Industry Segment Information

6 Months Ended

Jun. 30, 2011

Industry Segment Information

Industry Segment Information

NOTE 17 – INDUSTRY SEGMENT INFORMATION

International Paper's industry segments, Industrial Packaging, Printing Papers, Consumer Packaging and Distribution are consistent with the internal structure used to manage these businesses. Effective January 1, 2011, the Forest Products Business is no longer being reported by the Company as a separate industry segment due to the immateriality of the results of the remaining business on the Company's consolidated financial statements. All segments are differentiated on a common product, common customer basis consistent with the business segmentation generally used in the Forest Products industry.

The Company also has a 50% equity interest in Ilim in Russia that is a separate reportable industry segment.

Sales by industry segment for the six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June  30,						Six Months Ended June  30,
In millions	2011			2010			2011			2010
Industrial Packaging	$	2,705		$	2,440		$	5,260		$	4,660
Printing Papers		1,585			1,445			3,115			2,850
Consumer Packaging		945			845			1,850			1,650
Distribution		1,655			1,630			3,295			3,210
Forest Products (1)		0			5			0			15
Corporate and Intersegment Sales		(242	)		(244	)		(485	)		(457	)
Net Sales	$	6,648		$	6,121		$	13,035		$	11,928

Operating profit by industry segment for the six months ended June 31, 2011 and 2010 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
In millions	2011			2010			2011			2010
Industrial Packaging	$	269		$	192	(2)	$	548	(2)	$	233	(2)
Printing Papers		243	(3)		47	(3)		444	(3)		(31	)(3)
Consumer Packaging		(33	)(4)		48	(4)		67	(4)		76	(4)
Distribution		4	(5)		26			9	(5)		47
Forest Products (1)		0			40			0			48
Operating Profit		483			353			1,068			373
Interest expense, net		(137	)		(157	)		(273	)		(306	)
Noncontrolling interests/equity earnings adjustment (6)		9			7			7			15
Corporate items, net		(36	)		(54	)		(80	)		(105	)
Restructuring and other charges		(26	)		(31	)		(61	)		(34	)
Earnings (loss) from continuing operations before income taxes and equity earnings	$	293		$	118		$	661		$	(57	)
Equity earnings (loss), net of taxes – Ilim	$	57		$	5		$	101		$	2

(1) The Company has substantially completed its land sales and earnings for future land sales are expected to be insignificant. Beginning in 2011, Forest Products is no longer reported as a separate industry segment.

(2) Includes charges of $2 million for the six months ended June 30, 2011 and $1 million and $3 million for the three months and six months ended June 30, 2010, respectively, for additional closure costs for the Etienne mill in France, a gain of $7 million for the six months ended June 30, 2011 for a bargain purchase price adjustment on an acquisition by our joint venture in Turkey, and a charge of $3 million for the six months ended June 30, 2010 for closure costs for U.S. mills closed in 2009.

(3) Includes a gain of $21 million for the three months and six months ended June 30, 2011 related to the repurposing of the Franklin, Virginia mill to produce fluff pulp, charges of $111 million and $315 million for the three months and six months ended June 30, 2010, respectively, for shutdown costs for the Franklin, Virginia mill, and a charge of $8 million for the six months ended June 30, 2011 for asset impairment costs associated with the Inverurie mill in Scotland.

(4) Includes a charge of $129 million for the three months and six months ended June 30, 2011 for a fixed asset impairment and charges of $2 million and $3 million for the three months and six months ended June 30, 2011, respectively, and $1 million and $4 million for the three months and six months ended June 30, 2010, respectively, related to the reorganization of the Company's Shorewood operations.

(5) Includes charges of $10 million and $17 million for the three months and six months ended June 30, 2011, respectively, associated with the restructuring of the Company's xpedx operations.

(6) Operating profits for industry 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 and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.