8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 4, 2006

(Date of Report/Date of earliest event reported)

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)

NEW YORK	1-3157	13-0872805
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

400 Atlantic Street

Stamford, Connecticut 06921

(Address and zip code of principal executive offices)

(203) 541-8000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 4, 2006, International Paper Company issued a press release reporting earnings for the first quarter of 2006 and held a webcast and a conference call to discuss earnings and current market conditions. A copy of the press release is being furnished as Exhibit 99.1 and a copy of the slides presented at the webcast and discussed in the conference call is being furnished as Exhibit 99.2 to this Form 8-K.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit 99.1: Press release of International Paper Company, dated May 4, 2006.

Exhibit 99.2: Slides of International Paper Company, dated May 4, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

INTERNATIONAL PAPER COMPANY (Registrant)
By:	/s/ Maura A. Smith
	Name:	Maura A. Smith
	Title:	Senior Vice President, General Counsel & Secretary

Date: May 4, 2006

3

EXHIBIT INDEX

Exhibit 99.1: Press release of International Paper Company, dated May 4, 2006.

Exhibit 99.2: Slides of International Paper Company, dated May 4, 2006.

4

EX-99.1

Exhibit 99.1

INTERNATIONAL PAPER PLAZA

400 ATLANTIC STREET

STAMFORD, CT 06921

News Release

International Paper Reports Preliminary First Quarter 2006 Earnings

• Earnings per share from continuing operations and before special items were $0.19 versus $0.09 in the fourth quarter of 2005 and $0.34 per share in the 2005 first quarter.

• After charges of $2.66 per share for discontinued operations and $0.05 per share for special items, the company reported a 2006 first quarter net loss of $2.52 per share, compared with a loss of $0.16 in the 2005 fourth quarter and income of $0.16 per share in the 2005 first quarter.

• Quarterly net sales were $5.7 billion, on par with fourth-quarter 2005 net sales of $5.7 billion and first-quarter 2005 net sales of $5.6 billion.

STAMFORD, Conn. - May 4, 2006 - International Paper (NYSE: IP) today reported a preliminary first-quarter 2006 net loss of $1.2 billion ($2.52 per share) compared with a net loss of $77 million ($0.16 per share) in the fourth quarter of 2005 and net earnings of $77 million ($0.16 per share) in the 2005 first quarter. Amounts in all periods include special items as well as charges relating to the classification of the Company’s Coated and Supercalendered Papers and Kraft Papers businesses as discontinued operations.

Diluted Earnings Per Share Summary

	First Quarter 2006			Fourth Quarter 2005			First Quarter 2005
Net Earnings (Loss)	$	(2.52	)	$	(0.16	)	$	0.16
Less - Discontinued Operations:
(Earnings) Loss from Operations		(0.02	)		(0.03	)		0.04
Loss on Write-Down of Assets		2.68			—			—
		2.66			(0.03	)		0.04
Earnings (Loss) from Continuing Operations		0.14			(0.19	)		0.20
Add Back – Net Special Items Expense		0.05			0.28			0.14
Earnings from Continuing Operations and Before Special Items	$	0.19		$	0.09		$	0.34

Earnings from continuing operations and before special items in the first quarter of 2006 were $91 million ($0.19 per share), compared with $43 million ($0.09 per share) in the fourth quarter of 2005 and $165 million ($0.34 per share) in the first quarter of 2005.

First-quarter 2006 net sales of $5.7 billion were level with fourth quarter 2005. Sales in the first quarter of 2005 were $5.6 billion.

Operating profits of $456 million for the 2006 first quarter were higher than fourth-quarter 2005 operating profits of $371 million, because of higher price realizations, stronger volumes, lower manufacturing costs, sales mix improvements, and a drop in some raw material costs, primarily energy and wood.

“Higher price realizations, particularly in containerboard, boxes and uncoated papers, and strong mill performance and cost control are the biggest drivers of our earnings improvement from last quarter,” said IP Chairman and Chief Executive Officer John Faraci. “We also experienced far less market downtime in the quarter than in last quarter. Energy and raw material costs declined some, but are still about $0.13 per share higher than at this time last year.”

“I’m also pleased with the progress of IP’s transformation strategy. We recently announced sale agreements for 5.7 million acres of U.S. forestland for approximately $6.6 billion, the second significant step in the plan. We now estimate that total after-tax proceeds from the transformation could exceed $11 billion. We are maintaining our focus on improving our key platform operations, and our strategic alternatives reviews are also on track,” he said.

Commenting on the second quarter of 2006, Faraci said, “We expect the second quarter to be somewhat seasonally stronger than the first quarter, with average prices improving. We also anticipate continued progress in operations, as we move forward with our transformation strategy. Input costs remain high, especially for oil and transportation.”

DISCONTINUED OPERATIONS

During the 2006 first quarter, in connection with the evaluation of strategic options for certain businesses under the company’s previously announced transformation plan, management determined that the future sales of the Coated and Supercalendered Papers and Kraft Papers businesses were in the best interests of the company’s shareowners. Accordingly, a pre-tax charge of $1.4 billion ($1.3 billion after taxes, or $2.68 per share) was recorded to reduce the carrying value of the net assets of these businesses, including goodwill, to their estimated fair values based on estimated sales values less costs to sell. As a result, this 2006 first quarter charge and the operating results of these businesses for all periods are presented as discontinued operations.

SEGMENT INFORMATION

First-quarter 2006 segment operating profits and business trends compared with the fourth quarter of 2005 are as follows:

First-quarter operating profits for Printing Papers were $120 million compared with fourth-quarter operating profits of $60 million, bolstered by higher average price realizations for uncoated papers and pulp, as well as volume increases in U.S. and European uncoated papers.

Industrial Packaging operating profits for the first quarter were $38 million compared with fourth-quarter operating profits of $5 million. Decreases in containberboard volumes were more than offset by much higher average price realizations in both containerboard and U.S. container businesses.

Consumer Packaging operating profits were $35 million in the first quarter, up from $29 million in the fourth quarter, influenced by increased volume and higher price realizations in coated paperboard.

The company’s distribution business, xpedx, reported operating profits of $27 million for the first quarter compared with operating profits in the fourth quarter of $25 million, due to higher margins.

First-quarter Forest Products operating profits declined to $226 million from fourth-quarter earnings of $257 million principally as a result of lower forestland sales. Earnings from forestland and real estate sales were $151 million in first quarter 2006 versus $182 million in the prior quarter.

Net corporate expenses totaled $174 million for the quarter, up from $165 million in the 2005 fourth quarter because of higher pension expense in 2006, partially offset by lower inventory-related costs.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the first quarter of 2006 was 30 percent, compared with a tax rate of 14 percent in the 2005 fourth quarter and 19 percent in the first quarter of 2005. The 2006 first-quarter rate included $5 million of credits related to state tax audit settlements and non-U.S. tax credits.

EFFECTS OF SPECIAL ITEMS

Special items in the first quarter of 2006 consisted of a pre-tax charge of $46 million ($28 million after taxes) for restructuring and other charges, including a pre-tax charge of $18 million ($11 million after taxes) charge for adjustments to legal reserves; a pre-tax credit of $19 million ($12 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation; a $3 million pre-tax charge ($2 million after taxes) to adjust losses of businesses held for sale; and a charge of $6 million related to tax adjustments. The net after-tax effect of these special items was an expense of $0.05 per share.

Special items in the fourth quarter included a pretax charge of $230 million ($141 million after taxes) for restructuring charges and other charges, a pretax charge of $46 million ($30 million after taxes) for adjustments of estimated losses on businesses sold or held for sale, a $35 million pretax credit ($21 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation, and a $1 million credit for changes to previously provided reserves. In addition, an $11 million net income tax benefit was recorded in the quarter, reflecting a $74 million favorable adjustment from the finalization of the company’s 1997 through 2000 U.S. federal income tax audit, a $43 million provision for deferred taxes related to earnings being repatriated under the American Jobs Creation Act of 2004, and $20 million of other tax charges. The net after-tax effect of all of these special items was a charge of $0.28 per share.

Special items in the first quarter of 2005 included a charge of $79 million ($52 million after taxes) for estimated losses on businesses held for sale, reflecting charges to reduce the net assets of the Industrial Papers and Fine Papers businesses to their estimated realizable value, and a $24 million charge ($15 million after taxes) for losses on early extinguishment of high-cost debt. The net after-tax effect of these special items was an expense of $0.14 per share.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. Eastern Daylight Time today. All interested parties are invited to listen to the webcast live via the company’s Internet site at http://www.internationalpaper.com by clicking on the Investors tab and going to the Presentations page. A replay of the webcast will also be available on the Web site beginning at noon today. Parties who wish to participate in the webcast via teleconference may dial (706) 679-8242 or, within the U.S. only, (877) 316-2541 and ask to be connected to the International Paper 1Q 2006 Earnings Call. The conference ID number is 7697830. Participants should call in no later than 9:45 a.m. EDT. An audio-only replay will be available for four weeks following the call. To access the replay, dial (706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the conference ID, enter “7697830.”

Headquartered in the United States, International Paper has been a leader in the forest products industry for more than 100 years. The company is currently transforming its operations to focus on its global uncoated papers and packaging businesses, which operate and serve customers in the U.S., Europe, South America and Asia. These businesses are complemented by an extensive North American merchant distribution system. International Paper is committed to environmental, economic and social sustainability, and has a long-standing policy of using no wood from endangered forests. To learn more, visit www.internationalpaper.com.

This release contains forward-looking statements. These statements reflect management’s current views and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. Factors which could cause actual results to differ relate to: (i) industry conditions, including changes in the cost or availability of raw materials and energy, changes in transportation costs, competition, changes in the Company’s product mix and demand and pricing for the Company’s products; (ii) market and economic factors, including changes in international conditions, specifically in Brazil, Russia, Poland, China and South Korea, changes in currency exchange rates, changes in credit ratings issued by nationally recognized statistical rating organizations, pension and healthcare costs and natural disasters, such as hurricanes; (iii) the Company’s transformation plan, including the ability to accomplish the transformation plan, the impact of the plan on the Company’s relationship with its employees, the ability to realize anticipated profit improvement from the plan and the ability to successfully negotiate satisfactory sale terms for assets that are contemplated for sale but are not currently under contract; (iv) the execution of sale transactions currently under contract and the realization of anticipated sales proceeds thereunder, including, the ability to successfully consummate the transactions without a purchase price adjustment, the successful fulfillment (or waiver) of all conditions set forth in the sale agreements, the successful closing of the transactions within the estimated timeframes and the ability to monetize the non-cash portion of the sale proceeds; and (v) results of legal proceedings and compliance costs, including unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and the uncertainty of the costs and other effects of pending litigation. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. These and other factors that could cause or contribute to actual results differing materially from such forward looking statements are discussed in greater detail in the company’s Securities and Exchange Commission filings.

###

Contacts:

Media: Amy Sawyer, 901-419-4312; Investors: Darial Sneed, 203-541-8541 Brian Turcotte, 203-541-8632, or Brian McDonald, 203-541-8586

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Earnings

Preliminary and Unaudited

(In millions, except per share amounts)

	Three Months Ended March 31,						Three Months Ended December 31,
	2006			2005			2005
Net Sales	$	5,668		$	5,593		$	5,672
Costs and Expenses
Cost of products sold		4,229			4,107			4,343
Selling and administrative expenses		490			494			454
Depreciation, amortization and cost of timber harvested		316			316			329
Distribution expenses		294			245			286
Taxes other than payroll and income taxes		54			58			55
Restructuring and other charges		46	(a)		24	(c)		230	(f)
Insurance Recoveries		(19	)		—			(35	)
Net losses (gains) on sales and impairments of businesses held for sale		3			79			46
Reversal of reserves no longer required, net		—	(b)		—			(1	)
Interest expense, net		148			168			151
Earnings (Loss) From Continuing Operations Before Income Taxes and Minority Interest		107	(a)		102	(c)		(186	)(f)
Income tax provision (benefit)		35			2	(d)		(94	)(g)
Minority interest expense, net of taxes		5			2			3
Earnings (Loss) From Continuing Operations		67	(a)		98	(c,d)		(95	)(f,g)
Discontinued Operations, net of taxes and minority interest		(1,304	)(b)		(21	)(e)		18	(h)
Net Earnings (Loss)	$	(1,237	)(a,b)	$	77	(c-e)	$	(77	)(f-h)
Basic Earnings Per Common Share
Earnings (loss) from continuing operations	$	0.14	(a)	$	0.20	(c,d)	$	(0.19	)(f,g)
Discontinued operations		(2.68	)(b)		(0.04	)(e)		0.03	(h)
Net earnings (loss)	$	(2.54	)(a,b)	$	0.16	(c-e)	$	(0.16	)(f-h)
Diluted Earnings Per Common Share
Earnings (loss) from continuing operations	$	0.14	(a)	$	0.20	(c,d)	$	(0.19	)(f,g)
Discontinued operations		(2.66	)(b)		(0.04	) (e)		0.03 (h	)
Net earnings (loss)	$	(2.52	)(a,b)	$	0.16	(c-e)	$	(0.16	)(f-h)
Average Shares of Common Stock Outstanding - Diluted		491.7			488.9			486.0
Cash Dividends Per Common Share	$	0.25		$	0.25		$	0.25

(a) Includes a $20 million charge before taxes ($12 million after taxes) for organizational restructuring charges associated with the Company’s previously announced Transformation Plan, an $8 million charge before taxes ($5 million after taxes) for losses on early debt extinguishment, and an $18 million charge before taxes ($11 million after taxes) for legal reserves.

(b) Includes a charge of $1.4 billion before taxes ($1.3 billion after taxes) to reduce the carrying value of the net assets of the Coated and Supercalendered Papers and Kraft Papers businesses to their estimated fair values, and a $12 million before tax credit ($8 million after taxes) for the first quarter net income of these businesses.

(c) Includes a charge of $24 million before taxes ($15 million after taxes) for losses on early debt extinguishment.

(d) Includes a $19 million ($0.04 per share) reduction in the income tax provision reflecting the favorable settlement of a tax matter.

(e) Includes $18 million of net income before taxes ($11 million after taxes) from the Coated and Supercalendered Papers and Kraft Papers businesses, and $43 million before taxes ($32 million after taxes) of net loss of the Carter Holt Harvey Limited business prior to its sale in the third quarter of 2005.

(f) Includes $196 million ($121 million after taxes) for organizational restructuring charges associated with the Company’s previously announced transformation plan, a $27 million charge ($16 million after taxes) for legal reserves, and a $7 million charge ($4 million after taxes) for losses on early debt extinguishment.

(g) Includes an $11 million net income tax benefit reflecting a $74 million favorable adjustment from the finalization of the Company’s 1997 through 2000 U.S. federal income tax audit, a $43 million provision for deferred taxes related to earnings repatriated under the American Jobs Creation Act of 2004, and $20 million of other tax charges.

(h) Includes $21 million of net income before taxes ($13 million after taxes) from the Coated and Supercalendered Papers and Kraft Papers businesses and an $11 million pre-tax gain ($5 million after taxes) for adjustments related to Weldwood of Canada, Ltd. and Carter Holt Harvey Ltd.

International Paper

Reconciliation of Earnings Before

Special Items to Net Earnings (Loss)

Preliminary and Unaudited

(In millions except for per share amounts)

	Three Months Ended March 31,						Three Months Ended December 31,
	2006			2005			2005
Earnings Before Special Items	$	91		$	165		$	43
Restructuring and other charges		(28	)		(15	)		(141	)
Insurance Recoveries		12			—			21
Reserve Adjustments		—			—			1
Net gains (losses) on sales and impairments of businesses held for sale		(2	)		(52	)		(30	)
Income tax adjustments		(6	)		—			11
Earnings (Loss) from Continuing Operations		67			98			(95	)
Discontinued Operations		(1,304	)		(21	)		18
Net Earnings (Loss) as Reported	$	(1,237	)	$	77		$	(77	)
Diluted Earnings per Common Share	Three Months Ended March 31,						Three Months Ended December 31,
	2006			2005			2005
Earnings Per Share Before Special Items	$	0.19		$	0.34		$	0.09
Restructuring and other charges		(0.06	)		(0.03	)		(0.28	)
Insurance Recoveries		0.02			—			0.04
Reserve Adjustments		—			—			—
Net gains (losses) on sales and impairments of businesses held for sale		—			(0.11	)		(0.06	)
Income tax adjustments		(0.01	)		—			0.02
Earnings (Loss) Per Common Share from Continuing Operations		0.14			0.20			(0.19	)
Discontinued Operations		(2.66	)		(0.04	)		0.03
Diluted Earnings (Loss) per Common Share	$	(2.52	)	$	0.16		$	(0.16	)

Notes:

(1) The company calculates Earnings Before Special Items by excluding the after-tax effect of the adoption of new accounting standards and items considered by management to be unusual from the net earning (loss) reported under U.S. generally accepted principles (“GAAP”). Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes that using this information along with net earnings (loss) provides for a more complete analysis of the results of operations by quarter. Net earnings (loss) is the most directly comparable GAAP measure.

(2) Diluted earnings per common share reflect the inclusion of contingently convertible securities in the computation.

Sales and Earnings by Industry Segment

Preliminary and Unaudited

(In Millions)

Sales by Industry Segment
	Three Months Ended March 31,						Three Months Ended June 30,			Three Months Ended September 30,			Three Months Ended December 31,
	2006			2005			2005			2005			2005
Printing Papers	$	1,500		$	1,510		$	1,400		$	1,415		$	1,485
Industrial Packaging		1,170			1,215			1,165			1,075			1,170
Consumer Packaging		775			740			790			785			800
Distribution		1,650			1,530			1,570			1,645			1,635
Forest Products		630	(4)		610	(4)		605	(4)		700	(4)		665	(4)
Other Businesses (2)		230			275			230			220			195
Corporate and Inter-segment Sales		(287	)		(287	)		(272	)		(293	)		(278	)
Net Sales	$	5,668		$	5,593		$	5,488		$	5,547		$	5,672
Operating Profit by Industry Segment
	Three Months Ended March 31,						Three Months Ended June 30,			Three Months Ended September 30,			Three Months Ended December 31,
	2006			2005			2005			2005			2005
Printing Papers	$	120		$	157		$	118	(6)	$	85	(8)	$	60
Industrial Packaging		38			102			84			29	(8)		5
Consumer Packaging		35			32			53			43	(8)		29
Distribution		27			18			18			23			25
Forest Products		226	(5)		207	(5)		191	(5,6)		271	(5,8)		257	(5)
Other Businesses (2)		10			10			7			(8	)(8)		(5	)
Operating Profit		456			526			471			443			371
Interest expense, net		(148	)		(168	)		(154	)(7)		(120	)(9)		(151	)
Minority interest (3)		3			(1	)		2			—			(1	)
Corporate items, net		(174	)		(152	)		(133	)		(140	)		(165	)
Restructuring and other charges		(46	)		(24	)		—			(33	)		(230	)
Insurance recoveries		19			—			35			188			35
Net gains (losses) on sales of impairments of businesses held for sale		(3	)		(79	)		19			(5	)		(46	)
Reserve adjustment		—			—			—			3			1
Earnings from continuing operations before income taxes and minority interest	$	107		$	102		$	240		$	336		$	(186	)

(1) Prior-year industry information has been restated to conform to the 2006 management reporting structure and to reflect the classification of the Coated and Supercalendered business and Kraft Paper business as discontinued operations.

(2) Includes Arizona Chemical, European Distribution and certain smaller businesses.

(3) 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 minority interest for these subsidiaries is added here to present consolidated earnings before income taxes and minority interest.

(4) Includes $235 million, $240 million, $200 million, $280 million, and $275 million for Forest Resources, and $395 million, $370 million, $405 million, $420 million, and $390 million for Wood Products, in the first quarter of 2006, first quarter of 2005, second quarter of 2005, third quarter of 2005, and fourth quarter of 2005, respectively.

(5) Includes $190 million, $158 million, $129 million, $210 million, and $224 million for Forest Resources, and $36 million, $49 million, $62 million, $61 million, and $33 million for Wood Products, in the first quarter of 2006, first quarter of 2005, second quarter of 2005, third quarter of 2005, and fourth quarter of 2005, respectively.

(6) Includes 2005 second quarter special charges of $17 million before taxes in the Printing Papers segment for severance and other charges related to the indefinite shutdown of three U.S. paper machines, and $10 million before taxes for Forest Resources and $4 million before taxes for Wood Products for 2005 second quarter costs associated with relocating the Forest Resources and Wood Products headquarters to Memphis, TN from Savannah, GA.

(7) Includes interest income of $11 million before taxes from the collection of a note receivable from the 2001 sale of the Flexible Packaging business.

(8) Includes 2005 third quarter special charges of $6 million before taxes in the Printing Papers segment for severance charges related to the indefinite shutdown of three U.S. paper machines, $3 million before taxes in the Printing Papers segment and $1 million before taxes in the Consumer Packaging segment for environmental reserves, $4 million before taxes in the Industrial Packaging segment related to adjust reserves previously provided, $2 million before taxes for Wood Products for costs associated with relocating the headquarters to Memphis, TN from Savannah, GA, and $13 million before taxes in the Other Businesses segment related to a plant shutdown.

(9) Includes interest income of $43 million before taxes related to a favorable tax audit adjustment.

International Paper

Sales Volume by Product (1) (2)

Preliminary and Unaudited

International Paper Consolidated

	Three Months Ended March 31,		Three Months Ended June 30,	Three Months Ended Sept 30,	Three Months Ended Dec 31,
	2006	2005	2005	2005	2005
Printing Papers (In thousands of short tons)
Brazil Uncoated Papers	118	112	107	111	117
Europe & Russia Uncoated Papers	379	359	358	342	360
U.S. Uncoated Papers	1,029	1,031	915	940	964
Uncoated Papers	1,526	1,502	1,380	1,393	1,441
Coated Papers	93	97	106	105	102
Market Pulp (3)	285	296	307	335	353
Packaging (In thousands of short tons)
Container of the Americas	901	890	906	886	896
European Container (Boxes)	321	259	273	262	279
Other Industrial and Consumer Packaging	119	127	134	126	119
Industrial and Consumer Packaging	1,341	1,276	1,313	1,274	1,294
Containerboard	496	470	438	467	562
Bleached Packaging Board	376	371	351	341	349
Coated Bristols	108	103	107	101	100
Kraft	60	62	60	63	57
Wood Products (In millions)
Panels (sq. ft. 3/8” - basis)	402	401	367	444	394
Lumber (board feet)	628	613	663	675	645

(1) Sales volumes include third party and inter-segment sales.

(2) Sales volumes for divested businesses are included through the date of sale, except for discontinued operations.

(3) Includes internal sales to mills.

INTERNATIONAL PAPER

CONSOLIDATED BALANCE SHEET

Preliminary and Unaudited

(In Millions)

	March 31, 2006		December 31, 2005
Assets
Current Assets
Cash and Temporary Investments	$	709	$	1,641
Accounts and Notes Receivable, Net		2,923		2,796
Inventories		2,315		2,310
Assets of Business Held for Sale		1,696		3,002
Deferred income tax assets		282		279
Other		171		113
Total Current Assets		8,096		10,141
Plants, Properties and Equipment, Net		10,244		10,297
Forestlands		2,220		2,190
Investments		620		625
Goodwill		3,840		3,838
Deferred Charges and Other Assets		1,616		1,680
Total Assets	$	26,636	$	28,771
Liabilities and Common Shareholders’ Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	894	$	1,181
Liabilities of Business Held for Sale		203		195
Accounts Payable and Accrued Liabilities		3,281		3,483
Total Current Liabilities		4,378		4,859
Long-Term Debt		10,561		11,023
Deferred Income Taxes		666		726
Other Liabilities		3,769		3,601
Minority Interest		214		211
Common Shareholders’ Equity
Invested Capital		5,236		5,179
Retained Earnings		1,812		3,172
Total Common Shareholders’ Equity		7,048		8,351
Total Liabilities and Common Shareholders’ Equity	$	26,636	$	28,771

EX-99.2

First Quarter

2006 Review

May 4, 2006

First Quarter

2006 Review

May 4, 2006

John V. Faraci

Chairman & CEO

Marianne M. Parrs

Executive VP & CFO

John V. Faraci

Chairman & CEO

Marianne M. Parrs

Executive VP & CFO

Exhibit 99.2

2

Forward-Looking Statements

hese

slides

contain

forward-looking

statements.

These

statements

reflect

management's

current

views and are subject to risks and uncertainties that could cause actual results to differ materially

from those expressed or implied in these statements.  Factors which could cause actual results to

differ relate to: (i) industry conditions, including changes in the cost or availability of raw materials and

energy,

changes

in

transportation

costs,

competition,

changes

in

the

Company’s

product

mix

and

demand and pricing for the Company's products; (ii) market and economic factors, including changes

in international conditions, specifically in Brazil, Russia, Poland, China and South Korea, changes in

currency exchange rates, changes in credit ratings issued by nationally recognized statistical rating

organizations, pension and healthcare costs and natural disasters, such as hurricanes; (iii) the

Company's transformation plan, including the ability to accomplish the transformation plan, the impact

of the plan on the Company's relationship with its employees, the ability to realize anticipated profit

improvement from the plan and the ability to successfully negotiate satisfactory sale terms for assets

that are contemplated for sale but are not currently under contract; (iv) the execution of sale

transactions currently under contract and the realization of anticipated sales proceeds thereunder, 

including, the ability to successfully consummate the transactions without a purchase price

adjustment, the successful fulfillment (or waiver) of all conditions set forth in the sale agreements, the

successful closing of the transactions within the estimated timeframes and the ability to monetize the

non-cash portion of the sale proceeds; and (v) results of legal proceedings and compliance costs,

including unanticipated expenditures related to the cost of compliance with environmental and other

governmental regulations and the uncertainty of the costs and other effects of pending litigation.  We

undertake no obligation to publicly update any forward-looking statements, whether as a result of new

information,

future

events

or

otherwise.

These

and

other

factors

that

could

cause

or

contribute

to

actual

results

differing

materially

from

such

forward-looking

statements

are

discussed

in

greater

detail

in the company's Securities and Exchange Commission filings.

T

3

uring

the course of this presentation, certain non-

U.S. GAAP financial information will be presented.

A reconciliation of those numbers to U.S. GAAP

financial measures is available on the company’s

website at www.internationalpaper.com

under

Investors.

Statements Relating to

Non-GAAP Financial Measures

D

4

Agenda

First Quarter 2006 Review

Second Quarter 2006 Outlook

Transformation Plan Update

First Quarter 2006 Review

Second Quarter 2006 Outlook

Transformation Plan Update

5

First Quarter 2006 Summary

Solid first quarter –

broad-based improvement

from fourth quarter 2005

Volume stronger across many key grades

IP pricing

improving

Raw material costs lower

Manufacturing operations performed well

Record first quarter for IP’s distribution business

Lower land sales and higher tax rate

Solid first quarter –

broad-based improvement

from fourth quarter 2005

Volume stronger across many key grades

IP pricing

improving

Raw material costs lower

Manufacturing operations performed well

Record first quarter for IP’s distribution business

Lower land sales and higher tax rate

6

Diluted EPS from Continuing Operations

and Before Special Items

* A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

Investors

.13

.33

.27

.29

.16

.21

.21

.16

.15

.41

.34

.39

.34

2002

2003

2004

2005

1Q

3Q

1Q

2Q

4Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

.29

.23

3Q

4Q

.09

1Q

.19

2006

7

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

4Q'05

Price

Volume/

Downtime

Cost/Mix

Raw

Material

Land

Sales

Corporate

Items

Tax

Other

1Q'06

1Q’06 vs. 4Q’05

EPS $ / Share

EPS from cont. ops before special items

$.09

$.08

$.02

$.00

$.19

$.02

($.04)

($.01)

$.05

($.02)

Energy      $.03

Wood        $.01               

Other       ($.02)

Packaging      $.05                    

Paper             $.02

1Q06 Tax rate 30%  

4Q05 Tax rate 14%

IP Realty       $.01                       

Land Sales  ($.05)

8

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

1Q'05

Price

Volume/

Downtime

Cost/Mix

Raw

Material

Land

Sales

Corporate

Items

Interest

Tax

Other

1Q'06

1Q’06 vs. 1Q’05

EPS $ / Share

EPS from cont. ops before special items

$.34

$.05

($.13)

($.01)

$.19

$.02

($.05)

$.04

($.02)

($.02)

($.03)

Energy     ($.10)

Wood       ($.01)  

Caustic    ($.01)

Other       ($.01)

Packaging  ($.02)

1Q06 Tax rate 30%  

1Q05 Tax rate 19%

IP Realty       ($.01)                  

Land Sales     $.05

9

Higher Raw Material Costs

EBIT impact 1Q’06 vs. 1Q’05

Total of $88 million or $0.13 per share

negative impact in 1Q’06 versus 1Q’05

(100)

(80)

(60)

(40)

(20)

0

(100)

(80)

(60)

(40)

(20)

0

Energy

Wood

Caustic

Soda

EBIT ($MM)

(73)

(6)

(4)

(5)

Other

10

Printing Papers

1

U.S. operations only   

$  1,500

120

Sales

Earnings

1Q’06

4Q’05

$ Millions

$ Millions

Uncoated

1

Pulp

1

Europe

2

(uncoated)

Volume

Realizations/ton

$  1,485

60

1Q’06 Change vs 4Q’05:

1Q’06 Change vs 4Q’05:

7%

(18%)

5%

2

Europe is average commodity cut-size price, excluding Russia   

Average IP realization (includes the impact of mix across all grades)

$10

$25

€

5

11

Industrial Packaging

Average IP realization (includes the impact of mix across all grades)

$  1,170

38

Sales

Earnings

1Q’06

4Q’05

$ Millions

$ Millions

Containerboard

1

U.S. Container

$35

$35

Volume

Realizations/ton

$  1,170

5

1Q’06 Change vs 4Q’05:

1Q’06 Change vs 4Q’05:

(12%)

1%

1

U.S. operations only

12

Consumer Packaging

Average IP realization (includes the impact of mix across all grades)

$  775

35

Sales

Earnings

1Q’06

4Q’05

$ Millions

$ Millions

Coated Paperboard

1

$5

Volume

Realizations/ton

$  800

29

1Q’06 Change vs 4Q’05:

1Q’06 Change vs 4Q’05:

6%

Converting Businesses

Sales Revenue

(3%)

1

U.S. operations only

13

Distribution

$ 1,650

27

Sales

Earnings

1Q’06

4Q’05

$ Millions

$ Millions

$ 1,635

25

xpedx had record first quarter earnings

Revenues improved 8% vs. first quarter 2005

First quarter ROI of 7%

Expenses down, margins up

14

Forest Products

Average IP realization (includes the impact of mix across all grades)

$  630

226

Sales

Earnings

1Q’06

4Q’05

$ Millions

Lumber

1

(mbf)

Plywood (msf)

$15

($24)

Volume

Realizations/unit

$  665

257

1Q’06 Change vs 4Q’05:

1Q’06 Change vs 4Q’05:

(3%)

2%

1

U.S. operations only

15

Special Items  -

After Tax

•

Insurance Recoveries

12

•

Legal Reserves

(11)

•

Restructuring & Other

(17)

•

Divestitures

(2)

•

Tax Adjustments

(6)

Special Items Total

(24)

($0.05)

Discontinued Operations (Coated and Kraft Paper)

•

Writedown

to Estimated Sales Value

and Other

(1,311)

•

1Q’06 Earnings

7

(1,304)

($2.66)

Special Items  -

After Tax

•

Insurance Recoveries

12

•

Legal Reserves

(11)

•

Restructuring & Other

(17)

•

Divestitures

(2)

•

Tax Adjustments

(6)

Special Items Total

(24)

($0.05)

Discontinued Operations (Coated and Kraft Paper)

•

Writedown

to Estimated Sales Value

and Other

(1,311)

•

1Q’06 Earnings

7

(1,304)

($2.66)

$MM

EPS

Special Items & Discontinued

Operations –

1Q’06

16

Earnings from Continuing Operations

and Before Special Items

$0.19

Special Items

(0.05)

Earnings from Continuing Operations

0.14

Discontinued Operations 

(2.66)

Net Loss

($2.52)

Earnings from Continuing Operations

and Before Special Items

$0.19

Special Items

(0.05)

Earnings from Continuing Operations

0.14

Discontinued Operations 

(2.66)

Net Loss

($2.52)

Reconciliation to 1Q’06

Diluted

Earnings Per Share

Diluted EPS

17

Second Quarter 2006 Outlook

Volume remains solid

Implementing IP’s announced price increases in

paper and packaging

Continued progress in improving operations

Input costs mixed

•

Natural gas and wood costs down

•

Fuel oil and transportation costs up

Tax rate –

33%

Volume remains solid

Implementing IP’s announced price increases in

paper and packaging

Continued progress in improving operations

Input costs mixed

•

Natural gas and wood costs down

•

Fuel oil and transportation costs up

Tax rate –

33%

18

Carter Holt

Harvey

Forestlands

Coated Papers

Beverage

Packaging

Kraft Papers

Wood

Products

Arizona

Chemical

Consider

Strategic

Options

Distribute

Sales

Book

Evaluate

Final

Bids

Sales

Agreement

Announced

Close

on

Sale

-

Phase completed

Transformation Plan Update

Divestments status as of May 4, 2006

Sales agreements

announced for

5.7 million acres

as of 5/4/06

Inpacel

Mill

(Brazil)

19

Transformation Plan Update

Announced sales of 5.7 million acres for $6.6 billion

•

Cash to IP in 4Q’06

•

Retained 830,000 acres in U.S. South (700,000 acres for future

sale)

Total after-tax proceeds could exceed $11 billion

Industrial asset sales process on track

Details on returning value to shareholders will be

communicated by end of July 2006

Maintaining focus on improving key platform operations –

fewer, bigger, better strategy

Selective reinvestment –

taking a disciplined approach

Announced sales of 5.7 million acres for $6.6 billion

•

Cash to IP in 4Q’06

•

Retained 830,000 acres in U.S. South (700,000 acres for future

sale)

Total after-tax proceeds could exceed $11 billion

Industrial asset sales process on track

Details on returning value to shareholders will be

communicated by end of July 2006

Maintaining focus on improving key platform operations –

fewer, bigger, better strategy

Selective reinvestment –

taking a disciplined approach

First Quarter 2006

20

Q & A

Q & A

21

Appendix

Appendix

22

Total

IP Forestlands*

6.5 MM acres

Transformation Plan Update

IP has announced agreements to sell 5.7 million acres

for approximately $6.6 billion as of May 4, 2006

* U.S. forestlands owned or managed as of December 31, 2005

Targeted sale of 5.7 million acres

as part of transformation plan

U.S. Forestlands

RMS

Announced Sale

4.2MM acres

South

TimberStar

Announced Sale

0.9MM acre

South

Conservation

Announced Sales

0.3MM acres

South/Lake States

Lyme

Timber

Announced Sale

0.3MM acres

New York

Acreage

Retained

0.8 MM acres

South

23

Transformation Plan Update

6,620

5,672

Total Sales

137

275

Lyme

Timber

Sale

(NY)

1,100

900

TimberStar

Sale

(LA, TX, AR)

440

Michigan

3,770

Southern U.S.

5,000

4,210

RMS Sale

83

69

The Nature Conservancy (WI)

300

218

The Nature Conservancy

& The Conservation Fund

Southern U.S.

383

287

Conservation Sales

Timber

Notes

Cash

Estimated

Value

($MM)

Acres

(000s)

Forestland sales summary

24

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

Containerboard

Uncoated Papers

Pulp

Coated Paperboard

European Papers

*Includes indefinitely closed uncoated papers capacity at Pensacola, FL, Bastrop, LA and Jay, ME in 2Q05

(72,000 tons), 3Q05 (108,000 tons) and 4Q’05 (108,000 tons).  Permanently closed at end of 4Q’05.

168

44

49

232

Lack of Order Downtime

59

90

236

173

5

10

5

35

95

M  Short Tons

2002

2003

2004

2005

275*

270*

181*

25

2006

25

Earnings by Industry Segment

Earnings by Industry Segment

Printing Papers

$120

$60

$157

Industrial Packaging

38

5

102

Consumer Packaging

35

29

32

Distribution

27

25

18

Forest Resources

226

257

207

Other Businesses

10

(5)

10

Operating Profit

456

371

526

Interest Expense

(148)

(151)

(168)

Minority Interest

3

(1)

(1)

Corporate Items, net

(174)

(165)

(152)

Earnings from continuing operations

before income taxes, minority

interest & special items

$137

$54

$205

Earnings by Industry Segment

Printing Papers

$120

$60

$157

Industrial Packaging

38

5

102

Consumer Packaging

35

29

32

Distribution

27

25

18

Forest Resources

226

257

207

Other Businesses

10

(5)

10

Operating Profit

456

371

526

Interest Expense

(148)

(151)

(168)

Minority Interest

3

(1)

(1)

Corporate Items, net

(174)

(165)

(152)

Earnings from continuing operations

before income taxes, minority

interest & special items

$137

$54

$205

$ Millions

4Q’05*

4Q’05*

1Q’05*

1Q’05*

1Q’06

1Q’06

Before special items

*industry

segment

information

has

been

reclassified

to

conform

with

minor

changes

in

2006

organizational

structure

as

well

as

to

reflect

Coated

Papers

and

Kraft

Papers

businesses

as

discontinued

operations

26

Before Special Items

Q1

137

(41)

(5)

91

30%

491.7

0.19

Special Items

Q1

(30)

6

-

(24)

19%

491.7

(0.05)

Earnings from Continuing Operations

Q1

107

(35)

(5)

67

33%

491.7

0.14

2006 Earnings from Continuing

Operations

Pre-Tax 

Tax

MI

Net

ETR          Average

Diluted

Shares

2

EPS

1

$ MM

MM Shares

$/Share

$ MM

$ MM

$ MM

MI

–

Minority

Interest;

Net

–

Net

Income;

ETR

–

Effective

Tax

Rate;

EPS

–

Earnings

per

Share;

NM

–

Not

Meaningful

1

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

Investor

Information

2

Assuming dilution

27

Before Special Items

Q1

205

(39)

(2)

164

19%

488.9

0.34

Q2

205

(62)

(3)

141

30%

487.4

0.29

Q3

170

(54)

(4)

112³

32%

487.1

0.23

Q4

55

(8)

(4)

43

14%

486.0

0.09

Full Year Total

636

(163)

(12)

461

26%

509.7

0.96

Special Items

Q1

(103)

36

-

(67)

35%

488.9

(0.14)

Q2

35

(95)    

-

(61)

NM

487.4

(0.13)

Q3

167

441

-

608

NM

487.1

1.25

Q4

(241)

102

-

(138)

43%

486.0

(0.28)

Full Year Total

(142)

484

-

343

NM

509.7

0.67

Earnings from Continuing Operations

Q1

102

(2)

(2)

98

2%

488.9

0.20

Q2

240

(157)

(3)

80

65%

487.4

0.16

Q3

337

387

(4)

721³

NM

487.1

1.48

Q4

(186)

94

(4)

(95)

51%

486.0

(0.19)

Full Year Total

494

322

(12)

803³

NM

509.7

1.63

2005 Earnings from Continuing

Operations

Pre-Tax 

Tax

MI

Net

ETR          Average

Diluted

Shares

2

EPS

1

$ MM

MM Shares

$/Share

$ MM

$ MM

$ MM

MI

–

Minority

Interest;

Net

–

Net

Income;

ETR

–

Effective

Tax

Rate;

EPS

–

Earnings

per

Share;

NM

–

Not

Meaningful

1

A reconciliation to GAAP EPS is available at www.internationalpaper.com

under Investor Information

2

Assuming dilution

3

Does not include impact of additional $7 million in 3Q and $27 million for full year of income related to dilutive securities

Numbers may not add due to rounding

28

* U.S. only      

Average IP realization (includes the impact of mix across all grades)

Average Sales Realizations

Forest

Products

$/ton

Packaging

$/ton

Printing

Papers

Segments*

301

352

688

402

476

793

4Q’05

Average Sales Realizations

291

358

733

453

488

797

1Q’05

277

376

735

454

510

826

Mar 06

Plywood, $/MSF

Lumber, $/MBF

Corrugated boxes

Containerboard

Pulp

Uncoated

Grades

277

367

721

437

499

803

1Q’06

299

375

733

437

496

802

Mar 05

29

Forest Resources

Earnings Sources –

Gross Margin

•

Forestland Sales

1

$106

$142

$71

•

Harvest & Recreational Income

72

75

69

Forestland Expenses

(30)

(30)

(34)

Land Utilization (real estate),

Net of Expenses

45

40

54

Total EBIT

$193

$227

$160

Earnings Sources –

Gross Margin

•

Forestland Sales

1

$106

$142

$71

•

Harvest & Recreational Income

72

75

69

Forestland Expenses

(30)

(30)

(34)

Land Utilization (real estate),

Net of Expenses

45

40

54

Total EBIT

$193

$227

$160

$ Millions

4Q’05

4Q’05

1Q’05

1Q’05

1Q’06

1Q’06

1

Excludes U.S. forestlands identified for sale as part of transformation plan 

30

Lower Raw Material Costs

EBIT impact 1Q’06 vs. 4Q’05

Total of $16 million or $0.02 per share

positive impact in 1Q’06 versus 4Q’05

(30)

(20)

(10)

0

10

20

30

(30)

(20)

(10)

0

10

20

30

Energy

Wood

Other

EBIT ($MM)

18

10

(12)

31

0

50

100

150

200

250

300

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apri

July

Oct

Jan

Index: Jan 2003 Natural Gas Costs = 100

2003

2004

Natural gas costs

peaked in October

Natural Gas Costs

2005

Trended lower in 1Q’06

32

U.S. Mill Wood Costs

90

100

110

120

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Index: Jan 2003 Wood Costs = 100

2003

2004

* Delivered cost to  U.S. pulp & paper mills

Trended lower in 1Q’06

2005

U.S. mill wood costs

decreased in 1Q’06

33

0

100

200

300

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Index: Jan 2003 Caustic Soda Costs = 100

2003

2004

Caustic soda costs

remain historically high

Caustic Soda Costs

2005

Trended slightly lower in 1Q’06

34

Domestic Facilities

Key input indicative purchase levels

1

Old corrugated containers

2

2006

Run Rate

Natural Gas

MMbtus

37,000,000

# 6 Fuel Oil

BBLs

5,000,000

Coal

Tons

1,600,000

Wood

Tons

65,000,000

OCC

Tons

600,000

Caustic Soda

Tons

315,000

Sodium Chlorate

Tons

290,000

LD Polyethylene

Tons

100,000

Latex

Tons

41,000

Energy

Energy

Fiber

Fiber

Chemicals

Chemicals

Units

Units

Annual Purchases

Annual Purchases

2

1

35

Coated Papers and Kraft Papers moved to

Discontinued Operations

Coated Bristols

to Consumer Packaging from

Printing Papers

Bleached Kraft to Printing Papers from

Industrial Packaging

Minor Reclassifications

By industry segments

36

$6,011

(314)

275

610

1,530

1,295

630

$1,985

1Q’05

As

Reported

in 4Q’05

$526

10

207

18

102

32

$157

1Q’05

As

Restated

in 1Q’06

$546

$5,593

(287)

Less: Intersegment Sales

10

275

Other Businesses

207

610

Forest Products

18

1,530

Distribution

105

23

1,215

740

Industrial Packaging

Consumer Packaging

$183

$1,510

Printing Papers

1Q’05

1Q’05

As

Reported

in 4Q’05

As

Restated

in 1Q’06

Sales

Operating Profit

1Q’05 industry segment information has

been reclassified to conform with minor

changes in 2006 organizational structure

as well as to reflect Coated Papers and

Kraft Papers businesses as 

discontinued operations

$ Millions

Minor Reclassifications

Sales & earnings by industry segments

$ Millions

37