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

July 31, 2008

(Date of Report)

July 31, 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 July 31, 2008, International Paper Company issued a press release reporting preliminary earnings for the second quarter of 2008 and held a webcast and 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 July 31, 2008.

Exhibit 99.2 Slides of International Paper Company, dated July 31, 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: July 31, 2008

Exhibit Index

Exhibit 99.1 Press release of International Paper Company, dated July 31, 2008.

Exhibit 99.2 Slides of International Paper Company, dated July 31, 2008.

EX-99.1

Exhibit 99.1

INTERNATIONAL PAPER PLAZA

6400 POPLAR AVENUE

MEMPHIS, TN 38197

News Release

International Paper Reports Preliminary Second Quarter 2008 Results;

Highest Second Quarter since 2000, Despite Cost Pressures

• Earnings per share from continuing operations and before special items were $0.56 up from $0.41 in the first quarter of 2008 and $0.52 in the 2007 second quarter.

• Second-quarter 2008 net earnings totaled $0.54 per share, compared with net earnings of $0.31 per share in the prior quarter and $0.44 per share in the second quarter of 2007.

• Net sales for the quarter were $5.8 billion, versus $5.7 billion in the first quarter and $5.3 billion in the second quarter of 2007.

MEMPHIS, Tenn.—July 31, 2008 —International Paper (NYSE: IP) today reported preliminary second-quarter 2008 net earnings of $227 million ($0.54 per share) compared with net earnings of $133 million ($0.31 per share) in the 2008 first quarter and $190 million ($0.44 per share) in the second quarter of 2007. Amounts in all periods include special items.

Diluted Earnings Per Share Summary

	Second Quarter 2008		First Quarter 2008		Second Quarter 2007
Net Earnings	$	0.54	$	0.31	$	0.44
Discontinued Operations:
Loss on sale or impairment		—		0.04		0.02
Earnings from Continuing Operations		0.54		0.35		0.46
Net Special Items Expense (Income)		0.02		0.06		0.06
Earnings from Continuing Operations and Before Special Items	$	0.56	$	0.41	$	0.52

Earnings from continuing operations and before special items in the second quarter of 2008 were $235 million ($0.56 per share), compared with $175 million ($0.41 per share) in the 2008 first quarter and $223 million ($0.52 per share) in the second quarter of 2007.

Quarterly net sales were $5.8 billion, up from $5.7 billion in the first quarter and up from $5.3 billion in the second quarter of 2007.

Industry segment operating profits were $393 million for the 2008 second quarter up from $332 million in the 2008 first quarter and down from $450 million in the second quarter of 2007. The quarter-to-quarter increase reflects improved pricing and operating performance helping offset higher input costs. Additionally, the company reported equity earnings, net of taxes, of $32 million up from $17 million in the first quarter from its 50 percent investment in Ilim Holding S.A., a separate reportable industry segment in Russia.

Page 1

“We had a solid quarter because of strong operating performance, cost management and good results in our businesses outside of the U.S.,” said Chairman and CEO John Faraci, “overall, however higher than expected input costs continue to negatively impact our real earnings potential.”

Commenting on the third quarter of 2008, Faraci said, “Despite the current weakness in the U.S. economy, I am optimistic about our ability to manage through this period and come out in a stronger, better position. We’re ready to complete the acquisition of Weyerhaeuser’s Containerboard, Packaging and Recycling business next week, which will give us additional opportunities to reduce costs in our North American packaging business.”

SEGMENT INFORMATION

During 2008, in order to facilitate performance comparisons with other companies, the company changed its method of allocating corporate overhead expenses to attribute additional expense to its business segments. Accordingly, business segment operating profits for all periods have been restated to reflect this change. Second-quarter 2008 segment operating profits and business trends compared with the previous quarter are as follows:

Operating profits for Printing Papers were $226 million, up from first-quarter operating profits of $185 million due to improved pricing, primarily in North America, operating performance that more than offset higher input costs and a greater level of planned outages than the first quarter. U.S. uncoated free sheet sales volume declined but pulp sales were stronger. Eastern Europe and Brazil showed improved volumes and pricing.

Industrial Packaging operating profits were $87 million, down from $97 million in the prior quarter largely because of higher input costs, more maintenance outages and lower profitability due to the Vicksburg boiler accident. Containerboard inventory levels remain low. Both the U.S. and European box volumes were under pressure due to weaker economic conditions. Overall performance was stronger than industry average and pricing remained solid.

Consumer Packaging operating profits were $13 million (including a $13 million charge relating to the reorganization of Shorewood’s Canadian operations) compared with $9 million in the 2008 first quarter (including a $5 million charge related to the Shorewood reorganization). Price and favorable operating performance offset higher input costs and planned outages. Volumes in the converting business improved seasonally.

The company’s distribution business, xpedx, reported operating profits of $26 million, up from $16 million in the prior quarter. High fuel and freight costs were offset by improved pricing and margins. Printing paper and packaging volumes remained weak while facility supplies experienced some growth.

Forest Products operating profits were $41 million, compared with first quarter operating profits of $25 million due to higher earnings from land sales. While land sales are difficult to forecast within a quarter, the company’s objective continues to be to maximize net present value for shareholders.

Equity earnings, net of taxes, in Ilim Holding S.A. of $32 million for the quarter, up from $17 million reported in the 2008 first quarter, included a $14 million after-tax foreign exchange gain and a $3 million option write-off charge. Improved price realizations, higher sales volumes and favorable manufacturing operations during the quarter more than offset the effects of increased wood, chemical and energy costs. (Ilim’s results are reported on a one-quarter lag.)

Page 2

Net corporate expenses were $21 million for the quarter, the same as $21 million in the 2008 first quarter and less than half of the $57 million reported in the 2007 second quarter. Compared with the first quarter, higher supply chain initiative costs were offset by an $11 million gain on the sale of the former Natchez mill site. This gain, plus lower pension expenses, led to the year-over-year quarterly decline in net corporate expenses.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the second quarter of 2008 was 32.5 percent, compared with 31.5 percent in the first quarter of 2008 and 29 percent in the second quarter of 2007.

EFFECTS OF SPECIAL ITEMS

Special items in the second quarter of 2008 consisted of a $13 million pre-tax charge ($9 million after taxes) for costs associated with the reorganization of Shorewood operations in Canada and a $3 million pre-tax gain ($2 million after taxes) for an adjustment to the gain on the 2006 transformation plan forestland sales. The net after-tax effect of these special items is a loss of $7 million, or $0.02 per share.

Special items in the first quarter of 2008 included a $40 million pre-tax charge ($25 million after taxes) for adjustments of legal reserves, a pre-tax charge of $5 million ($3 million after taxes) for costs associated with the reorganization of Shorewood operations in Canada, a $3 million pre-tax gain ($2 million after taxes), for adjustments to previously recorded reserves associated with the company’s transformation plan, and a $1 million credit before and after taxes for adjustments to estimated gains/losses of businesses previously sold. The net after-tax effect of these special items is a loss of $25 million, or $0.06 per share.

Special items in the 2007 second quarter consisted of a $26 million pre-tax charge ($16 million after taxes) for organizational restructuring programs associated with the company’s transformation plan, including $17 million ($11 million after taxes) of accelerated depreciation expense for long-lived assets being removed from service, and a pre-tax gain of $1 million (a loss of $7 million after taxes) for adjustments to estimated losses on sales of businesses previously sold. The net after-tax effect of these special items is a loss of $23 million, or $0.06 per share.

DISCONTINUED OPERATIONS

Discontinued operations for the 2008 first quarter included a pre-tax charge of $25 million ($16 million after taxes) related to the final settlement of a Beverage Packaging post-closing sale adjustment and a $1 million after-tax charge for the operating results of certain Wood Products facilities for the quarter.

Discontinued operations for the 2007 second quarter included pre-tax charges of $11 million ($7 million after taxes) for adjustments related to the previously sold wood products and beverage packaging businesses, and the second quarter operating losses of these businesses.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. Eastern Daylight Time U.S. / 9 a.m. Central Daylight U.S. 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 +1 (706) 679-8242 or, within the U.S. only, (877) 316-2541, and ask to be connected to the International Paper 2Q 2008 Earnings Call. The conference ID number is 52276147. Participants should call in no later than 9:45 a.m. EDT/8:45 a.m. CDT. 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 “52276147.”

Page 3

International Paper (NYSE:IP) is a global paper and packaging company with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include uncoated papers and industrial and consumer packaging, complemented by xpedx, the company’s North American distribution company. Headquartered in Memphis, Tenn., the company employs more than 50,000 people in more than 20 countries and serves customers worldwide. 2007 net sales were approximately $22 billion. For more information about International Paper, its products and stewardship efforts, visit internationalpaper.com.

This press 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) the company’s ability to realize anticipated profit improvement from its transformation plan, including our ability to realize the expected benefits of our acquisition of the assets of Weyerhaeuser Company’s containerboard, packaging and recycling business in light of integration difficulties and other challenges; (ii) increases in interest rates and our ability to meet our debt service obligations; (iii) industry conditions, including but not limited to changes in the cost or availability of raw materials and energy, transportation costs, competition we face, the company’s product mix, demand and pricing for its products; (iv) global economic conditions and political changes, including but not limited to changes in currency exchange rates, credit availability, the company’s credit ratings issued by recognized credit rating organizations and pension and health care costs; (v) unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and to actual or potential litigation; and (vi) whether we experience a material disruption at one of our manufacturing facilities. 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: Patty Neuhoff, 901-419-4052; Investors: Tom Cleves, 901-419-7566, Ann-Marie Donaldson, 901-419-4967 and Emily Nix, 901-419-4987

Page 4

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, 2008			Six Months Ended June 30,
	2008			2007						2008			2007
Net Sales	$	5,807		$	5,291		$	5,668		$	11,475		$	10,508
Costs and Expenses
Cost of products sold		4,305			3,881			4,261			8,566			7,732
Selling and administrative expenses		459			441			472			931			876
Depreciation, amortization and cost of timber harvested		305			269			286			591			531
Distribution expenses		301			254			285			586			510
Taxes other than payroll and income taxes		44			47			44			88			89
Restructuring and other charges		13	(a)		26	(c)		42	(e)		55	(g)		44	(h)
Insurance recoveries		—	(a)		—			—			—			—
Forestland sales		(3	)(b)		—			—			(3	)(b)		—
Impairment of goodwill		—	(a)		—			—			—			—
Net gains on sales and impairments of businesses		—			(1	)		(1	)		(1	)		(315	)(i)
Reversal of reserves no longer required, net		—			—			—			—			—
Interest expense, net		81			80			81			162			141
Earnings From Continuing Operations Before Income Taxes, Equity Earnings and Minority Interest		302	(a,b)		294	(c)		198	(e)		500	(b,g)		900	(h,i)
Income tax provision		97			89			59			156			232
Equity earnings, net of taxes		30			—			16			46			—
Minority interest expense, net of taxes		7			5			5			12			11
Earnings From Continuing Operations		228	(a,b)		200	(c)		150	(e)		378	(b,g)		657	(h,i)
Discontinued operations, net of taxes and minority interest		(1	)		(10	)(d)		(17	)(f)		(18	)(f)		(33	)(j)
Net Earnings	$	227	(a,b)	$	190	(c,d)	$	133	(e,f)	$	360	(b,f,g)	$	624	(h-j)
Basic Earnings Per Common Share
Earnings from continuing operations	$	0.54	(a,b)	$	0.46	(c)	$	0.36	(e)	$	0.90	(b,g)	$	1.50	(h,i)
Discontinued operations		(0.00	)		(0.02	)(d)		(0.04	)(f)		(0.04	)(f)		(0.07	)(j)
Net earnings	$	0.54	(a,b)	$	0.44	(c,d)	$	0.32	(e,f)	$	0.86	(b,f,g)	$	1.43	(h-j)
Diluted Earnings Per Common Share
Earnings from continuing operations	$	0.54	(a,b)	$	0.46	(c)	$	0.35	(e)	$	0.89	(b,g)	$	1.49	(h,i)
Discontinued operations		(0.00	)		(0.02	)(d)		(0.04	)(f)		(0.04	)(f)		(0.07	)(j)
Net earnings	$	0.54	(a,b)	$	0.44	(c,d)	$	0.31	(e,f)	$	0.85	(b,f,g)	$	1.42	(h-j)
Average Shares of Common Stock Outstanding - Diluted		422.6			431.2			423.3			423.9			440.4
Cash Dividends Per Common Share	$	0.25		$	0.25		$	0.25		$	0.50		$	0.50

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

(a) Includes a pre-tax charge of $13 million ($9 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations in Canada.

(b) Includes a pre-tax gain of $3 million ($2 million after taxes) for an adjustment to the gain on the 2006 Transformation Plan forestland sales.

(c) Includes $17 million ($11 million after taxes) of accelerated depreciation charges for long-lived assets being removed from service, and $9 million ($5 million after taxes) of other charges associated with the Company’s Transformation Plan.

(d) Includes a pre-tax charge of $6 million ($4 million after taxes) for adjustments relating to the sale of the wood products business, a pre-tax charge of $5 million ($3 million after taxes) for adjustments relating to the sale of the beverage packaging business, and the operating results of these businesses.

(e) Includes a $40 million pre-tax charge ($25 million after taxes) for adjustments to legal reserves, a pre-tax charge of $5 million ($3 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations in Canada, and a pre-tax gain of $3 million ($2 million after taxes) for adjustments to previously recorded reserves associated with the Company’s Transformation Plan.

(f) Includes a pre-tax charge of $25 million ($16 million after taxes) for the settlement of a post-closing adjustment on the sale of the beverage packaging business and the operating results of certain wood products facilities during the quarter.

(g) Includes a $40 million pre-tax charge ($25 million after taxes) for adjustments to legal reserves, a pre-tax charge of $18 million ($12 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations in Canada, and a pre-tax gain of $3 million ($2 million after taxes) for adjustments to previously recorded reserves associated with the Company’s Transformation Plan.

(h) Includes $29 million ($18 million after taxes) of accelerated depreciation charges, and $15 million ($9 million after taxes) for severance and other charges associated with the Company’s Transformation Plan.

(i) Includes a pre-tax gain of $113 million ($101 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 $6 million pre-tax loss ($4 million after taxes) for adjustments to the loss on the sale of UK and Ireland box plants, a $6 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 $3 million pre-tax loss ($3 million after taxes) for other small items.

(j) Includes a pre-tax gain of $15 million ($5 million after taxes) relating to the sale of the wood products business, a pre-tax loss of $20 million ($42 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 $10 million pre-tax credit ($6 million after taxes) for additional refunds received from the Canadian government of duties paid by the Company’s Weldwood of Canada Limited business, and the year-to-date operating results of the beverage packaging and wood products businesses.

International Paper Company

Reconciliation of Earnings Before

Special Items to Net Earnings

(In millions except for per share amounts)

	Three Months Ended June 30,						Three Months Ended March 31,			Six Months Ended June 30,
	2008			2007			2008			2008			2007
Earnings Before Special Items	$	235		$	223		$	175		$	410		$	426
Restructuring and other charges		(9	)		(16	)		(26	)		(35	)		(27	)
Net gains (losses) on sales and impairments of businesses		—			(7	)		1			1			257
Forestland sales		2			—			—			2			—
Interest Income		—			—			—			—			1
Earnings Per Common Share from
Continuing Operations		228			200			150			378			657
Discontinued operations		(1	)		(10	)		(17	)		(18	)		(33	)
Net Earnings as Reported	$	227		$	190		$	133		$	360		$	624
Diluted Earnings per Common Share	Three Months Ended June 30,						Three Months Ended March 31,			Six Months Ended June 30,
	2008			2007			2008			2008			2007
Earnings Per Share Before Special Items	$	0.56		$	0.52		$	0.41		$	0.97		$	0.97
Restructuring and other charges		(0.02	)		(0.04	)		(0.06	)		(0.08	)		(0.06	)
Net gains (losses) on sales and impairments of businesses		—			(0.02	)		—			—			0.58
Earnings Per Common Share from
Continuing Operations		0.54			0.46			0.35			0.89			1.49
Discontinued operations		—			(0.02	)		(0.04	)		(0.04	)		(0.07	)
Diluted Earnings per Common Share	$	0.54		$	0.44		$	0.31		$	0.85		$	1.42

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) Since 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, 2008			Six Months Ended June 30,
	2008			2007						2008			2007
Printing Papers	$	1,790		$	1,610		$	1,715		$	3,505		$	3,150
Industrial Packaging		1,470			1,315			1,445			2,915			2,550
Consumer Packaging		795			745			770			1,565			1,460
Distribution		1,970			1,720			1,985			3,955			3,395
Forest Products		55			90			25			80			175
Other Businesses (4)		—			—			—			—			135
Corporate and Inter-segment Sales		(273	)		(189	)		(272	)		(545	)		(357	)
Net Sales	$	5,807		$	5,291		$	5,668		$	11,475		$	10,508
Operating Profit by Industry Segment
	Three Months Ended June 30,						Three Months Ended March 31, 2008			Six Months Ended June 30,
	2008			2007(2)						2008			2007(2)
Printing Papers	$	226		$	188		$	185		$	411		$	355
Industrial Packaging		87			108			97			184			181
Consumer Packaging		13	(3)		30			9	(3)		22	(3)		70
Distribution		26			30			16			42			50
Forest Products		41			94			25			66			191
Other Businesses (4)		—			—			—			—			6
Operating Profit (1)		393			450			332			725			853
Interest expense, net		(81	)		(80	)		(81	)		(162	)		(141	)
Minority interest/equity earnings adjustment (5)		8			6			4			12			11
Corporate items, net		(21	)		(57	)		(21	)		(42	)		(94	)
Restructuring and other charges		—			(26	)		(37	)		(37	)		(44	)
Sale of forestlands		3			—			—			3			—
Net gains on sales and impairments of businesses		—			1			1			1			315
Earnings From Continuing Operations Before Income Taxes, Equity Earnings, and Minority Interest	$	302		$	294		$	198		$	500		$	900
Equity Earnings in Ilim Holdings S.A., Net of Taxes (1)	$	32		$	—		$	17		$	48		$	—

(1) In addition to the operating profits shown above, International Paper recorded $17 million and $32 million of equity earnings, net of taxes, for the three months ended March 31, 2008 and June 30, 2008, respectively, related to its equity investment in Ilim HoldingsS.A., a separate reportable industry segment.

(2) Prior-year information has been revised to reflect a change in the allocation of corporate overhead to the Company’s industry segments.

(3) Includes charges of $5 million and $13 million for the first and second quarters of 2008, respectively, related to the reorganization of the Company’s Shorewood operations in Canada.

(4) Includes Arizona Chemical and certain smaller businesses.

(5) 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 and equity earnings for these subsidiaries are included here to present consolidated earnings before income taxes, equity earnings, and minority interest.

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, 2008	Six Months Ended June 30,
	2008	2007		2008	2007
Printing Papers (In thousands of short tons)
U.S. Uncoated Papers	868	949	910	1,778	1,931
European & Russian Uncoated Papers	373	354	373	746	730
Brazilian Uncoated Papers	211	198	210	421	342
Asian Uncoated Papers	7	7	8	15	12
Uncoated Papers	1,459	1,508	1,501	2,960	3,015
Market Pulp (3)	416	337	354	770	672
Packaging (In thousands of short tons)
Container of the Americas	896	905	882	1,778	1,787
European Container (Boxes)	288	298	295	583	605
Other Industrial and Consumer Packaging	198	165	179	377	296
Industrial and Consumer Packaging	1,382	1,368	1,356	2,738	2,688
Containerboard	493	457	506	999	849
Coated Paperboard	595	599	606	1,201	1,190
Saturated and Bleached Kraft Papers	61	63	65	126	116

(1) Sales volumes include third party and inter-segment sales and exclude sales of equity investees.

(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, 2008		December 31, 2007
Assets
Current Assets
Cash and Temporary Investments	$	3,979	$	905
Accounts and Notes Receivable, Net		3,284		3,152
Inventories		2,219		2,071
Assets of Businesses Held for Sale		—		24
Deferred Income Tax Assets		184		213
Other		353		370
Total Current Assets		10,019		6,735
Plants, Properties and Equipment, Net		10,442		10,141
Forestlands		824		770
Investments		1,357		1,276
Goodwill		3,722		3,650
Deferred Charges and Other Assets		1,609		1,587
Total Assets	$	27,973	$	24,159
Liabilities and Common Shareholders’ Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	757	$	267
Liabilities of Businesses Held for Sale		—		4
Accounts Payable and Accrued Liabilities		3,581		3,571
Total Current Liabilities		4,338		3,842
Long-Term Debt		8,915		6,353
Deferred Income Taxes		3,166		2,919
Other Liabilities		1,806		2,145
Minority Interest		245		228
Common Shareholders’ Equity
Invested Capital		4,986		4,297
Retained Earnings		4,517		4,375
Total Common Shareholders’ Equity		9,503		8,672
Total Liabilities and Common Shareholders’ Equity	$	27,973	$	24,159

International Paper Company

Consolidated Statement of Cash Flows

Preliminary and Unaudited

(In Millions)

	Six Months Ended June 30,
	2008			2007
Operating Activities
Net earnings	$	360		$	624
Discontinued operations, net of taxes and minority interest		18			33
Earnings from continuing operations		378			657
Depreciation, amortization and cost of timber harvested		591			531
Deferred income tax (benefit) expense, net		(113	)		95
Restructuring and other charges		55			44
Payments related to restructuring and legal reserves		(42	)		(38	)
Net gains on sales and impairments of businesses		(1	)		(315	)
Equity earnings, net		(46	)		—
Periodic pension expense, net		57			105
Other, net		45			186
Changes in current assets and liabilities
Accounts and notes receivable		(27	)		(156	)
Inventories		(90	)		(118	)
Accounts payable and accrued liabilities		110			(233	)
Other		93			(70	)
Cash provided by operations - continuing operations		1,010			688
Cash used for operations - discontinued operations		—			(53	)
Cash Provided by Operations		1,010			635
Investment Activities
Invested in capital projects		(482	)		(477	)
Proceeds from divestitures		14			1,670
Equity investment in Ilim		(21	)		—
Other		(159	)		(103	)
Cash (used for) provided by investment activities - continuing operations		(648	)		1,090
Cash used for investment activities - discontinued operations		—			(12	)
Cash (Used for) Provided by Investment Activities		(648	)		1,078
Financing Activities
Repurchases of common stock		(47	)		(1,073	)
Issuance of common stock		1			71
Issuance of debt		3,135			2
Reduction of debt		(125	)		(467	)
Change in book overdrafts		(53	)		1
Dividends paid		(218	)		(223	)
Other		(20	)		—
Cash Provided by (Used for) Financing Activities		2,673			(1,689	)
Effect of Exchange Rate Changes on Cash		39			33
Change in Cash and Temporary Investments		3,074			57
Cash and Temporary Investments
Beginning of the period		905			1,624
End of the period	$	3,979		$	1,681

EX-99.2

Second Quarter

2008 Review

July 31, 2008

Second Quarter

2008 Review

July 31, 2008

Tim S. Nicholls

Senior Vice President &

Chief Financial Officer

John V. Faraci

Chairman &

Chief Executive Officer

Exhibit 99.2

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

plan, including our ability to realize the expected benefits of our acquisition of the assets of

Weyerhaeuser Company’s containerboard, packaging and recycling business in light of

integration

difficulties

and

other

challenges;

(ii)

increases

in

interest

rates

and

our

ability

to

meet our debt service obligations; (iii) industry conditions, including but not limited to

changes

in

the

cost

or

availability

of

raw

materials

and

energy,

transportation

costs,

competition we face, the company's product mix, demand and pricing for its products; (iv)

global economic conditions and political changes, including but not limited to changes in

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

recognized credit rating organizations and pension and health care costs; (v) unanticipated

expenditures related to the cost of compliance with environmental and other governmental

regulations and to actual or potential litigation; and (vi) whether we experience a material

disruption at one of our manufacturing facilities. 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

Statements Relating to Non-GAAP

Financial Measures

Statements Relating to Non-GAAP

Financial Measures

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.

4

Second Quarter 2008 Results Summary

EPS up 8% vs. 2Q07

Second Quarter 2008 Results Summary

EPS up 8% vs. 2Q07

Input costs escalated

EPS excluding land sales up

35% vs. 2Q07

Prices improved

Reduced mill operating costs

Benefited from global balance

$0.37

$0.37

$0.50

$0.15

$0.04

$0.06

2Q07

1Q08

2Q08

Forest Products EPS

Operating Business EPS

$0.52

$0.41

$0.56

Earnings from continuing operations before special items

5

Diluted EPS from Continuing Operations before Special Items

Best

nd

-Quarter

Results

since

2000

Diluted EPS from Continuing Operations before Special Items

Best

nd

-Quarter

Results

since

2000

2008

2

2

2004

2005

2006

2007

2003

2002

.10

.27

.26

.11

.15

.11

.03

.02

.16

.30

.34

.27

.04

.12

.30

.47

.41

.56

.20

.17

.26

.52

.45

.57

.45

.69

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

6

(.03)

.52

.50

.08

.24

.14

.06

.08

(.02)

(.34)

(.02)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

2Q07

Price

Volume

Cost / Mix

Materials &

Freight

Corporate /

Other

Ilim

Vicksburg

Tax

2Q08

$ / Share

$ / Share

IPG        .05

CPG     

.03

P&C     

.12

Europe 

.04

Fiber           (.07)

Chemicals 

(.09)

Energy        (.12)    

Freight       

(.06)

Cost / Mix    .16 

Outages      (.02)

2Q08 vs. 2Q07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

2Q08 vs. 2Q07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

.37

.15

Earnings from continuing operations before special items

Forest Products Earnings

.56

2Q08   33%

2Q07   29%

7

Global Sales Revenues

2Q08 vs. 2Q07

Global Sales Revenues

2Q08 vs. 2Q07

15%

11%                   12%

7%                   10%

xpedx includes the addition of Central Lewmar revenues in 2Q08

*Includes Forest Products and inter-segment sales eliminations

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

xpedx

Printing

Papers

Industrial

Packaging

Consumer

Packaging

Cumulative*

2Q07

2Q08

8

(43)

(40)

(57)

(71)

($80)

($60)

($40)

($20)

$0

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$211MM, or $0.34/Share Impact vs. 2Q07

Increasing Global Input & Freight Costs

$211MM, or $0.34/Share Impact vs. 2Q07

Input costs for continuing businesses

Percentage change reflects estimated North American input cost increases

N.A.

34%                                                    

17%

9%

34%

9

($200)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2003 vs.

2002

2004 vs.

2003

2005 vs.

2004

2006 vs.

2005

2007 vs.

2006

6M08 vs.

6M07

Cumulative

Price Increases / Decreases         

Input Cost Increases

Recovering North American Input Cost Increases

Increasing Prices to Recover Costs

Recovering North American Input Cost Increases

Increasing Prices to Recover Costs

North American Papers & Packaging

10

Printing Papers Earnings

$38 Million Increase

Printing Papers Earnings

$38 Million Increase

226

188

8

95

3

51

(119)

$0

$50

$100

$150

$200

$250

$300

2Q07

Price

Materials &

Freight

Volume

Cost / Mix

Outages

2Q08

11

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

$22

€18

$65

$84

Price/ton

6%

5%

18%

(8%)

Volume

2Q08 vs. 2Q07

Price/ton

2Q08 vs. 1Q08

0%

0%

22%

(4%)

Volume

$10

Brazilian Uncoated Papers

€3

European Uncoated Papers

$5

U.S. Pulp

$38

N.A. Uncoated Papers

Business

$226

$1,790

2Q08

$185

$1,715

1Q08

$188

$1,610

2Q07

Earnings

Sales

$ Million

Printing Papers

Margin Expansion

Printing Papers

Margin Expansion

12

108

87

28

6

6

32

(21)

(15)

(57)

$0

$25

$50

$75

$100

$125

$150

2Q07

Price

Materials

& Freight

Volume*

Cost / Mix

Outages

Vicksburg

Other

2Q08

Industrial Packaging Earnings

Cost Inflation Exceeded Price Increases

Industrial Packaging Earnings

Cost Inflation Exceeded Price Increases

*Excludes trade volume

13

€48

$60

$43

Price / Ton

(3%)

(1%)

8%

Volume

2Q08 vs. 2Q07

€5

(3%)

European Container

2Q08 vs. 1Q08

2%

(2%)

Volume

$5

N.A. Container

$2

N.A. Containerboard

Price / Ton

Business

$87

$1,470

2Q08

$97

$1,445

1Q08

$108

$1,315

2Q07

Earnings

Sales

$ Million

Industrial Packaging

U.S.

Margins Under Pressure

Industrial Packaging

U.S.

Margins Under Pressure

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

14

26

30

5

12

(1)

(38)

18

$0

$10

$20

$30

$40

$50

2Q07

Price

Materials

& Freight

Volume

Cost / Mix

Other

2Q08*

Consumer Packaging Earnings

Cost Inflation Exceeded Price Increases

Consumer Packaging Earnings

Cost Inflation Exceeded Price Increases

*Excludes a special item of ($13) million related to the reorganization of Shorewood’s Canadian operations

15

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

1

Excludes

a

special

item

of

($5)

and

($13)

million

in

1Q08

and

2Q08,

respectively,

related

to

the

reorganization

of

Shorewood’s Canadian operations

NA

Price

$44

Price/Ton

2%

Revenue

1%

Volume

2Q08 vs. 2Q07

Price

Revenue

Business

2Q08 vs. 1Q08

7%

0%

Volume

NA

Converting Businesses

$15

U.S. Coated Paperboard

Price/Ton

Business

$795

2Q08

$770

1Q08

$30

$745

2Q07

Earnings

Sales

$ Million

Consumer Packaging

Margins Under Pressure

Consumer Packaging

Margins Under Pressure

$26

1

$14

1

16

$21

$19

$15

Fuel & Freight

$26

$1,970

2Q08

$16

$1,985

1Q08

$30

$1,720

2Q07

Earnings

Sales

$ Million

xpedx

Focus on Cost Reduction

xpedx

Focus on Cost Reduction

Weak demand for commercial printing and packaging

Growth from price increases and national accounts

Benefiting from cost reductions

Offset by fuel costs despite fewer miles & deliveries

17

xpedx

Product Diversity Overcoming Market Conditions

xpedx

Product Diversity Overcoming Market Conditions

Revenue dollars and growth percentages are based on 6M08 vs. 6M07 results

$0

$1

$2

$3

Merchant Printing

National Accounts

Merchant Packaging

Central Lewmar

Publishing

Saalfeld

Billions

Printing

Packaging

Facility Supplies

All Segments

6%

0%

2%

6%

22%

12%

18

Forest Products

Focusing on Maximizing Value   

Forest Products

Focusing on Maximizing Value   

30,000

13,000

37,000

Acres Sold

$1,872

$1,871

$2,144

Price / Acre

$41

$55

2Q08

$25

$25

1Q08

$94

$90

2Q07

Earnings

Sales

($ Million)

($ Million)

19

$15

$415

6M08

$10

$315

6M07

Earnings

Sales

$ Million

Asia

Building New Capabilities

Asia

Building New Capabilities

This slide includes the Asian business segments in Printing Papers, Industrial Packaging, and Consumer

Packaging as well as Asian sales and operating profits reported in Foodservice and Shorewood results

Strong sales and earnings growth

High demand growth for board

and boxes

Focus on domestic consumption

20

Asia

World-Class Assets, Low Capital Costs

Asia

World-Class Assets, Low Capital Costs

Heated Belt Calender

Forming Section

Film Size Press

Start-up of 420,000-ton Sun joint venture coated

board machine

Chinese cartonboard demand growing at 7%

annually

Box plant and folding carton plant start ups

Folio Sheeter

21

IP’s share of Ilim’s 1Q08 earnings include a $14 million after-tax foreign exchange gain and a $3 million after-tax

charge to write off a share repurchase option

1Q08 vs. 4Q07

2%

0%

Volume

(000 Metric Tons)

$13

Containerboard

$42

Pulp

Price / Ton

Business

$32

$555

1Q08

$17

$529

4Q07

Earnings (IP Share)

Sales (100%)

$ Million

Ilim Joint Venture 1Q08 Results

IP’s After-Tax Share: $32MM or $0.08 EPS

Ilim Joint Venture 1Q08 Results

IP’s After-Tax Share: $32MM or $0.08 EPS

22

Ilim Joint Venture

Sale of KPK Mill

Ilim Joint Venture

Sale of KPK Mill

Ilim Holding S. A. signed an agreement to sell its 56%

interest in the KPK recycled paperboard mill to Knauf,

its joint venture partner in this mill

After the transaction has been completed, Knauf

will

own the 220,000-TPY mill

The transaction is expected to close in 3Q08

After the divestiture, Ilim will continue to focus on its

market pulp,  industrial packaging, and paper

businesses

23

Free Cash Flow Improvement

Free Cash Flow Improvement

$309

($267)

$576

2Q08

$528

($482)

$1,010

6M08

$93

($299)

$392

2Q07

$219

Free Cash Flow

($215)

Less Capital Investment

$434

Cash Provided by

Continuing Operations

1Q08

Free Cash Flow

($ Million)

24

(132)

(103)

(80)

(63)

($150)

($125)

($100)

($75)

($50)

($25)

$0

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$378MM, or $0.60/Share Impact vs. 6M07

Increasing Global Input & Freight Costs

$378MM, or $0.60/Share Impact vs. 6M07

Input costs for continuing businesses

Percentage change reflects North American input costs

N.A.

28%                                                    

13%

6%

30%

25

$ / Share

$ / Share

6M08 vs. 6M07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

6M08 vs. 6M07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

.07

Earnings from continuing operations before special items

IPG     

.10

CPG    

.05

P&C     

.22

Europe 

.08

Fiber           (.13)

Chemicals

(.16)

Energy        (.21)    

Freight     

(.10)

Cost / Mix  

.17

Outages        .02

Forest Products

Earnings

2008A   32%

2007A   30%

.97

.97

.66

.86

.45

.19

.11

.09

.04

(.01)

(.02)

(.60)

(.03)

(.02)

.31

.11

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

6M07

Price

Volume

Cost /

Mix

Vicksburg

Materials

& Freight

Interest

Ilim

Corporate

/ Other

Tax

Shares

6M08

26

Weyerhaeuser CBPR Acquisition Update

Weyerhaeuser CBPR Acquisition Update

On schedule for August close

Management team in place

Expecting more merger benefits at faster pace

Expect acquisition to be cash positive in 2008

27

Weyerhaeuser CBPR Acquisition Update

Financing in Place

Weyerhaeuser CBPR Acquisition Update

Financing in Place

Original Financing Plan

$2 Billion

5-Year Term Loan

$2.5 Billion

5-Year Term Loan

$4 Billion

18-Month Bridge Loan

$3.0 Billion

Bond Offering

$0.5 Billion

Cash & Short-Term Debt

Current Financing

28

Weyerhaeuser CBPR Acquisition

Key Financial Statistics

Weyerhaeuser CBPR Acquisition

Key Financial Statistics

$50 million in 2008 merger benefits

$80 million one-time costs in 2008

–

Establish data center and IT systems

–

Severance and relocation expenses

–

Transition costs

$35 million one-time, non-cash charge in 3Q08 due to

the write up of inventory in connection with the asset

purchase

$160 -

$180 million in 2008 incremental interest expense

Also targeting $150 -

$200 million in incremental IP

overhead reduction by 2010

29

3Q08 Outlook

Changes from 2Q08

3Q08 Outlook

Changes from 2Q08

Increase

Increase

Input & Freight Costs

Ex-North America

North America

Steady

Slight Increase

Flat

Slight Increase

Under Pressure

Improving

Steady

Operations

Volume

Pricing

Flat

Packaging

Improving

Paper

Decrease

Maintenance Outages

Flat

Improving

Paper

Packaging

30

2008 Forest Products Earnings

2008 Forest Products Earnings

Signed agreement to sell mineral rights in northwest

Louisiana for $263 million

Expect transaction to close in 3Q08

At end of 2Q08, portfolio includes 270,000 acres of

land and mineral rights with an NPV of $675 million

to $775 million

Expect 2008 Forest Products earnings of $350 million

to $400 million

31

Summary

2Q08 Solid Results in Tough Market Conditions

Summary

2Q08 Solid Results in Tough Market Conditions

•

8% year-over-year earnings increase

•

$0.34 per share of increased input costs

•

Announced price increases to recover costs

•

Reduced mill operating costs

•

Benefit of global operations

32

Questions & Answers

Questions & Answers

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Ann-Marie Donaldson

901-419-4967

Emily Nix

901-419-4987

Media Contact

Patty Neuhoff

901-419-4052

33

Appendix

34

Special Items & Discontinued Operations

2Q08

Special Items & Discontinued Operations

2Q08

$0.00

($1)

Total Discontinued Operations

$0.54

$227

Net Earnings

$0.56

$235

Earnings from Continuing Operations &

Before Special Items

Special Items

Earnings

per Share

$ Million

($9)

Shorewood Canadian Reorganization

$2

Adjustment to Gain on Sale of Forestlands

($0.02)

($7)

Total Special Items

$0.54

$228

Earnings from Continuing Operations

35

$0

$24

$9

$0

Europe

$19

$28

$41

$28

North America

$63

$8

$3

$52

3Q08E

$103

$13

$40

$50

2Q08

$43

$13

$11

$19

4Q08E

Total Impact

Consumer Packaging

Industrial Packaging

Printing Papers Total

$ Millions

$53

$1

$24

$28

1Q08

Dollar

impact

of

planned

maintenance

outages

are

estimates

and

subject

to

change

Planned Maintenance Outages

Planned Maintenance Outages

36

Operating Profits by Industry Segment

from Continuing Operations before Special Items

Operating Profits by Industry Segment

from Continuing Operations before Special Items

$302

$198

$294

Earnings from continuing operations before income

taxes, equity earnings & minority interest

$32

$17

$0

Equity Earnings, net of taxes -

Ilim

($21)

($21)

($57)

Corporate Items

($25)

$6

($80)

$450

$0

$94

$30

$30

$108

$188

2Q07

($10)

$8

($81)

$406

$0

$41

$26

$26

$87

$226

2Q08

($41)

Special Items

$0

Other Businesses

$337

Operating Profit

($81)

Net Interest Expense

$4

Minority Interest / Equity Earnings Adjustment

$25

$16

$14

$97

$185

1Q08

Forest Products

Distribution

Consumer Packaging

Industrial Packaging

Printing Papers

$ Million

37

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Operating Profit

Sales

$ Million

$16

$3

$9

$2

$0

$18

$79

$0

$4

$33

$42

$106

1Q08

$30

$3

$6

$21

$1

$23

$84

$0

$18

$41

$44

$85

2Q07

$5

$95

$95

$85

Asian

$26

$8

$13

$2

$20

$65

$0

$11

$51

$39

$125

2Q08

$1,970

$75

$625

$95

$315

$1,060

$5

$205

$255

$445

$880

2Q08

$1,985

$75

$600

$80

$315

$1,050

$5

$165

$225

$435

$885

1Q08

$1,720

$65

$595

$70

$270

$975

$5

$155

$205

$370

$875

2Q07

Asian

Industrial Packaging

North American

European

Asian

Distribution

European

North American

Consumer Packaging

U.S. Market Pulp

Brazilian

European

North American

Printing Papers

Excludes Forest Products

38

2008 Earnings from Continuing Operations

2008 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

$0.35

423

30%

$150

$16

($5)

($59)

$198

1Q08

($0.06)

423

39%

($25)

$0

$0

$16

($41)

1Q08

$0.41

423

31.5%

$175

$16

($5)

($75)

$239

1Q08

$30

$0

$30

Equity

Earnings

$0.54

($0.02)

$0.56

Diluted

EPS

423

30%

($7)

$0

$3

($10)

2Q08

Earnings from Continuing Operations

423

32%

$228

($7)

($97)

$302

2Q08

$235

Net

Income

$MM

32.5%

Estimated

Tax Rate

($7)

Minority

Interest

$MM

Special Items

$312

Pre-Tax

$MM

423

($100)

2Q08

Before Special Items

Average

Shares  

MM

Tax

$MM

2

1

39

Business Segment Price Realization

Business Segment Price Realization

$851

$556

2Q08

$651

$988

2Q08

$846

$554

1Q08

$646

$950

1Q08

$791

$513

2Q07

$586

$904

2Q07

Average Selling Price

Realizations

Industrial Packaging ($/ton)

Printing Papers ($/ton)

Containerboard

Corrugated Boxes

Market Pulp

Uncoated Freesheet

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

40

226

188

10

(4)

40

(8)

$0

$50

$100

$150

$200

$250

$300

2Q07

North

America

Paper

North

America

Pulp

Europe

Brazil

2Q08

Printing Papers Earnings

2Q08 vs. 2Q07

Printing Papers Earnings

2Q08 vs. 2Q07

Brazilian earnings include a one-time, $6 million gain from the sale of government credits

41

87

108

(3)

(19)

1

$0

$20

$40

$60

$80

$100

$120

2Q07

North

America

Europe

Asia

2Q08

Industrial Packaging Earnings

2Q08 vs. 2Q07

Industrial Packaging Earnings

2Q08 vs. 2Q07

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

42

26

30

2

2

(2)

2

(8)

$0

$10

$20

$30

2Q07

US Coated

Paperboard

Shorewood

Food

Service

Europe

Asia

2Q08*

Consumer Packaging Earnings

2Q08 vs. 2Q07

Consumer Packaging Earnings

2Q08 vs. 2Q07

*Excludes a special item of ($13) million related to the reorganization of Shorewood’s Canadian operations

43

.50

.37

.16

.03

.06

.05

.03

(.08)

(.01)

(.02)

(.09)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

1Q08

Price

Volume

Cost / Mix

Materials /

Freight

Corporate

/ Other

Ilim

Outages

Vicksburg

Tax

2Q08

$ / Share

$ / Share

2Q08 vs. 1Q08 EPS

Higher Costs,

Higher Prices,

Higher

Maintenance Outages

2Q08 vs. 1Q08 EPS

Higher Costs,

Higher Prices,

Higher

Maintenance Outages

.04

.06

.56

.41

Earnings from continuing operations before special items

Forest Products Earnings               

44

Printing Papers Earnings

2Q08 vs. 1Q08

Printing Papers Earnings

2Q08 vs. 1Q08

226

185

12

12

44

31

(38)

(20)

$0

$50

$100

$150

$200

$250

$300

1Q08

Price

Volume

Cost / Mix

Materials

& Freight

Outages

Other

2Q08

45

87

97

19

8

(15)

(16)

(6)

$0

$20

$40

$60

$80

$100

$120

$140

1Q08

Volume*

Cost / Mix

Materials

& Freight

Outages

Vicksburg

2Q08

Industrial Packaging Earnings

2Q08 vs. 1Q08

Industrial Packaging Earnings

2Q08 vs. 1Q08

*Excludes trade volume

46

14

26

(11)

(13)

1

25

4

6

$0

$10

$20

$30

$40

$50

$60

1Q08*

Price

Volume

Cost /

Mix

Materials

& Freight

Outages

Other

2Q08*

Consumer Packaging Earnings

2Q08 vs. 1Q08

Consumer Packaging Earnings

2Q08 vs. 1Q08

*

Excludes

a

special

item

of

($5)

and

($13)

million

in

1Q08

and

2Q08,

respectively,

related

to

the

reorganization

of

Shorewood’s Canadian operations

47

North American Industry Capacity Closures

Uncoated Freesheet

North American Industry Capacity Closures

Uncoated Freesheet

12,000

13,000

14,000

15,000

16,000

2000

2001

2002

2003

2004

2005

2006

2007

2008E

2000 –

2008

Demand CAGR = (2.4%)

Capacity closures = (18%)

Source: AF&PA, RISI, IP Analysis

48

North American Industry Capacity Closures

Containerboard

North American Industry Capacity Closures

Containerboard

38,000

39,000

40,000

41,000

42,000

2000

2001

2002

2003

2004

2005

2006

2007

2008E

Source: AF&PA, RISI, IP Analysis

2008E includes Pratt’s new machine in Shreveport, LA:  360 M Tons

2000 –

2008

Demand CAGR = (0.4%)

Capacity closures = (3%)

49

Total Cash Cost Components

6M08

Total Cash Cost Components

6M08

North American Mills Only

Energy

11%

Materials

13%

Labor

14%

Fiber

27%

Freight

13%

Overhead

9%

Chemicals

12%

50

Energy

Substituting Lower-Cost Energy

Energy

Substituting Lower-Cost Energy

0%

20%

40%

60%

80%

100%

2001

2002

2003

2004

2005

2006

2007

2008P

Coal

Gas

Wood Waste

Fuel Oil

Power

Other

*Other includes shredded tires, recycled oil, and any other fossil fuels

51

($120)

($100)

($80)

($60)

($40)

($20)

$0

Wood

Energy

Chemicals

Freight

OCC

Global Input & Freight Costs by Segment

$211 Million Global Impact vs. 2Q07

Global Input & Freight Costs by Segment

$211 Million Global Impact vs. 2Q07

Consumer

Packaging

($37)

Industrial

Packaging

($56)

Printing

Papers

($118)

52

(24)

(17)

(2)

(19)

($35)

($25)

($15)

($5)

$5

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$62MM, or $0.10/Share Impact vs. 1Q08

Increasing Global Input & Freight Costs

$62MM, or $0.10/Share Impact vs. 1Q08

Input costs for continuing businesses

Percentage change reflects North American input costs

N.A.

18%

15%

1%

7%

53

0

50

100

150

200

250

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2005

2006

2007

NYMEX Natural Gas closing prices

Index: Jan 2005 Natural Gas Costs = 100

Natural Gas Costs

45% increase vs. 2Q07 average cost

Natural Gas Costs

45% increase vs. 2Q07 average cost

2008

54

50

70

90

110

130

150

170

190

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2006

2007

Index: Jan 2006 #6 Fuel Costs = 100

Delivered cost to U.S. facilities

U.S. #6 Fuel Oil

75% increase vs. 2Q07 average cost

U.S. #6 Fuel Oil

75% increase vs. 2Q07 average cost

2008

55

90

95

100

105

110

115

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

U.S. Mill Wood Costs

9% increase vs. 2Q07 average cost

U.S. Mill Wood Costs

9% increase vs. 2Q07 average cost

Index: Jan 2005 Wood Costs = 100

2005

2006

2007

2008

Delivered cost to U.S. facilities

56

75

100

125

150

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2005

2006

2007

2008

Index: Jan 2005 Caustic Soda Costs = 100

Delivered cost to U.S. facilities

U.S. Caustic Soda Costs

52% increase vs. 2Q07 average cost

U.S. Caustic Soda Costs

52% increase vs. 2Q07 average cost

57

100

125

150

175

200

225

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2006

2007

Index: Jan 2006 Corn Starch Costs = 100

Delivered cost to U.S. facilities

U.S. Corn Starch Costs

10% increase vs. 2Q07 average cost

U.S. Corn Starch Costs

10% increase vs. 2Q07 average cost

2008

58

110,000

350,000

Corn Starch (Tons)

Chemicals

Fiber

Energy

50,000

240,000

Sodium Chlorate (Tons)

-

40,000

LD Polyethylene (Tons)

4,000

24,000

Latex (Tons)

230,000

1,300,000

Coal (Tons)

8,200,000

43,000,000

Wood (Tons)

60,000

300,000

Caustic Soda (Tons)

310,000

600,000

Old Corrugated Containers (Tons)

Commodity

500,000

15,000,000

Non –

U. S.

3,000,000

#6 Fuel Oil (Barrels)

28,000,000

Natural Gas (MM BTUs)

U. S.

Global Consumption

2008 Purchase Estimates for Key Inputs

Global Consumption

2008 Purchase Estimates for Key Inputs

Includes only continuing businesses; does not include Asian or Weyerhaeuser consumption