Note 4 — Business and Geographical SegmeNote 4 — Business and Geographical Segments (all amounts million)

Note 4 – Business and Geographical Segments

(all amounts million)

Business segments: for management purposes, the Company is organised on a worldwide basis into three major operating divisions – paper products, office products and publishing – each headed by a senior vice president. The divisions are the basis on which the Company reports its primary segment information. The paper products segment produces a broad range of writing and publishing papers and newsprint. The office products segment manufactures labels, binders, pens, and markers and also distributes office products made by others. The publishing segment develops and sells loose-leaf services, bound volumes and CD-ROM products in the fields of taxation, law and accounting. Other operations include development of computer software for specialised business applications for unaffiliated customers and development of certain former productive timberlands into vacation home sites. Financial information about business segments is presented in Schedule A.

Geographical segments: although the Company’s three divisions are managed on a worldwide basis, they operate in four principal geographical areas of the world. In the United Kingdom, its home country, the Company produces and sells a broad range of papers and office products. Additionally, all of the Company’s publishing and computer software development operations are conducted in the United Kingdom, though the published loose-leaf and bound volumes and CD-ROM products are sold throughout the United Kingdom and Western Europe. In the European Union, the Company operates paper and office products manufacturing facilities and sales offices in the following countries: France, Belgium, Germany and the Netherlands. Operations in Canada and the United States are essentially similar and consist of manufacturing papers and newsprint that are sold entirely within those two countries. Most of the paper pulp comes from Company-owned timberlands in the two countries. Operations in Indonesia include the production of paper pulp and the manufacture of writing and publishing papers and office products, almost all of which is sold outside Indonesia, both to other segments of the Company and to external customers.

Sales by market: the following table shows the distribution of the Company’s consolidated sales by geographical market, regardless of where the goods were produced:

<table cellspacing="0" cellpadding="0" style="width:324.35pt; border-collapse:collapse"><tbody><tr><td style="width:96.65pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; page-break-before:always"></p></td><td style="width:99.8pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td colspan="3" style="width:95.5pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:center"><span style="font-weight:bold">Sales Revenue by Geographical Market</span></p><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:center"><span style="font-weight:bold"></span></p></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold"></span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x2</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x1</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>United Kingdom</span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>19</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>22</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Other European Union countries</span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>30</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>31</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Canada</span><span> and the </span><span>United States</span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>28</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>21</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Mexico</span><span> and </span><span>South America</span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>6</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>2</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Southeast Asia (principally </span><span>Japan</span><span> and </span><span>Taiwan</span><span>)</span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">18</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">14</span></p></td><td style="vertical-align:top"></td></tr><tr><td colspan="2" style="width:207.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="width:37.55pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">101</span></p></td><td style="width:34.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">90</span></p></td><td style="vertical-align:top"></td></tr><tr style="height:0pt"><td style="width:107.45pt"></td><td style="width:110.6pt"></td><td style="width:48.35pt"></td><td style="width:45pt"></td><td style="width:12.95pt"></td></tr></tbody></table>

Assets and additions to property, plant, equipment, and intangible assets by geographical area: the following tables show the carrying amount of segment assets and additions to property, plant, equipment, and intangible assets by geographical area in which the assets are located:

<table cellspacing="0" cellpadding="0" style="border-collapse:collapse"><tbody><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span style="font-weight:bold"></span></p></td><td colspan="3" style="width:74.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:center"><span style="font-weight:bold">Carrying Amount of Segment Assets</span></p></td><td colspan="3" style="width:81.25pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:center"><span style="font-weight:bold">Additions to Property, Plant, Equipment, and Intangible Assets</span></p><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:center"><span style="font-weight:bold"></span></p></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold"></span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x2</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x1</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x2</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-weight:bold">20x1</span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>United Kingdom</span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>72</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>78</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>8</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>5</span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Other European Union countries</span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>47</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>37</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>5</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>4</span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Canada</span><span> and the </span><span>United States</span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>34</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span></span><span>20</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>4</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span>3</span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span>Indonesia</span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">22</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">20</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">7</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">6</span></p></td><td style="vertical-align:top"></td></tr><tr><td style="width:134.1pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt"><span></span></p></td><td style="width:25.2pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">175</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">155</span></p></td><td colspan="2" style="width:38.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">24</span></p></td><td style="width:29.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="NoNumPlain1" style="margin-bottom:0pt; text-align:right"><span style="font-family:Times, serif; text-decoration:underline"></span><span style="font-family:Times, serif; text-decoration:underline">18</span></p></td><td style="vertical-align:top"></td></tr><tr style="height:0pt"><td style="width:144.9pt"></td><td style="width:36pt"></td><td style="width:40.5pt"></td><td style="width:9pt"></td><td style="width:40.5pt"></td><td style="width:40.5pt"></td><td style="width:11.05pt"></td></tr></tbody></table>

Segment revenue and expense: in Belgium, paper and office products are manufactured in combined facilities and are sold by a combined sales force. Joint revenues and expenses are allocated to the two business segments. All other segment revenue and expense is directly attributable to the segments.

Segment assets and liabilities: segment assets include all operating assets used by a segment and consist principally of operating cash, receivables, inventories and property, plant and equipment, net of allowances and provisions. While most such assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities and consist principally of accounts, wages, and taxes currently payable and accrued liabilities. Segment assets and liabilities do not include deferred income taxes.

Inter-segment transfers: segment revenue, segment expenses and segment result include transfers between business segments and between geographical segments. Such transfers are accounted for at competitive market prices charged to unaffiliated customers for similar goods. Those transfers are eliminated in consolidation.

Unusual item: sales of office products to external customers in 20x2 were adversely affected by a lengthy strike of transportation workers in the United Kingdom, which interrupted product shipments for approximately four months. The Company estimates that sales of office products were approximately half of what they would otherwise have been during the four-month period.

Investment in equity method associates: the Company owns 40 per cent of the capital stock of EuroPaper, Ltd., a specialist paper manufacturer with operations principally in Spain and the United Kingdom. The investment is accounted for by the equity method. Although the investment and the Company’s share of EuroPaper’s net profit are excluded from segment assets and segment revenue, they are shown separately in conjunction with data for the paper products segment. The Company also owns several small equity method investments in Canada and the United States whose operations are dissimilar to any of the three business segments.