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

February 7, 2008

(Date of Report)

February 7, 2008

(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)

(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 February 7, 2008, International Paper Company issued a press release reporting preliminary earnings for the fourth quarter and full-year 2007 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 February 7, 2008.
Exhibit 99.2	Slides of International Paper Company, dated February 7, 2008.

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 Abeln Smith
Name:	Maura Abeln Smith
Title:	Senior Vice President, General Counsel and Corporate Secretary

Date: February 7, 2008

Exhibit Index

Exhibit 99.1	Press release of International Paper Company, dated February 7, 2008.
Exhibit 99.2	Slides of International Paper Company, dated February 7, 2008.

EX-99.1

Exhibit 99.1

INTERNATIONAL PLACE

6400 POPLAR AVENUE

MEMPHIS, TN 38197

News Release

International Paper 4th-Quarter 2007 Net Earnings Reach $327 Million

2007 Annual Earnings from Continuing Operations Before Special Items Grow 52 Percent to $963 Million

• 2007 full-year earnings from continuing operations and before special items total $2.22 per share, up from $1.33 per share in 2006.

• Earnings per share from continuing operations and before special items for the fourth quarter of 2007 grew to $0.69 versus $0.57 in the third quarter and $0.47 in the 2006 fourth quarter.

• Quarterly net sales are $5.8 billion versus $5.5 billion in the third quarter of 2007 and $5.3 billion in the fourth quarter of 2006.

• Annual sales total $21.9 billion, about even with $22 billion in 2006.

MEMPHIS, Tenn.—Feb. 7, 2008—International Paper (NYSE: IP) preliminary full-year 2007 net earnings total $1.2 billion ($2.70 per share) compared with $1.1 billion ($2.18 per share) in 2006. The company reports fourth-quarter 2007 net earnings of $327 million ($0.78 per share) compared with $217 million ($0.51 per share) in the prior quarter and $2 billion ($4.38 per share) in the fourth quarter of 2006. Amounts in all periods include special items; most notably, 2006 fourth-quarter net earnings include an after-tax gain of $2.7 billion ($6.07 per share) from the sale of U.S. forestlands.

Diluted Earnings Per Share Summary

	Fourth Quarter 2007			Third Quarter 2007		Fourth Quarter 2006			Full Year 2007			Full Year 2006
Net Earnings	$	0.78		$	0.51	$	4.38		$	2.70		$	2.18
Discontinued Operations:
Loss on Sale or Impairment		0.01			—		0.17			0.08			0.61
Loss (Earnings) from Operations		0.01			0.01		(0.02	)		0.03			(0.14	)
		0.02			0.01		0.15			0.11			0.47
Earnings from Continuing Operations		0.80			0.52		4.53			2.81			2.65
Net Special Items Expense (Income)		(0.11	)		0.05		(4.06	)		(0.59	)		(1.32	)
Earnings from Continuing Operations and Before Special Items	$	0.69		$	0.57	$	0.47		$	2.22		$	1.33

Page 1

Full-year 2007 earnings from continuing operations and before special items are $963 million ($2.22 per share), up 52 percent from $635 million ($1.33 per share) in 2006. Earnings from continuing operations and before special items in the 2007 fourth quarter total $294 million ($0.69 per share), compared with $243 million ($0.57 per share) in the third quarter and $216 million ($0.47 per share) in the fourth quarter of 2006.

Quarterly net sales rose to $5.8 billion from $5.5 billion in the third quarter and $5.3 billion in the fourth quarter of 2006. Annual sales remain about even with the prior year, at $21.9 billion in 2007 versus $22 billion in 2006.

Operating profits in the fourth quarter reached $711 million, up from $610 million in the prior quarter and $425 million in the fourth quarter of 2006. Full-year 2007 operating profits of $2.4 billion also rose, up from $2.1 billion in 2006.

“We increased profits before special items by 52 percent in 2007, which is strong evidence that the transformation we began in 2005 is continuing to pay off,” said International Paper Chairman and Chief Executive Officer John Faraci. “We’ve steadily expanded our margins through internal cost controls and by focusing on the right customers and product segments within our key businesses. Our global investments are adding to revenue and profit growth and helping to offset some demand decline in North America.”

Chief Financial Officer and Senior Vice President Tim Nicholls added, “Solid fourth-quarter results tell the same story. Margins and volumes continue to improve, contributing to strong business earnings in paper, packaging and xpedx. Improved price realizations in the quarter helped offset the impact of continuing increases in raw material and distribution costs, but we expect continued input cost pressures in the first quarter of 2008. Uncertainty within the North American economy will also play a role in the first quarter, but we will continue to balance our supply with our customers’ demand. Global demand for paper and packaging continues to look solid.”

SEGMENT INFORMATION

Fourth-quarter 2007 segment operating profits and business trends compared with the previous quarter are as follows:

Operating profits for Printing Papers reached $314 million, up from third-quarter operating profits of $307 million. The increase is driven by price improvement in North American and European papers and market pulp as well as by fewer maintenance outages in the European paper mills. Higher raw material and energy costs and unfavorable operating expenses in several North American mills negatively impacted results. Volumes were generally strong as well, apart from a slight seasonal decline in North American paper volumes. Results in Brazil benefited from better mix and a tax gain in the quarter.

Industrial Packaging operating profits rose to $144 million from $115 million in the prior quarter, driven by strong price improvement and increased volumes in the North American containerboard and European container businesses. Volumes were seasonally lower in the U.S. box business, with prices strengthening. Higher distribution and raw material costs were largely offset by a reduction in Pensacola linerboard machine conversion and start-up costs versus the third quarter.

Consumer Packaging operating profits total $40 million for the fourth quarter, versus $49 million in the third quarter, primarily because of a quarter-to-quarter increase in planned maintenance outages in the coated paperboard business. Price improvements in that business were more than offset by higher raw material, distribution and operations costs. Foodservice and Shorewood results were about even quarter-to-quarter.

The company’s distribution business, xpedx, reported operating profits of $39 million on record revenues. Results are slightly lower than third quarter’s $40 million because of costs associated with the start-up of xpedx’s Canadian operations.

Page 2

Forest Products operating profits total $174 million, up from $99 million in the previous quarter, because of an increase in earnings from land sales. The company has approximately 300,000 acres of land remaining for sale, primarily composed of smaller retail and larger transitional tracts.

Net corporate expense totals $201 million for the 2007 fourth quarter, up from $188 million in the 2007 third quarter, reflecting higher year-end medical costs and adjustments to incentive compensation accruals.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the fourth quarter of 2007 is 31 percent, compared with 29 percent in the third quarter and 28 percent in the fourth quarter of 2006. The 2007 full-year tax rate is 30 percent compared with 29 percent for the 2006 full year.

EFFECTS OF SPECIAL ITEMS

Special items in the fourth quarter of 2007 include a pre-tax charge of $9 million ($6 million after taxes) for charges relating to the company’s transformation plan and an Ohio tax adjustment, as well as a $13 million pre-tax gain ($9 million after taxes) for adjustments to estimated gains/losses of production facilities previously sold. Additionally, a $41 million net income tax benefit was recorded relating to the effective settlement of certain tax audit issues. The net after-tax effect of these special items is a gain of $44 million, or $0.11 per share.

Special items in the third quarter of 2007 include restructuring and other charges totaling $42 million before taxes ($26 million after taxes), including $37 million of pre-tax charges ($23 million after taxes) related to the closure of the company’s Terre Haute, Ind., mill. Additionally, net pre-tax gains of $8 million ($6 million after taxes) were recorded, principally to reduce estimated transaction costs accrued in connection with the transformation plan forestland sales in 2006, and a $3 million increase to the income tax provision was recorded related to the settlement of a prior-year tax audit. The net after-tax effect of these special items is a loss of $23 million, or $0.05 per share.

Special items in the fourth quarter of 2006 include a pre-tax gain of $4.4 billion ($2.7 billion after taxes) from sales of U.S. forestlands included in the company’s transformation plan; a charge of $759 million (before and after taxes) for the impairment of goodwill in the company’s coated paperboard and Shorewood Packaging businesses; a $149 million pre-tax charge ($84 million after taxes) for losses on sales and impairments of businesses, including a $128 million pre-tax impairment charge ($84 million after taxes) to reduce the carrying value of the fixed assets of the company’s Saillat, France, mill to estimated fair value; a $111 million pre-tax charge ($69 million after taxes) for restructuring and other corporate charges; a $6 million pre-tax credit ($4 million after taxes) for interest received from the Canadian government on refunds of prior-year softwood lumber duties; and a $5 million pre-tax credit ($3 million after taxes) for reductions of reserves no longer required. Restructuring and other corporate charges include a $34 million charge ($21 million after taxes) for severance and other charges associated with the company’s transformation plan, a gain of $115 million ($70 million after taxes) for payments received in the fourth quarter relating to the company’s participation in the U.S. Coalition for Fair Lumber Imports, a charge of $157 million ($97 million after taxes) for losses on early debt extinguishment, a $40 million charge ($25 million after taxes) for increases to legal reserves, and a $5 million credit ($4 million after taxes) for other items. In addition, a $4 million tax expense was recorded in the quarter. The net after-tax effect of these special items is a gain of $1.8 billion, or $4.06 per share.

DISCONTINUED OPERATIONS

Discontinued operations for the fourth quarter of 2007 consist of a pre-tax charge of $17 million ($11 million after taxes) for adjustments relating to the sales of businesses previously sold and the fourth-quarter operating results of certain held-for-sale wood products facilities.

Discontinued operations for the fourth quarter of 2006 include pre-tax charges of $104 million ($69 million after taxes) for the wood products business and $18 million ($11 million after taxes) for the beverage packaging business to adjust the carrying value of these businesses based on the terms of definitive agreements to sell these

Page 3

businesses, a $38 million pre-tax credit ($23 million after taxes) for refunds received from the Canadian government of duties paid by the company’s previously owned Weldwood of Canada Limited business, and the quarterly operating results of the company’s kraft papers, wood products and beverage packaging businesses.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. Eastern Standard Time / 9 a.m. Central Standard 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 CST today. Parties who wish to participate in the webcast via teleconference may dial +1 (706) 679-8242 or, within the U.S. only, (877) 316-2541 and ask to be connected to the International Paper 4Q 2007 Earnings Call. The conference ID number is 26183760. Participants should call in no later than 9:45 a.m. EST/8:45 a.m. CST. An audio-only replay will be available for four weeks following the call. To access the replay, dial +1 (706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the conference ID, enter “26183760.”

International Paper (NYSE:IP), founded in 1898, is a global uncoated paper and packaging company with primary markets and manufacturing operations in North America, Europe, Russia, Latin America, Asia and North Africa. Its uncoated papers and packaging businesses are complemented by xpedx, North America’s largest distributor of printing papers and graphics supplies and equipment. Headquartered in the United States, International Paper employs 51,500 people in more than 20 countries and serves customers worldwide. Annual sales are about $22 billion. International Paper partners with customers and environmental, academic, civic and governmental organizations, as well as landowners and harvesting professionals, to encourage responsible forest stewardship, to improve the health and productivity of forestlands and to increase recovery of our recyclable products. The company has a long-standing policy of using no wood from endangered forests. To learn more about International Paper, its products and commitment to economic, social and environmental sustainability, 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 but not limited to changes in the cost or availability of raw materials and energy, transportation costs, the company’s product mix, demand and pricing for its products; (ii) global economic conditions and political changes, particularly in Latin America, Russia, Europe and Asia, including but not limited to changes in currency exchange rates, credit availability, and the company’s credit ratings issued by recognized credit rating organizations; (iii) natural disasters, such as hurricanes and earthquakes; (iv) the company’s ability to realize anticipated profit improvement from its transformation plan, and (v) unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and to actual or potential 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: Tom Cleves, 901-419-7566 and Ann-Marie Donaldson, 901-419-4967

Page 4

International Paper Company

Consolidated Statement of Operations

Preliminary and Unaudited

(In millions, except per share amounts)

	Three Months Ended December 31,						Three Months Ended September 30, 2007			Twelve Months Ended December 31,
	2007			2006						2007			2006
Net Sales	$	5,841		$	5,324		$	5,541		$	21,890		$	21,995
Costs and Expenses
Cost of products sold		4,242			3,903			4,086			16,060			16,248
Selling and administrative expenses		500			454			455			1,831			1,848
Depreciation, amortization and cost of timber harvested		278			275			277			1,086			1,158
Distribution expenses		269			247			255			1,034			1,075
Taxes other than payroll and income taxes		38			55			42			169			215
Restructuring and other charges		9	(a)		111	(e)		42	(k)		95	(m)		300	(p)
Insurance recoveries		—			—			—			—			(19	)
Forestland sales		—			(4,422	)(f)		(9	)(l)		(9	)(l)		(4,788	)(q)
Impairment of goodwill		—			759	(g)		—			—			759	(g)
Net losses (gains) on sales and impairments of businesses		(13	)(b)		149	(h)		1			(327	)(n)		1,496	(r)
Reversal of reserves no longer required, net		—			(5	)		—			—			(6	)
Interest expense, net		79			80	(i)		77			297			521	(i)
Earnings From Continuing Operations Before Income Taxes and
Minority Interest		439	(a,b)		3,718	(e-i)		315	(k,l)		1,654	(l-n)		3,188	(g,i,p-r)
Income tax provision		94	(c)		1,668			89			415	(c)		1,889
Minority interest expense, net of taxes		7			3			6			24			17
Earnings From Continuing Operations		338	(a-c)		2,047	(e-i)		220	(k,l)		1,215	(c,l-n)		1,282	(g,i,p-r)
Discontinued Operations, net of taxes and minority interest		(11	)(d)		(68	)(j)		(3	)		(47	)(o)		(232	)(s)
Net Earnings	$	327	(a-d)	$	1,979	(e-j)		217	(k,l)	$	1,168	(c,l-o)	$	1,050	(g,i,p-s)
Basic Earnings Per Common Share
Earnings from continuing operations	$	0.80	(a-c)	$	4.56	(e-i)		0.52	(k,l)	$	2.83	(c,l-n)	$	2.69	(g,i,p-r)
Discontinued operations		(0.02	)(d)		(0.15	)(j)		(0.01	)		(0.11	)(o)		(0.48	)(s)
Net earnings	$	0.78	(a-d)	$	4.41	(e-j)		0.51	(k,l)	$	2.72	(c,l-o)	$	2.21	(g,i,p-s)
Diluted Earnings Per Common Share
Earnings from continuing operations	$	0.80	(a-c)	$	4.53	(e-i)		0.52	(k,l)	$	2.81	(c,l-n)	$	2.65	(g,i,p-r)
Discontinued operations		(0.02	)(d)		(0.15	)(j)		(0.01	)		(0.11	)(o)		(0.47	)(s)
Net earnings	$	0.78	(a-d)	$	4.38	(e-j)		0.51	(k,l)	$	2.70	(c,l-o)	$	2.18	(g,i,p-s)
Average Shares of Common Stock Outstanding - Diluted		423.8			451.2			425.6			433.0			488.7
Cash Dividends Per Common Share	$	0.25		$	0.25			0.25		$	1.00		$	1.00

The accompanying notes are an integral part of these financial statements.

Certain 2006 amounts have been revised to reflect the retrospective application of a change in accounting for planned major maintenance activities.

(a) Includes a pre-tax charge of $4 million ($3 million after taxes) for asset write-offs at the Pensacola mill, a pre-tax charge of $14 million ($9 million after taxes) for severance and other charges associated with the Company’s Transformation Plan, and a pre-tax gain of $9 million ($6 million after taxes) for an Ohio Commercial Activity Tax adjustment.

(b) Includes a pre-tax gain of $7 million ($5 million after taxes) for an adjustment to the loss on the sale of box plants in the United Kingdom and Ireland, a pre-tax gain of $5 million ($3 million after taxes) for an adjustment to the loss on the sale of the Marasquel mill, and a net pre-tax gain of $1 million ($1 million after taxes) for other items.

(c) Includes a $41 million tax benefit relating to the effective settlement of certain income tax audit issues.

(d) Includes a pre-tax charge of $9 million ($5 million after taxes) for the beverage packaging business and a pre-tax gain of $4 million ($3 million after taxes) for the wood products business for adjustments related to the sale of those businesses, a pre-tax charge of $4 million ($3 million after taxes) for additional taxes associated with the sale of Weldwood of Canada Limited, and the quarterly operating results of the wood products business.

(e) Includes a $34 million pre-tax charge ($21 million after taxes) for severance and other charges associated with the Company’s Transformation Plan, a pre-tax gain of $115 million ($70 million after taxes) for payments received relating to the Company’s participation in the U.S. Coalition for Fair Lumber Imports, a pre-tax charge of $157 million ($97 million after taxes) for losses on early debt extinguishment, a $40 million pre-tax charge ($25 million after taxes) for increases to legal reserves, and a $5 million pre-tax credit ($4 million after taxes) for other items.

(f) Includes a pre-tax gain of $4.4 billion ($2.7 billion after taxes) from sales of U.S. forestlands included in the Company’s Transformation Plan.

(g) Includes a $759 million charge (before and after taxes) for the impairment of goodwill in the Company’s coated paperboard and Shorewood businesses.

(h) Includes a $128 million pre-tax charge ($84 million after taxes) to reduce the carrying value of the fixed assets of the Company’s Saillat mill in France to their estimated fair value, and a $21 million net pre-tax charge (zero after taxes) relating to smaller asset sales.

(i) Includes a $6 million pre-tax credit ($4 million after taxes) for interest received from the Canadian government on refunds of prior-year softwood lumber duties.

^(j) Includes pre-tax charges of $104 million ($69 million after taxes) for the wood products business and $18 million ($11 million after taxes) for the beverage packaging business to adjust the carrying value of these businesses based on the terms of the definitive agreements to sell these businesses, a $38 million pre-tax credit ($23 million after taxes) for refunds received from the Canadian government of duties paid by the Company’s Weldwood of Canada Limited business, a pre-tax charge of $1 million ($2 million after taxes) for adjustments of prior discontinued operations estimates, and the quarterly operating results of the Company’s kraft papers, wood products and beverage packaging businesses.

^(k) Includes a pre-tax charge of $27 million ($17 million after taxes) of accelerated depreciation charges for the Terre Haute, IN mill, which has been closed as part of the Company’s Transformation Plan, and a pre-tax charge of $10 million ($6 million after taxes) for environmental costs associated with this closure, a pre-tax charge of $3 million ($2 million after taxes) for Brazilian restructuring charges, and a pre-tax charge of $2 million ($1 million after taxes) for severance and other charges associated with the Company’s Transformation Plan.

^(l) Includes a pre-tax gain of $9 million ($5 million after taxes) to reduce estimated transaction costs accrued in connection with the 2006 sale of U.S. Forestlands included in the Company’s Transformation Plan.

^(m) Includes a pre-tax charge of $27 million ($17 million after taxes) of accelerated depreciation charges for the Terre Haute, IN mill, which has been closed as part of the Company’s Transformation Plan, a pre-tax charge of $10 million ($6 million after taxes) for environmental costs associated with this closure, a pre-tax charge of $4 million ($2 million after taxes) for Brazilian restructuring charges, accelerated depreciation charges of $33 million ($21 million after taxes) for long-lived assets being removed from service, $30 million ($19 million after taxes) for severance and other charges associated with the Company’s Transformation Plan, and a pre-tax gain of $9 million ($6 million after taxes) for an Ohio Commercial Activity Tax adjustment.

⁽ⁿ⁾ Includes a pre-tax gain of $113 million ($102 million after taxes) on the sale of the Arizona Chemical business, a pre-tax gain of $205 million ($159 million after taxes) related to the asset exchange for the Luiz Antonio mill in Brazil, a pre-tax gain of $5 million ($3 million after taxes) for an adjustment to the loss on the sale of the Marasquel mill, a $5 million pre-tax credit ($4 million after taxes) for adjustments to the loss on the sale of the coated and supercalendered papers business, and a $1 million net pre-tax loss ($1 million after taxes) for other items.

^(o) Includes a pre-tax gain of $20 million ($8 million after taxes) relating to the sale of the wood products business, a pre-tax loss of $30 million ($48 million after taxes) for adjustments to the loss on the sale of the beverage packaging business, a pre-tax gain of $6 million ($4 million after taxes) for adjustments to the loss on the sale of the kraft papers business, a net $6 million pre-tax credit ($4 million after taxes) relating to the Company’s Weldwood of Canada Limited business, and the year-to-date operating results of the beverage packaging and wood products businesses.

^(p) Includes a pre-tax charge of $157 million ($95 million after taxes) for severance and other charges associated with the Company’s Transformation Plan; a pre-tax charge of $165 million ($102 million after taxes) for losses on early debt extinguishment; a $97 million pre-tax charge ($60 million after taxes) for legal reserves; a pre-tax gain of $115 million ($70 million after taxes) for payments received relating to the Company’s participation in the U.S. Coalition for Fair Lumber Imports; and a $4 million pre-tax credit ($3 million after taxes) for other items.

^(q) Includes a pre-tax gain of $4.8 billion ($2.9 billion after taxes) from sales of U.S. forestlands included in the Company’s Transformation Plan.

^(r) Includes pre-tax charges of $1.4 billion ($1.3 billion after taxes) to reduce the carrying value of net assets of the U.S. coated and supercalendered papers business to their estimated fair value, 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 recognition of a previously deferred $110 million pre-tax gain ($68 million after taxes) related to a 2004 sale of forestlands in Maine, a $128 million pre-tax charge ($84 million after taxes) to reduce the carrying value of the fixed assets of the Company’s Saillat mill to their estimated fair value, and a net pre-tax charge of $21 million (zero after taxes) for other smaller items.

^(s) Includes a pre-tax credit of $101 million ($80 million after taxes) for the gain on the sale of the Company’s Brazilian coated papers business; pre-tax charges of $117 million ($72 million after taxes) for the kraft papers business, $267 million ($234 million after taxes) for the wood products business and $121 million ($90 million after taxes) for the beverage packaging business to adjust the carrying value of these businesses to their estimated fair value; and the 2006 operating results of the kraft paper, Brazilian coated papers, wood products and beverage packaging businesses.

International Paper Company

Reconciliation of Earnings Before

Special Items to Net Earnings

(In millions except for per share amounts)

	Three Months Ended December 31,						Three Months Ended September 30, 2007			Twelve Months Ended December 31,
	2007			2006						2007			2006
Earnings Before Special Items	$	294		$	216		$	243		$	963		$	635
Restructuring and other charges		(6	)		(69	)		(26	)		(59	)		(184	)
Insurance recoveries		—			—			—			—			12
Reversals of reserves no longer required		—			3			—			—			3
Net gains (losses) on sales and impairments of businesses		9			(84	)		1			267			(1,382	)
Forestland sales		—			2,740			5			5			2,964
Impairment of goodwill		—			(759	)		—			—			(759	)
Interest income		—			4			—			1			4
Income tax adjustments		41			(4	)		(3	)		38			(11	)
Earnings from Continuing Operations		338			2,047			220			1,215			1,282
Discontinued operations		(11	)		(68	)		(3	)		(47	)		(232	)
Net Earnings as Reported	$	327		$	1,979		$	217		$	1,168		$	1,050
Diluted Earnings per Common Share
	Three Months Ended December 31,						Three Months Ended September 30,			Twelve Months Ended December 31,
	2007			2006			2007			2007			2006
Earnings Per Share Before Special Items	$	0.69		$	0.47		$	0.57			2.22		$	1.33
Restructuring and other charges		(0.03	)		(0.15	)		(0.05	)		(0.15	)		(0.37	)
Insurance recoveries		—			—			—			—			0.02
Net gains (losses) on sales and impairments of businesses		0.02			(0.18	)		—			0.62			(2.80	)
Forestland sales		—			6.07			0.01			0.01			6.01
Impairment of goodwill		—			(1.68	)					—			(1.54	)
Interest income		—			—			—			—			0.01
Income tax adjustments		0.12			—			(0.01	)		0.11			(0.01	)
Earnings Per Common Share from Continuing Operations		0.80			4.53			0.52			2.81			2.65
Discontinued operations		(0.02	)		(0.15	)		(0.01	)		(0.11	)		(0.47	)
Diluted Earnings per Common Share	$	0.78		$	4.38		$	0.51		$	2.70		$	2.18

Notes:

(1) The Company calculates Earnings Before Special Items by excluding the after-tax effect of items considered by management to be unusual from the earnings reported under U.S. generally accepted accounting 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 provides for a more complete analysis of the results of operations by quarter. Net earnings is the most directly comparable GAAP measure.

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

(3) Certain 2006 amounts have been revised to reflect the retrospective application of a change in accounting for planned major maintenance activities.

(4) Since diluted earnings per share are computed independently for each period, twelve-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 December 31,						Three Months Ended September 30, 2007			Twelve Months Ended December 31,
	2007			2006						2007			2006
Printing Papers (2)	$	1,720		$	1,475		$	1,660		$	6,530		$	6,700	(5)
Industrial Packaging		1,390			1,265			1,305			5,245			4,925
Consumer Packaging (2)		780			735			775			3,015			2,685
Distribution		2,045			1,715			1,880			7,320			6,785
Forest Products		190			190			120			485			765
Other Businesses (3)		—			225			—			135			935
Corporate and Inter-segment Sales		(284	)		(281	)		(199	)		(840	)		(800	)
Net Sales	$	5,841		$	5,324		$	5,541		$	21,890		$	21,995
Operating Profit by Industry Segment
	Three Months Ended December 31,						Three Months Ended September 30, 2007			Twelve Months Ended December 31,
	2007			2006(1)						2007			2006(1)
Printing Papers (2)	$	314		$	63	(6)	$	307		$	1,101		$	636	(5,6)
Industrial Packaging		144			130			115			501			399	(7)
Consumer Packaging (2)		40			27			49			198			172
Distribution		39			31			40			146			128
Forest Products		174			162			99			471			678
Other Businesses (3)		—			12			—			6			61
Operating Profit		711			425			610			2,423			2,074
Interest expense, net		(79	)		(80	)		(77	)		(297	)		(521	)
Minority interest (4)		4			3			4			19			8
Corporate items, net		(201	)		(166	)		(188	)		(732	)		(746	)
Restructuring and other charges		(9	)		(111	)		(42	)		(95	)		(300	)
Insurance recoveries		—			—			—			—			19
Forestland sales		—			4,422			9			9			4,788
Impairments of goodwill		—			(759	)		—			—			(759	)
Net gains (losses) on sales and impairments of businesses		13			(21	)		(1	)		327			(1,381	)
Reserve adjustments		—			5			—			—			6
Earnings From Continuing Operations Before Income Taxes and Minority Interest	$	439		$	3,718		$	315		$	1,654		$	3,188

(1) Prior-year information has been revised to reflect the retrospective application of a change in accounting for planned major maintenance activities.

(2) Reflects the reclassification of the European coated paperboard business from Printing Papers to Consumer Packaging.

(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 $920 million of sales and $75 million of operating profits for the 12 months ended December 31, 2006, from the coated and supercalendered paper business sold in 2006.

(6) Includes a fourth-quarter charge of $128 million before taxes to write down the assets of the Saillat mill in France to its estimated fair value.

(7) Includes a third-quarter gain of $13 million before taxes related to a sale of property in Spain.

International Paper Company

Sales Volume by Product (1) (2)

Preliminary and Unaudited

	Three Months Ended December 31,			Three Months Ended September 30, 2007	Twelve Months Ended December 31,
	2007	2006			2007	2006
Printing Papers (In thousands of short tons)
U.S. Uncoated Papers	917	954		940	3,788	3,973
European & Russian Uncoated Papers	367	383		351	1,448	1,455
Brazilian Uncoated Papers	227	124		225	794	477
Asian Uncoated Papers	6	6		6	24	18
Uncoated Papers 1,517	1,517	1,467		1,522	6,054	5,923
Coated Papers	—	—		—	—	1,168
Market Pulp (3)	382	268		348	1,402	1,124
Packaging (In thousands of short tons)
Container of the Americas	895	895		896	3,578	3,628
European Container (Boxes)	294	328		274	1,173	1,267
Other Industrial and Consumer Packaging	187	124		158	641	525
Industrial and Consumer Packaging	1,376	1,347		1,328	5,392	5,420
Containerboard	461	431		466	1,776	1,816
Bleached Packaging Board	509	438	(4)	514	2,010	1,503	(4)
Coated Bristols	100	99		105	408	410
Saturated and Bleached Kraft Papers	63	36		61	240	232

(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.

(4) Includes two months of sales for International Paper & Sun Cartonboard Co., Ltd. in which International Paper acquired a 50% interest in the fourth quarter of 2006.

International Paper Company

Consolidated Balance Sheet

Preliminary and Unaudited

(In Millions)

	December 31, 2007		December 31, 2006
Assets
Current Assets
Cash and Temporary Investments	$	905	$	1,624
Accounts and Notes Receivable, Net		3,152		2,704
Inventories		2,071		1,909
Assets of Businesses Held for Sale		24		1,778
Deferred Income Tax Assets		213		490
Other		167		132
Total Current Assets		6,532		8,637
Plants, Properties and Equipment, Net		10,141		8,993
Forestlands		770		259
Investments		1,276		641
Goodwill		3,650		2,929
Assets Held for Exchange		—		1,324
Deferred Charges and Other Assets		1,587		1,251
Total Assets	$	23,956	$	24,034
Liabilities and Common Shareholders’ Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	267	$	692
Liabilities of Businesses Held for Sale		4		333
Accounts Payable and Accrued Liabilities		3,368		3,616
Total Current Liabilities		3,639		4,641
Long-Term Debt		6,353		6,531
Deferred Income Taxes		2,919		2,233
Other Liabilities		2,145		2,453
Minority Interest		228		213
Common Shareholders’ Equity
Invested Capital		4,297		4,226
Retained Earnings		4,375		3,737
Total Common Shareholders’ Equity		8,672		7,963
Total Liabilities and Common Shareholders’ Equity	$	23,956	$	24,034

INTERNATIONAL PAPER

CONSOLIDATED STATEMENT OF CASH FLOWS

Preliminary and Unaudited

(In Millions)

	Year Ended December 31,
	2007			2006
Operating Activities
Net earnings	$	1,168		$	1,050
Discontinued operations, net of taxes and minority interest		47			232
Earnings from continuing operations		1,215			1,282
Depreciation, amortization and cost of timber harvested		1,086			1,158
Deferred income tax expense, net		233			1,619
Restructuring and other charges		95			300
Payments related to restructuring and legal reserves		(78	)		(79	)
Reversal of reserves no longer required. Net		—			(6	)
Insurance recoveries		—			(19	)
Net (gains) losses on sales and impairments of businesses		(327	)		1,496
Gains on sales of forestlands		(9	)		(4,788	)
Periodic pension expense, net		210			377
Impairment of Goodwill		—			759
Other, net		75			265
Voluntary pension plan contribution		—			(1,000	)
Changes in current assets and liabilities
Accounts and notes receivable		(141	)		(39	)
Inventories		(82	)		(43	)
Accounts payable and accrued liabilities		(338	)		(202	)
Other		(23	)		(70	)
Cash provided by operations - continuing operations		1,916			1,010
Cash (used for) provided by operations - discontinued operations		(61	)		213
Cash Provided by Operations		1,855			1,223
Investment Activities
Invested in capital projects		(1,292	)		(1,073	)
Acquisitions, net of cash acquired		(254	)		(103	)
Proceeds from divestititures		1,675			1,833
Equity investment Ilim		(578	)		—
Proceeds from sale of forestlands		—			1,635
Cash deposit for asset exchange		—			(1,137	)
Other		30			(48	)
Cash (used for) provided by investment activities - continuing operations		(419	)		1,107
Cash used for investment activities - discontinued operations		(12	)		(73	)
Cash (Used for) Provided by Investment Activities		(431	)		1,034
Financing Activities
Repurchases of common stock		(1,224	)		(1,433	)
Issuance of common stock		128			32
Issuance of debt		85			223
Reduction of debt		(865	)		(5,391	)
Monetization of Timber Notes		—			4,850
Change in book overdrafts		77			10
Dividends paid		(436	)		(485	)
Other		—			(131	)
Cash used for financing activities - continuing operations		(2,235	)		(2,325	)
Cash provided by financing activities - discontinued operations		—			21
Cash Used for Financing Activities		(2,235	)		(2,304	)
Effect of Exchange Rate Changes on Cash		92			30
Change in Cash and Temporary Investments		(719	)		(17	)
Cash and Temporary Investments
Beginning of the period		1,624			1,641
End of the period	$	905		$	1,624

EX-99.2

Fourth Quarter

2007 Review

February 7, 2008

Fourth Quarter

2007 Review

February 7, 2008

Tim S. Nicholls

Senior Vice President &

Chief Financial Officer

John V. Faraci

Chairman & Chief

Executive Officer

2

Forward-Looking Statements

Forward-Looking Statements

These slides and statements made during this presentation 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

but

not

limited

to

changes

in

the

cost

or

availability

of

raw

materials and energy, transportation costs, the company's product mix, demand and

pricing for its products; (ii) global economic conditions and political changes, particularly in

Latin America, Russia, Europe and Asia, including but not limited to changes in currency

exchange rates, credit availability, and the company's credit ratings issued by recognized

credit rating organizations; (iii) natural disasters, such as hurricanes and earthquakes; (iv)

the company's ability to realize anticipated profit improvement from its transformation plan,

and (v) unanticipated expenditures related to the cost of compliance with environmental

and other governmental regulations and to actual or potential 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.

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 internationalpaper.com

under Investors.

Statements Relating to Non-GAAP

Financial Measures

Statements Relating to Non-GAAP

Financial Measures

4

2007 annual profits up 52%

2007 EPS up 67%

Transformation plan on track

Continuing trend of margin

expansion

Steady & balanced NA paper &

packaging demand

Record earnings growth outside

North America

IP Fourth-Quarter Profits up 21%

From continuing operations and before special items

5

Operating Profit Expansion

Improvement in all Operating Businesses

(31%)

Forest Products

11%

Operating Profits

15%

Consumer Packaging

14%

Distribution

30%

Industrial Packaging

44%

Printing Papers

2007 vs.

2006

($MM)

From continuing operations before special items

6

2003

2004

2005

2006

2007

Diluted EPS

from Continuing Operations before Special Items

Diluted EPS

from Continuing Operations before Special Items

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

$0.41

$0.82

$0.70

$1.33

$2.22

FY

.15

.11

.03

.02

.16

.30

.34

.27

.20

.04

.12

.30

.45

.47

.45

.52

.57

.69

.11

.17

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

7

1.1%

5.8%

3.4%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2005

2006

2007

EBIT Margins

Expansion in Operating Businesses

EBIT Margins

Expansion in Operating Businesses

Includes unallocated expenses

Excludes special items, Forest Products and divested businesses

+230 BP

+470 BP

8

.69

.57

.13

.02

.04

.11

(.02)

(.03)

(.04)

(.07)

(.02)

$0.25

$0.35

$0.45

$0.55

$0.65

$0.75

$0.85

3Q '07

Price

Volume

Cost/Mix

Pensacola

Land Sales

Input &

Distrib.Costs

Unallocated

Expenses

Labor

Agreements

Tax

4Q '07

$ / Share

$ / Share

Packaging   .02

Papers      

.02

Containerboard        .06

P&C                          .03

Europe                      .02

Cost/Mix    

Outages    

Wood          (.02)

Energy        (.02)

Chemicals   (.02)    

Freight        (.01)

4Q ’07 ETR  31%  

3Q ’07 ETR  29%

4Q07 vs. 3Q07 EPS

from Continuing Operations before Special Items

4Q07 vs. 3Q07 EPS

from Continuing Operations before Special Items

(.04)

.02

9

2.22

1.33

.05

.69

.37

.02

.66

(.02)

(.35)

(.15)

(.30)

(.08)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

12M '06

Price

Volume

Cost/Mix

Pensacola

Input &

Distrib.Costs

Land Sales

Cash

Redeployment

DivestituresUnallocated

Expenses /

Other

Tax

12M '07

$ / Share

$ / Share

IPG                            .12

Coated Paperboard  .07

P&C                           .32

Europe                       .15

Wood          (.14)

Chemicals   (.09)

Energy        (.02)    

Freight        (.05)

Interest         .33

Shares          .22

Reinvest.      .14

Cost/Mix        .44 

Outages       (.07)

2007 ETR  30%  

2006 ETR  29%

2007 vs. 2006 EPS

from Continuing Operations before Special Items

2007 vs. 2006 EPS

from Continuing Operations before Special Items

10

(10)

(77)

(85)

(33)

($90)

($80)

($70)

($60)

($50)

($40)

($30)

($20)

($10)

$0

Wood

Chemicals

Freight

Energy

$205 million, or $0.30/share, negative

$205 million, or $0.30/share, negative

purchase price variance  in 2007 vs. 2006

purchase price variance  in 2007 vs. 2006

Increasing Input & Distribution Costs

Global EBIT Impact 2007 vs. 2006

Increasing Input & Distribution Costs

Global EBIT Impact 2007 vs. 2006

Costs for continuing businesses

11

U.S Mills Wood Cost

Significant Increases in the West Region

U.S Mills Wood Cost

Significant Increases in the West Region

(7)

(63)

(65)

5

($70)

($60)

($50)

($40)

($30)

($20)

($10)

$0

$10

East

Central

West

Total

IP

West

Region

Mills:

Mansfield

&

Pineville

(containerboard),

Texarkana

(coated

paperboard),

Louisiana (uncoated freesheet)

100%

25%

29%

46%

% of Total

Volume

Purchase price variance for delivered wood costs

12

U.S. Total Purchased Energy Consumption

Reduced 27% per/ton since 2001

U.S. Total Purchased Energy Consumption

Reduced 27% per/ton since 2001

Mills only

“Other”

includes purchased electricity and steam, coal, purchased wood waste, and other materials

The annual savings from the reduction in

The annual savings from the reduction in

consumption and change in fuel mix is $285 million  

consumption and change in fuel mix is $285 million  

0

2

4

6

8

10

12

14

2001

2002

2003

2004

2005

2006

2007

Gas & Oil

Other

13

Improved Overall Equipment Efficiency

Reducing Manufacturing Costs

Improved Overall Equipment Efficiency

Reducing Manufacturing Costs

75%

79%

80%

81%

82%

83%

84%

75%

76%

77%

78%

79%

80%

81%

82%

83%

84%

85%

2001

2002

2003

2004

2005

2006

2007

The cumulative savings from OEE

The cumulative savings from OEE

improvements is $270 million

improvements is $270 million

All IP mills

14

Non-Price Improvement Update

$400 Million Target

Non-Price Improvement Update

$400 Million Target

$270*

$130

$125

$15

2007

$330

Total Non-Price Improvement

$145

Cost Reduction

$45

Mix

$140

Volume

2006

$ Millions

* Excludes Pensacola start-up costs

15

($200)

$0

$200

$400

$600

$800

$1,000

$1,200

2003 vs.

2002

2004 vs.

2003

2005 vs.

2004

2006 vs.

2005

2007 vs.

2006

2002 - 2007

Price Increases / Decreases

Input Cost Increases

Recovering Input Cost Increases

Recovered via Price Increases

Recovering Input Cost Increases

Recovered via Price Increases

North American Papers & Packaging

16

Quarterly Operating Profit Growth

from Continuing Operations before Special Items

Quarterly Operating Profit Growth

from Continuing Operations before Special Items

$10

European Industrial Packaging

$75

Forest Products

$20

European Paper

$9

Brazilian Paper

$9

Pulp

4Q07 vs. 3Q07

($31)

North American Paper

($1)

($9)

$18

$ Million

Distribution

Consumer Packaging

North American Industrial Packaging

17

Printing Papers

* Excludes a $128 million special charge

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

$4

1%

Brazilian Uncoated Papers

€7

5%

European Uncoated Papers

$16

11%

U.S. Pulp

$13

(2%)

N.A. Uncoated Papers

Price Realization

per Ton

Volume

Business

4Q07 vs. 3Q07

$314

$1,720

4Q07

$307

$1,660

3Q07

$319*

$1,475

4Q06

Earnings

Sales

$ Million

18

Printing Papers Earnings

4Q07 vs. 3Q07

Printing Papers Earnings

4Q07 vs. 3Q07

314

307

10

4

30

(21)

(6)

(10)

$250

$270

$290

$310

$330

$350

$370

3Q07

Price

Volume

Cost / Mix

Materials &

Freight

Labor

Agreements

FX

4Q07

Cost      (18)

Mix           3

Outages 19

19

Industrial Packaging

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

* Total 3Q07 and 4Q07 domestic containerboard price realization was $35/ton; DEC exit rate reflected full realization of the $40

increase

$33

(1%)

N.A. Container

$14*

(1%)

N.A. Containerboard

Price Realization

per Ton

Volume

Business

4Q07 vs. 3Q07

$144

$1,390

4Q07

$115

$1,305

3Q07

$130

$1,265

4Q06

Earnings

Sales

$ Million

20

144

115

13

30

10

(5)

(4)

(15)

$70

$80

$90

$100

$110

$120

$130

$140

$150

$160

$170

3Q '07

Price

Volume

Cost / Mix

Materials &

Freight

Labor

Agreements

Others

4Q '07

Industrial Packaging Earnings

4Q07 vs. 3Q07

Industrial Packaging Earnings

4Q07 vs. 3Q07

21

Consumer Packaging

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

(1%)

Converting Businesses

$11/ton

(1%)

U.S. Coated Paperboard

Price

Realization

Volume

Business

4Q07 vs. 3Q07

$40

$780

4Q07

$49

$775

3Q07

$27

$735

4Q06

Earnings

Sales

$ Million

22

Distribution

Continued Strong xpedx Performance

$39

$2,045

4Q07

$40

$1,880

3Q07

$31

$1,715

4Q06

Earnings

Sales

$ Million

•

Record 4Q07 earnings

•

Record full-year sales and earnings

•

2007 full-year earnings up 14% vs. 2006

23

xpedx

Margin Improvement

xpedx

Margin Improvement

Operating Expenses

% of Gross Profit

80%

81%

82%

83%

84%

85%

86%

87%

88%

89%

90%

2002

2003

2004

2005

2006

2007

Revenue Per

Warehouse Square Foot

$0.50

$0.55

$0.60

$0.65

$0.70

$0.75

2002

2003

2004

2005

2006

2007

•

•

400 BP improvement since 2002

400 BP improvement since 2002

•

•

Each 100 BP improvement increases profits

Each 100 BP improvement increases profits

by $13 million

by $13 million

•

•

34% increase in productivity since 2002

34% increase in productivity since 2002

•

•

12% decrease in total warehouse space

12% decrease in total warehouse space

24

Forest Products

$2,130

207,000

2006

$2,655

Price / Acre

165,000

Acres Sold

2007

$174

$190

4Q07

$99

$120

3Q07

$162

$190

4Q06

Earnings

Sales

$ Million

25

Replacing Land Sales Earnings

Confident in our Ability

Replacing Land Sales Earnings

Confident in our Ability

$1,734

$639

‘02 –

‘06

Average

$2,423

Total International

Paper Operating Profit

$185-$275

2008

Budget

$471

Forest Products

Operating Profit

2007

($ Million)

Excludes special items and discontinued operations

26

Strategic Projects

Good

Progress on all Projects

Strategic Projects

Good

Progress on all Projects

Pensacola Lightweight Linerboard

Riegelwood Fluff Pulp

Svetogorsk BCTMP

Sun Coated Paperboard Machine

Tres Lagoas Paper Machine

Tres Lagoas PM

Pensacola No. 5 PM

Sun Coated Paperboard PM

27

Ilim Joint Venture

Proceeding According to Plan

Ilim Joint Venture

Proceeding According to Plan

Reporting IP’s 50% share of Ilim Holding SA earnings

with a 90-day lag using the equity method of accounting

Continuing healthy economic conditions in Russia &

China

Strong demand growth

Operations performed well

Focus on cost reduction, quality improvement, and

capacity expansion

28

Geographic Operating Profit Growth

from Continuing Operations before Special Items

Geographic Operating Profit Growth

from Continuing Operations before Special Items

380%

$19

Asia

20%

$223

Total North America

2007 vs. 2006

11%

$55

Printing Papers

$273

$130

$124

$18

$56

$14

$80

$ Million

102%

Brazil

62%

Europe

80%

Total Outside North America

14%

117%

11%

24%

%

Distribution

U.S. Market Pulp

Consumer Packaging

Industrial Packaging

Excludes Forest Products and other businesses

29

2007

$1.9B

30%

70%

2006

$1.5B

20%

80%

Operating Profit Growth Outside North America

Diversifying our Earnings Capacity

Operating Profit Growth Outside North America

Diversifying our Earnings Capacity

Operating profits excluding special items, Forest Products and other businesses

North America

Non-North America

30

Free Cash Flow Improvement

Up $700 million in 2007

Free Cash Flow Improvement

Up $700 million in 2007

$0.6

($0.1)

Free Cash Flow

($1.3)

$1.9

2007

($1.1)

Less Capital Investment

$1.0

Cash Provided by

Continuing Operations

2006

2007 Free Cash Flow

($ Billion)

31

Working Capital Management

200 Basis Point Improvement since 1Q05

Working Capital Management

200 Basis Point Improvement since 1Q05

13.5%

14.0%

14.5%

15.0%

15.5%

16.0%

16.5%

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

32

Transformation Plan Scorecard

On Track Through Year Two

Transformation Plan Scorecard

On Track Through Year Two

G

G

G

G

R

R

G

G

G

G

G

G

Y

G

G

G

G

Improve Existing Businesses

Return Value to Shareholders

EPS

Improve Pricing

Improve Balance Sheet

Divestitures

Input Cost / Transportation

Selective Reinvestment

33

1.33

2.22

.86

.33

.22

(.15)

(.35)

(.02)

$0.75

$0.95

$1.15

$1.35

$1.55

$1.75

$1.95

$2.15

$2.35

12M '06

Core

Business

EBIT

Land Sales

Divestitures*

Interest

Shares

Tax

12M '07

Transformation Plan

Yielding Results

Transformation Plan

Yielding Results

EPS from continuing operations before special items

* Includes Harvest and Recreation income, Coated Papers and Arizona Chemical

34

Outlook

Current IP Business Conditions

Outlook

Current IP Business Conditions

North America

Steady demand

Inventories in good shape

Realizing announced paper & packaging price increases

Increasing input costs

Europe

Some inventory building

Increasing input costs

Brazil

Economy is strong

Paper demand growing at GDP rate

Increasing energy costs

35

Looking Forward to 1Q08

Looking Forward to 1Q08

Accretive

Ilim Group 4Q07 Earnings

IP Pricing

Volume

Slight Increase

Packaging

Steady

Paper

1Q08 Earnings Outlook

Increase

Input & Distribution Costs

Decrease

Land Sales Earnings

Slight Increase

Planned Maintenance Outages

Slight Increase

Steady

Paper

Packaging

37

Questions & Answers

Questions & Answers

Investor Relations Contacts

Tom Cleves

901-419-7566

Ann-Marie Donaldson

901-419-4967

Media Contact

Amy Sawyer

901-419-4312

38

Appendix

39

Special Items & Discontinued Operations

$0.78

($0.02)

$0.80

$0.11

$0.69

4Q07

$2.70

Net Earnings

($0.11)

Discontinued Operations

$2.81

Earnings from Continuing Operations

$0.59

Special Items

$2.22

Earnings from Continuing Operations &

Before Special Items

2007

Diluted Earnings per Share

40

Special Items & Discontinued Operations

-

($3)

Weldwood

2007

4Q07

($0.02)

$0.11

$/Share

($47)

$4

$4

($16)

($39)

$252

($58)

$38

$113

$159

($MM)

($0.11)

$0.59

$/Share

($2)

Wood Products

-

Kraft Papers

$41

Tax Adjustments

($6)

Restructuring & Corporate

($11)

Total Discontinued Operations

-

Other

($6)

Beverage Packaging

Discontinued

Operations (Net of tax)

$44

Total Special Items

$9

Divestitures

-

Brazil Asset Exchange

Special Items (Net of minority interest & tax)

($MM)

41

30%

$732

$297

$1.1

$1.3

2007

1

32 -

33%

$650 -

$675

$340 -

$360

$1.1

$1.1

2008 Estimate

29%

$746

$521

$1.2

$1.1

2006

1

Effective Tax Rate

2

Unallocated Expenses

($ Million)

Net Interest Expense

($ Million)

Depreciation &

Amortization ($ Billion)

Capital Spending

($ Billion)

20%

$607

$595

$1.2

$1.1

2005

1

1

Excludes discontinued operations and Coated Papers

2

Before special items and excluding Ilim

Key Financial Statistics

Key Financial Statistics

42

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

(72,000 tons), 3Q05 (108,000 tons) and 4Q05 (108,000 tons) which

we permanently closed at end of 4Q05.

Lack of Order Downtime

Lack of Order Downtime

59

90

236

173

5

10

5

35

95

M  Short Tons

2003

2004

2005

274*

270*

180*

25

2006

25

28

70

2007

35

4

7

7

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

Containerboard

Uncoated Papers

Pulp

Coated Paperboard

European Papers

59

90

236

173

5

5

10

35

95

25

25

28

70

35

4

7

7

274*

270*

180*

43

($11)

$9

($16)

($4)

Impact

($ Million)

Total Impact

Consumer Packaging

Industrial Packaging

Printing Papers

1Q08 Forecast vs. 4Q07

(20,000)

13,000

(26,000)

(7,000)

in

Maintenance

Outages (Tons)

Maintenance

outages

and

dollar

impacts

are

estimated

and

are

subject

to

change

Incremental Maintenance Outages

Incremental Maintenance Outages

44

Operating Profits by Industry Segment

from Continuing Operations before Special Items

Operating Profits by Industry Segment

from Continuing Operations before Special Items

$924

($746)

$8

($527)

$2,189

$61

$678

$128

$172

$386

$764*

2006

$304

($166)

$3

($86)

$553

$12

$162

$31

$27

$130

$191

4Q06

$435

($201)

$4

($79)

$711

-

$174

$39

$40

$144

$314

4Q07

($732)

($188)

Net Unallocated Expenses

$6

-

Other Businesses

$2,423

$610

Operating Profit

($297)

($77)

Net Interest Expense

$19

$4

Minority Interest

$1,413

$471

$146

$198

$501

$1,101

2007

$349

$99

$40

$49

$115

$307

3Q07

Earnings from continuing

operations before income taxes,

minority interest & special items

Forest Products

Distribution

Consumer Packaging

Industrial Packaging

Printing Papers

($ Million)

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

*Includes $75 million for the Coated and Supercalendered papers business sold in 2006.

45

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

$6,785

$50

$230

$2,405

$180

$1,020

$3,725

$10

$510

$495

$1,250

$4,430*

2006

$330

$85

$85

$50

Asian

$7,320

$280

$2,405

$265

$1,100

$3,880

$20

$655

$850

$1,510

$3,495

2007

$2,045

$75

$620

$85

$300

$1,005

$5

$180

$255

$415

$865

4Q07

$1,880

$70

$620

$65

$265

$975

$5

$165

$250

$370

$870

3Q07

$1,715

$70

$615

$45

$275

$945

$5

$125

$130

$345

$870

4Q06

Sales

Asian

$ Million

Industrial Packaging

North American

European

Asian

Distribution

European

North American

Consumer Packaging

U.S. Market Pulp

Brazilian

European

North American

Printing Papers

*Includes

$920

million

for

the

Coated

and

Supercalendered

papers

business

sold

in

2006.

46

Geographic Business Segment Operating

Results

From Continuing Operations before Special Items

Geographic Business Segment Operating

Results

From Continuing Operations before Special Items

$128

$2

$41

$129

$3

$56

$327

$48

$122

$112

$482*

2006

$18

$6

$5

$2

Asian

$146

$37

$143

$6

$88

$407

$104

$246

$214

$537

2007

$39

$9

$25

$2

$25

$117

$34

$81

$65

$134

4Q07

$40

$5

$39

$1

$15

$99

$25

$72

$45

$165

3Q07

$31

$10

$15

$1

$15

$114

$16

$18

$42

$115

4Q06

Operating Profit

$ Million

Industrial Packaging

North American

European

Asian

Distribution

European

North American

Consumer Packaging

U.S. Market Pulp

Brazilian

European

North American

Printing Papers

*Includes $75 million for the Coated and Supercalendered papers business sold in 2006

47

2007 Earnings from Continuing Operations

2007 Earnings from Continuing Operations

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

3

Not meaningful

$0.59

433

-4%

$252

$0

$9

$243

Full Year Total

$2.22

433

30%

$963

($24)

($424)

$1,411

Full Year Total

$0.80

424

21%

$338

($7)

($94)

$439

4Q07

$0.52

426

28%

$220

($6)

($89)

$315

3Q07

($0.05)

426

32%

($23)

$0

$11

($34)

3Q07

$0.11

424

NM

3

$44

$0

$40

$4

4Q07

$0.57

426

29%

$243

($6)

($100)

$349

3Q07

$2.81

$0.46

$1.02

($0.06)

$0.57

$0.69

$0.52

$0.45

Diluted

EPS

2

448

15%

$254

$0

($44)

$298

1Q07

431

8%

($23)

$0

$2

($25)

2Q07

Earnings from Continuing Operations

433

25%

$1,215

($24)

($415)

$1,654

Full Year Total

431

30%

$200

($5)

($89)

$294

2Q07

448

24%

$457

($6)

($143)

$606

1Q07

$294

$223

$203

Net Income

$MM

31%

29%

32%

Estimated

Tax Rate

($7)

($5)

($6)

Minority

Interest

$MM

Special Items

$435

$319

$308

Pre-Tax

$MM

424

($134)

4Q07

431

($91)

2Q07

448

($99)

1Q07

Before Special Items

Average

Shares

1

MM

Tax

$MM

under

the

Investors

tab

at

presentations

48

2006 Earnings from Continuing Operations

2006 Earnings from Continuing Operations

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

$1.32

489

71%

$647

$0

($1,617)

$2,264

Full Year Total

$1.33

489

29%

$635

($17)

($272)

$924

Full Year Total

$4.53

451

45%

$2,047

($3)

($1,668)

$3,718

4Q06

$0.80

485

34%

$385

($5)

($204)

$594

3Q06

$0.35

485

41%

$169

$0

($117)

$286

3Q06

$4.06

451

46%

$1,831

$0

($1,583)

$3,414

4Q06

$0.45

485

28%

$216

($5)

($87)

$308

3Q06

$2.65

$0.13

($2.49)

($0.17)

($2.61)

$0.47

$0.30

$0.12

Diluted

EPS

2

486

3%

($1,270)

$0

$38

($1,308)

1Q06

487

35%

($83)

$0

$45

($128)

2Q06

Earnings from Continuing Operations

489

59%

$1,282

($17)

($1,889)

$3,188

Full Year Total

487

33%

$62

($4)

($33)

$99

2Q06

486

1%

($1,212)

($5)

$16

($1,223)

1Q06

$216

$145

$58

Net Income

$MM

28%

34%

26%

Estimated

Tax Rate

($3)

($4)

($5)

Minority

Interest

$MM

Special Items

$304

$227

$85

Pre-Tax

$MM

451

($85)

4Q06

487

($78)

2Q06

486

($22)

1Q06

Before Special Items

Average

Shares

1

MM

Tax

$MM

49

Business Segment Price Realization

Business Segment Price Realization

$763

$483

2006

$533

$862

2006

Full Year

$802

$521

2007

$598

$907

2007

$825

$536

4Q07

$621

$925

4Q07

$792

$521

3Q07

$605

$912

3Q07

$787

$509

4Q06

$566

$898

4Q06

Quarterly

Average Selling Price Realizations

Industrial Packaging ($/ton)

Printing Papers ($/ton)

Containerboard

Corrugated Boxes

Pulp

Uncoated Freesheet

Average IP U.S. selling price realizations (includes the impact of mix across all grades)

50

Pension Returns

Pension Returns

10%

Real Estate & Other

31%

Bonds

59%

Equity

Portfolio Asset Allocation at 12/31/07

9.3%

Past Ten Years

15.1%

Past Five Years

9.6%

2007

Average Annualized Returns

51

Annual Pension Expense*

377

210

115

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2006

2007

2008E

Key Variables

6.2%

5.75%

5.5%

Discount

Rate

8.5%

8.5%

8.5%

Rate of

Return

2008E

2007

2006

Pension Expense

* U.S. plans only.  Pension expense reflects service cost, interest cost, amortization of actuarial losses and

expected return on plan assets

52

(5)

(11)

(18)

(7)

($20)

($15)

($10)

($5)

$0

Wood

Energy

Freight

Chemicals

$41 million, or $0.07

$41 million, or $0.07

per share, negative

per share, negative

purchase price variance in 4Q07 versus 3Q07

purchase price variance in 4Q07 versus 3Q07

Increasing Input & Distribution Costs

Global EBIT Impact 4Q07 vs. 3Q07

Increasing Input & Distribution Costs

Global EBIT Impact 4Q07 vs. 3Q07

Costs for continuing businesses

53

0

50

100

150

200

250

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

Jul

Oct

Jan

2004

2005

2006

2007

Natural Gas Costs

NYMEX Natural Gas closing prices

Index: Jan 2004 Natural Gas Costs = 100

54

90

95

100

105

Jan

Apr

July

Oct

Jan

Apr

July

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

U.S. Mill Wood Costs

U.S. Mill Wood Costs

Index: Jan 2004 Wood Costs = 100

2004

2005

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

2006

2007

55

0

50

100

150

200

250

300

350

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

2004

2005

2006

2007

U.S. Caustic Soda Costs

Index: Jan 2004 Caustic Soda Costs = 100

Delivered cost to U.S. facilities

56

40

60

80

100

120

140

160

180

200

220

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

2006

2007

U.S. Corn Starch Costs

Index: Jan 2006 Corn Starch Costs = 100

Delivered cost to U.S. facilities

57

Chemicals

Fiber

Energy

50,000

215,000

Sodium Chlorate (Ton)

-

40,000

LD Polyethylene (Ton)

4,000

24,000

Latex (Ton)

230,000

1,300,000

Coal (Ton)

8,200,000

40,000,000

Wood (Ton)

60,000

340,000

Caustic Soda (Ton)

310,000

600,000

Old Corrugated Containers (Ton)

Commodity

500,000

15,000,000

Non –

U. S.

4,000,000

#6 Fuel Oil (Barrel)

28,000,000

Natural Gas (MM BTU)

U. S.

Global Consumption

Annual Purchase Estimates for Key Inputs

Global Consumption

Annual Purchase Estimates for Key Inputs

2007 Run Rate Estimates

Includes only continuing businesses

58