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 30, 2009

(Date of Report)

July 30, 2009

(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 30, 2009, International Paper Company issued a press release reporting preliminary earnings for the second quarter of 2009 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 30, 2009.
Exhibit 99.2	Slides of International Paper Company, dated July 30, 2009.

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 30, 2009

Exhibit Index

Exhibit 99.1	Press release of International Paper Company, dated July 30, 2009.
Exhibit 99.2	Slides of International Paper Company, dated July 30, 2009.

EX-99.1

Exhibit 99.1

    

INTERNATIONAL PLACE

6400 POPLAR AVENUE

MEMPHIS, TN 38197

News Release

International Paper Reports Second-Quarter Earnings

MEMPHIS, Tenn. – July 30, 2009 – International Paper (NYSE: IP) today reported preliminary 2009 second-quarter net earnings attributable to common shareholders of $136 million ($0.32 per share) compared with $257 million ($0.61 per share) in the first quarter of 2009 and $227 million ($0.54 per share) in the second quarter of 2008. Amounts in all periods include special items.

Diluted Earnings Per Share Attributable to International Paper Shareholders

	Second Quarter 2009			First Quarter 2009			Second Quarter 2008
Net Earnings	$	0.32		$	0.61		$	0.54
Add Back – Net Special Items Expense (Income)		(0.12	)		(0.53	)		0.02
Earnings from Continuing Operations and Before Special Items	$	0.20		$	0.08		$	0.56

Earnings from continuing operations and before special items in the 2009 second quarter totaled $86 million ($0.20 per share), compared with $34 million ($0.08 per share) in the first quarter of 2009 and $235 million ($0.56 per share) in the second quarter of 2008.

Quarterly net sales were $5.8 billion in the second quarter compared with $5.6 billion in the first quarter of 2009 and $5.8 billion reported in the second quarter of 2008.

Operating profits in the 2009 second quarter were $788 million, up from $779 million in the first quarter of 2009 and $393 million in the second quarter of 2008.

“Over the course of this recession, International Paper has consistently demonstrated our ability to execute well despite the economic environment,” said Chairman and Chief Executive Officer John Faraci. “Our performance in the second quarter once again generated solid earnings and strong free cash flow. We’re also well ahead of our announced plans to pay down debt.

“When we look at global economic conditions today, it appears the worst is behind us. We have not seen any signs of sustainable progress in North America, but it appears demand has stabilized at lower levels. We are seeing improvement in Latin American paper markets and solid packaging demand growth in China. The good news is that mill and channel inventories are lean for both paper and containerboard, which positions us well for the eventual upturn in demand.”

Page 1

At the end of the 2009 second quarter, International Paper had $4.2 billion in cash and committed liquidity facilities. The company also generated $1.3 billion of free cash flow (cash provided by operations less capital expenditures) during the quarter, reflecting its continued focus on reducing capital spending, managing working capital and decreasing overhead spending, as well as cash received from alternative fuel mixture credits. The company also repaid $600 million of debt.

SEGMENT INFORMATION

To measure the performance of the company’s business segments from quarter to quarter without variations caused by special or unusual items, management focuses on business segment operating profits excluding those items. Second-quarter 2009 segment operating profits and business trends, excluding special items, compared with the prior quarter are as follows:

Industrial Packaging operating profits increased to $255 million, up from $188 million in the first quarter of 2009 as improved volume, favorable input costs, strong manufacturing operations and synergy benefits related to the CBPR acquisition offset weakened pricing.

Printing Papers had operating profits of $86 million compared with an operating profit of $101 million in the first quarter of 2009. Benefits from improved volume, input cost relief and strong operations were offset by higher annual maintenance outages, mix and pricing pressure in global paper and pulp markets.

Consumer Packaging had operating profits of $38 million, up from $22 million in the previous quarter due to improvements in volume and operating performance, as well as lower input costs, partially offset by higher annual maintenance outages.

The company’s distribution business, xpedx, reported operating profits of $10 million, up from a loss of $7 million in the previous quarter due to cost reductions and improved volumes.

Forest Products operating profits totaled $3 million, up from $2 million in the first quarter of 2009. The pending sale of 143,000 acres is expected to close in the fourth quarter of 2009, subject to the buyer’s receipt of financing.

Net corporate expenses totaled $44 million for the 2009 second quarter, down from $51 million in the 2009 first quarter but up from $21 million in the second quarter of 2008. The decline compared with first-quarter levels principally reflects the finalization of full-year 2009 pension expense based on actual versus estimated year-end census data. The increase from the 2008 second quarter reflects higher pension expense, lower supply chain initiative costs and the effect of an $11 million gain on the sale of the former Natchez mill site in 2008.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items was 33 percent for both the second and first quarters of 2009 compared with 32.5 percent in the second quarter of 2008.

Page 2

EFFECTS OF SPECIAL ITEMS

Special items in the second quarter of 2009 included a credit of $482 million before taxes ($294 million after taxes) for alternative fuel mixture credits earned under 2007 legislation enacted to provide a tax credit for companies that use alternative fuel mixtures to produce energy to operate their businesses, a $48 million before and after-tax charge to write down the assets of the Etienne mill in France to estimated fair value, a $18 million pre-tax charge ($11 million after taxes) for integration costs associated with the Industrial Packaging business integration, and a pre-tax charge of $79 million ($55 million after taxes) for restructuring and other charges. Restructuring and other charges included a $34 million charge before taxes ($21 million after taxes) for severance and benefit costs associated with the Company’s 2008 overhead reduction program, a $25 million charge before taxes ($16 million after taxes) for early debt extinguishment costs, a $15 million before and after-tax charge for severance and other costs related to the Company’s Etienne mill in France, and a $5 million charge before taxes ($3 million after taxes) for other closure costs. Additionally, the second-quarter income tax provision included a $156 million charge to establish a valuation allowance for net operating loss carryforwards in France, and a $26 million credit related to the closing of the 2004 and 2005 U.S. federal income tax audit and related state income tax effects.

Special items in the first quarter of 2009 included a credit of $540 million before taxes ($330 million after taxes) for alternative fuel mixture credits, a pre-tax charge of $36 million ($22 million after taxes) for costs related to the Industrial Packaging business integration, a pre-tax charge of $83 million ($65 million after taxes) for restructuring and other charges, and a $20 million after-tax charge for certain income tax adjustments. Restructuring and other charges included a $52 million pre-tax charge ($32 million after taxes) for severance and benefits associated with the company’s 2008 overhead reduction program, a pre-tax charge of $23 million ($28 million after taxes) for closure costs for the Inverurie mill in Scotland, a $6 million pre-tax charge ($4 million after taxes) for closure costs for the Franklin lumber mill, sheet converting plant and converting innovations center, and a $2 million pre-tax charge ($1 million after taxes) for costs associated with the reorganization of the company’s Shorewood operations.

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.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. EDT / 9 a.m. CDT 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 approximately two hours after the call. 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 Second-Quarter Earnings Call. The conference ID number is 15781616. 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 15781616.

Page 3

About International Paper

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 58,000 people in more than 20 countries and serves customers worldwide. 2008 net sales were approximately $25 billion. For more information about International Paper, its products and stewardship efforts, visit www.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) increases in interest rates and our ability to meet our debt service obligations; (ii) industry conditions, including but not limited to changes in the cost or availability of raw materials, energy and transportation costs, competition we face, cyclicality and changes in consumer preferences, demand and pricing for its products; (iii) global economic conditions and political changes, including but not limited to the impairment of financial institutions, changes in currency exchange rates, credit availability, credit ratings issued by recognized credit rating organizations, the amount of our future pension funding obligation, changes in tax laws and pension and health care costs; (iv) unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and to actual or potential litigation; and (v) whether we experience a material disruption at one of our manufacturing facilities and risks inherent in conducting business through a joint venture. 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: Kathleen Bark, 901-419-4333; Investors: Thomas A. Cleves, 901-419-7566; 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, 2009				Six Months Ended June 30,
	2009				2008								2009				2008
Net Sales	$	5,802			$	5,807			$	5,668			$	11,470			$	11,475
Costs and Expenses
Cost of products sold		3,781		(a)		4,305				3,731		(h)		7,512		(k)		8,566
Selling and administrative expenses		508		(b)		459				500		(i)		1,008		(l)		931
Depreciation, amortization and cost of timber harvested		367				305				343				710				591
Distribution expenses		279				301				279				558				586
Taxes other than payroll and income taxes		47				44				50				97				88
Restructuring and other charges		79		(c)		13		(f)		83		(j)		162		(m)		55	(n)
Forestland sales		—				(3	)	(g)		—				—				(3	) (g)
Net (gains) losses on sales and impairments of businesses		48		(d)		—				—				48		(d)		(1	)
Interest expense, net		173				81				164				337				162
Earnings From Continuing Operations Before Income Taxes and Equity Earnings		520		(a-d)		302		(f,g)		518		(h-j)		1,038		(d,k-m)		500	(g,n)
Income tax provision		348		(e)		97				230				578		(e)		156
Equity earnings (losses), net of taxes		(32	)			30				(27	)			(59	)			46
Earnings From Continuing Operations		140		(a-e)		235		(f,g)		261		(h-j)		401		(d,e,k-m)		390	(g,n)
Discontinued operations, net of taxes		—				(1	)			—				—				(18	) (o)
Net Earnings	$	140		(a-e)	$	234		(f,g)	$	261		(h-j)	$	401		(d,e,k-m)	$	372
Less: Net earnings attributable to noncontrolling interests		4				7				4				8				12
Net Earnings Attributable to International Paper Company	$	136		(a-e)	$	227		(f,g)	$	257		(h-j)	$	393		(d,e,k-m)	$	360	(g,n,o)
Basic Earnings Per Common Share Attributable to International Paper Common Shareholders
Earnings from continuing operations	$	0.32		(a-e)	$	0.54		(f,g)	$	0.61		(h-j)	$	0.93		(d,e,k-m)	$	0.90	(g,n)
Discontinued operations		—				—				—				—				(0.04	) (o)
Net earnings	$	0.32		(a-e)	$	0.54		(f,g)	$	0.61		(h-j)	$	0.93		(d,e,k-m)	$	0.86	(g,n,o)
Diluted Earnings Per Common Share Attributable to International Paper Common Shareholders
Earnings from continuing operations	$	0.32		(a-e)	$	0.54		(f,g)	$	0.61		(h-j)	$	0.93		(d,e,k-m)	$	0.89	(g,n)
Discontinued operations		—				—				—				—				(0.04	) (o)
Net earnings	$	0.32		(a-e)	$	0.54		(f,g)	$	0.61		(h-j)	$	0.93		(d,e,k-m)	$	0.85	(g,n,o)
Average Shares of Common Stock Outstanding - Diluted		425.4				422.6				423.1				424.2				423.9
Cash Dividends Per Common Share	$	0.025			$	0.25			$	0.25			$	0.275			$	0.50
Amounts Attributable to International Paper Common Shareholders
Earnings from continuing operations, net of tax	$	136			$	228			$	257			$	393			$	378
Discontinued operations, net of tax		—				(1	)			0				—				(18	)
Net Earnings	$	136			$	227			$	257			$	393			$	360

The accompanying notes are an integral part of this consolidated statement of operations.

(a) Includes a pre-tax gain of $482 million ($294 million after taxes) related to alternative fuel mixture credits.

(b) Includes a pre-tax charge of $18 million ($11 million after taxes) for integration costs associated with the Containerboard, Packaging and Recycling business (CBPR) acquired from Weyerhaeuser Company in August 2008.

(c) Includes a pre-tax charge of $34 million ($21 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $25 million ($16 million after taxes) for early debt extinguishment costs, a charge of $15 million (before and after taxes) for severance and other costs associated with the Etienne mill in France, and a pre-tax charge of $5 million ($3 million after taxes) for other items.

(d) Includes a pre-tax charge of $48 million (before and after taxes) to write down the assets at the Etienne mill to estimated fair value.

(e) Includes a $156 million tax expense for the write off of deferred tax assets in France and a $26 million tax benefit related to the closing of the 2004 and 2005 U.S. federal income tax audit, and related state income tax effects.

(f) 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.

(g) 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.

(h) Includes a pre-tax gain of $540 million ($330 million after taxes) related to alternative fuel mixture credits.

(i) Includes a pre-tax charge of $36 million ($22 million after taxes) for integration costs associated with the CBPR business.

(j) Includes a pre-tax charge of $52 million ($32 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $23 million ($28 million after taxes) for closure costs associated with the Inverurie, Scotland mill, a pre-tax charge of $6 million ($4 million after taxes) for shutdown costs associated with the Franklin lumber mill, sheet converting plant and converting innovations center, and a pre-tax charge of $2 million ($1 million after taxes) for shutdown costs associated with the reorganization of the Company's Shorewood operations.

(k) Includes a pre-tax gain of $1 billion ($624 million after taxes) related to alternative fuel mixture credits.

(l) Includes a pre-tax charge of $54 million ($33 million after taxes) for integration costs associated with the CBPR business.

(m) Includes a pre-tax charge of $86 million ($53 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $23 million ($28 million after taxes) for closure costs associated with the Inverurie, Scotland mill, a pre-tax charge of $25 million ($16 million after taxes) for early debt extinguishment costs, a pre-tax charge of $15 million (before and after taxes) for severance and other costs associated with the Etienne mill, and a pre-tax charge of $13 million ($8 million after taxes) for other items.

(n) 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.

(o) 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.

International Paper Company

Reconciliation of Earnings Before Special Items to Net Earnings

Attributable to International Paper Company

(In millions except for per share amounts)

	Three Months Ended June 30,						Three Months Ended March 31,			Six Months Ended June 30,
	2009			2008			2009			2009			2008
Earnings Before Special Items	$	86		$	235		$	34		$	120		$	410
Restructuring and other charges		(55	)		(9	)		(65	)		(120	)		(35	)
CBPR business integration costs		(11	)		—			(22	)		(33	)		—
Alternative fuel mixture credits		294			—			330			624			—
Forestland sales		—			2			—			—			2
Net gains (losses) on sales and impairments of businesses		(48	)		—			—			(48	)		1
Income tax adjustments		(130	)		—			(20	)		(150	)		—
Earnings from Continuing Operations		136			228			257			393			378
Discontinued operations		—			(1	)		—			—			(18	)
Net Earnings as Reported	$	136		$	227		$	257		$	393		$	360
	Three Months Ended June 30,						Three Months Ended March 31,			Six Months Ended June 30,
Diluted Earnings per Common Share	2009			2008			2009			2009			2008
Earnings Per Share Before Special Items	$	0.20		$	0.56		$	0.08		$	0.28		$	0.97
Restructuring and other charges		(0.13	)		(0.02	)		(0.15	)		(0.28	)		(0.08	)
CBPR business integration costs		(0.03	)		—			(0.05	)		(0.08	)		—
Alternative fuel mixture credits		0.69			—			0.78			1.47			—
Net gains (losses) on sales and impairments of businesses		(0.11	)		—			—			(0.11	)		—
Income tax adjustments		(0.30	)		—			(0.05	)		(0.35	)		—
Earnings Per Common Share from Continuing Operations		0.32			0.54			0.61			0.93			0.89
Discontinued operations		—			—			—			—			(0.04	)
Diluted Earnings per Common Share	$	0.32		$	0.54		$	0.61		$	0.93		$	0.85

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

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, 2009			Six Months Ended June 30,
	2009			2008						2009			2008
Industrial Packaging	$	2,270		$	1,470		$	2,180		$	4,450		$	2,915
Printing Papers		1,360			1,790			1,325			2,685			3,505
Consumer Packaging		770			795			715			1,485			1,565
Distribution		1,595			1,970			1,590			3,185			3,955
Forest Products		10			55			5			15			80
Corporate and Inter-segment Sales		(203	)		(273	)		(147	)		(350	)		(545	)
Net Sales	$	5,802		$	5,807		$	5,668		$	11,470		$	11,475

Operating Profit by Industry Segment

	Three Months Ended June 30,							Three Months Ended March 31, 2009				Six Months Ended June 30,
	2009				2008							2009				2008
Industrial Packaging	$	382		(2,3,4)	$	87		$	360		(2,4)	$	742		(2,3,4)	$	184
Printing Papers		279		(2,5)		226			312		(2,5)		591		(2,5)		411
Consumer Packaging		114		(2,6)		13	(6)		112		(2,6)		226		(2,6)		22	(6)
Distribution		10				26			(7	)			3				42
Forest Products		3				41			2				5				66
Operating Profit (1)		788				393			779				1,567				725
Interest expense, net		(173	)			(81	)		(164	)			(337	)			(162	)
Noncontrolling interest/equity earnings adjustment (7)		8				8			6				14				12
Corporate items, net		(44	)			(21	)		(51	)			(95	)			(42	)
Restructuring and other charges		(59	)			—			(52	)			(111	)			(37	)
Sale of forestlands		—				3			—				—				3
Net gains on sales and impairments of businesses		—				—			—				—				1
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	$	520			$	302		$	518			$	1,038			$	500
Equity Earnings (Loss) in Ilim Holdings S.A., Net of Taxes (1)	$	(30	)		$	32		$	(26	)		$	(56	)		$	49

(1) In addition to the operating profits shown above, International Paper recorded equity losses, net of taxes, of $30 million for the three months ended June 30, 2009, and $26 million for the three months ended March 31, 2009, and $56 million for the six months ended June 30, 2009, and equity earnings, net of taxes, of $32 million for the three months ended June 30, 2008, and $49 million for the six months ended June 30, 2008, related to its equity investment in Ilim Holdings S.A., a separate reportable industry segment.

(2) Includes gains of $208 million and $208 million in the Industrial Packaging segment, $197 million and $240 million in the Printing Papers segment, and $77 million and $92 million in the Consumer Packaging segment for the three months ended June 30, 2009 and March 31, 2009, respectively, relating to alternative fuel mixture credits.

(3) Includes charges of $48 million to write down the assets at the Etienne mill in France to estimated fair value and $15 million for severance and other costs related to the Etienne mill.

(4) Includes charges of $18 million and $36 million for the three months ended June 30, 2009 and March 31, 2009, respectively, for CBPR integration costs.

(5) Includes charges of $4 million and $6 million for the three months ended June 30, 2009 and March 31, 2009, respectively, for shutdown costs for the Louisiana mill and the Franklin lumber mill, sheet converting plant and converting innovations center, and a charge of $23 million for the three months ended March 31, 2009 for the closure of the Inverurie, Scotland mill.

(6) Includes charges of $1 million, $13 million, and $2 million for the three months ended June 30, 2009, June 30, 2008, and March 31, 2009, and $3 million and $18 million for the six months ended June 30, 2009 and 2008, related to the reorganization of the Company's Shorewood operations.

(7) 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 noncontrolling interest and equity earnings for these subsidiaries are adjusted here to present consolidated earnings before income taxes and equity earnings.

International Paper

Sales Volume by Product (1) (2)

Preliminary and Unaudited

International Paper Consolidated

	Three Months Ended June 30,		Three Months Ended March 31,	Six Months Ended June 30,
	2009	2008	2009	2009	2008
Industrial Packaging (In thousands of short tons)
Corrugated Packaging (4)	1,899	896	1,776	3,675	1,778
Containerboard (4)	530	493	471	1,001	999
Recycling (4)	598	—	595	1,193	—
Saturated Kraft	29	39	21	50	85
Bleached Kraft	17	22	13	30	41
European Industrial Packaging	268	288	270	538	583
Asian Industrial Packaging	139	152	88	227	290
Industrial Packaging	3,480	1,890	3,234	6,714	3,776
Printing Papers (In thousands of short tons)
U.S. Uncoated Papers	702	868	693	1,395	1,778
European & Russian Uncoated Papers	332	373	370	702	746
Brazilian Uncoated Papers	234	211	180	414	421
Asian Uncoated Papers	12	7	3	15	15
Uncoated Papers	1,280	1,459	1,246	2,526	2,960
Market Pulp (3)	375	416	317	692	770
Consumer Packaging (In thousands of short tons)
U.S. Coated Paperboard	318	399	290	608	799
European Coated Paperboard	92	73	87	179	154
Asian Coated Paperboard	218	123	189	407	248
Other Consumer Packaging	42	46	46	88	87
Consumer Packaging	670	641	612	1,282	1,288

(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.

(4) Includes CBPR volumes from date of acquisition.

INTERNATIONAL PAPER COMPANY

Consolidated Balance Sheet

Preliminary and Unaudited

(In Millions)

	June 30, 2009		December 31, 2008
Assets
Current Assets
Cash and Temporary Investments	$	1,654	$	1,144
Accounts and Notes Receivable, Net		3,312		3,288
Inventories		2,209		2,495
Deferred Income Tax Assets		166		261
Other		208		172
Total Current Assets		7,549		7,360
Plants, Properties and Equipment, Net		13,766		14,202
Forestlands		691		594
Investments		1,068		1,274
Goodwill		2,248		2,027
Deferred Charges and Other Assets		1,326		1,456
Total Assets	$	26,648	$	26,913
Liabilities and Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	386	$	828
Accounts Payable and Accrued Liabilities		3,564		3,927
Total Current Liabilities		3,950		4,755
Long-Term Debt		10,531		11,246
Deferred Income Taxes		2,359		1,957
Pension Benefit Obligation		3,294		3,260
Postretirement and Postemployment Benefit Obligation		643		663
Other Liabilities		792		631
Equity
Invested Capital		3,142		2,739
Retained Earnings		1,701		1,430
Total Shareholders' Equity		4,843		4,169
Non-controlling interests		236		232
Total Equity		5,079		4,401
Total Liabilities and Equity	$	26,648	$	26,913

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Cash Flows

Preliminary and Unaudited

(In Millions)

	Six Months Ended June 30,
	2009			2008
Operating Activities
Net earnings attributable to International Paper Company	$	393		$	360
Noncontrolling interests		8			12
Discontinued operations, net of taxes and noncontrolling interest		—			18
Earnings from continuing operations		401			390
Depreciation, amortization and cost of timber harvested		710			591
Deferred income tax expense (benefit), net		539			(113	)
Restructuring and other charges		162			55
Payments related to restructuring and legal reserves		(24	)		(42	)
Net (gains) losses on sales and impairments of businesses		48			(1	)
Equity loss (earnings), net		59			(46	)
Periodic pension expense, net		107			57
Alternative fuel mixture credits receivable		(189	)		—
Other, net		107			33
Changes in current assets and liabilities
Accounts and notes receivable		195			(27	)
Inventories		310			(90	)
Accounts payable and accrued liabilities		(165	)		137
Interest payable		(32	)		(27	)
Other		(39	)		93
Cash Provided by Operations		2,189			1,010
Investment Activities
Invested in capital projects		(259	)		(482	)
Acquisitions, net of cash received		(8	)		—
Proceeds from divestitures		—			14
Equity investment in Ilim		—			(21	)
Other		(59	)		(159	)
Cash Used for Investment Activities		(326	)		(648	)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding		(10	)		(47	)
Issuance of common stock		—			1
Issuance of debt		1,476			3,135
Reduction of debt		(2,617	)		(125	)
Change in book overdrafts		(72	)		(53	)
Dividends paid		(118	)		(218	)
Other		(35	)		(20	)
Cash (Used for) Provided by Financing Activities		(1,376	)		2,673
Effect of Exchange Rate Changes on Cash		23			39
Change in Cash and Temporary Investments		510			3,074
Cash and Temporary Investments
Beginning of the period		1,144			905
End of the period	$	1,654		$	3,979

EX-99.2

Second Quarter

2009 Review

July 30, 2009

Second Quarter

2009 Review

July 30, 2009

John V. Faraci

Chairman &

Chief Executive Officer

Tim S. Nicholls

Senior Vice President &

Chief Financial 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)  increases in interest rates and our ability to meet our debt service

obligations; (ii) industry conditions, including but not limited to changes in the cost or

availability of raw materials, energy and transportation costs, competition we face,

cyclicality and changes in consumer preferences, demand and pricing for its products;

(iii) global economic conditions and political changes, including but not limited to the

impairment of financial institutions, changes in currency exchange rates, credit

availability, credit ratings issued by recognized credit rating organizations, the amount

of our future pension funding obligation, changes in tax laws and pension and health

care costs; (iv) unanticipated expenditures related to the cost of compliance with

environmental and other governmental regulations and to actual or potential litigation;

and (v) whether we experience a material disruption at one of our manufacturing

facilities and risks inherent in conducting business through a joint venture. 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 2009

Outstanding Results

Second Quarter 2009

Outstanding Results

150% Earnings Increase

180 BPS EBITDA Margin Increase

$1.3 Billion in Free Cash Flow

$600 Million Debt Reduction

Exceeded $400 Million Run Rate

in WY PKG Integration Synergies

Two Years Ahead of Plan

Earnings from continuing operations before special items

$0.56

5

2Q09 Financial Snapshot

2Q09 Financial Snapshot

Earnings

from

continuing

operations

before

special

items;

1Q09

&

2Q09

includes

WY

PKG

1

Cash provided by continuing operations less capital expenditures

2

Excludes $3.0B proceeds from WY PKG bond issuance

$ Billion

2Q08

1Q09

2Q09

Sales

$5.8

$5.7

$5.8

EBITDA

$0.7

$0.6

$0.7

Free

Cash

Flow

$0.3

$0.7

$1.3

Cash Balance

$1.0

$1.0

$1.7

1

2

6

N.A. Industrial Packaging

Integration Progress

Earnings Well Ahead of Plan

N.A. Industrial Packaging

Integration Progress

Earnings Well Ahead of Plan

North American earnings before special items

7

.08

.20

.20

.12

.12

(.01)

(.01)

(.19)

(.05)

(.06)

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

1Q09

Volume

& LOO

Price

Input

Costs

Cost

Reduction

Mix

Outages

Interest

Ilim JV

2Q09

Earnings before special items

2Q09 vs. 1Q09 EPS

Volume Stabilized, Price Slippage, Input Cost Relief

2Q09 vs. 1Q09 EPS

Volume Stabilized, Price Slippage, Input Cost Relief

8

IP Transformation

28% Headcount Reduction

IP Transformation

28% Headcount Reduction

* At January 1, 2005

Excludes Ilim joint venture employees

8

Achieved year-end headcount goal during 2Q

9

Global

Input

&

Freight

Costs

by

Segment

$77

Million,

or

$0.12/Share

Favorable

vs.

1Q09

Global

Input

&

Freight

Costs

by

Segment

$77

Million,

or

$0.12/Share

Favorable

vs.

1Q09

By Business

By Input Type

10

N.A. Lack of Order & Maintenance Downtime

20% of Capacity in 2Q, Down from 27% in 1Q

N.A. Lack of Order & Maintenance Downtime

20% of Capacity in 2Q, Down from 27% in 1Q

Lack-of-order & maintenance downtime for North American Containerboard, Uncoated Papers, Market Pulp, & Coated    

Paperboard.  See Appendix slide 32 for detail by business.

2009

LOO

downtime

excludes

capacity

from

mills

or

machines

that

have

been

permanently

shutdown

(Franklin

#3

-

32,000

tons

and

Louisiana

mill

-

120,000

tons)

or

indefinitely

shut

down

(Valliant

#3

-

97,000

tons)

1,156

868

1,013

107

11

Industrial Packaging

Earnings

2Q09 vs. 1Q09

Industrial Packaging

Earnings

2Q09 vs. 1Q09

1

Excludes trade volume

Earnings before special items

1

12

N.A. Industrial Packaging

Performance

N.A. Industrial Packaging

Performance

Box shipments up 5.8%

vs. prior quarter

Domestic containerboard prices stabilized

Continued strong operations combined with

cost reduction

Some input cost pressure –

OCC increasing

Lean

inventories

13

N.A. Industrial Packaging

Synergies

Exceeded Year-Three Run Rate

N.A. Industrial Packaging

Synergies

Exceeded Year-Three Run Rate

$118 MM

$118 MM

$220 MM

$220 MM

$490 MM

$490 MM

$400 MM

$400 MM

14

N.A. Industrial Packaging

Relative Performance

Outperforming

Competitors in 2009

N.A. Industrial Packaging

Relative Performance

Outperforming

Competitors in 2009

IP EBITDA margins based on North American Industrial Packaging operating profit before special items

Competitor EBITDA margins obtained from public filings and IP analysis

15

Printing

Papers Earnings

2Q09 vs. 1Q09

Printing

Papers Earnings

2Q09 vs. 1Q09

Earnings Before Special Items

16

Consumer Packaging

Earnings

2Q09 vs. 1Q09

Consumer Packaging

Earnings

2Q09 vs. 1Q09

Earnings Before Special Items

17

$ Million

2Q08

1Q09

2Q09

Sales

$1,970

$1,590

$1,595

Earnings

$26

($7)

$10

xpedx

xpedx

Unit sales up, but offset by coated paper price deflation

National accounts segment continues to outperform

competition

Continued cost reductions

Position eliminations

Warehouse space reduction

Inventory reduction

18

$ Million

2Q08

1Q09

2Q09

Sales (100%)

$555

$395

$290

Earnings (IP Share)

$32

($26)

($30)

Ilim’s results are reported on a one-quarter lag

IP’s shares of Ilim’s 2Q08, 1Q09 & 2Q09 earnings includes an after-tax foreign exchange gain of $14 million,

and after-tax foreign exchange losses of $15 million and $22 million, respectively

Ilim Joint Venture

Ilim Joint Venture

2Q09 vs. 1Q09

2Q09 vs. 2Q08

Business

Volume

(000 Metric

Tons) 

Price /

Ton

Volume

(000 Metric

Tons)

Price /

Ton

Pulp

(1%)

($148)

(12%)

($292)

Containerboard

(5%)

($110)

(4%)

($128)

19

International Operations

Highlights

International Operations

Highlights

New Brazilian UFS machine production seven

months ahead of ramp-up plan

Improved

mix

on

Svetogorsk

coated

paperboard

+$200

per

ton

on

60,000

tons

Strong

performance

at

Kwidzyn

Sun JV coated paperboard shipments up 75%

over 2Q08 levels

20

Free Cash Flow

Free Cash Flow

$ Million

2Q08

1Q09

2Q09

Cash from Operations

$576

$649

$707

Alternative Fuel Mixture

Tax Credits

-

$145

$688

Cash Provided by

Continuing Operations

$576

$794

$1,395

Less Capital Investment

($267)

($128)

($131)

Free Cash Flow

$309

$666

$1,264

21

Debt Reduction Progress

Projecting $3.2 Billion Minimum Reduction

Debt Reduction Progress

Projecting $3.2 Billion Minimum Reduction

22

22

20

325

75

570

$0

$200

$400

$600

$800

$1,000

2009

2010

2011

2012

Debt Maturities

Monetization & Other

Debt maturity profile as of May 31, 2009

Monetization & Other: Intend to rollover or refinance timber monetization debt, Sun JV debt and other foreign subsidiary debt

Debt Profile

Maturities as of July Month-end

Debt Profile

Maturities as of July Month-end

23

Second Quarter Summary

Solid Results Despite Recession

Second Quarter Summary

Solid Results Despite Recession

180 BPS EBITDA Margin Expansion

$120 Million in Integration Synergies

$1.3 Billion Free Cash Flow

$600 Million Debt Reduction in 2Q plus

$600 Million Reduction in July

24

Third Quarter Outlook

Changes from 2Q09

Third Quarter Outlook

Changes from 2Q09

North America

Europe

Brazil

Russia -

Svetogorsk

Asia

Volume

Paper

Flat

Flat

Increase

Flat

Flat

Packaging

Export Increase

Decrease

Increase

Pricing

Paper

Flat

Under

Pressure

Flat

Flat

Flat

Packaging

Decrease

Under

Pressure

Increase

Maintenance Outages

$65 Million

Decrease

Slight

Decrease

Flat

Significant

Decrease

Input & Freight Costs

OCC Up

Flat

Flat

Slight

Decrease

Slight

Increase

Pulp Up

Ilim

Joint Venture

Improved Equity Earnings

25

Priorities

Priorities

Maximize Free Cash Flow

Match

our Supply

to

our Customers’

Needs

Continue Cost Reductions

Continue Debt Reduction

26

Appendix

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Emily Nix

901-419-4987

Media Contact

Kathleen Bark

901-419-4333

27

Special Items Net of Taxes

2Q09

Special Items Net of Taxes

2Q09

$ Million

EPS

Earnings Before Special Items

$86

$0.20

Special Items Net of Taxes:

Alternative Fuel Mixture Credits

$294

Tax Adjustments

($130)

Etienne Impairment & Severance Costs

($63)

Overhead Reduction Initiative

($21)

Debt Extinguishment Costs

($16)

Integration Costs

($11)

Other Previously Announced Closures

($3)

Total Special Items Net of Taxes

$50

$0.12

Net Earnings

$136

$0.32

28

$ Billion

2007

1

2008

2009

Estimate

Capital Spending

$1.3

$1.0

$0.6

Depreciation &

Amortization

$1.1

$1.3

$1.5

3

Net Interest Expense

$0.3

$0.5

$0.7

Corporate Items

2

$0.2

$0.1

$0.2

Effective Tax Rate

2

30%

31.5%

32% -

34%

1

Excludes discontinued operations

2

Before special items and excluding Ilim

3

Estimated depreciation impacted by extensive lack-of-order downtime

Key Financial Statistics

Key Financial Statistics

29

29

Monetization & Other: Intend to rollover or refinance timber monetization debt, Sun JV debt and other foreign subsidiary debt

Preferred Annual

Debt Ceiling

Debt Maturity Profile

Maturities as of July Month-end

Debt Maturity Profile

Maturities as of July Month-end

30

Cash & Committed Facilities

$4.2 Billion

Cash & Committed Facilities

$4.2 Billion

$ Billion

Maturity

Facility

Cost

Quarter-End Cash

-

$1.7

-

$1.0B

Accounts

Receivables Program

JAN 2010

Zero Drawn

CP Rate

2

+ 150 bps

$1.5B Corporate

Revolver 

MAR 2011

Zero Drawn

LIBOR + 50 to 60 bps

Total Cash & Committed Facilities

$4.2

-

Cost includes commitment fees

1

$890 million available at quarter-end based on eligible receivable balances

2

Conduit’s rate

1

31

Debt Covenants & Credit Ratings

Debt Covenants & Credit Ratings

Covenant

2Q09

Maximum Debt-to-Total Capital

60%

48.6%

Minimum Consolidated Net Worth

$9B

$11.5B

Rating

Outlook

Standard & Poor’s

BBB

Negative

Moody’s

Baa3

Negative

32

N.A. Lack of Order & Maintenance Downtime

20% of Capacity in 2Q, Down from 27% in 1Q

N.A. Lack of Order & Maintenance Downtime

20% of Capacity in 2Q, Down from 27% in 1Q

•

LOO

downtime

excludes

capacity

from

mills

or

machines

that

have

been

permanently

shutdown

(Franklin

#3

-

32,000

tons

and

Louisiana

mill

-

120,000

tons)

or

indefinitely

shut

down

(Valliant

#3

-

97,000

tons)

3

127

82

27

1Q09

2Q09

9

34

152

132

1Q09

2Q09

Containerboard

Uncoated Papers

Market Pulp

Coated

Paperboard

806

582

161

166

59

11

130

109

33

$ Millions

1Q09

2Q09

3Q09E

4Q09E

Industrial Packaging

$44

$46

$6

$43

North America

19

33

17

44

Europe

7

19

13

0

Brazil

5

0

3

0

Printing Papers Total

$31

$52

$33

$44

Consumer Packaging

$4

$20

$11

$9

Total Impact

$79

$118

$50

$96

Dollar impact of planned maintenance outages are estimates and subject to change

Includes WY PKG outages

Maintenance Outages Expenses

Maintenance Outages Expenses

34

Forest Products

Forest Products

2Q08

1Q09

2Q09

Sales ($ Million)

$55

$5

$10

Earnings ($ Million)

$41

$2

$3

Acres Sold

30,000

2,000

2,900

Price / Acre

$1,872

$2,108

$2,649

Pending sale of 143,000 acres now expected to close in

4Q09, at the earliest.  When that transaction closes,

remaining

NPV

of

land

portfolio

will

be

$60

-

$80

million.

35

Business Segment Price Realization

Business Segment Price Realization

Average Selling Price Realizations

Industrial Packaging ($/ton)

2Q08

1Q09

2Q09

Containerboard

$551 

$551

$494

Corrugated Boxes

$794

$846

$818

Printing Papers ($/ton)

2Q08

1Q09

2Q09

Uncoated Freesheet

$988

$996

$959

Pulp

$651

$538

$511

1

Estimate based on IP legacy plus WY PKG history

Average

IP

U.S.

selling

price

realizations

(includes

the

impact

of

mix

across

all

grades)

1

1

36

2Q09 vs. 1Q09

2Q09 vs. 2Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

N.A. Containerboard

13%

($57)

(37%)

($57)

N.A. Container

7%

($28)

(16%)

$24

European Container

(1%)

(€24)

(7%)

(€55)

Industrial Packaging

Industrial Packaging

1

Estimate

based

on

IP

legacy

plus

WY

PKG

history

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

1

1

1

1

37

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

2Q09 vs. 1Q09

2Q09 vs. 2Q08

Business

Volume

Price / Ton

Volume

Price / Ton

N.A. Paper

2%

($37)

(19%)

($30)

N.A. Pulp

13%

($27)

(16%)

($140)

European Paper

(10%)

(€16)

(11%)

(€91)

Brazilian Paper

31%

($50)

11%

($59)

Printing

Papers

Printing

Papers

38

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

2Q09 vs. 1Q09

2Q09 vs. 2Q08

Volume

Price/Ton

Volume

Price/Ton

U.S. Coated Paperboard

11%

($9)

(20%)

$84

Revenue

Price

Revenue

Price

Converting Businesses

5%

NA

(5%)

NA

Consumer Packaging

Consumer Packaging

39

Special Items

Special Items

Special Items Pre-Tax:

2Q08

1Q09

2Q09

Industrial

Packaging

Alternative Fuel Mixture Credits

$208

$208

Integration Costs

($36)

($18)

Facility Closure Costs

($63)

Printing

Papers

Alternative Fuel Mixture Credits

$240

$197

Facility Closure Costs

($29)

($4)

Consumer

Packaging

Alternative Fuel Mixture Credits

$92

$77

Reorganization

($13)

($2)

($1)

Corporate

Restructuring & Other Charges

($52)

($59)

Sale of Forestlands

$3

Total Special Items Pre-Tax

($10)

$421

$337

40

2Q09 EBITDA

before Special Items

2Q09 EBITDA

before Special Items

Operating

Profit

$ Million

D & A

$ Million

Tons

Thousand

EBITDA

$ per Ton

EBITDA

Margin %

Industrial Packaging

North

American

$241

$164

3,056

$133

20.7%

European

$14

$9

268

$86

9.6%

Printing Papers

North

American

$61

$53

719

$159

16.5%

European & Russian

$16

$19

332

$105

11.3%

Brazilian

$23

$29

234

$222

23.9%

U.S. Market Pulp

($14)

$9

263

($15)

(3.5%)

Consumer Packaging

U.S. Coated Paperboard

$11

$30

318

$129

11.7%

1

Includes Recycling & Saturating Kraft businesses

2

Includes Bleached Kraft business

1

2

41

Operating

Profits by Industry Segment

Operating

Profits by Industry Segment

$ Million

2Q08

1Q09

2Q09

Industrial Packaging

$87

$188

$255

Printing Papers

$226

$101

$86

Consumer Packaging

$26

$22

$38

Distribution

$26

($7)

$10

Forest Products

$41

$2

$3

Operating Profit

$406

$306

$392

Net Interest Expense

($81)

($164)

($173)

Noncontrolling

Interest

/

Equity Earnings Adjustment

$8

$6

$8

Corporate Items

($21)

($51)

($44)

Special Items

($10)

$421

$337

Earnings

from

continuing

operations

before

income

taxes, equity earnings & minority interest

$302

$518

$520

Equity

Earnings,

net

of

taxes

-

Ilim

$32

($26)

($30)

42

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

$ Million

Sales

Operating Profit

2Q08

1Q09

2Q09

2Q08

1Q09

2Q09

Industrial Packaging

North American

$1,060

$1,885

$1,955

$65

$175

$241

European

$315

$240

$240

$20

$13

$14

Asian

$95

$55

$75

$2

$0

$0

Printing Papers

North American

$880

$705

$685

$125

$84

$61

European

$445

$325

$315

$39

$25

$16

Brazilian

$255

$170

$215

$51

$20

$23

U.S. Market Pulp

$205

$125

$135

$11

($28)

($14)

Asian

$5

$0

$10

$0

$0

$0

Consumer Packaging

North American

$625

$530

$565

$13

$4

$17

European

$75

$70

$80

$8

$14

$14

Asian

$95

$115

$125

$5

$4

$7

Distribution

$1,970

$1,590

$1,595

$26

($7)

$10

Excludes Forest Products

43

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

Pre-Tax

$MM

Tax

$MM

Minority

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

MM

Diluted

EPS

Before Special Items

1Q09

$97

($32)

($4)

($27)

$34

33%

423

$0.08

2Q09

$183

($61)

($4)

($32)

$86

33%

425

$0.20

Special Items

1Q09

$421

($198)

$0

$0

$223

47%

423

$0.53

2Q09

$337

($287)

$0

$0

$50

85%

425

$0.12

Earnings

1Q09

$518

($230)

($4)

($27)

$257

44%

423

$0.61

2Q09

$520

($348)

($4)

($32)

$136

67%

425

$0.32

2009 Earnings

2009 Earnings

1

2

44

Total Cash Cost Components

2Q09

Total Cash Cost Components

2Q09

North American Mills Only

45

Global Input & Freight Costs by Input

$129MM, or $0.21/Share Favorable Impact vs. 2Q08

Global Input & Freight Costs by Input

$129MM, or $0.21/Share Favorable Impact vs. 2Q08

Input costs for continuing businesses; does not include WY PKG

46

.20

.50

.18

.21

(.15)

(.06)

(.15)

(.04)

(.05)

(.24)

.06

$0.00

$0.20

$0.40

$0.60

$0.80

2Q08

Volume

& LOO

Price

Input

Costs

Cost

Reduction

Mix

Interest

Corporate

& Other

Ilim JV

2Q09

.56

Earnings

from

continuing

operations

before

special

items;

volume

includes

earnings

from

WY

PKG

.48

2Q09 vs. 2Q08 EPS

2Q09 vs. 2Q08 EPS

Forest

Products

Earnings

47

Industrial Packaging

Earnings

2Q09 vs. 2Q08

Industrial Packaging

Earnings

2Q09 vs. 2Q08

1

Excludes trade volume and includes WY PKG earnings

Earnings Before Special Items

1

1

48

Printing

Papers Earnings

2Q09 vs. 2Q08

Printing

Papers Earnings

2Q09 vs. 2Q08

Earnings Before Special Items

49

Consumer Packaging

Earnings

2Q09 vs. 2Q08

Consumer Packaging

Earnings

2Q09 vs. 2Q08

Earnings Before Special Items

50

2005

2006

2007

NYMEX Natural Gas closing prices

Index: Jan 2005 Natural Gas Costs = 100

Natural Gas Costs

28% Decrease vs. 1Q09 Average Cost

Natural Gas Costs

28% Decrease vs. 1Q09 Average Cost

2008

2009

51

U.S. Mill Wood Costs

6% Decrease vs. 1Q09 Average Cost

U.S. Mill Wood Costs

6% Decrease vs. 1Q09 Average Cost

Index: Jan 2005 Wood Costs = 100

2005

2006

2007

2009

Delivered cost to U.S. facilities

2008

52

2006

2007

Index: Jan 2006 Fuel Oil Costs = 100

U.S. Fuel Oil

32% Increase vs. 1Q09 Average Cost

U.S. Fuel Oil

32% Increase vs. 1Q09 Average Cost

2008

Delivered cost to U.S. facilities

2009

53

2005

2006

2007

2009

Index: Q1’05 Chemical Composite= 100

2008

Delivered cost to U.S. facilities; includes Caustic Soda, Sodium

Chlorate, Starch and Sulfuric Acid

2005 -

2008 excludes WY PKG

U.S. Chemical Composite Index

20% Decrease vs. 1Q09 Average Cost

U.S. Chemical Composite Index

20% Decrease vs. 1Q09 Average Cost

54

Global Consumption

Annual Purchase Estimates for Key Inputs

Global Consumption

Annual Purchase Estimates for Key Inputs

Does not include Asian or Ilim consumption; excludes consumption by permanent & indefinite machine shutdowns

Estimates are based on normal operations and may be impacted by downtime

Commodity

U. S.

Non –

U. S.

Energy

Natural Gas (MM BTUs)

50,500,000

16,000,000

Fuel Oil (Barrels)

2,100,000

500,000

Coal (Tons)

1,100,000

230,000

Fiber

Wood (Tons)

50,000,000

8,400,000

Old Corrugated Containers (Tons)

3,500,000

310,000

Chemicals

Caustic Soda (Tons)

330,000

60,000

Starch (Tons)

490,000

110,000

Sodium Chlorate (Tons)

225,000

50,000

LD Polyethylene (Tons)

50,000

-

Latex (Tons)

25,000

4,000