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, 2011

(Date of Report)

February 3, 2011

(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, 2011, International Paper Company issued a press release reporting preliminary earnings for the fourth quarter and full-year 2010 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, 2011.
Exhibit 99.2	Slides of International Paper Company, dated February 3, 2011.

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, 2011

Exhibit Index

Exhibit 99.1	Press release of International Paper Company, dated February 3, 2011.
Exhibit 99.2	Slides of International Paper Company, dated February 3, 2011.

EX-99.1

Exhibit 99.1

INTERNATIONAL PLACE

6400 POPLAR AVENUE

MEMPHIS, TN 38197

News Release

International Paper Reports Fourth-Quarter and 2010 Earnings

Strong Seasonal Earnings, Strong Free Cash Flow

MEMPHIS, Tenn. – Feb. 3, 2011 – International Paper (NYSE: IP) reported preliminary full-year 2010 net earnings attributable to common shareholders totaling $644 million ($1.48 per share) compared with $663 million ($1.55 per share) in full-year 2009. In the fourth quarter of 2010, the company reported net earnings of $316 million ($0.73 per share) compared with a net loss of $101 million ($0.24 per share) in the fourth quarter of 2009. Amounts in all periods include special items.

Diluted Earnings Per Share Attributable to International Paper Shareholders

	Fourth Quarter 2010			Fourth Quarter 2009			Full Year 2010		Full Year 2009
Net Earnings (Loss)	$	0.73		($	0.24	)	$	1.48	$	1.55
Add Back – Net Special Items Expense (Income)		(0.05	)		0.48			0.57		(0.67	)
Earnings from Continuing Operations and Before Special Items	$	0.68		$	0.24		$	2.05	$	0.88

Full-year 2010 earnings from continuing operations and before special items were $890 million ($2.05 per share) compared with $378 million ($0.88 per share) in 2009. Earnings from continuing operations and before special items in the 2010 fourth quarter totaled $296 million ($0.68 per share), compared with $101 million ($0.24 per share) in the fourth quarter of 2009.

Quarterly net sales were $6.5 billion compared with $6.0 billion in the fourth quarter of 2009. Annual sales totaled $25.2 billion compared with $23.4 billion in 2009.

Operating profits in the fourth quarter were $561 million compared with a loss of $147 million in 2009, both of which included special items. Full-year 2010 operating profits were $1.7 billion compared with $2.4 billion in 2009.

The company repaid $350 million of debt during 2010 and contributed $1.2 billion toward its pension plan. At year end, the company had $2.1 billion in cash.

“Our year-over-year fourth quarter operating business earnings were strong with solid revenue growth and margin expansion across IP business segments. We also continued to generate strong cash flow,” said Chairman and Chief Executive Officer John Faraci. “International Paper performed well during 2010, a year of transition from recession to global economic growth. We expect to further build on our strong earnings and free cash flow momentum in 2011.”

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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 2010 segment operating profits and business trends, excluding special items, compared with the prior quarter are as follows (special items were immaterial in the 2010 third quarter).

Industrial Packaging had an operating profit of $274 million ($261 million including special items) compared to an operating profit of $332 million in the third quarter of 2010. Quarterly earnings drivers included modestly higher box prices, offset by seasonally lower box demand, higher mill and fiber costs.

Printing Papers had an operating profit of $236 million ($234 million including special items) compared to an operating profit of $278 million in the third quarter of 2010. Included in the 2010 third quarter was $16 million from the recovery of bad debt. The segment was impacted by seasonally higher energy usage and seasonally lower uncoated freesheet and market pulp demand in North America, partly offset by seasonally higher demand in Brazil.

Consumer Packaging had an operating profit of $64 million ($60 million including special items) compared to an operating profit of $71 million in the third quarter of 2010. Fourth quarter performance was lower than in the third quarter due to seasonally lower sales volumes and higher planned maintenance outages in Coated Paperboard partially offset by increased selling prices. Foodservice reported strong earnings.

xpedx, the company’s distribution business, reported operating profits of $9 million for the fourth quarter of 2010, compared to $22 million posted in the third quarter of 2010. Fourth quarter performance includes one-time costs of exiting certain retail store and printing equipment segments and year-end inventory valuation adjustments.

Forest Products earnings were not meaningful since we sold our remaining land portfolio in North America during the third quarter of 2010.Beginning in 2011, Forest Products will no longer be reported as a separate industry segment.

Net corporate expenses for the 2010 fourth quarter totaled $63 million, compared with $58 million in the 2010 third quarter and $40 million in the fourth quarter of 2009. The increase from the 2009 fourth quarter reflects higher supply chain initiative and pension expenses in 2010.

EFFECTIVE TAX RATE

The effective tax rate from continuing operations and before special items for the fourth quarter of 2010 was 28 percent, compared with 31 percent in the third quarter of 2010. The lower fourth quarter rate is a result of the passage on December 17, 2010, of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This extended the research and development tax credit and the non-taxability of certain dividend payments between related controlled foreign corporations. The 2010 full year tax rate was 30 percent compared with 30 percent for the 2009 full year.

EFFECTS OF SPECIAL ITEMS

Special items in the fourth quarter of 2010 included pre-tax charges of $35 million ($22 million after taxes) for restructuring and other charges, a pre-tax gain of $25 million ($15 million after taxes)

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related to the partial redemption of the Company’s interests in Arizona Chemical, an $18 million pre-tax charge ($11 million after taxes) for an environmental reserve related to the Company’s property in Cass Lake, Minnesota , a charge of $2 million (before and after taxes) for asset impairment costs associated with the Inverurie, Scotland mill which was closed in 2009 and a net $40 million tax benefit related to cellulosic bio-fuel tax credits. Restructuring and other charges included pre-tax charges of $12 million ($7 million after taxes) for closure costs for the Bellevue Washington and Spartanburg South Carolina box plant closures, a pre-tax charge of $13 million ($8 million after taxes) for early debt extinguishment costs, a pre-tax charge of $5 million ($3 million after taxes) for severance and benefit costs associated with the Company’s 2008 overhead cost reduction initiative, a pre-tax charge of $4 million ($3 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations, a pre-tax charge of $3 million ($2 million after taxes) for closure costs for three box plants in Asia and a pre-tax gain of $2 million ($1 million after taxes) for other items.

Special items in the third quarter of 2010 were immaterial.

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, Oregon, Franklin, Virginia and Pineville, Louisiana 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, Oklahoma 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.

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 34891863. 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 34891863.

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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 59,500 people in more than 20 countries and serves customers worldwide. 2010 net sales were more than $25 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 existing and new 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: Thomas J. Ryan, 901-419-4333; Investors: Thomas A. Cleves, 901-419-7566; and Emily Nix, 901-419-4987

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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, 2010		Twelve Months Ended December 31,
	2010			2009					2010			2009
Net Sales	$	6,531		$	5,977		$	6,720	$	25,179		$	23,366
Costs and Expenses
Cost of products sold		4,770	(a)		3,950	(e)		4,758		18,482	(a)		15,220	(l)
Selling and administrative expenses		533			496	(f)		504		1,930			2,031	(m)
Depreciation, amortization and cost of timber harvested		360			384			362		1,456			1,472
Distribution expenses		332			318			339		1,318			1,175
Taxes other than payroll and income taxes		42			43			58		192			188
Restructuring and other charges		35	(b)		1,040	(g)		—		394	(j)		1,353	(n)
Net losses on sales and impairments of businesses		(23	)(c)		11	(h)		—		(23	)(c)		59	(o)
Interest expense, net		150			163			152		608			669
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings		332			(428	)(e-h)		547		822	(a,c,j)		1,199	(l-o)
Income tax provision (benefit)		50	(d)		(321	)(i)		170		221	(k)		469	(p)
Equity earnings (losses), net of taxes		37			10			22		64			(49	)
Net Earnings (Loss)	$	319	(a-d)	$	(97	)(e-i)	$	399	$	665	(a,c,j,k)	$	681	(l-p)
Less: Net earnings attributable to noncontrolling interests		3			4			2		21			18
Net Earnings (Loss) Attributable to International Paper Company	$	316	(a-d)	$	(101	)(e-i)	$	397	$	644	(a,c,j,k)	$	663	(l-p)
Basic Earnings (Loss) Per Common Share Attributable to International Paper Common Shareholders	$	0.74	(a-d)	$	(0.24	)(e-i)	$	0.92	$	1.50	(a,c,d,j,k)	$	1.56	(l-p)
Diluted Earnings (Loss) Per Common Share Attributable to International Paper Common Shareholders	$	0.73	(a-d)	$	(0.24	)(e-i)	$	0.91	$	1.48	(a,c,d,j,k)	$	1.55	(l-p)
Average Shares of Common Stock Outstanding - Diluted		434.7			426.7			433.8		434.2			428.0
Cash Dividends Per Common Share	$	0.125		$	0.025		$	0.125	$	0.400		$	0.325

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

(a) Includes a pre-tax charge of $18 million ($11 million after taxes) for an environmental reserve related to the Company’s property in Cass Lake, Minnesota.

(b) Includes a pre-tax charge of $12 million ($7 million after taxes) for closure costs for the Bellevue and Spartanburg box plants, a pre-tax charge of $13 million ($8 million after taxes) for early debt extinguishment costs, a pre-tax charge of $5 million ($3 million after taxes) for severance and benefit costs associated with the Company’s 2008 overhead cost reduction initiative, a pre-tax charge of $4 million ($3 million after taxes) for costs associated with the reorganization of the Company’s Shorewood operations, a pre-tax charge of $3 million ($2 million after taxes) for costs associated with the shutdown of three box plants in Asia and a net pre-tax gain of $2 million ($1 million after taxes) for other items.

(c) Includes a pre-tax gain of $25 million ($15 million after taxes) related to the partial redemption of the Company’s interests in Arizona Chemicals and a charge of $2 million (before and after taxes) for asset impairment costs associated with the Inverurie, Scotland mill which was closed in 2009.

(d) Includes a tax benefit of $40 million related to cellulosic bio-fuel tax credits.

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

(f) 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.

(g) 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.

(h) Includes a charge of $8 million (before and after taxes) related to the Etienne mill in France.

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

(j) Includes a pre-tax charge of $315 million ($192 million after taxes) for shutdown costs for the Franklin mill (including $236 million of accelerated depreciation and $36 million of environmental closure costs), a pre-tax charge of $35 million ($21 million after taxes) for early debt extinguishment costs, pre-tax charges of $12 million ($7 million after taxes) for the closure costs for the Bellevue and Spartanburg box plants, a pre-tax charge of $11 million ($7 million after taxes) for an Ohio Commercial Activity tax adjustment, a pre-tax charge of $6 million ($4 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 costs associated with the reorganization of the Company’s Shorewood operations, a pre-tax charge of $3 million ($2 million after taxes) for costs associated with the closure of three box plants in Asia and charges of $4 million (before and after taxes) for other items.

(k) Includes a $14 million tax expense and a $32 million tax expense for incentive compensation and Medicare Part D deferred tax write-offs, respectively and a $40 million tax benefit related to cellulosic bio-fuel tax credits.

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

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

(n) 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.

(o) Includes a charge of $56 million (before and after taxes) related to the Etienne mill.

(p) 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.

International Paper Company

Reconciliation of Earnings Before Special Items to Net Earnings

Attributable to International Paper Company

Preliminary and Unaudited

(In millions except for per share amounts)

	Three Months Ended December 31,						Three Months Ended September 30, 2010		Twelve Months Ended December 31,
	2010			2009					2010			2009
Earnings Before Special Items	$	296		$	101		$	397	$	890		$	378
Restructuring and other charges		(33	)		(638	)		—		(253	)		(853	)
CBPR business integration costs		—			(10	)		—		—			(54	)
Alternative fuel mixture credits		—			469			—		—			1,413
Net losses on sales and impairments of businesses		13			(8	)		—		13			(56	)
Income tax adjustments		40			(15	)		—		(6	)		(165	)
Net Earnings as Reported	$	316		$	(101	)	$	397	$	644		$	663
	Three Months Ended December 31,						Three Months Ended September 30, 2010		Twelve Months Ended December 31,
Diluted Earnings per Common Share	2010			2009					2010			2009
Earnings Per Share Before Special Items	$	0.68		$	0.24		$	0.91	$	2.05		$	0.88
Restructuring and other charges		(0.07	)		(1.52	)		—		(0.59	)		(2.00	)
CBPR business integration costs		—			(0.02	)		—		—			(0.13	)
Alternative fuel mixture credits		—			1.11			—		—			3.32
Net gain (losses) on sales and impairments of businesses		0.03			(0.02	)		—		0.03			(0.13	)
Income tax adjustments		0.09			(0.03	)		—		(0.01	)		(0.39	)
Diluted Earnings per Common Share as Reported	$	0.73		$	(0.24	)	$	0.91	$	1.48		$	1.55

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) 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, 2010			Twelve Months Ended December 31,
	2010			2009						2010			2009
Industrial Packaging	$	2,570		$	2,210		$	2,610		$	9,840		$	8,890
Printing Papers		1,540			1,525			1,550			5,940			5,680
Consumer Packaging		880			785			870			3,400			3,060
Distribution		1,770			1,675			1,755			6,735			6,525
Forest Products		—			25			205			220			45
Corporate and Inter-segment Sales		(229	)		(243	)		(270	)		(956	)		(834	)
Net Sales	$	6,531		$	5,977		$	6,720		$	25,179		$	23,366
Operating Profit by Industry Segment
	Three Months Ended December 31,						Three  Months Ended September 30, 2010			Twelve Months Ended December 31,
	2010			2009						2010			2009
Industrial Packaging	$	261	(2)	$	(391	)(5,6,7)	$	332		$	826	(2)	$	761	(5,6,7)
Printing Papers		234	(3)		137	(5,8)		278			481	(3)		1,091	(5,8)
Consumer Packaging		60	(4)		63	(4,5)		71			207	(4)		433	(4,5)
Distribution		9			26	(9)		22			78			50	(9)
Forest Products		(3	)		18			49			94			25
Operating Profit (1)		561			(147	)		752			1,686			2,360
Interest expense, net		(150	)		(163	)		(152	)		(608	)		(669	)
Noncontrolling interest/equity earnings adjustment (10)		(5	)		4			5			15			23
Corporate items, net		(63	)		(40	)		(58	)		(226	)		(181	)
Restructuring and other charges		(36	)		(81	)		—			(70	)		(333	)
Net gains (losses) on sales and impairments of businesses		25			(1	)		—			25			(1	)
Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings	$	332		$	(428	)	$	547		$	822		$	1,199
Equity Earnings (Loss) in Ilim Holdings S.A., Net of Taxes (1)	$	31		$	6		$	22		$	55		$	(50	)

(1) In addition to the operating profits shown above, International Paper recorded equity earnings, net of taxes, of $31 million, $6 million and $22 million for the three months ended December 31, 2010, December 31, 2009 and September 30, 2010, respectively, and $55 million for the twelve months ended December 31, 2010; and equity losses, net of taxes, of $50 million for the twelve months ended December 31, 2009, related to the equity investment in Ilim Holdings S.A., a separate reportable industry segment.

(2) Includes charges of $12 million for closure costs for the Bellevue and Spartanburg box plants for the three and twelve months ended December 31, 2010, a gain of $2 million and a net charge of $1 million for the three and twelve months ended December 31, 2010, respectively, related to closure costs for U.S. mills closed in 2009, charges of $3 million for additional closure costs for the Etienne mill in France for the twelve months ended December 31, 2010, and charges of $3 million for closure costs for three Asian box plants for the three and twelve months ended December 31, 2010.

(3) Includes charges of $2 million for asset impairment costs associated with the Inverurie mill for the 3 months and twelve months ended December 31, 2010 and charges of $315 million for the twelve months ended December 31, 2010, for shutdown costs for the Franklin mill.

(4) 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 $4 million and $2 million for the three months ended December 31, 2010 and December 31, 2009, respectively, and $8 million and $7 million for the twelve months ended December 31, 2010 and December 31, 2009, respectively, related to the reorganization of the Company’s Shorewood operations.

(5) Includes gains of $212 million in the Industrial Packaging segment, $221 million in the Printing Papers segment, and $83 million in the Consumer Packaging segment for the three months ended December 31, 2009, 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.

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

(7) 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 for the three months ended December 31, 2009 , 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 the impairment of an investment in Asia.

(8) Includes charges of $223 million for the three months and twelve months ended December 31, 2009 for shutdown costs for the Franklin mill; $11 million for the twelve months ended December 31, 2009, 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.

(9) Includes a charge of $5 million for the three months and twelve months ended December 31, 2009 related to the reorganizaton 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 Company

Reconciliation of Operating Profit to Operating Profit Before Special Items

(In millions)

	Three Months Ended December 31, 2010
	Industrial Packaging			Printing Papers			Consumer Packaging			Distribution		Forest Products			Total
Operating Profit as Reported		261			234			60			9		(3	)		561
Restructuring and other charges		13			—			4			—		—			17
Net losses on sales and impairments of businesses					2			—			—		—			2
Operating Profit Before Special Items		274			236			64			9		(3	)		580
	Three Months Ended September 30, 2010
	Industrial Packaging			Printing Papers			Consumer Packaging			Distribution		Forest Products			Total
Operating Profit as Reported		332			278			71			22		49			752
Restructuring and other charges*		—			—			—			—		—			—
Operating Profit Before Special Items		332			278			71			22		49			752
*Note: Special items were immaterial in the third quarter of 2010.
	Three Months Ended December 31, 2009
	Industrial Packaging			Printing Papers			Consumer Packaging			Distribution		Forest Products			Total
Operating Profit as Reported		(391	)		137			63			26		18			(147	)
Restructuring and other charges		662			223			69			5		—			959
Alternative fuel mixture credits		(212	)		(221	)		(83	)							(516	)
CBPR business integration costs		15														15
Net losses on sales and impairments of businesses		10														10
Operating Profit Before Special Items		84			139			49			31		18			321

International Paper

Sales Volume by Product (1)

Preliminary and Unaudited

International Paper Consolidated

	Three Months Ended December 31,				Three Months Ended September 30, 2010		Twelve Months Ended December 31,
	2010		2009				2010		2009
Industrial Packaging (In thousands of short tons)
Corrugated Packaging		1,832		1,782		1,928		7,525		7,313
Containerboard		591		677		634		2,458		2,258
Recycling		626		521		636		2,486		2,280
Saturated Kraft		40		43		45		176		126
Bleached Kraft		19		20		23		85		72
European Industrial Packaging		272		256		251		1,040		1,046
Asian Box		110		40		114		307		149
Asian Distribution		90		147		87		360		465
Industrial Packaging		3,580		3,486		3,718		14,437		13,709
Printing Papers (In thousands of short tons)
U.S. Uncoated Papers		644		734		684		2,695		2,882
European & Russian Uncoated Papers		306		330		311		1,235		1,336
Brazilian Uncoated Papers		289		311		262		1,081		1,007
Asian Uncoated Papers		21		41		24		96		81
Uncoated Papers		1,260		1,416		1,281		5,107		5,306
Market Pulp (2)		369		410		385		1,422		1,524
Consumer Packaging (In thousands of short tons)
U.S. Coated Paperboard		341		310		364		1,398		1,242
European Coated Paperboard		87		89		88		351		354
Asian Coated Paperboard		219		231		213		870		859
Other Consumer Packaging		45		39		45		174		169
Consumer Packaging		692		669		710		2,793		2,624

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

(2) Includes internal sales to mills.

INTERNATIONAL PAPER COMPANY

Consolidated Balance Sheet

Preliminary and Unaudited

(In Millions)

	December 31, 2010		December 31, 2009
Assets
Current Assets
Cash and Temporary Investments	$	2,073	$	1,892
Accounts and Notes Receivable, Net		3,039		2,695
Inventories		2,347		2,179
Deferred Income Tax Assets		339		368
Other		230		417
Total Current Assets		8,028		7,551
Plants, Properties and Equipment, Net		12,002		12,688
Forestlands		747		757
Investments		1,092		1,077
Goodwill		2,308		2,290
Deferred Charges and Other Assets		1,191		1,185
Total Assets	$	25,368	$	25,548
Liabilities and Equity
Current Liabilities
Notes Payable and Current Maturities of Long-Term Debt	$	313	$	304
Accounts Payable and Accrued Liabilities		4,190		3,708
Total Current Liabilities		4,503		4,012
Long-Term Debt		8,358		8,729
Deferred Income Taxes		2,793		2,425
Pension Benefit Obligation		1,482		2,765
Postretirement and Postemployment Benefit Obligation		499		538
Other Liabilities		649		824
Equity
Invested Capital		4,418		4,074
Retained Earnings		2,416		1,949
Total Shareholders’ Equity		6,834		6,023
Noncontrolling interests		250		232
Total Equity		7,084		6,255
Total Liabilities and Equity	$	25,368	$	25,548

INTERNATIONAL PAPER COMPANY

Consolidated Statement of Cash Flows

Preliminary and Unaudited

(In Millions)

	Twelve Months Ended December 31,
	2010			2009
Operating Activities
Net Earnings		665			681
Depreciation, amortization and cost of timber harvested		1,456			1,472
Deferred income tax expense (benefit), net		422			160
Restructuring and other charges		394			1,353
Payments related to restructuring and legal reserves		(2	)		(38	)
Pension plan contribution		(1,150	)		—
Net losses on sales and impairments of businesses		(23	)		59
Cost of timberlands sold		143			—
Equity (earnings) loss, net		(64	)		49
Periodic pension expense, net		231			213
Other, net		17			227
Changes in current assets and liabilities
Accounts and notes receivable		(327	)		604
Inventories		(186	)		316
Accounts payable and accrued liabilities		(52	)		(321	)
Interest payable		3			(8	)
Other		104			(112	)
Cash Provided by Operations		1,631			4,655
Investment Activities
Invested in capital projects		(775	)		(534	)
Acquisitions, net of cash received		(152	)		(17	)
Other		93			(42	)
Cash Used for Investment Activities		(834	)		(593	)
Financing Activities
Repurchases of common stock and payments of restricted stock tax withholding		(26	)		(10	)
Issuance of debt		193			3,229
Reduction of debt		(576	)		(6,318	)
Change in book overdrafts		38			20
Dividends paid		(175	)		(140	)
Other		(42	)		(157	)
Cash Used for Financing Activities		(588	)		(3,376	)
Effect of Exchange Rate Changes on Cash		(28	)		62
Change in Cash and Temporary Investments		181			748
Cash and Temporary Investments
Beginning of the period		1,892			1,144
End of the period	$	2,073		$	1,892

EX-99.2

Fourth Quarter

and Full Year

2010 Review

February 3, 2011

Fourth Quarter

and Full Year

2010 Review

February 3, 2011

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

existing

and

new

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

Fourth Quarter 2010

Solid Finish in Transition Year

Fourth Quarter 2010

Solid Finish in Transition Year

Strong Earnings

Strong Free Cash Flow

Incremental price realization

offset seasonal volume declines

More Maintenance Outages

Increased Input Costs

Strong Ilim JV Contribution

Earnings from continuing operations

before special items

5

4Q10 Operating Business EPS

Strongest 4Q in more than a decade

4Q10 Operating Business EPS

Strongest 4Q in more than a decade

Earnings from continuing operations before special items as reported at the time

6

Strong Full-Year 2010 Results

Strong Full-Year 2010 Results

$3.3 B EBITDA

$1.7 B

Free Cash Flow

1

110 BPS EBITDA Margin Expansion

250 BPS ROI Improvement

Significant Debt Reduction Progress

Pension Funding Gap down $1.3 B

Net Debt down $550 MM

Annual Dividend Rate Increase

From $0.10 to $0.75

Earnings from continuing operations before special items

1

See slide #34 for a reconciliation of free cash flows

7

Strong Full-Year 2010 Results

Strong Full-Year 2010 Results

1

See slide #34 for a reconciliation of free cash flows

2

Earnings from continuing operations before special items

$ Billion

2009

2010

Sales

$23.4

$25.2

Free Cash Flow

1

$2.2

$1.7

Year-End Debt

$9.0

$8.7

Cash Balance

$1.9

$2.1

EBITDA

2

8

2010 Revenue

$1.8 Billion Increase

2010 Revenue

$1.8 Billion Increase

1

Reflects 100% of Ilim’s

revenues

2010 vs. 2009 Revenue Growth

U.S.

6%

Non-U.S.

13%

Ilim

Joint Venture

33%

Non-U.S., Inc. Ilim

1

18%

9

Earnings before special items

2010 vs. 2009 EPS

2010 vs. 2009 EPS

Earnings from continuing operations before special items

10

Step-Change

Improvement

in

Free

Cash

Flow

Step-Change

Improvement

in

Free

Cash

Flow

2000 –

2004 Average

$0.9 Billion

2008 –

2010 Average

$1.9 Billion

Transformation

Free cash flow, based on data in the 10-K for each year at the time of filing.

See slide #34 for a reconciliation of free cash flows

11

Transformation Enabling Improved Returns

Recovering from Global Recession

Transformation Enabling Improved Returns

Recovering from Global Recession

Cost of Capital

Return on Investment

12

4Q10 Financial Snapshot

Strong EBITDA & Free Cash Flow

4Q10 Financial Snapshot

Strong EBITDA & Free Cash Flow

4Q09

3Q10

4Q10

Sales ($B)

$6.0

$6.7

$6.5

EBITDA

1

($MM)

$669

$1,061

$872

EBITDA Margin

11%

16%

13%

Free Cash Flow

2

($MM)

$530

$753

$601

Debt ($B)

$9.0

$8.7

$8.7

Cash Balance ($B)

$1.9

$1.4

$2.1

1

Earnings from continuing operations before special items

2

4Q09 excludes cash received from alternative fuel credits of $388 MM; See slide #34 for a reconciliation of 3Q10 and 4Q10

free cash flows

13

Earnings before special items

4Q10 vs. 3Q10 EPS

4Q10 vs. 3Q10 EPS

Earnings before special items

14

Global Input Costs vs. 3Q10

$22 MM Unfavorable, or $0.03/Share

Global Input Costs vs. 3Q10

$22 MM Unfavorable, or $0.03/Share

By Business

By Input Type

15

Industrial Packaging Earnings

4Q10 vs. 3Q10

Industrial Packaging Earnings

4Q10 vs. 3Q10

Earnings before special items

16

N.A. Industrial Packaging Relative EBITDA Margins

N.A. Industrial Packaging Relative EBITDA Margins

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

Excludes revenue from trade volumes

4Q10

Sales

$2.0 B

$0.6 B

$1.6 B

17

N.A. Industrial Packaging Relative EBIT

N.A. Industrial Packaging Relative EBIT

Operating profit before special items.

Operating Profit up 13%

Operating Profit up 28%

18

Printing Papers Earnings

4Q10 vs. 3Q10

Printing Papers Earnings

4Q10 vs. 3Q10

Earnings before special items

19

Printing Papers EBITDA Margins

Strong Recovery in 2010 in all Regions

Printing Papers EBITDA Margins

Strong Recovery in 2010 in all Regions

2009

Margin

19%

15%

(6%)

24%

20

Consumer Packaging Earnings

4Q10 vs. 3Q10

Consumer Packaging Earnings

4Q10 vs. 3Q10

Earnings before special items

21

U.S. Coated Paperboard EBITDA Margins

Now similar to UFS & Containerboard Margins

U.S. Coated Paperboard EBITDA Margins

Now similar to UFS & Containerboard Margins

22

$ Million

4Q09

3Q10

4Q10

Sales

$1,675

$1,755

$1,770

Earnings

$31

$22

$9

xpedx

4Q10 vs. 3Q10

xpedx

4Q10 vs. 3Q10

2010 EBIT increased more than 40% vs. 2009

Average daily sales rates increased in all segments

4Q10 results include initial investments to improve results, including

charges to exit specific retail and printing equipment segments

Plans under development to significantly improve operating earnings

Daily Sales Change

vs. 3Q10

Printing

2.8%

Packaging

5.8%

Facility Supplies

6.0%

Earnings before special items

23

$ Million

4Q09

3Q10

4Q10

Sales (100%)

$350

$465

$490

Earnings (IP Share)

$6

$22

$31

1

1

Ilim

recorded an asset impairment charge (IP share was $12 million)

Ilim’s

results are reported on a one-quarter lag.

IP’s shares of Ilim’s

reported earnings for 4Q09 & 4Q10 include an after-tax foreign exchange gain of $2MM and $10MM,

respectively.  3Q10 earnings include an after-tax foreign exchange loss of $6MM.

Ilim

Joint Venture

4Q10

vs.

3Q10

Ilim

Joint Venture

4Q10

vs.

3Q10

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

Pulp

4%

($46)

7%

$217

Containerboard

7%

$61

(2%)

$185

24

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

Ilim Joint Venture

Three-Year Progress

Ilim Joint Venture

Three-Year Progress

2010

EPS accretive

Record earnings

2007 -

2010

$0.15 per share of equity earnings

$152 million in cash dividends

Current

Developed & implementing strategic

capital expansion program

25

IP Europe, Middle East & Africa

2010: 10% of IP Sales & 15% of IP EBITDA

IP Europe, Middle East & Africa

2010: 10% of IP Sales & 15% of IP EBITDA

Record earnings in 2010

Strong earnings in paper &

packaging segments

Strong returns in both

Western & Eastern Europe

Return on Investment

2010

European Papers, excl. Russia

18%

Russian Papers

15%

EMEA Container

11%

Total

Capital

Employed

(Billion)

$1.6

26

Debt Reduction Progress

Target: Adjusted Debt < 3X EBITDA

Debt Reduction Progress

Target: Adjusted Debt < 3X EBITDA

Adjusted Debt reflects gross balance sheet debt plus pension gap

1

Pension gap as of 12/31/08

2

Excludes debt repayments of $2.75 B from the proceeds of bonds issuances of $2.75 B

3

Pension gap as of 12/31/10

27

Capital Spending

2011 Estimate: $1.2 -

$1.3 Billion

Capital Spending

2011 Estimate: $1.2 -

$1.3 Billion

$ Million

Normalized Target 60-70% of Depreciation

% of

Depreciation

Reflects continuing operations

Cycle Capex

Target: ~$1B

28

Energy Efficiency Progress

Record-Low Purchased Energy Consumption

Energy Efficiency Progress

Record-Low Purchased Energy Consumption

U.S. Mill System 2010 Fossil Fuel

Consumption per Ton

8% less than 2009 ($75 MM)

45% less than 2000 ($360 MM)

Set new low-record for purchased

energy usage

5 mills set new records

2010 Most-Improved Mills

Saillat –

18% lower

Svetogorsk –

16% lower

29

Fourth-Quarter Summary

Fourth-Quarter Summary

Started with strong 3Q momentum

Seasonal volume decline offset by price realization

More maintenance outages

Input cost increases

Strong Ilim JV contribution

Strong 4Q Earnings & Free Cash Flow

30

First Quarter Outlook

Changes from 4Q10

First Quarter Outlook

Changes from 4Q10

North America

Europe

Brazil

Asia

Volume

Paper

Stable

Stable

Seasonal

Decrease

Packaging

Stable

Stable

Stable

Pricing

Paper

Stable

Stable

Stable

Packaging

Stable

Stable

Stable

Maintenance Outages

~$12MM

Increase

~$14MM

Decrease

Stable

Input & Freight Costs

Higher Fiber

& Chemicals

Slight Increase

Stable

Stable

xpedx

Increase

Ilim

Increase

31

1Q & 2011 Outlook

Momentum Continues

1Q & 2011 Outlook

Momentum Continues

1Q11 Outlook

Stable volumes

Stable prices (with some 

pressure on exports)

Increasing fiber & chemicals

costs

Strong Ilim

JV contribution

Strong 1Q EPS & FCF

2011 Outlook

Global economies continue

to recover

Demand growth in most IP

business segments

Inventories in good shape

Robust margin-improvement

initiatives

OCC costs to remain high

Strong EPS, FCF & ROI

32

Appendix

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Emily Nix

901-419-4987

Media Contact

Tom Ryan

901-419-4333

33

$ Million

(Except as noted)

2009

2010

2011

Estimate

Capital Spending

$534

$775

$1.2 -

$1.3 B

Depreciation &

Amortization

$1,472

$1,456

$1.4 B

Net Interest Expense

$669

$608

$575 -

$600

Corporate Items

$181

$226

$175 -

$200

Effective Tax Rate

30%

30%

32 -

34%

Before special items and excluding Ilim

Key Financial Statistics

Key Financial Statistics

34

Free Cash Flow

2010

Free Cash Flow

2010

$ Million

2008

2009

1Q10

2Q10

3Q10

4Q10

2010

Cash from Operations

$2,669

$2,766

1

$159

$509

$937

2

$919

3

$2,524

2,3

Cash Received from

AFMTC & CBTC

$0

$1,684

$0

$132

$0

$17

$149

Cash Provided by

Continuing Operations

$2,669

$4,655

$159

$641

$937

$936

$2,673

Less Capital Investment

($1,002)

($534)

($120)

($153)

($184)

($318)

($775)

Free Cash Flow

$1,667

$4,121

$39

$488

$753

$618

$1,898

Free Cash Flow

Excluding AFMTC, CBTC

& European AR Cash

$1,667

$2,232

$39

$356

$753

$601

$1,749

1

Includes $205 MM cash received under European accounts receivable securitization

2

Excludes $1,150 MM cash paid for voluntary pension contributions

3

Excludes

a

tax

receivable

of

$108

MM

collected

related

to

pension

contributions

IP received $1,684 MM cash from alternative fuel mixture tax credits (AFMTC) in 2009; $132 MM in 2Q10

IP received $17 MM cash from cellulosic biofuel

tax credits (CBTC) in 4Q10

35

Monetization & Other: Timber Monetization debt and other debt intended to be rolled over or refinanced,

(Sun joint venture debt and other foreign subsidiary debt)

Debt Maturity Profile

Maturities as of Year-End

Debt Maturity Profile

Maturities as of Year-End

36

Cash & Committed Facilities

$4.6 Billion

Cash & Committed Facilities

$4.6 Billion

Maturity

Facility

Cost

Quarter-End Cash

-

$2.1 B

-

$1 B

1

Accounts

Receivables Program

JAN 2012

Zero Drawn

CP Rate

2

+ 75 bps

$1.5 B Corporate Revolver 

NOV 2012

Zero Drawn

LIBOR + 300 bps

Total Cash & Committed Facilities

$4.6 B

-

Cost includes commitment fees

1

$877 MM available at quarter-end based on eligible receivable balances. Program renewed in January, 2011.

2

Conduit’s rate

37

Debt Covenants & Credit Ratings

Debt Covenants & Credit Ratings

Covenant

12/31/10

Actual

Maximum Debt-to-Total Capital

60%

41.2%

Minimum Consolidated Net Worth

$9 B

$12.4 B

Rating

Outlook

Standard & Poor’s

BBB

Stable

Moody’s

Baa3

Stable

38

Pension Update

Pension Update

Market value of assets

increased to $8.3 B

15.1% return on plan assets

in 2010

Pension benefits obligation

increased to $9.8 B

1

Unfunded obligation declined

from $2.8 B to $1.5 B

1

No cash contribution required

in 2011

1

US GAAP basis

Year-End Funded Status

39

Pension Plan

Pension Plan

Key Variables

2009

2010

2011E

Assumed Rate

of Return

8.25%

8.25%

8.25%

Discount Rate

6.0%

5.8%

5.6%

* 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

2010

15.1%

Past Five Years

6.5%

Past Ten Years

7.2%

Portfolio Asset Allocation at 12-31-10

Target

Actual

Equity

40% -

51%

49%

Bonds

30% -

40%

31%

Real Estate

7% –

13%

8%

Other

9% -

18%

12%

40

$ Million

4Q10

1Q11E

2010

2011E

Industrial Packaging

$22

$41

$136

$149

North America

$29

$39

$131

$138

Europe

14

0

$38

$35

Brazil

0

0

$13

$15

Printing Papers Total

$43

$39

$182

$188

Consumer Packaging

$17

$0

$42

$44

Total Impact

$82

$80

$360

$381

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

Maintenance Outages Expenses

Maintenance Outages Expenses

~60% of 2011 outage expense planned for 1H11

41

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

N.A. Container

(5%)

$4

3%

$89

European Container*

13%

€7

7%

€76

Industrial Packaging

Industrial Packaging

* European Container volumes reflect box shipments only, including the shipments by the non-consolidated joint venture in

Turkey

42

Average

IP

price

realization

(includes

the

impact

of

mix

across

all

grades)

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price / Ton

Volume

Price / Ton

N.A. Paper

(6%)

$7

(12%)

$91

N.A. Pulp

(10%)

$3

(14%)

$211

European Paper

(2%)

€0

(7%)

€68

Printing Papers

Printing Papers

43

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

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Volume

Price/Ton

Volume

Price/Ton

U.S. Coated Paperboard

(7%)

$14

9%

$77

Revenue

Price

Revenue

Price

Converting Businesses

4%

NA

7%

NA

Consumer Packaging

Consumer Packaging

44

Cellulosic Biofuel

Tax Credit

4Q10

Cellulosic Biofuel

Tax Credit

4Q10

$40 million after-tax credit

1

$17

million cash benefit

IP cannot quantify the value of additional

CBTC because it depends on future taxable

earnings, but it could be significant

1

Reflects the after-tax value of 65 million gallons of black liquor processed in 2009 that was not submitted for alternative fuel mixture tax credits

45

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax ($Million)

4Q09

3Q10

4Q10

Industrial

Packaging

Alternative Fuel Mixture Credits

$212

Facility & Machine Closure Costs

($670)

($10)

Integration Costs

($15)

Other

($2)

($3)

Printing

Papers

Alternative Fuel Mixture Credits

$221

Facility Closure Costs

($223)

Other

($2)

Consumer

Packaging

Alternative Fuel Mixture Credits

$83

Facility Closure Costs

($67)

Reorganization

($2)

($4)

xpedx

Reorganization

($5)

Corporate

Net Gain on Sale of Business

$25

Restructuring & Other Charges

($82)

($36)

Total Special Items Pre-Tax

($550)

$0

($30)

46

Special Items Net of Taxes

from Continuing Operations

Special Items Net of Taxes

from Continuing Operations

4Q10

2010

$ Million

EPS

$ Million

EPS

Earnings Before Special Items

$296

$0.68

$890

$2.05

Special Items Net of Taxes:

Mill & Machine Shutdowns

$1

($196)

Tax Adjustments

($46)

Debt Extinguishment Costs

($8)

($21)

Environmental Reserve

($11)

($11)

Box Plant Closures

($9)

($9)

Cellulosic Biofuel Tax Credit

$40

$40

Reorganization

($2)

($4)

Overhead Reduction Initiative

($3)

($4)

Other

($3)

($10)

Net Gain on Sale of Business

$15

$15

Total Special Items Net of Taxes

$20

$0.05

($246)

($0.57)

Net Earnings

$316

$0.73

$644

$1.48

47

4Q10 EBITDA

4Q10 EBITDA

Operating

Profit

$ Million

D & A

$ Million

Tons

Thousand

EBITDA

per Ton

EBITDA

Margin

Industrial Packaging

North America

1

$259

$128

2,463

$157

19.5%

Europe

$16

$10

272

$96

9.4%

Printing Papers

North America

2

$92

$49

663

$214

21.0%

Eastern Europe & Russia

3

$37

$21

306

$190

19.3%

Brazil

$63

$36

289

$343

31.6%

U.S. Market Pulp

$43

$14

250

$228

30.0%

Consumer Packaging

U.S. Coated Paperboard

$36

$36

341

$211

18.2%

1

Excludes Recycling & Bag businesses; includes Saturating Kraft business

2

Includes Bleached Kraft business

3

Excludes Market Pulp

48

Operating Profits by Industry Segment

from Continuing Operations

Operating Profits by Industry Segment

from Continuing Operations

$ Million

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

$84

$332

$274

$741

$845

Printing Papers

$139

$278

$236

$464

$798

Consumer Packaging

$49

$71

$64

$177

$215

Distribution

$31

$22

$9

$55

$78

Forest Products

$18

$49

($3)

$25

$94

Operating Profit

$321

$752

$580

$1,462

$2,030

Net Interest Expense

($163)

($152)

($150)

($669)

($608)

Noncontrolling Interest /

Equity Earnings Adjustment

$4

$5

($5)

$23

$15

Corporate Items

($40)

($58)

($63)

($181)

($226)

Special Items

($550)

$0

($30)

$564

($389)

Earnings from continuing operations

before income taxes, equity earnings &

noncontrolling interest

($428)

$547

$332

$1,199

$822

Equity Earnings, net of taxes -

Ilim

$6

$22

$31

($50)

$55

49

Geographic Business Segment Operating Results

Geographic Business Segment Operating Results

Excludes Forest Products

$ Million

Sales

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

North American

$1,855

$2,210

$2,135

$7,585

$8,355

European

$260

$235

$275

$980

$990

Asian

$95

$165

$160

$325

$495

Printing Papers

North American

$700

$715

$675

$2,815

$2,750

European

$340

$325

$345

$1,280

$1,305

Brazilian

$300

$275

$315

$960

$1,090

U.S. Market Pulp

$160

$210

$190

$575

$715

Asian

$25

$25

$15

$50

$80

Consumer Packaging

North American

$540

$615

$605

$2,200

$2,350

European

$85

$85

$95

$315

$430

Asian (Sun JV)

$160

$170

$180

$545

$620

Distribution

$1,675

$1,755

$1,770

$6,525

$6,730

50

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

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

North American

$65

$320

$261

$682

$776

European

$17

$14

$16

$57

$73

Asian

$2

($2)

($3)

$2

($4)

Printing Papers

North American

$70

$125

$92

$307

$333

European

$46

$58

$38

$115

$199

Brazilian

$33

$46

$63

$112

$159

U.S. Market Pulp

($11)

$49

$43

($71)

$107

Asian

$1

$0

$0

$1

$0

Consumer Packaging

North American

$22

$51

$38

$87

$105

European

$21

$17

$20

$66

$76

Asian (Sun JV)

$6

$3

$6

$24

$34

Distribution

$31

$22

$9

$55

$78

51

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

52

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

1Q10

$40

($13)

($9)

($2)

$16

32%

429

$0.04

2Q10

$262

($81)

($7)

$7

$181

31%

433

$0.42

3Q10

$547

($170)

($2)

$22

$397

31%

434

$0.91

4Q10

$362

($100)

($3)

$37

$296

28%

435

$0.68

2010

$1,211

($364)

($21)

$64

$890

30%

434

$2.05

Special Items

1Q10

($215)

$37

$0

$0

($178)

17%

429

($0.42)

2Q10

($144)

$56

$0

$0

($88)

39%

433

($0.21)

3Q10

$0

$0

$0

$0

$0

0%

434

$0

4Q10

($30)

$50

$0

$0

$20

167%

435

$0.05

2010

($389)

$143

$0

$0

($246)

37%

434

($0.57)

Earnings

1Q10

($175)

$24

($9)

($2)

($162)

14%

429

($0.38)

2Q10

$118

($25)

($7)

$7

$93

21%

433

$0.21

3Q10

$547

($170)

($2)

$22

$397

31%

434

$0.91

4Q10

$332

($50)

($3)

$37

$316

15%

435

$0.73

2010

$822

($221)

($21)

$64

$644

27%

434

$1.48

2010 Earnings from Continuing Operations

2010 Earnings from Continuing Operations

53

Earnings before special items

4Q10 vs. 4Q09 EPS

4Q10 vs. 4Q09 EPS

Earnings from continuing operations before special items

54

Industrial Packaging Earnings

4Q10 vs. 4Q09

Industrial Packaging Earnings

4Q10 vs. 4Q09

Earnings before special items

55

Printing Papers Earnings

4Q10 vs. 4Q09

Printing Papers Earnings

4Q10 vs. 4Q09

Earnings before special items

56

$ Million

4Q09

3Q10

4Q10

Sales

$300

$275

$315

Earnings

$33

$46

$63

EBITDA Margin

23%

29%

32%

IP Brazil results are reported in the Printing Papers segment

IP Brazil

IP Brazil

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

Uncoated Freesheet

10%

($7)

(7%)

$93

Domestic

13%

($23)

5%

$7

Export

8%

$6

(15%)

$167

57

Consumer Packaging Earnings

4Q10 vs. 4Q09

Consumer Packaging Earnings

4Q10 vs. 4Q09

Earnings before special items

58

2010 Total North American Mills

Cash Cost Components

2010 Total North American Mills

Cash Cost Components

59

Global Input & Freight Costs vs. 2009

$643 MM Unfavorable, or $1.05/Share

Global Input & Freight Costs vs. 2009

$643 MM Unfavorable, or $1.05/Share

Input costs for continuing businesses

60

Global Input & Freight Costs vs. 4Q09

$168 MM Unfavorable, or $0.31/Share

Global Input & Freight Costs vs. 4Q09

$168 MM Unfavorable, or $0.31/Share

Input costs for continuing businesses

61

U.S. Mill Wood Delivered Cost Trends

2% Decrease vs. 3Q10 Average Cost

U.S. Mill Wood Delivered Cost Trends

2% Decrease vs. 3Q10 Average Cost

62

U.S. OCC Delivered Cost Trends

17% Increase vs. 3Q10 Average Cost

U.S. OCC Delivered Cost Trends

17% Increase vs. 3Q10 Average Cost

2005-2007 represents WY PKG delivered costs; 2008-2010 represents delivered costs to the integrated system

63

NYMEX Natural Gas closing prices

Natural Gas Costs

13% Decrease vs. 3Q10 Average Cost

Natural Gas Costs

13% Decrease vs. 3Q10 Average Cost

64

U.S. Fuel Oil

7% Increase vs. 3Q10 Average Cost

U.S. Fuel Oil

7% Increase vs. 3Q10 Average Cost

WTI Crude prices

65

U.S. Chemical Composite Index

7% Increase vs. 3Q10 Average Cost

U.S. Chemical Composite Index

7% Increase vs. 3Q10 Average Cost

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

Chlorate, Starch and Sulfuric Acid

2005 -

2008 excludes WY PKG

66

2011 Global Consumption

Annual Purchase Estimates for Key Inputs

2011 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

-

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