27.13
Forfeited (5,000) 28.91
Outstanding at December 31, 2012 151,549 $30.49
At December 31, 2012 , 2011 and 2010 a total of
19.3 million , 18.6 million and 18.8 million shares,
respectively, were available for grant under the ICP.
Stock-based compensation expense and related
income tax benefits were as follows:
In millions 2012 2011 2010
Total stock-based compensation expense
(included in selling and administrative
expense) $116 $84 $73
Income tax benefits related to stock-based
compensation 48 34 29
At December 31, 2012 , $105 million of compensation
cost, net of estimated forfeitures, related to unvested
restricted performance shares, executive continuity
awards and restricted stock attributable to future
performance had not yet been recognized. This
amount will be recognized in expense over a
weighted-average period of 1.7 years.
NOTE 18 FINANCIAL INFORMATION BY
INDUSTRY SEGMENT AND GEOGRAPHIC AREA
International Paper’s industry segments, Industrial
Packaging, Printing Papers, Consumer Packaging
and Distribution Businesses, are consistent with the
internal structure used to manage these businesses.
Beginning on January 1, 2011, the Forest Products
Business is no longer being reported by the Com-
pany as a separate industry segment due to the
immateriality of the results of the remaining busi-
ness on the Company’s consolidated financial
statements. All segments are differentiated on a
common product, common customer basis con-
sistent with the business segmentation generally
used in the Forest Products industry.
For management purposes, International Paper
reports the operating performance of each business
based on earnings before interest and income taxes
(EBIT). Intersegment sales and transfers are recorded
at current market prices.
External sales by major product is determined by
aggregating sales from each segment based on sim-
ilar products or services. External sales are defined
as those that are made to parties outside Interna-
tional Paper’s consolidated group, whereas sales by
segment in the Net Sales table are determined using
a management approach and include intersegment
sales.
The Company also holds a 50% interest in Ilim that is
a separate reportable industry segment. The Com-
pany recorded equity earnings, net of taxes, of $56
million, $134 million and $102 million in 2012, 2011,
and 2010, respectively, for Ilim.
INFORMATION BY INDUSTRY SEGMENT
Net Sales
In millions 2012 2011 2010
Industrial Packaging $13,280 $10,430 $ 9,840
Printing Papers 6,230 6,215 5,940
Consumer Packaging 3,170 3,710 3,400
Distribution 6,040 6,630 6,735
Forest Products —— 220
Corporate and Intersegment Sales (887) (951) (956)
Net Sales $27,833 $26,034 $25,179
Operating Profit
In millions 2012 2011 2010
Industrial Packaging $1,066 $1,147 $ 826
Printing Papers 599 872 481
Consumer Packaging 268 163 207
Distribution 22 34 78
Forest Products ——94
Operating Profit 1,955 2,216 1,686
Interest expense, net (672) (541) (608)
Noncontrolling interests / equity earnings
adjustment (a) —10 15
Corporate items, net (51) (102) (142)
Restructuring and other charges (51) (82) (70)
Net gains (losses) on sales and
impairments of businesses 2—25
Non-operating pension expense (159) (43) (84)
Earnings (Loss) From Continuing
Operations Before Income Taxes and
Equity Earnings $1,024 $1,458 $ 822
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