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

August 1, 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.)

6400 Poplar Avenue

Memphis, Tennessee 38197

(Address and zip code of principal executive offices)

(901) 419-7000

(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 August 1, 2006, International Paper Company issued a press release reporting earnings for the second 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 August 1, 2006.

Exhibit 99.2: Slides of International Paper Company, dated August 1, 2006.

2

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: August 1, 2006

EXHIBIT INDEX

Exhibit 99.1: Press release of International Paper Company, dated August 1, 2006.

Exhibit 99.2: Slides of International Paper Company, dated August 1, 2006.

EX-99.1

Exhibit 99.1

INTERNATIONAL PLACE

6400 POPLAR AVENUE

MEMPHIS, TN 38197

Stronger Revenue, Margins Boost International Paper’s

Preliminary Second Quarter 2006 Earnings

News Release

• Earnings per share from continuing operations and before special items were $0.41 (including $0.06 from the Coated Papers business), versus $0.20 in the first quarter and $0.31 in the 2005 second quarter.

• Second-quarter 2006 net earnings were $0.24 per share, compared with a loss of $2.54 per share (reflects a $2.57 per share charge related to Coated Papers) in the first quarter and earnings of $0.16 per share in the second quarter of 2005.

• Quarterly net sales were up 7 percent from a year ago, at $6.3 billion, versus $5.9 billion in the 2005 second quarter and $6.1 billion in the first quarter 2006.

MEMPHIS, Tenn.—Aug. 1, 2006—International Paper (NYSE: IP) today reported preliminary second-quarter 2006 net earnings of $115 million ($0.24 per share) compared with a first-quarter net loss of $1.24 billion ($2.54 per share) and net earnings of $77 million ($0.16 per share) in the second quarter of 2005. Amounts in all periods include special items, including a $2.57 per share charge in the first quarter of 2006 to write down the assets of the Coated and Supercalendered Papers business to their estimated fair value.

Diluted Earnings Per Share Summary

	Second Quarter 2006			First Quarter 2006			Second Quarter 2005
Net Earnings (Loss)	$	0.24		$	(2.54	)	$	0.16
Less - Discontinued Operations:
(Earnings) Loss from Operations		(0.02	)		(0.01	)		0.03
(Earnings) Loss on Write-Down of Assets		0.02			0.13			—
		—			0.12			0.03
Earnings (Loss) from Continuing Operations		0.24			(2.42	)		0.19
Add Back – Net Special Items Expense		0.17			2.62			0.12
Earnings from Continuing Operations and Before Special Items	$	0.41		$	0.20		$	0.31
Coated Papers results (incl. above)	$	0.06		$	0.01		$	0.03

Earnings from continuing operations and before special items in the second quarter of 2006 were $200 million ($0.41 per share), compared with $95 million ($0.20 per share) in the previous quarter and $152 million ($0.31 per share) in the second quarter of 2005, including $31 million ($0.06 per share), $6

million ($0.01 per share) and $15 million ($0.03 per share) for the 2006 second quarter, 2006 first quarter and 2005 second quarter, respectively, from the Coated and Supercalendered Papers business, the sale of which is expected to close today.

Quarterly net sales of $6.3 billion were the company’s highest second-quarter sales since 2000. Sales in the first quarter were $6.1 billion and second-quarter 2005 sales were $5.9 billion.

Operating profits of $631 million for the 2006 second quarter showed marked improvement from first quarter’s operating profits of $464 million because of higher average price realizations, manufacturing cost and sales mix improvements.

“International Paper had a solid second quarter, driven by increasing price realizations, good volume and excellent operations in our key platform businesses,” said IP Chairman and Chief Executive Officer John Faraci. “We had record results for the quarter in printing papers and distribution, and total sales were up 7 percent from a year ago.”

Further commenting on the third quarter of 2006 compared with the second quarter, Faraci said, “We expect higher earnings in the third quarter as we continue to realize previously announced price increases in North America. Our volumes remain solid, and costs are likely to continue at their current high levels, with some puts and takes.”

COATED PAPERS

In the 2006 first quarter, the company had reported its Coated and Supercalendered Papers business as a discontinued operation, in anticipation of selling it. In the second quarter, the company signed a definitive agreement to sell this business for approximately $1.4 billion, subject to certain post-closing adjustments, and agreed to acquire a 10-percent limited partnership interest in CMP Investments L.P., the parent company that will own it. Because of the required accounting treatment for this continuing interest, results for this business and write-downs to its estimated fair value are now included in continuing operations for all periods presented.

DISCONTINUED OPERATIONS

Discontinued operations includes the operating results of the company’s Kraft Papers business. In the 2006 first quarter, a pre-tax charge of $101 million ($0.13 per share) had been recorded to write down the carrying value of the assets of this business to their estimated fair value. During the 2006 second quarter, International Paper signed a definitive agreement to sell this business to Stone Arcade Acquisition Corp. and recorded an additional pre-tax charge of $16 million ($0.02 per share) based on the terms of this agreement.

SEGMENT INFORMATION

Second-quarter 2006 segment operating profits and business trends compared with the first quarter of 2006 are as follows:

Second-quarter operating profits for Printing Papers were $254 million ($205 million, excluding coated papers), markedly better than first-quarter operating profits of $128 million ($120 million, excluding coated papers). The segment’s results were bolstered by much stronger sales and earnings in the U.S. uncoated freesheet business, driven by increasing average prices, better input costs, strong mill operations and good sales mix. Higher price realizations and sales mix improvements also boosted results in pulp, coated papers and European papers. Coated papers operating results for the second quarter included a $31 million reduction ($19 million after taxes, or $0.04 per share) in depreciation expense to reflect its treatment as a business held for sale.

Industrial Packaging had its best quarter since 2004, with second-quarter operating profits of $100 million, compared with first-quarter operating profits of $38 million. Improvements were largely due to higher average price realizations, modest volume and mix improvements, good cost control, and lower input costs.

Consumer Packaging operating profits were $41 million in the second quarter, up from $35 million in the first quarter, due to slightly stronger volumes and price realizations. Results were negatively impacted by an $8 million charge related to the write-off of obsolete equipment.

The company’s distribution business, primarily xpedx, reported record operating profits of $36 million for the quarter compared with operating profits in the prior quarter of $27 million. Improved margins and good cost control drove xpedx to its best-ever quarterly earnings and highest sales in more than five years.

Second-quarter Forest Products operating profits declined to $184 million from first-quarter operating profits of $226 million principally as a result of lower price realizations in wood products and lower forestland sales. Earnings from forestland and real estate sales were $130 million in second quarter 2006 versus $148 million in the prior quarter.

Net corporate expenses totaled $174 million for the quarter, down slightly from $176 million in the first quarter.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the second quarter of 2006 was 34 percent, compared with a tax rate of 30 percent in the first quarter and 31 percent in the second 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 second quarter of 2006 consisted of a pre-tax charge of $54 million ($33 million after taxes) for restructuring and other charges, including a pre-tax charge of $50 million ($30 million after taxes) for severance and other charges associated with the company’s transformation plan and a $4 million charge ($3 million after taxes) for a legal settlement; and a pre-tax charge of $75 million ($51 million after taxes) for net gains (losses) on sales and impairments of businesses held for sale, including a pre-tax credit of $62 million ($39 million after taxes) for gains on sales of U.S. forestlands included in the transformation plan, a pre-tax charge of $85 million ($53 million after taxes) to adjust the carrying value of the assets of the company’s Coated and Supercalendered Papers business to their estimated fair value based on the terms of the definitive sales agreement signed in the second quarter, and a pre-tax charge of $52 million ($37 million after taxes) to write down the carrying value of certain assets in Brazil to their estimated fair value. The net after-tax effect of these special items was an expense of $0.17 per share.

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 $1.3 billion pre-tax charge ($1.3 billion after taxes) for net losses on sales and impairments of businesses held for sale, principally relating to the write-down of the assets of the Coated and Supercalendered Papers business to their estimated fair values; and a charge of $6 million related to tax adjustments. The net after-tax effect of these special items was an expense of $2.62 per share.

Special items in the second quarter of 2005 included a pretax charge of $31 million ($19 million after taxes) for organizational restructuring charges, a pretax credit of $35 million ($21 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation, and a $19 million pretax credit ($12 million after taxes) for net adjustments of losses on businesses previously sold, including a $25 million credit from the collection of a note receivable from the 2001 sale of the Flexible Packaging business. In addition, Interest expense, net, included pretax interest income of $11 million ($7 million after taxes) collected on this note. Additionally, an $82 million increase in the income tax provision was recorded principally for deferred taxes related to earnings repatriated during the quarter under the American Jobs Creation Act of 2004. The net after-tax effect of all of these special items was an expense of $0.12 per share.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. Eastern Daylight Time / 9 a.m. Central 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 2Q 2006 Earnings Call. The conference ID number is 2739408. Participants should call in no later than 9:45 a.m. EDT/8:45 CDT. 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 “2739408.”

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 there under, 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: Brian McDonald, 901-419-4957 or Brian Turcotte, 203-541-8632

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Operations

Preliminary and Unaudited

(In millions, except per share amounts)

	Three Months Ended June 30,						Three Months Ended March 31, 2006			Six Months Ended June 30,
	2006			2005						2006			2005
Net Sales	$	6,270		$	5,860		$	6,063		$	12,333		$	11,817
Costs and Expenses
Cost of products sold		4,666			4,359			4,575			9,241			8,774
Selling and administrative expenses		476			462			490			966			956
Depreciation, amortization and cost of timber harvested		305	(a)		333			339			644	(a)		673
Distribution expenses		305			259			312			617			518
Taxes other than payroll and income taxes		59			55			56			115			116
Restructuring and other charges		54	(b)		31	(e)		46	(k)		100	(n)		55	(q)
Insurance Recoveries		—			(35)	(f)		(19)			(19	)		(35)	(f)
Net losses (gains) on sales and impairments of businesses held for sale		75	(c)		(19)	(g)		1,283	(l)		1,358	(o)		60	(r)
Reversal of reserves no longer required, net		—			—			—			—			—
Interest expense, net		148			155	(h)		148			296			323	(h)
Earnings (Loss) From Continuing Operations Before Income Taxes and Minority Interest		182	(b,c)		260	(e-h)		(1,167	) (k,l)		(985	) (n,o)		377	(f,h,q,r)
Income tax provision		61			166	(i)		8			69			174	(i)
Minority interest expense, net of taxes		5			3			4			9			5
Earnings (Loss) From Continuing Operations		116	(b,c)		91	(e-i)		(1,179	) (k,l)		(1,063	) (n,o)		198	(f,h,i,q,r)
Discontinued Operations, net of taxes and minority interest		(1)	(d)		(14)	(j)		(58	) (m)		(59	) (p)		(44)	(j)
Net Earnings (Loss)	$	115	(b-d)	$	77	(e-j)	$	(1,237	) (k-m)	$	(1,122	) (n-p)	$	154	(f,h,i,j,q,r)
Basic Earnings Per Common Share
Earnings (loss) from continuing operations	$	0.24	(b,c)	$	0.19	(e-i)	$	(2.42	) (k,l)	$	(2.19	) (n,o)	$	0.41	(f,h,i,q,r)
Discontinued operations		—			(0.03)	(j)		(0.12	) (m)		(0.12	) (p)		(0.09)	(j)
Net earnings (loss)	$	0.24	(b-d)	$	0.16	(e-j)	$	(2.54	) (k-m)	$	(2.31	) (n-p)	$	0.32	(f,h,i,j,q,r)
Diluted Earnings Per Common Share
Earnings (loss) from continuing operations	$	0.24	(b,c)	$	0.19	(e-i)	$	(2.42	) (k,l)	$	(2.19	) (n,o)	$	0.41	(f,h,i,q,r)
Discontinued operations		—			(0.03)	(j)		(0.12	) (k)		(0.12	) (o)		(0.09)	(j)
Net earnings (loss)	$	0.24	(b-d)	$	0.16	(e-j)	$	(2.54	) (k-m)	$	(2.31	) (n-p)	$	0.32	(f,h,i,j,q,r)
Average Shares of Common Stock Outstanding - Diluted		487.2			487.4			486.3			486.6			488.0
Cash Dividends Per Common Share	$	0.25		$	0.25		$	0.25		$	0.50		$	0.50

(a) Includes a $31 million pre-tax reduction reflecting the elimination of depreciation expense for the coated papers business that is held for sale.

(b) Includes a pre-tax charge of $50 million ($30 million after taxes) for severance and other charges associated with the Company's Transformation Plan and a $4 million charge ($3 million after taxes) for a legal settlement.

(c) Includes a pre-tax credit of $62 million ($39 million after taxes) for gains on sales of U.S. forestlands included in the Transformation Plan, a pre-tax charge of $85 million ($53 million after taxes) to adjust the carrying value of the assets of the Company's Coated and Supercalendered Papers business to their estimated fair value based on the terms of the definitive sales agreement signed in the second quarter, and a pre-tax charge of $52 million ($37 million after taxes) to write down the carrying value of certain assets in Brazil to their estimated fair value.

(d) Includes a pre-tax charge of $16 million ($10 million after taxes) to reduce the carrying value of the net assets of the Kraft Papers business to their estimated fair value, and a pre-tax credit of $14 million ($9 million after taxes) for the second quarter net income of this business.

(e) Includes a pre-tax charge of $31 million charge ($19 million after taxes) for organizational restructuring charges.

(f) Includes a pre-tax $35 million credit ($21 million after taxes) for insurance recoveries related to hardboard siding and roofing litigation.

(g) Includes a pre-tax $19 million credit ($12 million after taxes) for net adjustments of losses on businesses previously sold.

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

(i) Includes an $82 million increase in the income tax provision, principally for deferred taxes related to earnings repatriated during the quarter under the American Jobs Creation Act of 2004.

(j) Includes net income from the Kraft Papers business, and the Carter Holt Harvey Limited business prior to its sale in the third quarter of 2005.

(k) Includes a pre-tax charge of $20 million ($12 million after taxes) for organizational restructuring charges associated with the company's 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.

(l) Includes a pre-tax and after-tax charge of $1.3 billion to reduce the carrying value of the net assets of the Coated and Supercalendered Papers business to their estimated fair value.

(m) Includes a pre-tax charge of $101 million ($62 million after taxes) to reduce the carrying value of the net assets of the Kraft Papers business to their estimated fair value, and a pre-tax credit of $6 million ($4 million after taxes) for the first-quarter net income of this business.

(n) Includes a pre-tax charge of $70 million ($42 million after taxes) for organizational charges associated with the Company's Transformation Plan, a pre-tax charge of $8 million ($5 million after taxes) for losses on early debt extinguishment, and a pre-tax charge of $22 million ($14 million after taxes) for legal reserves.

(o) Includes a pre-tax charge of $1.4 billion ($1.3 billion after taxes) to reduce the carrying value of the net assets of the Coated and Supercalendered Papers business to their estimated fair value, a pre-tax credit of $62 million ($39 million after taxes) for gains on sales of U.S. forestlands included in the Transformation Plan, and a pre-tax charge of $52 million ($37 million after taxes) to write down the carrying value of certain assets in Brazil to their estimated fair value.

(p) Includes a pre-tax charge of $117 million ($72 million after taxes) to reduce the carrying value of the net assets of the Kraft Papers business to its estimated fair value, and a pre-tax credit of $20 million ($13 million after taxes) for net income of this business.

(q) Includes a pre-tax charge of $31 million ($19 million after taxes) for organizational charges, and a pre-tax charge of $24 million ($15 million after taxes) for losses on early debt extinguishment.

(r) Includes a pre-tax charge of $60 million ($40 million after taxes) for estimated losses of businesses held for sale.

6

INTERNATIONAL PAPER COMPANY

Reconciliation of Earnings Before Special Items to Net Earnings (Loss)

Preliminary and Unaudited

(In millions except for per share amounts)

	Three Months Ended June 30,						Three Months Ended March 31, 2006			Six Months Ended June 30,
	2006			2005						2006			2005
Earnings Before Special Items	$	200		$	152		$	95		$	295		$	326
Restructuring and other charges		(33	)		(19	)		(28	)		(61	)		(34	)
Insurance Recoveries		—			21			12			12			21
Net gains (losses) on sales and impairments of businesses held for sale		(51	)		12			(1,252	)		(1,303	)		(40	)
Interest Income		—			7			—			—			7
Income tax adjustments		—			(82	)		(6	)		(6	)		(82	)
Earnings (Loss) Per Common Share from Continuing Operations		116			91			(1,179	)		(1,063	)		198
Discontinued Operations		(1	)		(14	)		(58	)		(59	)		(44	)
Net Earnings (Loss) as Reported	$	115		$	77		$	(1,237	)	$	(1,122	)	$	154
	Three Months Ended June 30,						Three Months Ended March 31, 2006			Six Months Ended June 30,
	2006			2005						2006			2005
Diluted Earnings per Common Share
Earnings Per Share Before Special Items	$	0.41		$	0.31		$	0.20		$	0.60		$	0.67
Restructuring and other charges		(0.07	)		(0.04	)		(0.06	)		(0.13	)		(0.07	)
Insurance Recoveries		—			0.04			0.02			0.02			0.04
Net gains (losses) on sales and impairments of businesses held for sale		(0.10	)		0.03			(2.57	)		(2.67	)		(0.08	)
Interest Income		—			0.01			—			—			0.01
Income tax adjustments		—			(0.16	)		(0.01	)		(0.01	)		(0.16	)
Earnings (Loss) Per Common Share from Continuing Operations		0.24			0.19			(2.42	)		(2.19	)		0.41
Discontinued Operations		—			(0.03	)		(0.12	)		(0.12	)		(0.09	)
Diluted Earnings (Loss) per Common Share	$	0.24		$	0.16		$	(2.54	)	$	(2.31	)	$	0.32

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 earninings (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.

(3) Since the basic and diluted earnings per share are computed independently for each period, six-month per share amounts may not equal the sum of the respective quarters.

INTERNATIONAL PAPER COMPANY

Sales and Earnings by Industry Segment

Preliminary and Unaudited

(In Millions)

Sales by Industry Segment

	Three Months Ended June 30,						Three Months Ended March 31,			Six Months Ended June 30,
	2006			2005			2006			2006			2005
Printing Papers	$	1,915		$	1,775		$	1,895		$	3,810		$	3,650
Industrial Packaging		1,240			1,165			1,170			2,410			2,380
Consumer Packaging		795			790			775			1,570			1,530
Distribution		1,690			1,570			1,650			3,340			3,100
Forest Products		595	(5)		605	(5)		630	(5)		1,225	(5)		1,215	(5)
Other Businesses (3)		235			230			230			465			505
Corporate and Inter-segment Sales		(200	)		(275	)		(287	)		(487	)		(563	)
Net Sales	$	6,270		$	5,860		$	6,063		$	12,333		$	11,817

Operating Profit by Industry Segment

	Three Months Ended June 30,						Three Months Ended March 31, 2006			Six Months Ended June 30,
	2006			2005						2006			2005
Printing Papers	$	254	(1,6)	$	139	(8)	$	128		$	382	(1,6)	$	313
Industrial Packaging		100			84			38			138			186	(8)
Consumer Packaging		41	(6)		53			35			76	(6)		85
Distribution		36			18			27			63			36
Forest Products		184	(7)		191	(7,8)		226	(7)		410	(7)		398	(7,8)
Other Businesses (3)		16			7			10			26			17
Operating Profit		631			492			464			1,095			1,035
Interest expense, net		(148	)		(155	)(9)		(148	)		(296	)		(323	)(9)
Minority interest (4)		2			2			3			5			1
Corporate items, net		(174	)		(133	)		(176	)		(350	)		(287	)
Restructuring and other charges		(54	)		—			(46	)		(100	)		(24	)
Insurance recoveries		—			35			19			19			35
Net gains (losses) on sales of impairments of businesses held for sale		(75	)		19			(1,283	)		(1,358	)		(60	)
Earnings (loss) from continuing operations before income taxes and minority interest	$	182		$	260		$	(1,167	)	$	(985	)	$	377

(1) Includes a $31 million pre-tax benefit ($19 million after taxes), reflecting the elimination of 2006 second-quarter depreciation expense for the coated papers business that is held for sale.

(2) Prior-year industry information has been restated to conform to the 2006 management reporting structure and to reflect the classification of the Kraft Paper business as a discontinued operation.

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

(4) 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.

(5) Includes $205 million, $200 million, $235 million, $440 million, and $440 million for Forest Resources, and $390 million, $405 million, $395 million, $785 million, and $775 million for Wood Products, in the second quarter of 2006, second quarter of 2005, first quarter of 2006, first six months of 2006, and first six months of 2005, respectively.

(6) Includes a 2006 second-quarter special charge of $8 million before taxes in the Consumer Packaging segment for asset write-offs, and a credit of $8 million before taxes in the Printing Papers segment for a tax settlement in Brazil.

(7) Includes $160 million, $129 million, $190 million, $350 million, and $287 million for Forest Resources, and $24 million, $62 million, $36 million, $60 million, and $111 million for Wood Products, in the second quarter of 2006, second quarter of 2005, first quarter of 2006, first six months of 2006, and first six months of 2005, respectively.

(8) 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, Tenn., from Savannah, Ga.

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

INTERNATIONAL PAPER COMPANY

Sales Volume by Product (1) (2)

Preliminary and Unaudited

International Paper Consolidated

	Three Months Ended June 30,		Three Months Ended March 31, 2006	Six Months Ended June 30,
	2006	2005		2006	2005
Printing Papers (In thousands of short tons)
Brazil Uncoated Papers	114	107	118	232	219
Europe & Russia Uncoated Papers	340	358	379	719	717
U.S. Uncoated Papers	996	915	1,029	2,025	1,946
Uncoated Papers	1,450	1,380	1,526	2,976	2,882
Coated Papers	588	580	595	1,183	1,155
Market Pulp (3)	289	307	285	574	603
Packaging (In thousands of short tons)
Container of the Americas	930	906	901	1,831	1,796
European Container (Boxes)	325	273	321	646	532
Other Industrial and Consumer Packaging	120	134	119	239	261
Industrial and Consumer Packaging	1,375	1,313	1,341	2,716	2,589
Containerboard	438	438	496	934	909
Bleached Packaging Board	393	351	376	769	722
Coated Bristols	102	107	108	210	210
Kraft	74	60	60	134	122
Wood Products (In millions)
Panels (sq. ft. 3/8” - basis)	413	367	402	815	768
Lumber (board feet)	666	663	628	1,294	1,276

(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 COMPANY

Consolidated Balance Sheet

Preliminary and Unaudited

(In Millions)

	June 30, 2006		December 31, 2005
Assets
Current Assets
Cash and Temporary Investments	$	274	$	1,641
Accounts and Notes Receivable, Net		2,987		2,796
Inventories		2,334		2,310
Assets of Business Held for Sale		1,661		3,002
Deferred income tax assets		307		279
Other		158		113
Total Current Assets		7,721		10,141
Plants, Properties and Equipment, Net		10,248		10,297
Forestlands		484		2,190
Forestlands Held for Sale		1,666		—
Investments		618		625
Goodwill		3,862		3,838
Deferred Charges and Other Assets		1,555		1,680
Total Assets	$	26,154	$	28,771
Liabilities and Common Shareholders’ Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	1,774	$	1,181
Liabilities of Business Held for Sale		216		195
Accounts Payable and Accrued Liabilities		3,595		3,483
Total Current Liabilities		5,585		4,859
Long-Term Debt		9,038		11,023
Deferred Income Taxes		377		726
Other Liabilities		3,853		3,601
Minority Interest		200		211
Common Shareholders’ Equity
Invested Capital		5,298		5,179
Retained Earnings		1,803		3,172
Total Common Shareholders’ Equity		7,101		8,351
Total Liabilities and Common Shareholders’ Equity	$	26,154	$	28,771

EX-99.2

Second Quarter

2006 Review

August 1, 2006

Second Quarter

2006 Review

August 1, 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

These

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 that could

cause actual results to differ relate to: (i) 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 material 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; (ii) the ability of the

Company to accomplish the transformation plan, including the ability to realize anticipated

profit

improvement

from

the

plan

and

the

ability

to

successfully

negotiate

satisfactory

sale

terms

for assets that are being evaluated for sale but are not currently under contract; and

(iii) the effect of economic and industry conditions on the Company generally, and on the

market

price

of

the

Company’s

stock,

including

unanticipated

events

(in

type,

scope

or

magnitude) that would have a material adverse impact upon the Company’s liquidity or

results of operations. 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.

3

During 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

4

Agenda

Second Quarter 2006

Review

Third Quarter 2006 Outlook

Transformation Plan Update

Second Quarter 2006

Review

Third Quarter 2006 Outlook

Transformation Plan Update

5

Second Quarter 2006 Summary

Solid second quarter, strong revenue

Improving IP paper and packaging pricing

Comparable volume to first quarter 2006

Strong manufacturing operations

Lower raw material costs / higher freight costs

Lower land sales / higher tax rate

Coated Papers included in continuing

operations

Solid second quarter, strong revenue

Improving IP paper and packaging pricing

Comparable volume to first quarter 2006

Strong manufacturing operations

Lower raw material costs / higher freight costs

Lower land sales / higher tax rate

Coated Papers included in continuing

operations

6

0.00

0.10

0.20

0.30

0.40

0.50

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

0.00

0.10

0.20

0.30

0.40

0.50

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

2002

2003

2004

2005

2006

.13

.33

.27

.29

.14

.20

.21

.14

.12

.41

.32

.42

.35

.31

.28

.11

.20

.41

Diluted EPS from Continuing Operations

and Before Special Items

Best second quarter EPS results since 2000

$/Share

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

under Investors

7

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

1Q'06

Price

Volume /

Downtime

Cost / 

Mix

Materials /

Freight

Land

Sales

Corporate

Items

Tax

Other

2Q'06

EPS $ / Share

Energy                  $0.04

Wood Cost           $0.02

Freight                 ($0.01)

Packaging             $0.05                    

Papers                   $0.07 

Wood Products    ($0.02)

1Q06 Tax rate 30%  

2Q06 Tax rate 34%

IP Realty       ($0.02)                  

Land Sales     $0.00

2Q’06 vs. 1Q’06

EPS from cont. ops before special items

$.20

$.10

$.05

$.00

$.41

$.00

($.02)

$.00

$.09

($.01)

8

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

6M'05

Price

Volume /

Downtime

Cost / 

Mix

Materials /

Freight

Land

Sales

Corporate

Items

Interest

Tax

Other

6M'06

EPS $ / Share

Packaging           $0.03    

Papers                  $0.10   

Wood Products  ($0.05)

2006 Tax rate 33%  

2005 Tax rate 26%

6M’06 vs. 6M’05

EPS from cont. ops before special items

$.67

$.08

($.30)

$.16

($.04)

($.06)

$.07

($.08)

$.05

$.05

$.60

Energy              ($0.13)

Freight              ($0.08)

Wood Cost        ($0.02)

Other                 ($0.07)

Land Sales       $0.09                  

IP Realty         ($0.02)

9

Raw Material & Freight Costs

EBIT impact 6M’06 vs. 6M’05

Total of $220 million or $0.30 per share

negative impact in 6M’06 versus 6M’05

(120)

(100)

(80)

(60)

(40)

(20)

0

(120)

(100)

(80)

(60)

(40)

(20)

0

Energy

Wood

Chemicals

EBIT ($MM)

(94)

(13)

(36)

(57)

Non-

U.S.

Freight

(20)

10

Printing Papers

$1,915

254

Sales

Earnings

2Q’06

1Q’06

$ Millions

$ Millions

$

1,895

128

2

U.S. operations only   

3

Europe is average commodity cut-size price, excluding Russia   

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

Uncoated

Pulp

Europe  (uncoated)

Volume

Realizations/ton

2Q’06 Change vs 1Q’06:

2Q’06 Change vs 1Q’06:

(2)%

2%

(10)%

$60

$25

€20

1

Includes a $31 million benefit from the elimination of Coated Paper’s depreciation expense

2

3

1

2

11

Industrial Packaging

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

$

1,240

100

Sales

Earnings

2Q’06

1Q’06

$ Millions

$ Millions

$

1,170

38

Containerboard

U.S. Container

$50

$35

Volume

Realizations/ton

2Q’06 Change vs 1Q’06:

2Q’06 Change vs 1Q’06:

(12%)

3%

1

U .S. operations only

1

12

Consumer Packaging

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

$  795

41

Sales

Earnings

2Q’06

1Q’06

$ Millions

$ Millions

$  775

35

Coated Paperboard

Flat

Volume

Realizations/ton

2Q’06 Change vs 1Q’06:

2Q’06 Change vs 1Q’06:

3%

Converting Businesses

Sales Revenue

4%

2

U.S. operations only

1

Includes a charge of $8 million for Shorewood Packaging asset write-off

2

1

13

Distribution

$ 1,690

36

Sales

Earnings

2Q’06

1Q’06

$ Millions

$ Millions

$ 1,650

27

xpedx reported record earnings for month,

quarter and six-month period

Revenues improved 8% vs. second quarter

2005

Expenses down, margins up

14

Forest Products

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

$  595

184

Sales

Earnings

2Q’06

1Q’06

$ Millions

Lumber  (mbf)

Plywood (msf)

($15)

($5)

Volume

Realizations/unit

$  630

226

2Q’06 Change vs 1Q’06:

2Q’06 Change vs 1Q’06:

6%

3%

1

U.S. operations only

1

15

Special Items –

After Tax

•

Transformation Plan Costs & Other

(70)

•

Divestitures

Gain on Conservation Tracts

39

Estimated Loss on Coated Paper Sale

(53)

Special Items Total

(84)

($0.17)

Discontinued Operations (Kraft Papers)

•

Earnings

9

•

Estimated Loss on Sale

(10)

Discontinued Operations Total

(1)

$0.00

Special Items –

After Tax

•

Transformation Plan Costs & Other

(70)

•

Divestitures

Gain on Conservation Tracts

39

Estimated Loss on Coated Paper Sale

(53)

Special Items Total

(84)

($0.17)

Discontinued Operations (Kraft Papers)

•

Earnings

9

•

Estimated Loss on Sale

(10)

Discontinued Operations Total

(1)

$0.00

$MM

EPS

Special Items & Discontinued

Operations –

2Q’06

16

Earnings from Continuing Operations

and Before Special Items

$0.41

Special Items

(0.17)

Earnings from Continuing Operations

0.24

Discontinued Operations 

0.00

Net Earnings

$0.24

Earnings from Continuing Operations

and Before Special Items

$0.41

Special Items

(0.17)

Earnings from Continuing Operations

0.24

Discontinued Operations 

0.00

Net Earnings

$0.24

Reconciliation to 2Q’06

Diluted

Earnings Per Share

Diluted EPS

17

Third Quarter 2006 Outlook

Volume –

Continued solid, inventories in good

shape

Implementing IP’s previously announced price

increases in paper and packaging

Continued progress in improving operations

Costs remain high, outlook mixed

Volume –

Continued solid, inventories in good

shape

Implementing IP’s previously announced price

increases in paper and packaging

Continued progress in improving operations

Costs remain high, outlook mixed

18

Transformation Plan Update

Continued focus on improving our key platform

operations

Communicated details on returning value to

shareholders on July 13, 2006

•

Board authorized up to $3 billion share repurchase

•

Plan to spend $6-7 billion to strengthen balance sheet

•

Disciplined approach to strategic opportunities for

selective reinvestment

Divestment program on track

Continued focus on improving our key platform

operations

Communicated details on returning value to

shareholders on July 13, 2006

•

Board authorized up to $3 billion share repurchase

•

Plan to spend $6-7 billion to strengthen balance sheet

•

Disciplined approach to strategic opportunities for

selective reinvestment

Divestment program on track

Second Quarter 2006

19

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

5.7 MM acres

Inpacel

(Brazil)

Proceeds

$1.1B

$6.6B*

*Estimated proceeds to be received in 3Q’06 and 4Q’06

$1.4B

$0.2B

Could reach

decisions regarding

these assets within

the next 90 days

Sales Agreed To Date $9.3B

Transformation Plan Update

Divestments status as of August 1, 2006

20

Q & A

Q & A

21

Appendix

Appendix

22

Capital Spending

Depreciation & Amort.

Net Interest Expense

Corporate Items

Effective

Tax

Rate

Capital Spending

Depreciation & Amort.

Net Interest Expense

Corporate Items

Effective

Tax

Rate

$ 1.2 B

$ 1.2-1.3 B

$ 600 MM

$ 700-750 MM

33%

2006 Est.

Key Financial Statistics

$ 1.2 B

$ 1.4 B

$ 650 MM

$ 595 MM

27%

2005

$ 1.2 B

$ 1.4 B

$ 710 MM

$ 470 MM    

26%

2004

1

Excludes Carter Holt Harvey results

2

Includes impact of all businesses except Coated Papers and Kraft Papers for entire year

3

Before special items

Updated as of August 1, 2006

1

1

3

3

2

23

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

Containerboard

Uncoated Papers

Pulp

Coated Paperboard

European Papers

Coated 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

274*

270*

194*

28

2006

25

24

Earnings by Industry Segment

Earnings by Industry Segment

Printing Papers

$215

$128

$156

Industrial Packaging

100

38

84

Consumer Packaging

49

35

53

Distribution

36

27

18

Forest Products

184

226

205

Other Businesses

16

10

7

Operating Profit

600

464

523

Interest Expense

(148)

(148)

(166)

Minority Interest

2

3

2

Corporate Items, net

(174)

(176)

(133)

Earnings from continuing operations

before income taxes, minority

interest & special items

$280

$143

$226

Earnings by Industry Segment

Printing Papers

$215

$128

$156

Industrial Packaging

100

38

84

Consumer Packaging

49

35

53

Distribution

36

27

18

Forest Products

184

226

205

Other Businesses

16

10

7

Operating Profit

600

464

523

Interest Expense

(148)

(148)

(166)

Minority Interest

2

3

2

Corporate Items, net

(174)

(176)

(133)

Earnings from continuing operations

before income taxes, minority

interest & special items

$280

$143

$226

$ Millions

1Q’06*

1Q’06*

2Q’05*

2Q’05*

2Q’06

2Q’06

Before special items & Coated Papers depreciation expense

*Industry segment information has been reclassified to conform with minor changes in 2006 organizational structure

as well as to reflect the Kraft Papers business as a discontinued operation and Coated Papers as a continuing operation.

25

Before Special Items

Q1

143

(44)

(4)

95

30%

486.3

0.20

Q2

311

(106)

(5)

200

34%

487.2

0.41

Special Items

Q1

(1,310)

36

-

(1,274)         3%

486.3

(2.62)

Q2

(129)

45

-

(84)

35%

487.2

(0.17)

Earnings from Continuing Operations

Q1

(1,167)

(8)

(4)

(1,179)

(1%)

486.3

(2.42)

Q2

182

(61)

(5)

116

34%

487.2

0.24

2006 Earnings from Continuing

Operations

Pre-Tax 

Tax

MI

Net

ETR          Average

Diluted

Shares

EPS

$ 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

2

1

26

* U.S. only      

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

Average Sales Realizations       

(Preliminary)

Forest

Products

$/ton

Packaging

$/ton

Printing

Papers

Segments*

300

369

721

437

499

803

1Q’06

Average Sales Realizations

300

406

726

450

496

813

2Q’05

285

347

772

502

528

885

Jun 06

Plywood, $/MSF

Lumber, $/MBF

Corrugated boxes

Containerboard

Pulp

Uncoated

Grades

293

372

754

489

525

862

2Q’06

309

416

721

442

475

810

Jun 05

27

Forest Resources

Earnings Sources –

Gross Margin

•

Forestland Sales

$101

$103

$67

•

Harvest & Recreational Income

61

72

62

Forestland Expenses

(31)

(30)

(39)

Land Utilization (real estate),

Net of Expenses

29

45

39

Total EBIT

$160

$190

$129

Earnings Sources –

Gross Margin

•

Forestland Sales

$101

$103

$67

•

Harvest & Recreational Income

61

72

62

Forestland Expenses

(31)

(30)

(39)

Land Utilization (real estate),

Net of Expenses

29

45

39

Total EBIT

$160

$190

$129

$ Millions

1Q’06

1Q’06

2Q’05

2Q’05

2Q’06

2Q’06

1

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

1

28

Raw Material & Freight Costs

EBIT impact 2Q’06 vs. 1Q’06

Total of $37 million or $0.05 per share

positive impact in 2Q’06 versus 1Q’06

(10)

(5)

0

5

10

15

20

25

30

(10)

(5)

0

5

10

15

20

25

30

Energy

Wood

Other

EBIT ($MM)

24

15

2

(4)

Freight

29

0

50

100

150

200

250

300

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Index: Jan 2003 Natural Gas Costs = 100

2003

2004

Natural gas costs

peaked in October

Natural Gas Costs

2005

Trended lower in 2Q’06

2006

* U.S. pulp & paper mills average

30

90

100

110

120

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

U.S. Mill Wood Costs

Index: Jan 2003 Wood Costs = 100

2003

2004

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

Trended lower in 2Q’06

2005

U.S. mill wood costs

decreased in 2Q’06

2006

31

0

100

200

300

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Index: Jan 2003 Caustic Soda Costs = 100

2003

2004

Caustic soda costs

remain historically high

Caustic Soda Costs 

2005

Trended lower in 2Q’06 

2006

* Delivered cost to U.S. facilities

32

Global Consumption 

Key input indicative annual purchase levels

Natural Gas

MMbtu

37,000,000        16,000,000

# 6 Fuel Oil

BBL

5,000,000

440,000

Coal

Tons

1,600,000             230,000

Wood

Tons

65,000,000          5,700,000

OCC

Tons

600,000             310,000

Caustic Soda

Tons

315,000                60,000

Sodium Chlorate

Tons

290,000                40,000

LD Polyethylene

Tons

100,000                        -

Latex

Tons

41,000                  4,000

Energy

Energy

Fiber

Fiber

Chemicals

Chemicals

Units

Units

U.S.

U.S.

Non-

U.S.

Non-

U.S.

3

Old corrugated containers

1

2006

Run Rate

2

Includes Coated Papers business

3

2

1

33