8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

February 3, 2010 (Date of Report)

February 3, 2010 (Date of earliest event reported)

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)

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

6400 Poplar Avenue

Memphis, Tennessee 38197

(Address and zip code of principal executive offices)

(901) 419-7000

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

On February 3, 2010, International Paper Company issued a press release reporting preliminary earnings for the fourth quarter and full-year 2009 and held a webcast and a conference call to discuss earnings and current market conditions. A copy of the press release is being furnished as Exhibit 99.1 and a copy of the slides presented at the webcast and discussed in the conference call is being furnished as Exhibit 99.2 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1	Press release of International Paper Company, dated February 3, 2010.
Exhibit 99.2	Slides of International Paper Company, dated February 3, 2010.

SIGNATURES

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

INTERNATIONAL PAPER COMPANY
(Registrant)
By:	/S/    MAURA ABELN SMITH
Name:	Maura Abeln Smith
Title:	Senior Vice President, General Counsel and Corporate Secretary

Date: February 3, 2010

Exhibit Index

Exhibit 99.1	Press release of International Paper Company, dated February 3, 2010.
Exhibit 99.2	Slides of International Paper Company, dated February 3, 2010.

EX-99.1

INTERNATIONAL PLACE

6400 POPLAR AVENUE

MEMPHIS, TN 38197

Exhibit 99.1

News Release

International Paper Reports Fourth-Quarter and 2009 Earnings

MEMPHIS, Tenn. – Feb. 3, 2010 – International Paper (NYSE: IP) reported preliminary full-year 2009 net earnings attributable to common shareholders totaling $663 million ($1.55 per share) compared with a loss of $1.3 billion ($3.05 per share) in 2008. In the fourth quarter of 2009, the company reported a net loss of $101 million ($0.24 per share) compared with a net loss of $1.8 billion ($4.25 per share) in the fourth quarter of 2008. Amounts in all periods include special items. Full-year 2008 results of operations include the acquisition of Weyerhaeuser Company’s packaging business since August 2008.

Diluted Earnings Per Share Attributable to International Paper Shareholders

	Fourth Quarter 2009			Fourth Quarter 2008			Full Year 2009			Full Year 2008
Net Earnings (Loss)	($	0.24	)	($	4.25	)	$	1.55		($	3.05	)
Less – Discontinued Operations (Gain) Loss		—			(0.01	)		—			0.03
Earnings (Loss) from Continuing Operations		(0.24	)		(4.26	)		1.55			(3.02	)
Add Back – Net Special Items Expense (Income)		0.48			4.47			(0.67	)		5.03
Earnings from Continuing Operations and Before Special Items	$	0.24		$	0.21		$	0.88		$	2.01

Full-year 2009 earnings from continuing operations and before special items were $378 million ($0.88 per share) compared with $855 million ($2.01 per share) in 2008. Earnings from continuing operations and before special items in the 2009 fourth quarter totaled $101 million ($0.24 per share), compared with $89 million ($0.21 per share) in the fourth quarter of 2008.

Quarterly net sales were $6.0 billion compared with $6.5 billion in the fourth quarter of 2008. Annual sales totaled $23.4 billion compared with $24.8 billion in 2008.

Operating profits in the fourth quarter were a loss of $147 million, including special items, down from profits of $132 million in the fourth quarter of 2008. Full-year 2009 operating profits were $2.4 billion compared with $1.4 billion in 2008.

During 2009, International Paper generated $4.1 billion of free cash flow (cash provided by operations less capital expenditures), compared with $1.7 billion in 2008, reflecting reduced capital spending and continued focus on working capital management and overhead spending control, as well as $1.7 billion received from alternative fuel mixture credits. The company also repaid $3.1 billion of debt during 2009. At year end, the company had $1.9 billion in cash and $2.5 billion in committed liquidity facilities.

Page 1

“Despite all the uncertainties we faced at the beginning of 2009 and throughout the year, plus the challenge of rising input costs in the fourth quarter, International Paper overall has delivered solid results,” said John Faraci, chairman and chief executive officer. “Our focus on reducing overhead costs, matching our supply with our customer demand and realizing Industrial Packaging synergies gave us the ability to generate record free cash flow and pay down a significant amount of debt while positioning ourselves for 2010.”

SEGMENT INFORMATION

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

Industrial Packaging had an operating profit of $84 million compared to an operating profit of $214 million in the third quarter of 2009 due to higher-cost manufacturing operations, higher freight, unfavorable input costs and higher annual maintenance outages. Results were also negatively impacted by lower prices and lower margins from increased export sales.

Printing Papers had an operating profit of $139 million compared to an operating profit of $138 million in the third quarter. While operatons were solid, lower annual maintenance outage costs were largely offset by higher input costs and lower margins from increased export sales. Pulp prices increased but paper prices were lower before starting to see improvement late in the quarter.

Consumer Packaging had an operating profit of $49 million compared to an operating profit of $68 million in the third quarter. In Coated Paperboard, results were negatively impacted by higher annual outages and operations costs. Improved operations in Shorewood Packaging and Foodservice were offset by lower volume and unfavorable mix.

The company’s distribution business, xpedx, reported operating profits of $31 million, higher than the $21 million posted in the third quarter of 2009 reflecting a $17 million favorable inventory valuation adjustment. Volumes improved and while overhead reduction efforts continued, higher costs were incurred for commissions, advertising and freight.

Forest Products operating profits totaled $18 million, up from $2 million in the prior quarter due to two land sales. Our previously announced agreement to sell approximately 143,000 acres has expired in accordance with its terms and will not be completed. The company has nearly 200,000 acres of land remaining for sale, primarily composed of smaller retail and larger transitional tracts.

Net corporate expenses totaled $40 million for the 2009 fourth quarter compared with $46 million in the 2009 third quarter and $21 million in the fourth quarter of 2008. The increase from the 2008 fourth quarter reflects higher pension expense in 2009.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the fourth quarter of 2009 was 22 percent, compared with 30 percent in the third quarter of 2009. The lower fourth-quarter rate is a result of non-U.S. tax incentives and adjustments of tax estimates upon the filing of the company’s 2008 non-U.S. income tax returns. The 2009 full-year tax rate was 30 percent compared with 31.5 percent for the 2008 full year.

Page 2

EFFECTS OF SPECIAL ITEMS

Special items in the fourth quarter of 2009 included a $516 million pre-tax credit ($469 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 renewable energy to operate their businesses, a $15 million pre-tax charge ($10 million after taxes) for costs associated with the Industrial Packaging business integration, a pre-tax charge of $1.0 billion ($638 million after taxes) for restructuring and other charges, and an $11 million pre-tax charge ($8 million after taxes) for net losses on sales and impairments of businesses. Restructuring and other charges included a pre-tax charge of $861 million ($525 million after taxes) for shutdown costs for the closures of the Albany, Franklin and Pineville mills announced in the fourth quarter of 2009; a pre-tax charge of $82 million ($50 million after taxes) for the shutdown of a paper machine at the Valliant mill; a pre-tax charge of $58 million ($35 million after taxes) for early debt extinguishment costs; a pre-tax charge of $23 million ($15 million after taxes) for severance and benefit costs associated with the company’s 2008 overhead reduction program; a $9 million charge, before and after taxes, for severance and other costs associated with the planned closure of the Etienne mill in France; and pre-tax charges of $7 million ($4 million after taxes) for costs associated with the reorganizations of the company’s Shorewood and xpedx operations. Additionally, a $15 million income tax expense was recorded to write off a deferred tax asset for a recycling credit in the state of Louisiana. The net after-tax effect of these special items is a loss of $202 million, or $0.48 per share.

Special items in the third quarter of 2009 included a $525 million pre-tax credit ($320 million after taxes) for alternative fuel mixture credits, an $18 million pre-tax charge ($11 million after taxes) for costs associated with the Industrial Packaging business integration, and a pre-tax charge of $151 million ($95 million after taxes) for restructuring and other charges. Restructuring and other charges included a pre-tax charge of $102 million ($62 million after taxes) for early debt extinguishment costs, a $39 million pre-tax charge ($24 million after taxes) for severance and benefits costs associated with the company’s 2008 overhead reduction program, and a $10 million pre-tax charge ($9 million after taxes) for facility closure costs.

Special items in the fourth quarter of 2008 included a pre-tax charge of $218 million ($132 million after taxes) for restructuring and other charges, a $1.8 billion charge, before and after taxes, for impairments of goodwill for the company’s U.S. Printing Papers and U.S. and European Coated Paperboard businesses, a pre-tax charge of $26 million ($16 million after taxes) for costs associated with the Industrial Packaging business integration, and a $40 million after-tax benefit for a reduction in deferred taxes related to the restructuring of the company’s international operations. Restructuring and other charges included a $123 million pre-tax charge ($75 million after taxes) associated with the closure of the Louisiana mill, a $30 million pre-tax charge ($18 million after taxes) for the shutdown of a paper machine at the Franklin mill, a $53 million pre-tax charge ($32 million after taxes) for costs associated with the company’s 2008 overhead reduction program, an $8 million pre-tax charge ($5 million after taxes) related to the closure of the company’s Ace Packaging business, and a $4 million pre-tax charge ($2 million after taxes) associated with the reorganization of Shorewood operations.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. EST / 9 a.m. CST 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 Fourth-Quarter Earnings Call. The conference ID number is 48748739. Participants should call in no later than 9:45 a.m. EST/8:45 a.m. CST. An audio-only replay will be available for four weeks following the call. To access the replay, dial +1 (706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for the conference ID, enter 48748739.

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 about 56,000 people in more than 20 countries and serves customers worldwide. 2009 net sales were more than $23 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) increases in interest rates; (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 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 December 31,								Three Months Ended September 30, 2009			Twelve Months Ended December 31,
	2009				2008							2009				2008
Net Sales	$	5,977			$	6,546			$	5,919		$	23,366			$	24,829
Costs and Expenses
Cost of products sold		3,950		(a)		5,022				3,758	(k)		15,220		(n)		18,742		(s)
Selling and administrative expenses		496		(b)		509		(f)		527	(l)		2,031		(o)		1,947		(t)
Depreciation, amortization and cost of timber harvested		384				382				378			1,472				1,347
Distribution expenses		318				324				299			1,175				1,286
Taxes other than payroll and income taxes		43				46				48			188				182
Restructuring and other charges		1,040		(c)		218		(g)		151	(m)		1,353		(p)		370		(u)
Gain on sale of mineral rights		—				—				—			—				(261	)
Forestland sales		—				—				—			—				(6	)	(v)
Impairment of goodwill		—				1,777		(h)		—			—				1,777		(h)
Net losses on sales and impairments of businesses		11		(d)		—				—			59		(q)		106		(w)
Interest expense, net		163				186				169			669				492
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings		(428	)	(a -d)		(1,918	)	(f-h)		589	(k-m)		1,199		(n-q)		(1,153	)	(h,s-w)
Income tax provision (benefit)		(321	)	(e)		(112	)	(i)		212			469		(r)		162		(i)
Equity earnings (losses), net of taxes		10				(2	)			—			(49	)			49
Earnings (Loss) From Continuing Operations		(97	)	(a-e)		(1,808	)	(f-i)		377	(k-m)		681		(n-r)		(1,266	)	(h,i, s-w)
Discontinued operations, net of taxes		—				5		(j)		—			—				(13	)	(x)
Net Earnings (Loss)	$	(97	)	(a-e)	$	(1,803	)	(f-j)	$	377	(k-m)	$	681		(n-r)	$	(1,279	)	(h,i, s-x)
Less: Net earnings attributable to noncontrolling interests		4				(12	)			6			18				3
Net Earnings (Loss) Attributable to International Paper Company	$	(101	)	(a-e)	$	(1,791	)	(f-j)	$	371	(k-m)	$	663		(n-r)	$	(1,282	)	(h,i, s-x)
Basic Earnings Per Common Share Attributable to International Paper Common Shareholders
Earnings (loss) from continuing operations	$	(0.24	)	(a-e)	$	(4.26	)	(f-i)	$	0.87	(k-m)	$	1.56		(n-r)	$	(3.02	)	(h,i, s-w)
Discontinued operations		—				0.01		(j)		—			—				(0.03	)	(x)
Net earnings (loss)	$	(0.24	)	(a-e)	$	(4.25	)	(f-j)	$	0.87	(k-m)	$	1.56		(n-r)	$	(3.05	)	(h,i, s-x)
Diluted Earnings Per Common Share Attributable to International Paper Common Shareholders
Earnings (loss) from continuing operations	$	(0.24	)	(a-e)	$	(4.26	)	(f-i)	$	0.87	(k-m)	$	1.55		(n-r)	$	(3.02	)	(h,i, s-w)
Discontinued operations		—				0.01		(j)		—			—				(0.03	)	(x)
Net earnings(loss)	$	(0.24	)	(a-e)	$	(4.25	)	(f-j)	$	0.87	(k-m)	$	1.55		(n-r)	$	(3.05	)	(h,i, s-x)
Average Shares of Common Stock Outstanding-Diluted		426.7				421.2				428.7			428.0				421.0
Cash Dividends Per Common Share	$	0.025			$	0.25			$	0.025		$	0.325			$	1.00
Amounts Attributable to International Paper Common Shareholders
Earnings (loss) from continuing operations, net of tax	$	(101	)		$	(1,796	)		$	371		$	663			$	(1,269	)
Discontinued operations, net of tax		—			$	5			$	—			—				(13	)
Net Earnings (loss)	$	(101	)		$	(1,791	)		$	371		$	663			$	(1,282	)

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

(a) Includes a pre-tax gain of $516 million ($469 million after taxes) related to alternative fuel mixture credits.

(b) Includes a pre-tax charge of $15 million ($10 million after taxes) for integration costs associated with the acquisition of the Containerboard, Packaging and Recycling business (CBPR) in August 2008.

(c) Includes pre-tax charges of $469 million ($286 million after taxes), $290 million ($177 million after taxes), and $102 million ($62 million after taxes) for shutdown costs for the Albany, Franklin, and Pineville mills, respectively, a pre-tax charge of $82 million ($50 million after taxes) for costs related to the shutdown of a paper machine at the Valliant mill, a pre-tax charge of $23 million ($15 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $58 million ($35 million after taxes) for early debt extinguishment costs, a charge of $9 million (before and after taxes) for severance and other costs associated with the planned closure of the Etienne mill in France, and pre-tax charges of $5 million ($3 million after taxes) and $2 million ($1 million after taxes) for costs associated with the reorganization of the Company's xpedx and Shorewood operations, respectively.

(d) Includes a pre-tax charge of $8 million (before and after taxes) to write down the assets at the Etienne mill in France to estimated fair value.

(e) Includes a $15 million write-off of a deferred tax asset for a recycling tax credit in the state of Louisiana.

(f) Includes a pre-tax charge of $26 million ($16 million after taxes) for integration costs associated with the acquisition of the CBPR business.

(g) Includes a pre-tax charge of $123 million ($75 million after taxes) for shutdown costs for the Louisiana mill, a pre-tax charge of $30 million ($18 million after taxes) for the shutdown of a paper machine at the Franklin mill, a pre-tax charge of $53 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 $8 million ($5 million after taxes) for closure costs associated with the Ace Packaging business, and a pre-tax charge of $4 million ($2 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations.

(h) Includes a charge of $1.3 billion (before and after taxes) for the impairment of goodwill in the Company's U.S. printing papers business and charges of $379 million and $59 million (before and after taxes) for the impairment of goodwill in the Company's U.S. and European coated paperboard businesses.

(i) Includes a $40 million tax benefit for a reduction in deferred taxes related to the restructuring of the Company’s international operations.

(j) Includes pre-tax gains of $9 million ($5 million after taxes) for adjustments to reserves associated with the sale of discontinued businesses.

(k) Includes a pre-tax gain of $525 million ($320 million after taxes) related to alternative fuel mixture credits.

(l) Includes a pre-tax charge of $18 million ($11 million after taxes) for integration costs associated with the acquisition of the CBPR business.

(m) Includes a pre-tax charge of $39 million ($24 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $102 million ($62 million after taxes) for early debt extinguishment costs, a charge of $7 million (before and after taxes) for costs associated with the planned closure of the Etienne mill in France, and a pre-tax charge of $3 million ($2 million after taxes) for other items.

(n) Includes a pre-tax gain of $2.1 billion ($1.4 billion after taxes) related to alternative fuel mixture credits.

(o) Includes a pre-tax charge of $87 million ($54 million after taxes) for integration costs associated with the acquisition of the CBPR business.

(p) Includes pre-tax charges of $469 million ($286 million after taxes), $290 million ($177 million after taxes), and $102 million ($62 million after taxes) for shutdown costs for the Albany, Franklin, and Pineville mills, respectively, a pre-tax charge of $82 million ($50 million after taxes) for costs related to the shutdown of a paper machine at the Valliant mill, a pre-tax charge of $148 million ($92 million after taxes) for severance and benefit costs associated with the Company's 2008 overhead cost reduction initiative, a pre-tax charge of $185 million ($113 million after taxes) for early debt extinguishment costs, a pre-tax charge of $23 million ($28 million after taxes) for closure costs associated with the Inverurie, Scotland mill, a charge of $31 million (before and after taxes) for severance and other costs associated with the planned closure of the Etienne mill in France, and a pre-tax charge of $23 million ($14 million after taxes) for other items.

(q) Includes a charge of $56 million (before and after taxes) to write down the assets at the Etienne mill to estimated fair value.

(r) Includes a $156 million tax expense for the write off of deferred tax assets in France, a $15 million write-off of a deferred tax asset for a recycling tax credit in the state of Louisiana, and a $26 million tax benefit related to the settlement of the 2004 and 2005 U.S. federal income tax audit.

(s) Includes a pre-tax charge of $39 million ($24 million after taxes) relating to the write-up of inventory to fair value in connection with the CBPR acquisition.

(t) Includes a pre-tax charge of $45 million ($28 million after taxes) for integration costs associated with the acquisition of the CBPR business.

(u) Includes a pre-tax charge of $123 million ($75 million after taxes) for shutdown costs for the Louisiana mill, a pre-tax charge of $30 million ($18 million after taxes) for the shutdown of a paper machine at the Franklin mill, a pre-tax charge of $53 million ($32 million after taxes) for severance costs associated with the Company's 2008 overhead cost reduction initiative, a $75 million pre-tax charge ($47 million after taxes) for adjustments to legal reserves, a pre-tax charge of $30 million ($19 million after taxes) for costs associated with the reorganization of the Company's Shorewood operations, a pre-tax charge of $53 million ($33 million after taxes) to write off deferred supply chain initiative development costs for U.S. container operations that will not be implemented due to the CBPR acquisition, a pre-tax charge of $8 million ($5 million after taxes) for closure costs associated with the Ace Packaging business, and a gain of $2 million (before and after taxes) for adjustments to previously recorded reserves and other charges associated with the Company’s Transformation Plan.

(v) Reflects adjustments of estimated transaction costs accrued in connection with the 2006 Transformation Plan forestland sales.

(w) Includes a pre-tax charge of $107 million ($84 million after taxes) to write down the assets of the Inverurie, Scotland mill to estimated fair value.

(x) 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, pre-tax gains of $9 million ($5 million after taxes) for adjustments to reserves associated with the sale of discontinued businesses, and the operating results of certain wood products facilities.

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 December 31,						Three Months Ended September 30, 2009			Twelve Months Ended December 31,
	2009			2008						2009			2008
Earnings Before Special Items	$	101		$	89		$	157		$	378		$	855
Restructuring and other charges		(638	)		(132	)		(95	)		(853	)		(227	)
CBPR business integration costs		(10	)		(16	)		(11	)		(54	)		(52	)
Alternative fuel mixture credits		469			—			320			1,413			—
Forestland sales		—			—			—			—			4
Impairments of goodwill		—			(1,777	)		—			—			(1,777	)
Net losses on sales and impairments of businesses		(8	)		—			—			(56	)		(83	)
Income tax adjustments		(15	)		40			—			(165	)		11
Earnings (Loss) from Continuing Operations		(101	)		(1,796	)		371			663			(1,269	)
Discontinued operations		—			5			—			—			(13	)
Net Earnings (Loss) as Reported	$	(101	)	$	(1,791	)	$	371		$	663		$	(1,282	)

	Three Months Ended December 31,						Three Months Ended September 30, 2009			Twelve Months Ended December 31,
Diluted Earnings per Common Share	2009			2008						2009			2008
Earnings Per Share Before Special Items	$	0.24		$	0.21		$	0.37		$	0.88		$	2.01
Restructuring and other charges		(1.52	)		(0.35	)		(0.22	)		(2.00	)		(0.54	)
CBPR business integration costs		(0.02	)		—			(0.03	)		(0.13	)		(0.12	)
Alternative fuel mixture credits		1.11			—			0.75			3.32			—
Forestland sales		—			—			—			—			0.01
Impairments of goodwill		—			(4.22	)		—			—			(4.22	)
Net losses on sales and impairments of businesses		(0.02	)		—			—			(0.13	)		(0.19	)
Income tax adjustments		(0.03	)		0.10			—			(0.39	)		0.03
Earnings (Loss) Per Common Share from Continuing Operations		(0.24	)		(4.26	)		0.87			1.55			(3.02	)
Discontinued operations		—			0.01			—			—			(0.03	)
Diluted Earnings (Loss) per Common Share	$	(0.24	)	$	(4.25	)	$	0.87		$	1.55		$	(3.05	)

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, twelve-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 December 31,						Three Months Ended September 30, 2009			Twelve Months Ended December 31,
	2009			2008						2009			2008
Industrial Packaging	$	2,210		$	2,455		$	2,230		$	8,890		$	7,690
Printing Papers		1,525			1,505			1,470			5,680			6,810
Consumer Packaging		785			800			790			3,060			3,195
Distribution		1,675			1,940			1,665			6,525			7,970
Forest Products		25			65			5			45			200
Corporate and Inter-segment Sales		(243	)		(219	)		(241	)		(834	)		(1,036	)
Net Sales	$	5,977		$	6,546		$	5,919		$	23,366		$	24,829

Operating Profit by Industry Segment

	Three Months Ended December 31,						Three Months Ended September 30, 2009			Twelve Months Ended December 31,
	2009			2008						2009			2008
Industrial Packaging	$	(391	)(2,3,4)	$	111	(5)	$	410	(2,3,4)	$	761	(2,3,4)	$	390	(5)
Printing Papers		137	(2,6)		(40	)(7)		363	(2,6)		1,091	(2,6)		474	(7)
Consumer Packaging		63	(2,8)		(3	)(8)		144	(2,8)		433	(2,8)		17	(8)
Distribution		26	(9)		26			21			50	(9)		103
Forest Products		18			38			2			25			409
Operating Profit (Loss) (1)		(147	)		132			940			2,360			1,393
Interest expense, net		(163	)		(186	)		(169	)		(669	)		(492	)
Noncontrolling interest/equity earnings adjustment (10)		4			(13	)		5			23			(2	)
Corporate items, net		(40	)		(21	)		(46	)		(181	)		(103	)
Restructuring and other charges		(81	)		(53	)		(141	)		(333	)		(179	)
Sale of forestlands		—			—			—			—			6
Impairments of goodwill		—			(1,777	)		—			—			(1,777	)
Net gains (losses) on sales and impairments of businesses		(1	)		—			—			(1	)		1
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	$	(428	)	$	(1,918	)	$	589		$	1,199		$	(1,153	)
Equity Earnings (Loss) in Ilim Holdings S.A., Net of Taxes (1)	$	6		$	—		$	—		$	(50	)	$	54

(1) In addition to the operating profits shown above, International Paper recorded equity earnings, net of taxes, of $6 million for the three months ended December 31, 2009 and $0 million for the three months ended September 30, 2009, equity losses, net of taxes, of $50 million for the twelve months ended December 31, 2009, and equity earnings, net of taxes, of $0 million for the three months ended December 31, 2008 and $54 million for the twelve months ended December 31, 2008, related to its equity investment in Ilim Holdings S.A., a separate reportable industry segment.

(2) Includes gains of $212 million and $221 million in the Industrial Packaging segment, $221 million and $226 million in the Printing Papers segment, and $83 million and $78 million in the Consumer Packaging segment for the three months ended December 31, 2009 and September 30, 2009, respectively, and gains of $849 million in the Industrial Packaging segment, $884 million in the Printing Papers segment, and $330 million in the Consumer Packaging segment for the twelve months ended December 31, 2009, relating to alternative fuel mixture credits.

(3) Includes charges of $15 million and $18 million for the three months ended December 31, 2009 and September 30, 2009, and $87 million for the twelve months ended December 31, 2009, for CBPR integration costs.

(4) Includes charges of $469 million, $102 million and $82 million for the three months and twelve months ended December 31, 2009 for shutdown costs for the Albany mill, Pineville mill and a paper machine at the Valliant mill, respectively, charges of $8 million and $56 million for the three months and twelve months ended December 31, 2009, respectively, to write down the assets at the Etienne mill in France to estimated fair value, and charges of $9 million and $7 million for the three months ended December 31, 2009 and September 30, 2009, respectively, and $31 million for the twelve months ended December 31,2009 for severance and other costs related to the planned closure of the Etienne mill, and $2 million for the three months and twelve months ended December 31, 2009 for other items.

(5) Includes charges of $26 million and $45 million for the three months and twelve months ended December 31, 2008, respectively, for CBPR integration costs, $8 million for the three months and twelve months ended December 31, 2008 for Ace Packaging closure costs, and $39 million for the twelve months ended December 31, 2008 relating to the write-up of inventory to fair value in connection with the CBPR acquisition.

(6) Includes charges of $223 million for the three months and twelve months ended December 31, 2009 for shutdown costs for the Franklin mill; $1 million and $11 million for the three months ended September 30, 2009 and the twelve months ended December 31, 2009, respectively, related to the shutdown of a paper machine at the Franklin paper mill, the shutdown of the Franklin lumber mill, sheet converting plant and converting innovations center and the Louisiana mill; and a charge of $23 million for the twelve months ended December 31, 2009 for the closure of the Inverurie, Scotland mill.

(7) Includes charges of $123 million and $30 million for the three and twelve months ended December 31, 2008 for the shutdown of the Louisiana mill and for the shutdown of a paper machine at the Franklin mill, respectively, and $107 million for the twelve months ended December 31, 2008 to write down the assets of the Inverurie, Scotland mill to estimated fair value.

(8) Includes a charge of $67 million for the three months and twelve months ended December 31, 2009 related to the closure of the Franklin paper mill, charges of $2 million, $4 million, and $2 million for the three months ended December 31, 2009, December 31, 2008 and September 30, 2009, respectively, and $7 million and $30 million for the twelve months ended December 31, 2009 and 2008, respectively, related to the reorganization of the Company’s Shorewood operations.

(9) Includes a charge of $5 million for the three months and twelve months ended December 31, 2009 related to the reorganization of the Company’s xpedx operations.

(10) 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 December 31,		Three Months Ended September 30, 2009	Twelve Months Ended December 31,
	2009	2008		2009	2008
Industrial Packaging (In thousands of short tons)
Corrugated Packaging (4)	1,782	1,879	1,856	7,313	5,298
Containerboard (4)	677	619	580	2,258	2,305
Recycling (4)	521	569	566	2,280	966
Saturated Kraft	43	40	33	126	170
Bleached Kraft	20	17	22	72	82
European Industrial Packaging	256	279	252	1,046	1,123
Asian Industrial Packaging	187	125	200	614	568
Industrial Packaging	3,486	3,528	3,509	13,709	10,512
Printing Papers (In thousands of short tons)
U.S. Uncoated Papers	734	744	753	2,882	3,397
European & Russian Uncoated Papers	330	360	304	1,336	1,461
Brazilian Uncoated Papers	311	215	282	1,007	853
Asian Uncoated Papers	41	6	25	81	27
Uncoated Papers	1,416	1,325	1,364	5,306	5,738
Market Pulp (3)	410	386	422	1,524	1,604
Consumer Packaging (In thousands of short tons)
U.S. Coated Paperboard	310	389	324	1,242	1,591
European Coated Paperboard	89	76	86	354	311
Asian Coated Paperboard	231	164	221	859	550
Other Consumer Packaging	39	42	42	169	178
Consumer Packaging	669	671	673	2,624	2,630

(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)

	December 31, 2009		December 31, 2008
Assets
Current Assets
Cash and Temporary Investments	$	1,892	$	1,144
Accounts and Notes Receivable, Net		2,695		3,288
Inventories		2,179		2,495
Deferred Income Tax Assets		368		261
Other		417		172
Total Current Assets		7,551		7,360
Plants, Properties and Equipment, Net		12,688		14,202
Forestlands		757		594
Investments		1,077		1,274
Goodwill		2,290		2,027
Deferred Charges and Other Assets		1,185		1,456
Total Assets	$	25,548	$	26,913
Liabilities and Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	304	$	828
Accounts Payable and Accrued Liabilities		3,708		3,927
Total Current Liabilities		4,012		4,755
Long-Term Debt		8,729		11,246
Deferred Income Taxes		2,425		1,957
Pension Benefit Obligation		2,765		3,260
Postretirement and Postemployment Benefit Obligation		538		663
Other Liabilities		824		631
Equity
Invested Capital		4,074		2,739
Retained Earnings		1,949		1,430
Total Shareholders’ Equity		6,023		4,169
Noncontrolling interests		232		232
Total Equity		6,255		4,401
Total Liabilities and Equity	$	25,548	$	26,913

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Cash Flows

Preliminary and Unaudited

(In Millions)

	Twelve Months Ended December 31,
	2009			2008
Operating Activities
Net earnings (loss) attributable to International Paper Company	$	663		$	(1,282	)
Noncontrolling interests		18			3
Discontinued operations, net of taxes and noncontrolling interests		—			13
Earnings (loss) from continuing operations		681			(1,266	)
Depreciation, amortization and cost of timber harvested		1,472			1,347
Deferred income tax expense (benefit), net		160			(81	)
Restructuring and other charges		1,353			370
Payments related to restructuring and legal reserves		(38	)		(87	)
Net losses on sales and impairments of businesses		59			106
Gains on sales of forestlands		—			(3	)
Equity loss (earnings), net		49			(49	)
Periodic pension expense, net		213			123
Impairment of goodwill		—			1,777
Other, net		227			115
Changes in current assets and liabilities
Accounts and notes receivable		604			451
Inventories		316			48
Accounts payable and accrued liabilities		(321	)		(317	)
Interest payable		(8	)		(31	)
Other		(112	)		166
Cash Provided by Operations		4,655			2,669
Investment Activities
Invested in capital projects		(534	)		(1,002	)
Acquisitions, net of cash received		(17	)		(6,086	)
Proceeds from divestitures		—			14
Equity investment in Ilim		—			(21	)
Other		(42	)		(102	)
Cash Used for Investment Activities		(593	)		(7,197	)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding		(10	)		(47	)
Issuance of common stock		—			1
Issuance of debt		3,229			6,024
Reduction of debt		(6,318	)		(696	)
Change in book overdrafts		20			(36	)
Dividends paid		(140	)		(428	)
Other		(157	)		41
Cash (Used for) Provided by Financing Activities		(3,376	)		4,859
Effect of Exchange Rate Changes on Cash		62			(92	)
Change in Cash and Temporary Investments		748			239
Cash and Temporary Investments
Beginning of the period		1,144			905
End of the period	$	1,892		$	1,144

EX-99.2

Fourth Quarter

and Full Year

2009 Review

February 3, 2010

Fourth Quarter

and Full Year

2009 Review

February 3, 2010

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; (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 our

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

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

issued by recognized credit rating organizations, the amount of our future pension funding

obligation and changes in 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

IP Delivers Solid Full-Year Results

Despite Challenging Economic Environment

IP Delivers Solid Full-Year Results

Despite Challenging Economic Environment

$2.2 B

Free Cash Flow

1

$4.3 B Balance Sheet Improvement

$3.1 B Debt Reduction

$400 MM Unfunded Pension Obligation Reduction

$800 MM Cash Balance Increase

2.6 MM Ton Excess Capacity Reduction

$500 MM Industrial Packaging Synergies

$500 MM Overhead Cost Reduction

1

Cash provided by continuing operations less capital expenditures, excluding cash received from alternative fuel credits of $1.7 B

and cash received under European accounts receivable securitization of $0.2 B

5

Responding to the Economic Contraction

Decisive Actions in 2009

Responding to the Economic Contraction

Decisive Actions in 2009

NA

Containerboard

1.8 MM tons (16%) LOO

1.4 MM tons (13%) closed

NA

Uncoated

Freesheet

405

M

tons

(13%)

LOO

600 M tons (19%) to close in 2009/10

NA

Coated

Paperboard

300 M tons (16%) LOO

140 M tons (7%) closed

Capacity

Management

Integration

Synergies

Cost

Reduction

Balance

Sheet

$500 MM Overhead Reduction

Hourly Headcount Reduction

Salaried Position Eliminations

Systematic, Not Episodic

$500

MM

Integration

Synergies

Salaried Headcount Reduction

Mill & Box Plants Optimization

Box Margins Improvement

Mill Freight Reduction

Box Plant Rationalization

$300 MM Incremental Synergies

$3.1 B Debt Reduction

$800 MM Cash Increase

$2.75 B Debt Refinanced

$1.5 B Corporate Revolver Extension

$1 B AR Securitization Extension

$450

MM

Capex

Reduction

6

Debt Reduction Progress

$3.7 Billion Reduction since Acquisition

Debt Reduction Progress

$3.7 Billion Reduction since Acquisition

1

Excludes the debt repayment of $1 B from the proceeds of our May bond issuance: $1 B 9.375% notes due 2019

2

Excludes the debt repayment of $1 B from the proceeds of our August bond issuance: $1 B 7.5% notes due 2021

3

Excludes the debt repayment of $750 MM from the proceeds of our November bond issuance: $750 MM 7.3% notes due 2039

7

2009 Full-Year Results

Record Free Cash Flow

2009 Full-Year Results

Record Free Cash Flow

1

Earnings from continuing operations before special items

2

Cash provided by continuing operations less capital expenditures before dividends; 2009 excludes cash received from alternative

fuel credits of $1.7 B and cash received under European accounts receivable securitization of $0.2 B

$ Billion

2008

2009

Sales

$24.8

$23.4

EBITDA

1

$3.0

$2.8

Year-End Debt

$12.1

$9.0

Cash Balance

$1.1

$1.9

Free

Cash

Flow

2

$0.6

$1.7

$2.2

2007

2008

2009

8

Earnings from continuing operations before special items

2009 Earnings per Share

Weak Demand, Input Cost Relief, Strong Operations

2009 Earnings per Share

Weak Demand, Input Cost Relief, Strong Operations

9

Improving Earnings Quality

Replaced Land Sales Earnings

Improving Earnings Quality

Replaced Land Sales Earnings

EBIT before

special

items

including

discontinued

operations; Forest Products EBIT excludes Wood Products

Earnings as reported in the 10-K for each year at time of filing

Forest Products

EBIT ($B)                     

$0.6           $0.5            $0.7            $0.7

$0.5            $0.4           < $0.1

10

Fourth Quarter 2009

Strong Free Cash Flow & Debt Reduction

Fourth Quarter 2009

Strong Free Cash Flow & Debt Reduction

$500 MM Free Cash Flow

1

$600 MM Debt Reduction

$200 MM Cash Increase

$36 MM Input Cost Inflation

Earnings from continuing operations before

special items

•

1

Cash provided by continuing operations less capital expenditures,

excluding cash received from alternative fuel mixture credits

11

Earnings before special items

4Q09 vs. 3Q09 EPS

Stable Volumes, Rising Input Costs, Weather-Impacted Operations

4Q09 vs. 3Q09 EPS

Stable Volumes, Rising Input Costs, Weather-Impacted Operations

12

Industrial Packaging Earnings

4Q09 vs. 3Q09

Industrial Packaging Earnings

4Q09 vs. 3Q09

Earnings before special items

13

N.A. Industrial Packaging Relative EBITDA Margins

Industry-Leading Margins Despite LOO Costs

N.A. Industrial Packaging Relative EBITDA Margins

Industry-Leading Margins Despite LOO Costs

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

Competitor EBITDA margin estimates obtained from public filings and IP analysis

2009

17.5%

2008

16.5%

20.7%

16.9%

19.0%

15.4%

12.4%

12.3%

17.6%

16.9%

0%

4%

8%

12%

16%

20%

24%

IP

Competitor A

1Q09

2Q09

3Q09

4Q09

2008

15.2%

IP 2009 margins reflect 2.1 MM tons

(19% of capacity) of downtime

Competitor A 2009 margins reflect 200

M tons (8% of capacity) of downtime

2009

15.3%

14

Printing Papers Earnings

4Q09 vs. 3Q09

Printing Papers Earnings

4Q09 vs. 3Q09

Earnings before special items

15

Consumer Packaging Earnings

4Q09 vs. 3Q09

Consumer Packaging Earnings

4Q09 vs. 3Q09

Earnings before special items

68

49

(2)

(7)

(10)

(2)

2

$0

$15

$30

$45

$60

$75

3Q09

Price

Input Costs

Operations &

Costs

Maintenance

Outages

Mix

4Q09

16

$ Million

4Q08

3Q09

4Q09

Sales

$1,940

$1,665

$1,675

Earnings

$26

$21

$31

xpedx

xpedx

4Q09 earnings include a $17 MM favorable LIFO adjustment

Paper prices stabilized as the quarter progressed

4Q08 and 3Q09 earnings include $6 MM unfavorable and $3 MM favorable LIFO inventory valuation adjustments respectively

17

$ Million

4Q08

3Q09

4Q09

Sales

$215

$275

$300

Earnings

$44

$36

$33

EBITDA Margin

32%

25%

23%

IP Brazil results are reported in the Printing Papers segment

4Q09 vs. 3Q09

4Q09 vs. 4Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

Uncoated Freesheet

7%

($29)

44%

($172)

Domestic

(5%)

($43)

(7%)

($70)

Export

16%

($19)

134%

($244)

IP Brazil

18

$ Million

4Q08

3Q09

4Q09

Sales (100%)

$530

$305

$350

Earnings (IP Share)

$0

$0

$6

Ilim’s

results are reported on a one-quarter lag

IP’s shares of Ilim’s

4Q08, 3Q09 & 4Q09 earnings includes an after-tax foreign exchange loss of $11 MM, and after-tax foreign

exchange gains of $10 MM and $2 MM, respectively

4Q09 vs. 3Q09

4Q09 vs. 4Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

Pulp

0%

$65

(7%)

($213)

Containerboard

10%

$18

15%

($189)

IP received a $51 MM dividend from Ilim in 4Q09

Ilim Joint Venture

19

Global Input Costs by Segment

$36 MM, or $0.06/Share Unfavorable vs. 3Q09

Global Input Costs by Segment

$36 MM, or $0.06/Share Unfavorable vs. 3Q09

By Business

By Input Type

($30)

($8)

$2

Industrial

Packaging

Printing

Papers

Consumer

Packaging

Fiber

Energy

Chemicals

Freight

OCC

($26)

($16)

($3)

$9

Fiber

Energy

Freight

Chemicals

Outside North America

North America

20

Positives

Improved N.A. Exports

Printing Papers Results

Quarter-End Price Momentum

Further Cost Reduction

Continued Debt Reduction

Offsets

Increasing Fiber Costs

Isolated Operating Issues

Ongoing LOO Downtime

Costs

Fourth Quarter Summary

21

Input Cost Inflation

Input Costs Ahead of Price Increases

Input Cost Inflation

Input Costs Ahead of Price Increases

Previously Announced IP Price Increases

Business

Increase

per Ton

IP Capacity

(MM Tons)

N. A. Industrial Packaging

$50

10.0

N. A. Uncoated Freesheet

$40

2.6

N. A. Coated Paperboard

$40

1.8

Global Pulp

$30 -

$40

3.0

Brazil Export Cut-Size

$50

.4

European Cut-Size

€30 -

€40

.4

Russian Cut-Size

$30

.3

Sun Coated Paperboard

$25

.9

($36)

($120)

($120)

($100)

($80)

($60)

($40)

($20)

$0

4Q09

1Q10

Wood

OCC

Natural Gas

Other

22

From 4Q09 to 1H10

Cost Increases Precede Price Increases

From 4Q09 to 1H10

Cost Increases Precede Price Increases

Input Cost Inflection

Isolated Operating Issues

Input Cost Escalation

Higher Maintenance Outages

Input Cost Stabilization

Price Increase Realization

1Q

2Q

4Q

23

First Quarter Outlook

Changes from 4Q09

First Quarter Outlook

Changes from 4Q09

North America

Europe

Brazil

Russia -

Svetogorsk

Asia

Volume

Paper

Slight Increase

Slight

Decrease

Decrease

Decrease

Flat

Packaging

Slight Increase

Seasonal

Decrease

Stable

Pricing

Paper

Ramping Up

Flat

Slight

Increase

Flat

Slight

Increase

Packaging

Ramping Up

Margin

Squeeze

Slight

Increase

Maintenance

Outages

~$25MM

Increase

Flat

Flat

Flat

Input & Freight

Costs

~$120MM

Increase

Increasing

Increasing

Increasing

Pulp

Increasing

xpedx

Seasonal

Decrease

Ilim

Decrease

Corporate

Expense

Increase

24

2010 Priorities

2010 Priorities

Regain momentum after 1Q input cost squeeze

Increase margins and ROI

Capture benefits of higher operating rates

Build on operating performance

Balanced use of cash

25

Appendix

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Emily Nix

901-419-4987

Media Contact

Kathleen Bark

901-419-4333

26

4Q09 Financial Snapshot

4Q09 Financial Snapshot

4Q08

3Q09

4Q09

Sales ($B)

$6.5

$5.9

$6.0

EBITDA ($MM)

$671

$780

$669

Free

Cash

Flow

1

($MM)

$443

$605

$530

Debt ($B)

$12.1

$9.6

$9.0

Cash Balance ($B)

$1.1

$1.7

$1.9

•

Earnings from continuing operations before special items

•

1

Cash provided by continuing operations less capital expenditures, excluding cash received from alternative fuel credits of 

   $0.5 B in 3Q09, $0.4 B in 4Q09 and cash received under European accounts receivable securitization of $0.2 B in 3Q09

27

$ Million

2008

2009

2010

Estimate

Capital Spending

$1,002

$534

$800

Depreciation &

Amortization

$1,347

$1,472

$1,450

1

Net Interest Expense

$492

$669

$620 -

$640

Corporate Items

2

$103

$181

$200 -

$225

Effective Tax Rate

2

31.5%

30%

30-32%

1

Estimated depreciation may be impacted by lack-of-order downtime

2

Before special items and excluding Ilim

Key Financial Statistics

Key Financial Statistics

28

Free Cash Flow

2009

Free Cash Flow

2009

$ Million

2007

2008

1Q09

2Q09

3Q09

4Q09

2009

Cash from Operations

$1,887

$2,669

$649

$707

$713*

$697

$2,766*

Cash Received from

Alternative Fuel

Mixture Tax Credits

$0

$0

$145

$688

$463

$388

$1,684

Cash Provided by

Continuing Operations

$1,887

$2,669

$794

$1,395

$1,381

$1,085

$4,655

Less Capital Investment

($1,288)

($1,002)

($128)

($131)

($108)

($167)

($534)

Free Cash Flow

$599

$1,667

$666

$1,264

$1,273

$918

$4,121

Free Cash Flow

Excluding AFMTC &

European AR Cash

$599

$1,667

$521

$576

$605

$530

$2,232

* Excludes $205 MM cash received under European accounts receivable securitization in 3Q09

29

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

Debt Maturity Profile

Maturities as of Year-End

Debt Maturity Profile

Maturities as of Year-End

30

Cash & Committed Facilities

$4.4 Billion

Cash & Committed Facilities

$4.4 Billion

Maturity

Facility

Cost

Quarter-End Cash

-

$1.9 B

-

$1 B

1

Accounts

Receivables Program

JAN 2011

Zero Drawn

CP Rate

2

+ 100 bps

$1.5 B Corporate Revolver 

NOV 2012

Zero Drawn

LIBOR + 300 bps

Total Cash & Committed Facilities

$4.4 B

-

Cost includes commitment fees

1

$816 MM available at quarter-end based on eligible receivable balances

2

Conduit’s rate

31

Debt Covenants & Credit Ratings

Debt Covenants & Credit Ratings

Covenant

Year-end

Actual

Maximum Debt-to-Total Capital

60%

43.3%

Minimum Consolidated Net Worth

$9 B

$11.8 B

Rating

Outlook

Standard & Poor’s

BBB

Negative

Moody’s

Baa3

Negative

32

Pension Update

Pension Update

Market value of assets

increased to $6.8 B

23.8% return in 2009

Benefits obligation

increased to $9.5 B

1

Unfunded obligation

declined from $3.2 B to

$2.8 B

1

No cash contribution

required in 2010

1

US GAAP basis

2009 Year-End Portfolio

33

Pension Plan

Pension Plan

Key Variables

2008

2009

2010E

Assumed Rate

of Return

8.5%

8.25%

8.25%

Discount Rate

6.2%

6.0%

5.8%

*

Non-cash

expense

for

U.S.

plans

only

Pension expense reflects service cost, interest cost, amortization of actuarial losses and expected return on plan assets

Average Annualized Returns

2009

23.8%

Past Five Years

5.9%

Past Ten Years

5.6%

Portfolio Asset Allocation at 12-31-09

Target

Actual

Equity

40% -

51%

49%

Bonds

30% -

40%

32%

Real Estate

7% –

13%

7%

Other

9% -

18%

12%

34

Capacity Management Summary

Permanent Capacity Reductions in 2009

Capacity Management Summary

Permanent Capacity Reductions in 2009

Mill

Products

Annual

Capacity

(Tons)

% of  IP

Global

Capacity

Closure Date

Franklin, VA

Uncoated Freesheet

600,000

1

12%

Spring 2010

Coated Paperboard

140,000

4%

December 2009

Albany, OR

Containerboard

580,000

12%

December 2009

Pineville, LA

Containerboard

390,000

Valliant, OK

Containerboard

430,000

2

Etienne, France

Containerboard

200,000

2%

November 2009

Inverurie, Scotland

Uncoated Freesheet

275,000

5%

March 2009

•

1

Does not include 150,000-ton capacity of #3 machine previously closed in November 2008

•

2

Capacity of #3 machine previously indefinitely idled in November 2008

35

N.A. Lack of Order & Maintenance Downtime

14% of Capacity in 4Q, 20% for the Year

N.A. Lack of Order & Maintenance Downtime

14% of Capacity in 4Q, 20% for the Year

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

Paperboard.  See the following slide 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)

as

of

December

31,

2009

107

1,013

1,253

965

653

617

36

N.A. Lack of Order & Maintenance Downtime

N.A. Lack of Order & Maintenance Downtime

Containerboard

Uncoated Papers

Market Pulp

Coated

Paperboard

LOO downtime excludes capacity from mills or machines that have been permanently shutdown (Franklin  #3 - 32,000 tons

and Louisiana mill - 120,000 tons) as of December 31, 2009

37

$ Million

4Q09

1Q10E

2009

2010E

Industrial Packaging

$26

$70

$120

$140

North America

$32

$25

$118

$125

Europe

0

0

$39

$40

Brazil

0

0

$7

$5

Printing Papers Total

$32

$25

$164

$170

Consumer Packaging

$16

$5

$41

$40

Total Impact

$74

$100

$325

$350

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

Maintenance Outages Expenses

Maintenance Outages Expenses

~70% of 2010 outage expense planned for 1H10

38

Forest Products

4Q09 vs. 3Q09

Forest Products

4Q09 vs. 3Q09

4Q08

3Q09

4Q09

Sales ($ MM)

$65

$5

$25

Earnings ($ MM)

$38

$2

$18

Acres Sold

30,000

3,200

7,700

1

Price / Acre

$2,106

$1,994

$2,655

1

1

4Q09 figures exclude a 17,000-acre sale of a partnership interest at $369 per acre.

The previously announced agreement to sell 143,000 acres of timberland has expired

in accordance with its terms and will not be completed.

39

4Q09 vs. 3Q09

4Q09 vs. 4Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

N.A. Container

(4%)

($14)

(5%)

($65)

European Container

2%

(€23)

(8%)

(€81)

Industrial Packaging

Industrial Packaging

40

Average

IP

price

realization

(includes

the

impact

of

mix

across

all

grades)

4Q09 vs. 3Q09

4Q09 vs. 4Q08

Business

Volume

Price / Ton

Volume

Price / Ton

N.A. Paper

(3%)

($11)

(1%)

($82)

N.A. Pulp

(3%)

$37

(1%)

($27)

European Paper

9%

(€15)

(8%)

(€105)

Printing Papers

Printing Papers

41

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

4Q09 vs. 3Q09

4Q09 vs. 4Q08

Volume

Price/Ton

Volume

Price/Ton

U.S. Coated Paperboard

(5%)

($10)

(19%)

($3)

Revenue

Price

Revenue

Price

Converting Businesses

(4%)

NA

(10%)

NA

Consumer Packaging

Consumer Packaging

42

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax ($Million)

4Q08

3Q09

4Q09

Industrial

Packaging

Alternative Fuel Mixture Credits

$221

$212

Facility & Machine Closure Costs

($8)

($7)

($670)

Integration Costs

($26)

($18)

($15)

Other

($2)

Printing

Papers

Alternative Fuel Mixture Credits

$226

$221

Facility Closure Costs

($153)

($1)

($223)

Consumer

Packaging

Alternative Fuel Mixture Credits

$78

$83

Facility Closure Costs

($67)

Reorganization

($4)

($2)

($2)

xpedx

Reorganization

($5)

Corporate

Impairments of Goodwill

($1,777)

Restructuring & Other Charges

($53)

($141)

($82)

Total Special Items Pre-Tax

($2,021)

$356

($550)

43

Special Items Net of Taxes

from Continuing Operations

Special Items Net of Taxes

from Continuing Operations

4Q09

2009

$ Million

EPS

$ Million

EPS

Earnings Before Special Items

$101

$0.24

$378

$0.88

Special Items Net of Taxes:

Alternative Fuel Mixture Credits

$469

$1,413

North American Mill Shutdowns

($525)

($525)

Machine

Shutdown

–

Valliant

PM#3

($50)

($50)

Etienne Mill Shutdown

($17)

($87)

Inverurie

Mill Shutdown

($28)

Tax Adjustments

($15)

($165)

Debt Extinguishment Costs

($35)

($113)

Overhead Reduction Initiative

($15)

($92)

Integration Costs

($10)

($54)

Other

($4)

($14)

Total Special Items Net of Taxes

($202)

($0.48)

$285

$0.67

Net Earnings

($101)

($0.24)

$663

$1.55

44

4Q09 EBITDA

before Special Items

4Q09 EBITDA

before Special Items

Operating

Profit

$ Million

D & A

$ Million

Tons

Thousand

EBITDA

per Ton

EBITDA

Margin

Industrial Packaging

North America

1

$68

$162

2,502

$92

13.1%

Europe

$17

$9

256

$102

9.9%

Printing Papers

North America

2

$70

$58

754

$170

18.4%

Western Europe

3

$0

$2

74

$27

1.2%

Eastern Europe & Russia

3

$46

$16

256

$242

30.0%

Brazil

$33

$35

311

$219

22.6%

U.S. Market Pulp

($11)

$9

292

($7)

(1.2%)

Consumer Packaging

U.S. Coated Paperboard

$22

$33

310

$177

16.5%

1

Excludes Recycling & Bag businesses; includes Saturating Kraft business

2

Includes Bleached Kraft business

3

Excludes Market Pulp

45

Operating Profits by Industry Segment

from Continuing Operations

Operating Profits by Industry Segment

from Continuing Operations

$ Million

4Q08

3Q09

4Q09

2008

2009

Industrial Packaging

$145

$214

$84

$482

$741

Printing Papers

$113

$138

$139

$734

$464

Consumer Packaging

$1

$68

$49

$47

$177

Distribution

$26

$21

$31

$103

$55

Forest Products

$38

$2

$18

$409

$25

Operating Profit

$323

$443

$321

$1,775

$1,462

Net Interest Expense

($186)

($169)

($163)

($492)

($669)

Noncontrolling Interest /

Equity Earnings Adjustment

($13)

$5

$4

($2)

$23

Corporate Items

($21)

($46)

($40)

($103)

($181)

Special Items

($2,021)

$356

($550)

($2,331)

$564

Earnings from continuing operations

before income taxes, equity earnings &

noncontrolling interest

($1,918)

$589

($428)

($1,153)

$1,199

Equity

Earnings,

net

of

taxes

-

Ilim

$0

$0

$6

$54

($50)

46

Geographic Business Segment Operating Results

from Continuing Operations

Geographic Business Segment Operating Results

from Continuing Operations

Excludes Forest Products

$ Million

Sales

4Q08

3Q09

4Q09

2008

2009

Industrial Packaging

North American

$2,125

$1,890

$1,855

$6,170

$7,585

European

$255

$240

$260

$1,170

$980

Asian

$75

$100

$95

$350

$325

Printing Papers

North American

$765

$725

$700

$3,435

$2,815

European

$350

$300

$340

$1,655

$1,280

Brazilian

$215

$275

$300

$950

$960

U.S. Market Pulp

$170

$155

$160

$750

$575

Asian

$5

$15

$25

$20

$50

Consumer Packaging

North American

$635

$565

$540

$2,505

$2,200

European

$70

$80

$85

$300

$315

Asian

$95

$145

$160

$390

$545

Distribution

$1,940

$1,665

$1,675

$7,970

$6,525

47

Geographic Business Segment Operating Results

from Continuing Operations before Special Items

Geographic Business Segment Operating Results

from Continuing Operations before Special Items

Excludes Forest Products

$ Million

Operating Profit

4Q08

3Q09

4Q09

2008

2009

Industrial Packaging

North American

$130

$201

$68

$414

$685

European

$15

$14

$17

$64

$57

Asian

$0

$0

($1)

$4

($1)

Printing Papers

North American

$73

$92

$70

$435

$307

European

$36

$28

$46

$146

$115

Brazilian

$44

$36

$33

$186

$112

U.S. Market Pulp

($39)

($18)

($11)

($33)

($71)

Asian

($1)

$0

$1

$0

$1

Consumer Packaging

North American

$16

$44

$22

$38

$87

European

$5

$17

$21

$22

$66

Asian

($20)

$7

$6

($13)

$24

Distribution

$26

$21

$31

$103

$55

48

Pre-Tax

$MM

Tax

$MM

Non-

controlling

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

1

MM

Diluted

EPS

2

Before Special Items

1Q08

$239

($75)

($5)

$16

$175

32%

423

$0.41

2Q08

$312

($100)

($7)

$30

$235

33%

423

$0.56

3Q08

$524

($170)

($3)

$5

$356

33%

423

$0.84

4Q08

$103

($24)

$12

($2)

$89

23%

421

$0.21

2008

$1,178

($369)

($3)

$49

$855

32%

421

$2.01

Special Items

1Q08

($41)

$16

$0

$0

($25)

39%

423

($0.06)

2Q08

($10)

$3

$0

$0

($7)

30%

423

($0.02)

3Q08

($259)

$52

$0

$0

($207)

20%

423

($0.49)

4Q08

($2,021)

$136

$0

$0

($1,885)

7%

421

($4.47)

2008

($2,331)

$207

$0

$0

($2,124)

9%

421

($5.03)

Earnings from Continuing Operations

1Q08

$198

($59)

($5)

$16

$150

30%

423

$0.35

2Q08

$302

($97)

($7)

$30

$228

32%

423

$0.54

3Q08

$265

($118)

($3)

$5

$149

45%

423

$0.35

4Q08

($1,918)

$112

$12

($2)

($1,796)

6%

421

($4.26)

2008

($1,153)

($162)

($3)

$49

($1,269)

(14%)

421

($3.02)

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 Webcasts and Presentations

49

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com under the Investors tab at Webcasts and Presentations

Pre-Tax

$MM

Tax

$MM

Non-

controlling

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

1

MM

Diluted

EPS

2

Before Special Items

1Q09

$97

($32)

($4)

($27)

$34

33%

423

$0.08

2Q09

$183

($61)

($4)

($32)

$86

33%

425

$0.20

3Q09

$233

($70)

($6)

$0

$157

30%

429

$0.37

4Q09

$122

($27)

($4)

$10

$101

22%

427

$0.24

2009

$635

($190)

($18)

($49)

$378

30%

428

$0.88

Special Items

1Q09

$421

($198)

$0

$0

$223

47%

423

$0.53

2Q09

$337

($287)

$0

$0

$50

85%

425

$0.12

3Q09

$356

($142)

$0

$0

$214

40%

429

$0.50

4Q09

($550)

$348

$0

$0

($202)

63%

427

($0.48)

2009

$564

($279)

$0

$0

$285

49%

428

$0.67

Earnings

1Q09

$518

($230)

($4)

($27)

$257

44%

423

$0.61

2Q09

$520

($348)

($4)

($32)

$136

67%

425

$0.32

3Q09

$589

($212)

($6)

$0

$371

36%

429

$0.87

4Q09

($428)

$321

($4)

$10

($101)

75%

427

($0.24)

2009

$1,199

($469)

($18)

($49)

$663

39%

428

$1.55

2009 Earnings from Continuing Operations

2009 Earnings from Continuing Operations

50

Earnings from continuing operations before special items

4Q09 vs. 4Q08 EPS

4Q09 vs. 4Q08 EPS

Forest

Products

Earnings

51

Industrial Packaging Earnings

4Q09 vs. 4Q08

Industrial Packaging Earnings

4Q09 vs. 4Q08

Earnings before special items

52

Printing Papers Earnings

4Q09 vs. 4Q08 

Printing Papers Earnings

4Q09 vs. 4Q08 

Earnings before special items

53

Consumer Packaging Earnings

4Q09 vs. 4Q08

Consumer Packaging Earnings

4Q09 vs. 4Q08

Earnings before special items

54

Total Cash Cost Components

2009

Total Cash Cost Components

2009

North American Mills Only

55

Global Input & Freight Costs by Input

$212 MM, or $0.39/Share Favorable vs. 4Q08

Global Input & Freight Costs by Input

$212 MM, or $0.39/Share Favorable vs. 4Q08

Input costs for continuing businesses

103

37

37

35

($5)

$10

$25

$40

$55

$70

$85

$100

Chemicals

Energy

Fiber

Freight

North America

Outside North America

56

NYMEX Natural Gas closing prices

Index: Jan 2005 Natural Gas Costs = 100

Natural Gas Costs

23% Increase vs. 3Q09 Average Cost

Natural Gas Costs

23% Increase vs. 3Q09 Average Cost

2005

2006

2007

2008

2009

57

U.S. Mill Wood Costs

5% Increase vs. 3Q09 Average Cost

U.S. Mill Wood Costs

5% Increase vs. 3Q09 Average Cost

Index: Jan 2005 Wood Costs = 100

Delivered cost to U.S. facilities

2005

2006

2007

2009

2008

58

Index: Jan 2005 OCC Costs = 100

U.S. Old Corrugated Containers Costs

1% Increase vs. 3Q09 Average Cost

U.S. Old Corrugated Containers Costs

1% Increase vs. 3Q09 Average Cost

2005-2007 represents WY PKG delivered costs; 2008-2009 represents delivered costs to the integrated system

2005

2006

2007

2008

2009

59

Index: Jan 2006 Fuel Oil Costs = 100

U.S. Fuel Oil

9% Increase vs. 3Q09 Average Cost

U.S. Fuel Oil

9% Increase vs. 3Q09 Average Cost

WTI Crude prices

2006

2007

2008

2009

60

U.S. Chemical Composite Index

5% Decrease vs. 3Q09 Average Cost

U.S. Chemical Composite Index

5% Decrease vs. 3Q09 Average Cost

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

Chlorate, Starch and Sulfuric Acid

2005 -

2008 excludes WY PKG

Index: 1Q05 Chemical Composite= 100

2005

2006

2007

2009

2008

61

2010 Global Consumption

Annual Purchase Estimates for Key Inputs

2010 Global Consumption

Annual Purchase Estimates for Key Inputs

Does not include Asian or Ilim consumption

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

Commodity

U. S.

Non –

U. S.

Energy

Natural Gas (MM BTUs)

42,000,000

13,000,000

Fuel Oil (Barrels)

1,500,000

500,000

Coal (Tons)

860,000

260,000

Fiber

Wood (Tons)

44,200,000

8,800,000

Old Corrugated Containers (Tons)

3,000,000

310,000

Chemicals

Caustic Soda (Tons)

250,000

70,000

Starch (Tons)

394,000

96,000

Sodium Chlorate (Tons)

180,000

40,000

LD Polyethylene (Tons)

39,000

-

Latex (Tons)

22,000

4,000