International Paper 2012 Annual Report Download - page 82

provisions of this guidance in conjunction with its
annual impairment testing in the fourth quarter of
2012 with no material effect on its consolidated
financial statements.
In July 2012, the FASB issued ASU 2012-02, “Testing
Indefinite-Lived Intangible Assets for Impairment,”
which amends ASC 350, “Intangibles—Goodwill and
Other.” This ASU gives an entity the option to first
assess qualitative factors if it is more likely than not
that the fair value of indefinite-lived intangible assets
are less than their carrying amount. If that assess-
ment indicates no impairment, the quantitative
impairment test is not required. This amendment is
effective for annual and interim impairment tests
performed for fiscal years beginning after Sep-
tember 15, 2012. The adoption will not have a
material effect on the Company’s consolidated
financial statements.
COMPREHENSIVE INCOME
In June 2011, the FASB issued ASU 2011-5,
“Presentation of Comprehensive Income,” which
revises the manner in which entities should present
comprehensive income in their financial statements.
The new guidance requires entities to report
components of comprehensive income in either (1) a
continuous statement of comprehensive income or
(2)two separate but consecutive statements. This
guidance is effective for fiscal years, and interim
periods within those years, beginning after
December 15, 2011. The Company adopted the
provisions of this guidance in using the two state-
ment approach in the first quarter of 2012 on a
retrospective basis for all periods presented.
In December 2011, the FASB issued ASU 2011-12,
“Presentation of Comprehensive Income,” which
defers certain provisions of ASU 2011-5 that require
entities to present reclassification adjustments out of
accumulated other comprehensive income by
component in both the statement in which net
income is presented and the statement in which
other comprehensive income is presented (for both
interim and annual financial statements). This
requirement is indefinitely deferred by ASU 2011-12
and will be further deliberated by the FASB at a
future date. The Company does not anticipate that
the adoption of the remaining requirements of this
guidance will have a material effect on its con-
solidated financial statements.
FAIR VALUE MEASUREMENTS
In May 2011, the FASB issued ASU 2011-4,
“Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S.
GAAP and IFRS.” This ASU is the result of joint
efforts by the FASB and International Accounting
Standards Board (IASB) to develop converged guid-
ance on how to measure fair value and what dis-
closures to provide about fair value measurements.
The ASU is largely consistent with existing fair value
measurement principles in U.S. GAAP; however, it
expands existing disclosure requirements for fair
value measurements and makes other amendments,
many of which eliminate unnecessary wording
differences between U.S. GAAP and IFRS. This ASU
is effective for interim and annual periods beginning
after December 15, 2011. The application of the
requirements of this guidance did not have a
material effect on the consolidated financial state-
ments.
NOTE 3 EARNINGS PER SHARE ATTRIBUTABLE
TO INTERNATIONAL PAPER COMPANY
COMMON SHAREHOLDERS
Basic earnings per share is computed by dividing
earnings by the weighted average number of
common shares outstanding. Diluted earnings per
share is computed assuming that all potentially dilu-
tive securities, including “in-the-money” stock
options, were converted into common shares.
A reconciliation of the amounts included in the
computation of basic earnings (loss) per share from
continuing operations, and diluted earnings (loss)
per share from continuing operations is as follows:
In millions, except per share amounts 2012 2011 2010
Earnings (loss) from continuing operations $ 749 $1,273 $ 691
Effect of dilutive securities (a) ———
Earnings (loss) from continuing
operations – assuming dilution $ 749 $1,273 $ 691
Average common shares outstanding 435.2 432.2 429.8
Effect of dilutive securities (a):
Restricted performance share plan 5.0 4.8 4.4
Stock options (b) ———
Average common shares outstanding – assuming
dilution 440.2 437.0 434.2
Basic earnings (loss) per share from continuing
operations $ 1.72 $ 2.95 $ 1.61
Diluted earnings (loss) per share from continuing
operations $ 1.70 $ 2.92 $ 1.59
(a) Securities are not included in the table in periods when anti-
dilutive.
(b) Options to purchase 9.1 million , 15.6 million and 18.2 million
shares for the years ended December 31, 2012 , 2011 and 2010 ,
respectively, were not included in the computation of diluted
common shares outstanding because their exercise price
exceeded the average market price of the Company’s common
stock for each respective reporting date.
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