International Paper Reports Second-Quarter Earnings

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

(Logo: http://www.newscom.com/cgi-bin/prnh/20020701/IPLOGO )

Diluted Earnings Per Share Attributable to International
Paper Shareholders

Second First Second
Quarter Quarter Quarter
2009 2009 2008
------ ------ -------

Net Earnings $0.32 $0.61 $0.54
----- ----- -----

Add Back - Net Special
Items Expense (Income) (0.12) (0.53) 0.02
----- ----- ----
Earnings from Continuing
Operations and Before $0.20 $0.08 $0.56
Special Items ===== ===== =====

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

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

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

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

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

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

SEGMENT INFORMATION

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

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

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

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

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

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

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

EFFECTIVE TAX RATE

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

EFFECTS OF SPECIAL ITEMS

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

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

Special items in the second quarter of 2008 consisted of a $13 million pre-tax
charge ($9 million after taxes) for costs associated with the reorganization
of Shorewood operations in Canada and a $3 million pre-tax gain ($2 million
after taxes) for an adjustment to the gain on the 2006 transformation plan
forestland sales.

EARNINGS WEBCAST

The company will hold a webcast to review earnings at 10 a.m. EDT / 9 a.m. CDT
today. All interested parties are invited to listen to the webcast live via
the company's Internet site at http://www.internationalpaper.com by clicking
on the Investors tab and going to the Presentations page. A replay of the
webcast will also be available on the Web site beginning approximately two
hours after the call. Parties who wish to participate in the webcast via
teleconference may dial +1 (706) 679-8242 or, within the U.S. only, (877)
316-2541 and ask to be connected to the International Paper Second-Quarter
Earnings Call. The conference ID number is 15781616. Participants should call
in no later than 9:45 a.m. EDT/8:45 a.m. CDT. An audio-only replay will be
available for four weeks following the call. To access the replay, dial +1
(706) 645-9291 or, within the U.S. only, (800) 642-1687, and when prompted for
the conference ID, enter 15781616.

About International Paper
International Paper (NYSE: IP) is a global paper and packaging company with
manufacturing operations in North America, Europe, Latin America, Russia, Asia
and North Africa. Its businesses include uncoated papers and industrial and
consumer packaging, complemented by xpedx, the company's North American
distribution company. Headquartered in Memphis, Tenn., the company employs
more than 58,000 people in more than 20 countries and serves customers
worldwide. 2008 net sales were approximately $25 billion. For more information
about International Paper, its products and stewardship efforts, visit
www.internationalpaper.com.

This press release contains forward-looking statements. These statements
reflect management's current views and are subject to risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in these statements. Factors which could cause actual results to
differ relate to: (i) increases in interest rates and our ability to meet our
debt service obligations; (ii) industry conditions, including but not limited
to changes in the cost or availability of raw materials, energy and
transportation costs, competition we face, cyclicality and changes in consumer
preferences, demand and pricing for its products; (iii) global economic
conditions and political changes, including but not limited to the impairment
of financial institutions, changes in currency exchange rates, credit
availability, credit ratings issued by recognized credit rating organizations,
the amount of our future pension funding obligation, changes in tax laws and
pension and health care costs; (iv) unanticipated expenditures related to the
cost of compliance with environmental and other governmental regulations and
to actual or potential litigation; and (v) whether we experience a material
disruption at one of our manufacturing facilities and risks inherent in
conducting business through a joint venture. We undertake no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise. These and other factors that could
cause or contribute to actual results differing materially from such forward
looking statements are discussed in greater detail in the company's Securities
and Exchange Commission filings.

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)

Three Months Three Months Six Months
Ended Ended Ended
June 30, March 31, June 30,
------------- --------- -----------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Net Sales $5,802 $5,807 $5,668 $11,470 $11,475
------ ------ ------ ------- -------
Costs and
Expenses
Cost of
products
sold 3,781(a) 4,305 3,731(h) 7,512(k) 8,566
Selling and
administrative
expenses 508(b) 459 500(i) 1,008(l) 931
Depreciation,
amortization
and cost of
timber
harvested 367 305 343 710 591
Distribution
expenses 279 301 279 558 586
Taxes other
than payroll
and income
taxes 47 44 50 97 88
Restructuring
and other
charges 79(c) 13(f) 83(j) 162(m) 55(n)
Forestland
sales - (3)(g) - - (3)(g)
Net (gains)
losses on
sales and
impairments
of
businesses 48(d) - - 48(d) (1)
Interest
expense, net 173 81 164 337 162
--- --- --- --- ---
Earnings From
Continuing
Operations
Before Income
Taxes and
Equity Earnings 520(a-d) 302(f,g) 518(h-j)1,038(d,k-m) 500(g,n)
Income tax
provision 348(e) 97 230 578(e) 156
Equity earnings
(losses), net
of taxes (32) 30 (27) (59) 46
--- --- --- --- ---
Earnings From
Continuing
Operations 140(a-e) 235(f,g) 261(h-j) 401(d,e,k-m) 390(g,n)
Discontinued
operations, net
of taxes - (1) - - (18)(o)
--- --- --- --- ---
Net Earnings $140(a-e) $234(f,g) $261(h-j) $401(d,e,k-m) $372
Less: Net
earnings
attributable to
noncontrolling
interests 4 7 4 8 12
--- --- --- --- ---
Net Earnings
Attributable to
International
Paper
Company $136(a-e) $227(f,g) $257(h-j) $393(d,e,k-m) $360(g,n,o)
==== ==== ==== ==== ====

Basic Earnings Per
Common Share
Attributable to
International
Paper Common
Shareholders
Earnings from
continuing
operations $0.32(a-e)$0.54(f,g)$0.61(h-j)$0.93(d,e,k-m)$0.90(g,n)
Discontinued
operations - - - - (0.04)(o)
----- ----- ----- ----- -----
Net earnings $0.32(a-e)$0.54(f,g)$0.61(h-j)$0.93(d,e,k-m)$0.86(g,n,o)
===== ===== ===== ===== =====

Diluted Earnings
Per Common Share
Attributable to
International
Paper Common
Shareholders
Earnings from
continuing
operations $0.32(a-e)$0.54(f,g)$0.61(h-j)$0.93(d,e,k-m)$0.89(g,n)
Discontinued
operations - - - - (0.04)(o)
----- ----- ----- ----- -----
Net earnings $0.32(a-e)$0.54(f,g)$0.61(h-j)$0.93(d,e,k-m)$0.85(g,n,o)
===== ===== ===== ===== =====

Average Shares
of Common
Stock
Outstanding -
Diluted 425.4 422.6 423.1 424.2 423.9
===== ===== ===== ===== =====
Cash Dividends
Per Common
Share $0.025 $0.25 $0.25 $0.275 $0.50
====== ===== ===== ====== =====

Amounts
Attributable to
International
Paper Common
Shareholders
Earnings from
continuing
operations,
net of tax $136 $228 $257 $393 $378
Discontinued
operations, net
of tax - (1) 0 - (18)
---- ---- ---- ---- ----
Net Earnings $136 $227 $257 $393 $360
==== ==== ==== ==== ====

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International Paper Company
Reconciliation of Earnings Before Special Items to Net Earnings
Attributable to International Paper Company
(In millions except for per share amounts)

Three Months Three Months Six Months
Ended Ended Ended
June 30, March 31, June 30,
-------- ---------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----

Earnings Before Special
Items $86 $235 $34 $120 $410

Restructuring and other
charges (55) (9) (65) (120) (35)
CBPR business integration
costs (11) - (22) (33) -
Alternative fuel mixture
credits 294 - 330 624 -
Forestland sales - 2 - - 2
Net gains (losses) on
sales and impairments of
businesses (48) - - (48) 1
Income tax adjustments (130) - (20) (150) -
--- --- --- --- ---
Earnings from Continuing
Operations 136 228 257 393 378
Discontinued operations - (1) - - (18)
---- ---- ---- ---- ----

Net Earnings as Reported $136 $227 $257 $393 $360
==== ==== ==== ==== ====

Three Months Three Months Six Months
Ended Ended Ended
June 30, March 31, June 30,
Diluted Earnings per -------- --------- --------
Common Share 2009 2008 2009 2009 2008
---- ---- ---- ---- ----

Earnings Per Share Before
Special Items $0.20 $0.56 $0.08 $0.28 $0.97

Restructuring and other
charges (0.13) (0.02) (0.15) (0.28) (0.08)
CBPR business integration
costs (0.03) - (0.05) (0.08) -
Alternative fuel mixture
credits 0.69 - 0.78 1.47 -
Net gains (losses) on
sales and impairments of
businesses (0.11) - - (0.11) -
Income tax adjustments (0.30) - (0.05) (0.35) -
---- --- ---- ---- ---
Earnings Per Common
Share from
Continuing Operations 0.32 0.54 0.61 0.93 0.89
Discontinued operations - - - - (0.04)
---- ---- ---- ---- ----

Diluted Earnings per
Common Share $0.32 $0.54 $0.61 $0.93 $0.85
===== ===== ===== ===== =====

Notes:

(1) The Company calculates Earnings Before Special Items by excluding the
after-tax effect of items considered by management to be unusual from the
earnings reported under U.S. generally accepted accounting principles
("GAAP"). Management uses this measure to focus on on-going operations,
and believes that it is useful to investors because it enables them to
perform meaningful comparisons of past and present operating results.
International Paper believes that using this information, along with net
earnings, provides for a more complete analysis of the results of
operations by quarter. Net earnings is the most directly comparable GAAP
measure.

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

(3) Since diluted earnings per share are computed independently for each
period, six-month per share amounts may not equal the sum of the
respective quarters.

International Paper
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)

Sales by Industry Segment
Three Three Six
Months Months Months
Ended Ended Ended
June 30, March 31, June 30,
-------- -------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial
Packaging $2,270 $1,470 $2,180 $4,450 $2,915
Printing Papers 1,360 1,790 1,325 2,685 3,505
Consumer Packaging 770 795 715 1,485 1,565
Distribution 1,595 1,970 1,590 3,185 3,955
Forest Products 10 55 5 15 80
Corporate and Inter-
segment Sales (203) (273) (147) (350) (545)
---- ---- ---- ---- ----

Net Sales $5,802 $5,807 $5,668 $11,470 $11,475
====== ====== ====== ======= =======

Operating Profit by Industry
Segment
Three Three Six
Months Months Months
Ended Ended Ended
June 30, March 31, June 30,
-------- -------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial Packaging $382(2,3,4) $87 $360(2,4) $742(2,3,4) $184
Printing Papers 279(2,5) 226 312(2,5) 591(2,5) 411
Consumer Packaging 114(2,6) 13(6) 112(2,6) 226(2,6) 22(6)
Distribution 10 26 (7) 3 42
Forest Products 3 41 2 5 66
--- --- --- --- ---

Operating Profit (1) 788 393 779 1,567 725

Interest expense, net (173) (81) (164) (337) (162)
Noncontrolling
interest/equity
earnings adjustment
(7) 8 8 6 14 12
Corporate items, net (44) (21) (51) (95) (42)
Restructuring and
other
charges (59) - (52) (111) (37)
Sale of forestlands - 3 - - 3
Net gains on sales and
impairments of
businesses - - - - 1
--- --- --- --- ---

Earnings (Loss) From
Continuing Operations
Before Income Taxes
and
Equity
Earnings $520 $302 $518 $1,038 $500
==== ==== ==== ====== ====

Equity Earnings
(Loss) in Ilim
Holdings S.A.,
Net of Taxes (1) $(30) $32 $(26) $(56) $49
==== === ==== ==== ===

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

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

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

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

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

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

(7) Operating profits for industry segments include each segment's
percentage share of the profits of subsidiaries included in that segment
that are less than wholly owned. The pre-tax noncontrolling interest and
equity earnings for these subsidiaries are adjusted here to present
consolidated earnings before income taxes and equity earnings.

International Paper
Sales Volume by Product (1) (2)
Preliminary and Unaudited

International Paper Consolidated

Three Three
Months Months Six Months
Ended Ended Ended
June 30, March 31, June 30,
-------- --------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Industrial Packaging (In
thousands of short tons)
Corrugated Packaging (4) 1,899 896 1,776 3,675 1,778
Containerboard (4) 530 493 471 1,001 999
Recycling (4) 598 - 595 1,193 -
Saturated Kraft 29 39 21 50 85
Bleached Kraft 17 22 13 30 41
European Industrial
Packaging 268 288 270 538 583
Asian Industrial Packaging 139 152 88 227 290
--- --- -- --- ---
Industrial Packaging 3,480 1,890 3,234 6,714 3,776
----- ----- ----- ----- -----

Printing Papers (In thousands
of short tons)
U.S. Uncoated Papers 702 868 693 1,395 1,778
European & Russian
Uncoated Papers 332 373 370 702 746
Brazilian Uncoated Papers 234 211 180 414 421
Asian Uncoated Papers 12 7 3 15 15
-- -- -- -- --
Uncoated Papers 1,280 1,459 1,246 2,526 2,960
----- ----- ----- ----- -----
Market Pulp (3) 375 416 317 692 770
--- --- --- --- ---

Consumer Packaging (In
thousands of short tons)
U.S. Coated Paperboard 318 399 290 608 799
European Coated Paperboard 92 73 87 179 154
Asian Coated Paperboard 218 123 189 407 248
Other Consumer Packaging 42 46 46 88 87
-- -- -- -- --
Consumer Packaging 670 641 612 1,282 1,288
--- --- --- ----- -----

(1) Sales volumes include third party and inter-segment sales and exclude
sales of equity investees.
(2) Sales volumes for divested businesses are included through the date
of sale, except for discontinued operations.
(3) Includes internal sales to mills.
(4) Includes CBPR volumes from date of acquisition.

INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)

June 30, December 31,
2009 2008
---- ----
Assets

Current Assets
Cash and Temporary Investments $1,654 $1,144
Accounts and Notes Receivable, Net 3,312 3,288
Inventories 2,209 2,495
Deferred Income Tax Assets 166 261
Other 208 172
--- ---
Total Current Assets 7,549 7,360
----- -----

Plants, Properties and Equipment, Net 13,766 14,202
Forestlands 691 594
Investments 1,068 1,274
Goodwill 2,248 2,027
Deferred Charges and Other Assets 1,326 1,456
----- -----

Total Assets $26,648 $26,913
======= =======

Liabilities and Equity

Current Liabilities
Notes Payable and Current Maturities
of Long-Term Debt $386 $828
Accounts Payable and Accrued Liabilities 3,564 3,927
----- -----
Total Current Liabilities 3,950 4,755
----- -----

Long-Term Debt 10,531 11,246
Deferred Income Taxes 2,359 1,957
Pension Benefit Obligation 3,294 3,260
Postretirement and Postemployment Benefit
Obligation 643 663
Other Liabilities 792 631

Equity
Invested Capital 3,142 2,739
Retained Earnings 1,701 1,430
----- -----
Total Shareholders' Equity 4,843 4,169
----- -----

Non-controlling interests 236 232
--- ---
Total Equity 5,079 4,401
----- -----

Total Liabilities and Equity $26,648 $26,913
======= =======

INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In Millions)

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

SOURCE International Paper

Media: Kathleen Bark, +1-901-419-4333; Investors: Thomas A. Cleves,
+1-901-419-7566; and Emily Nix, +1-901-419-4987, all for International Paper