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NOTE 12 - DEBT In May 2009, International Paper issued $1 billion of 9.375% senior unsecured notes with a maturity date in May 2019. The proceeds from this borrowing were used, along with available cash, to repay approximately $875 million of notes with interest rates ranging from 4.0% to 9.25% and original maturities from 2010 to 2012 and $268 million of long-term debt issued in the first quarter of 2009 by International Paper Investments (Luxembourg) S.a.r.l, a wholly-owned subsidiary of International Paper. Also during the second quarter, International Paper repaid $313 million of the $2.5 billion long-term debt issued in connection with the CBPR business acquisition, and International Paper Company Europe Ltd, a wholly-owned subsidiary of International Paper, repaid $75 million of notes issued in connection with the Ilim Holdings S.A. joint ventures that matured during the quarter. Pre-tax early debt retirement costs of $25 million related to these debt repayments are included in Restructuring and other charges in the accompanying consolidated statement of operations. In June 2009, International Paper entered into a series of fixed-to-floating interest rate swap agreements with a notional amount of $500 million due in 2014 to manage interest rate exposure. These interest rate swaps qualify for fair value hedge accounting in accordance with SFAS No. 133. In March 2009, Luxembourg borrowed $468 million of long-term debt with an initial interest rate of LIBOR plus a margin of 450 basis points, that can vary depending upon the credit rating of the Company, and a maturity date in March 2012. International Paper used the $468 million of proceeds from the loan and cash of approximately $170 million to repay its 500 million euro-denominated debt (equivalent to $638 million at date of payment) with an original maturity date in August 2009. Other debt activities in the first quarter of 2009 included the repayment of approximately $366 million of notes with interest rates ranging from 4.25% to 5.0% that had matured. Also in the first quarter of 2009, International Paper terminated an interest rate swap with a notional value of $100 million designated as a fair value hedge, resulting in a gain of $11 million that was deferred and recorded in Long-term debt in the accompanying consolidated balance sheet. As the swap agreement was terminated early, the resulting gain will be amortized over the life of the related debt through April 2016. In the second quarter of 2008, International Paper issued $3 billion of unsecured senior notes consisting of $1 billion of 7.4% notes due in 2014, $1.7 billion of 7.95% notes due in 2018 and $300 million of 8.7% notes due in 2038. Debt issuance costs of approximately $20 million related to this debt were recorded in Deferred charges and other assets in the accompanying consolidated balance sheet and will be amortized over the term of the notes. Also in the second quarter of 2008, International Paper entered into a series of fixed-to-floating interest rate swap agreements with a notional amount of $1 billion and maturities ranging from 2014 to 2018 to manage interest rate exposure associated with the $3 billion of unsecured senior notes. These interest rate swaps are being accounted for as fair value hedges in accordance with SFAS No. 133. At June 30, 2009 and December 31, 2008, International Paper classified $450 million and $796 million, respectively, of bank notes and Current maturities of long-term debt as Long-term debt. International Paper has the intent and ability, as evidence by its contractually committed credit facility, to renew or convert these obligations. At June 30, 2009, International Paper had $10.9 billion of debt with a fair value of approximately $10.3 billion. The fair value of the Companys long-term debt is estimated based on the quoted market prices for the same or similar issues. Maintaining an investment-grade credit rating is an important element of International Papers financing strategy. At June 30, 2009, the Company held long-term credit ratings of BBB (negative outlook) and Baa3 (negative outlook) by Standard and Poors (S&P) and Moodys Investor Services (Moodys), respectively. The Company currently has short-term credit ratings of A-3 and P-3 by S&P and Moodys, respectively.

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NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of Management, include all adjustments that are necessary for the fair presentation of the Companys financial position, results of operations, and cash flows for the interim periods presented. Except as disclosed herein, such adjustments are of a normal, recurring nature. Results for the first six months of the year may not necessarily be indicative of full year results. It is suggested that these consolidated financial statements be read in conjunction with the audited financial statements and the notes thereto included in International Papers (the Company) Annual Report on Form 10-K for the year ended December 31, 2008, and International Papers Current Report on Form 8-K filed on May 13, 2009 to update the historical financial statements included in the Companys Form 10-K for the year ended December 31, 2008 to reflect the retrospective application of Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements (collectively the 2008 10-K), both of which have previously been filed with the Securities and Exchange Commission. International Paper accounts for its investment in Ilim Holding S.A., a separate reportable industry segment, using the equity method of accounting. Due to the complex organizational structure of Ilims operations, and the extended time required to prepare consolidated financial information in accordance with accounting principles generally accepted in the United States, the Company reports its share of Ilims operating results on a one-quarter lag basis.

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NOTE 5 - RESTRUCTURING CHARGES AND OTHER ITEMS 2009: Restructuring and Other Charges During the second quarter of 2009, restructuring and other charges totaling $79 million before taxes ($55 million after taxes) were recorded, including a $34 million charge before taxes ($21 million after taxes) for severance and benefit costs associated with the Companys 2008 overhead reduction program, a $25 million charge before taxes ($16 million after taxes) related to early debt extinguishment costs, a $15 million charge, before and after taxes, for severance and other costs related to the Companys 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 deferred tax assets in France, and a $26 million credit related to the settlement of certain tax issues (see Note 10). During the first quarter of 2009, restructuring and other charges totaling $83 million before taxes ($65 million after taxes) were recorded, including a $52 million charge before taxes ($32 million after taxes) for severance and benefits associated with the Companys 2008 overhead reduction program, a $23 million charge before taxes ($28 million after taxes) for closure costs related to the Inverurie mill in Scotland, a $6 million charge before taxes ($4 million after taxes) for closure costs for the Franklin, Virginia, 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 Companys Shorewood Packaging operations. Additionally, a $20 million charge was recorded related to certain tax adjustments (see Note 10). Alternative Fuel Mixture Credits The U.S. Internal Revenue Code provides a tax credit for companies that use alternative fuel mixtures to produce energy to operate their businesses. The credit, equal to $0.50 per gallon of alternative fuel contained in the mixture, is refundable to the taxpayer. In January 2009, the Company received notification that its application to be registered as an alternative fuel mixer had been approved. During the first six months of 2009, the Company filed claims for alternative fuel mixture credits covering eligible periods subsequent to November 2008 totaling approximately $1.0 billion, including $189 million recorded in Accounts and notes receivable at June 30, 2009 and $833 million that was received in cash. Accordingly, the accompanying consolidated statement of operations includes credits of approximately $482 million and $1.0 billion for the three months and six months ended June 30, 2009, respectively, in Cost of products sold ($294 million and $624 million after taxes), representing eligible alternative fuel mixture credits earned through June 30, 2009. 2008: During the second quarter of 2008, restructuring and other charges totaling $13 million before taxes ($9 million after taxes) were recorded related to the reorganization of the Companys Shorewood operations in Canada, including $10 million before taxes ($7 million after taxes) of severance and $3 million before taxes ($2 million after taxes) of accelerated depreciation expense for long-lived assets being removed from service. During the first quarter of 2008, restructuring and other charges totaling $42 million before taxes ($26 million after taxes) were recorded, including a $40 million charge before taxes ($25 million after taxes) for adjustments of legal reserves, a $5 million charge before taxes ($3 million after taxes) related to the reorganization of the Companys Shorewood operations in Canada and a $3 million credit before taxes ($2 million after taxes) for adjustments to previously recorded reserves associated with the Companys organizational restructuring programs.

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10-Q 9887280215 NOTE 8 - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION Temporary investments with an original maturity of three months or less are treated as cash equivalents and are stated at cost. Temporary investments totaled $1.5 billion and $908 million at June 30, 2009 and December 31, 2008, respectively. Inventories by major category were:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="80%"></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">June 30, 2009</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">December 31, 2008</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Raw materials</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">307</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">405</TD></TR> <TR> <TD VALIGN="top"> Finished pulp, paper and packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,482</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,658</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Operating supplies</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">356</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">379</TD></TR> <TR> <TD VALIGN="top"> Other</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">64</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">53</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,209</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,495</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE> Accumulated depreciation was $16.3 billion at June 30, 2009 and $15.6 billion at December 31, 2008. The allowance for doubtful accounts was $139 million at June 30, 2009 and $121 million at December 31, 2008. The gross carrying amount of Intangible Assets, excluding goodwill, was $297 million ($251 million net of accumulated amortization) and $284 million ($246 million net of accumulated amortization) at June 30, 2009 and December 31, 2008, respectively. The Company recognized amortization expense of intangible assets of approximately $17 million and $16 million for the first six months of 2009 and 2008, respectively. There was no material activity related to asset retirement obligations during either the first six months of 2009 or 2008. Interest payments made during the six-month periods ended June 30, 2009 and 2008 were $343 million and $186 million, respectively. Capitalized interest costs were $7 million and $10 million for the six months ended June 30, 2009 and 2008, respectively. Total interest expense was $353 million for the first six months of 2009 and $207 million for the first six months of 2008. Interest income was $16 million and $45 million for the six months ended June 30, 2009 and 2008, respectively. Interest expense and interest income in 2009 and 2008 exclude approximately $72 million and $127 million, respectively, related to investments in and borrowings from variable interest entities for which the Company has a legal right of offset. Distributions under preferred securities paid by Southeast Timber, Inc., a consolidated subsidiary of International Paper, were $4 million and $5 million during the first six months of 2009 and 2008, respectively. The expense related to these preferred securities was included as a component of Net earnings attributable to noncontrolling interests. Income tax payments of $13 million and $81 million were made during the first six months of 2009 and 2008, respectively. Equity earnings, net of taxes includes the Companys share of earnings from its investment in Ilim Holding S.A. (losses of $56 million and earnings of $49 million for the six months ended June 30, 2009 and 2008, respectively) and certain other smaller investments. The components of the Companys postretirement benefit cost were as follows:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="72%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Service cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Interest cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">7</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">17</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Actuarial loss</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">4</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">7</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">12</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">14</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Amortization of prior service cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(7</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(9</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(14</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(18</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net postretirement benefit cost (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">4</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">7</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">14</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">14</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Excludes charges of $0.4 million and $1.9 million for the three-month and six-month periods ended June 30, 2009, respectively, for termination benefits related to cost reduction programs recorded in Restructuring and other charges in the consolidated statement of operations. </TD></TR></TABLE>

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NOTE 11 - COMMITMENTS AND CONTINGENCIES In May 2008, a recovery boiler at the Companys Vicksburg, Mississippi facility exploded, resulting in one fatality and injuries to employees of contractors working on the site. The Company has been served with several lawsuits and is on notice of additional claims, and currently believes that it has adequate insurance to resolve these lawsuits and other claims. The Company believes that the settlement of these lawsuits will not have a material adverse effect on its consolidated financial statements. Exterior Siding and Roofing Litigation: International Paper has established reserves relating to the settlement, during 1998 and 1999, of three nationwide class action lawsuits against the Company and Masonite Corp., a former wholly-owned subsidiary of the Company. Those settlements relate to (1) exterior hardboard siding installed during the 1980s and 1990s (the Hardboard Claims); (2) Omniwood siding installed during the 1990s (the Omniwood Claims); and (3) Woodruf roofing installed during the 1980s and 1990s (the Woodruf Claims). Each of these settlements is discussed in detail in Note 11, Commitments and Contingent Liabilities, to the financial statements included in International Papers 2008 10-K. All Hardboard Claims were required to be made by January 15, 2008, while all Omniwood and Woodruf Claims were required to be made by January 6, 2009. Net settlement payments for the six-month period ended June 30, 2009 totaled $24 million. Remaining reserve balances for these settlements totaled $17 million at June 30, 2009.   Other Legal Matters: International Paper is involved in various other inquiries, administrative proceedings and litigation relating to contracts, real property, intellectual property, environmental, safety, tax, antitrust, personal injury, labor and employment and other matters. While any proceeding or litigation has the element of uncertainty, the Company believes that the outcome of any of the lawsuits or claims that are pending or threatened, or all of them combined, will not have a material adverse effect on its consolidated financial statements.

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Amendment No. 1 to Form 10-Q for the quarterly period ended June 30, 2009 is filed solely to provide Exhibit 101 in accordance with Rule 405(a)(2) of Regulation S-T.

NOTE 7 - BUSINESSES HELD FOR SALE AND DIVESTITURES Discontinued Operations: 2008: During the first quarter of 2008, the Company recorded a pre-tax charge of $25 million ($16 million after taxes) related to the final settlement of a post-closing adjustment to the purchase price received by the Company for the sale of its Beverage Packaging business, and a $2 million charge before taxes ($1 million after taxes) for operating losses related to certain wood products facilities. Forestlands: 2008: During the second quarter of 2008, the Company recorded a $3 million gain before taxes ($2 million after taxes) to adjust the gain previously recognized in the 2006 Transformation Plan sale of forestlands. Other Divestitures and Impairments: 2009: During the second quarter of 2009, based on a current strategic plan update of projected future operating results of the Companys Etienne, France mill, a determination was made that the current book value of the mills long-lived assets exceeded their estimated fair value, calculated using the probability-weighted present value of projected future cash flows. As a result, a $48 million charge, before and after taxes, was recorded to write down the long-lived assets of the mill to their estimated fair value. This charge is included in Net losses (gains) on sales and impairments of businesses in the accompanying consolidated statement of operations. 2008: During the first quarter of 2008, a $1 million pre-tax credit ($1 million after taxes) was recorded to adjust previously estimated gains/losses of businesses previously sold.

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NOTE 2 - RECENT ACCOUNTING DEVELOPMENTS Variable Interest Entities: In June 2009, the Financial Accounting Standards Board (FASB) issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which amends the consolidation guidance that applies to variable interest entities under FIN 46(R). SFAS No. 167 changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. This statement is effective for financial statements issued in fiscal years (and interim periods) beginning after November 15, 2009 (calendar year 2010). The Company is currently evaluating the provisions of this statement but does not currently anticipate that it will have a material effect on its consolidated financial statements. Transfers of Financial Assets: In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial AssetsAn Amendment of FASB Statement No. 140, which amends the derecognition guidance in SFAS No. 140. This statement eliminates the concept of qualifying special-purpose entities, changes the requirements for derecognizing financial assets and requires additional disclosures. This statement is effective for financial asset transfers occurring after the beginning of an entitys first fiscal year beginning after November 15, 2009 (calendar year 2010). The Company is currently evaluating the provisions of this statement but does not currently anticipate that it will have a material effect on its consolidated financial statements. Subsequent Events: In May 2009, the FASB issued SFAS No. 165, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement is effective prospectively for interim and annual periods ending after June 15, 2009. The Company included the requirements of this statement in the preparation of the accompanying financial statements, and has evaluated subsequent events through August 5, 2009, the date that the accompanying consolidated financial statements were issued. Other-Than-Temporary Impairment for Debt Securities: In April 2009, the FASB issued Staff Position (FSP) FAS 115-2 and FAS 124-2, which provides a new other-than-temporary impairment model for debt securities. This FSP was effective for financial statements issued in fiscal years (and interim periods) ending after June 15, 2009. The application of the requirements of this FSP did not have a material effect on the accompanying consolidated financial statements. Employers Accounting for Defined Benefit Pension and Other Postretirement Plans: In December 2008, the FASB issued FSP FAS 132(R)-1 which amends Statement 132(R) to require more detailed disclosures about employers plan assets, including employers investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets. The disclosures required by this FSP must be provided in the financial statements for fiscal years ending after December 15, 2009 (calendar year 2009). The Company is currently evaluating the provisions of this FSP. Intangible Assets: In April 2008, the FASB issued FSP FAS 142-3, which amends the factors that should be considered in developing renewal or extension assumptions used in determining the useful life of a recognized intangible asset. This FSP was effective for financial statements issued for fiscal years (and interim periods) beginning after December 15, 2008 (calendar year 2009). The application of the requirements of this FSP did not have a material effect on the accompanying consolidated financial statements. Derivative Instruments and Hedging Activities: In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities An Amendment of FASB Statement No. 133. This statement requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of, and gains and losses on, derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS No. 161 was effective for fiscal years (and interim periods) beginning after November 15, 2008 (calendar year 2009). The Company included the disclosures required by this statement in the accompanying consolidated financial statements. Noncontrolling Interests in Consolidated Financial Statements: In December 2007, the FASB also issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial StatementsAn Amendment of ARB 51. This statement clarifies that a noncontrolling (minority) interest in a subsidiary is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and noncontrolling interest, with disclosure on the face of the consolidated statement of operations of the amounts attributable to the parent and to the noncontrolling interest. The Company has retrospectively applied the provisions of this standard in the preparation of the accompanying consolidated financial statements.   The effects of the retrospective application of this standard were as follows:   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"> </TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"></TD> <TD WIDTH="1%" VALIGN="top"> </TD> <TD ALIGN="left" VALIGN="top"> Noncontrolling interests of $232 million as of December 31, 2008 are included in Total equity in the accompanying consolidated balance sheet. </TD></TR></TABLE> <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="5%"> </TD> <TD WIDTH="2%" VALIGN="top" ALIGN="left"></TD> <TD WIDTH="1%" VALIGN="top"> </TD> <TD ALIGN="left" VALIGN="top"> Net earnings attributable to noncontrolling interests of $7 million and $12 million for the three and six months ended June 30, 2008, respectively, are presented separately in the accompanying consolidated statement of operations. </TD></TR></TABLE> Fair Value Measurements: In February 2008, the FASB issued FSP FAS 157-2, which delayed the effective date of SFAS No. 157 for all nonrecurring fair value measurements of nonfinancial assets and liabilities until fiscal years beginning after November 15, 2008 (calendar year 2009). The Company partially adopted the provisions of this statement with respect to its financial assets and liabilities that are measured at fair value effective January 1, 2008 (see Note 13). The Company included the remaining provisions of SFAS No. 157 in the preparation of the accompanying consolidated financial statements. In October 2008, the FASB issued FSP FAS 157-3, which clarifies the application of SFAS No. 157 in cases where the market for the asset is not active. FSP FAS 157-3 is effective upon issuance. The Company considered the guidance provided by the FSP in the preparation of the accompanying consolidated financial statements. In April 2009, the FASB issued FSP FAS 157-4, in accordance with SFAS No. 157, Fair Value Measurements, which provides guidance on estimating the fair value of an asset or liability (financial or nonfinancial) when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions are not orderly. The application of the requirements of this FSP did not have a material effect on the accompanying consolidated financial statements. In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, which expands the fair value disclosures required for all financial instruments within the scope of SFAS No. 107 to interim reporting periods. The disclosures required by this FSP were to be provided in financial statements for the first reporting period ending after June 15, 2009. The Company included the disclosures required by this FSP in the accompanying consolidated financial statements.

7549000000

7360000000

3312000000

3288000000

NOTE 16 SUBSEQUENT EVENTS In August 2009, the Company announced that it had priced $1.0 billion of 7.50% senior unsecured notes due in 2021, and also announced that it had commenced cash tender offers to repurchase any and all of its outstanding 7.40% notes due 2014, and some or all of its 7.20% notes due 2026 and 5.50% notes due 2014 up to a maximum of $1.0 billion less the principal amount of any repurchases of the 7.40% notes.

NOTE 15 STOCK-BASED COMPENSATION International Paper has an Incentive Compensation Plan (ICP) which, upon the approval by the Companys shareholders in May 2009, replaced the Companys Long-Term Incentive Compensation Plan (LTICP). The ICP authorizes the grants of restricted stock, restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, stock options, stock appreciation rights, other stock-based awards in the discretion of the Committee, and cash-based awards. The ICP is administered by the Management Development and Compensation Committee of the Board of Directors (the Committee). A detailed discussion of the LTICP, including the stock option program and executive continuity award program that provided for tandem grants of restricted stock and stock options, is presented in Note 18 to the financial statements included in International Papers 2008 10-K. As of June 30, 2009, 16.1 million shares were available for grant under the ICP. Total stock-based compensation cost recognized in Selling and administrative expenses in the accompanying consolidated statement of operations for the six months ended June 30, 2009 and 2008 was $47 million and $51 million, respectively. The actual tax deduction realized for stock-based compensation costs related to non-qualified stock options was $0 and $19,000 for the six-month periods ended June 30, 2009 and 2008, respectively. The actual tax deduction realized for stock-based compensation costs related to restricted and performance shares was $28 million and $130 million for the six-month periods ended June 30, 2009 and 2008, respectively. At June 30, 2009, $82 million, net of estimated forfeitures, of compensation cost related to unvested restricted performance shares, executive continuity awards and restricted stock attributable to future performance had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.4 years. Performance-Based Restricted Share Program: Under the Performance Share Program (PSP), contingent awards of International Paper common stock are granted by the Committee to approximately 1,100 employees. Awards are earned based on the achievement of defined performance rankings of return on investment (ROI) and total shareholder return (TSR) compared to peer groups. Awards are weighted 75% for ROI and 25% for TSR for all participants except for officers for whom awards are weighted 50% for ROI and 50% for TSR. The ROI component of the PSP awards is valued at the closing stock price on the day prior to the grant date. As the ROI component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of the PSP awards is valued using a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, the risk-free rate, expected dividends, and the expected volatility for the Company and its competitors. The expected term was estimated based on the vesting period of the awards, the risk-free rate was based on the yield on U.S. Treasury securities matching the vesting period, the expected dividends were assumed to be zero for all companies, and the volatility was based on the Companys historical volatility over the expected term. PSP awards issued to certain members of senior management are liability awards, which are required to be remeasured at fair value at each balance sheet date. The valuation of these PSP liability awards is computed based on the same methodology as other PSP awards. The following table sets forth the assumptions used to determine compensation cost for the market condition component of the PSP consistent with the requirements of SFAS No. 123(R):   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="68%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30, 2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30, 2009</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Expected volatility</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" NOWRAP VALIGN="bottom">33.83% - 99.39</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">% </TD> <TD VALIGN="bottom"> </TD> <TD ALIGN="right" COLSPAN="1" NOWRAP VALIGN="bottom">33.83% - 99.39</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">% </TD></TR> <TR> <TD VALIGN="top"> Risk-free interest rate</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">0.3% - 1.274</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">% </TD> <TD VALIGN="bottom"> </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">0.3% - 1.274</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">% </TD></TR> </TABLE> The following summarizes the activity for PSP for the six months ended June 30, 2009:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="74%"></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Nonvested Shares</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Weighted Average Grant Date Fair Value</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Outstanding at December 31, 2008</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">6,254,256</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">32.69</TD></TR> <TR> <TD VALIGN="top"> Granted</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">4,100,080</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">19.09</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Shares Issued (a)</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">(3,233,764</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">33.56</TD></TR> <TR> <TD VALIGN="top"> Forfeited</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">(402,203</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">23.59</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Outstanding at June 30, 2009</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">6,718,369</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">24.51</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Includes 243,364 shares held for payout at the end of the performance period. </TD></TR></TABLE> Stock Option Program: The Company discontinued its stock option program in 2004 for members of executive management, and in 2005 for all other eligible U.S. and non-U.S. employees. A summary of option activity under the plan as of June 30, 2009 is presented below:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="68%"></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Options</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Weighted Average Exercise Price</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Weighted Average Remaining Life (years)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Aggregate Intrinsic Value (millions)</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Outstanding at December 31, 2008</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">25,093,122</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">39.68</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Forfeited</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">(235,978</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">43.84</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Expired</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">(1,714,330</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">44.31</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR> <TD VALIGN="top"> Outstanding at June 30, 2009</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">23,142,814</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">39.29</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">3.3</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE> All options were fully vested and exercisable as of June 30, 2009. Executive Continuity and Restricted Stock Award Program: The following summarizes the activity of the Executive Continuity and Restricted Stock Award Program for the six months ended June 30, 2009:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="76%"></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Nonvested Shares</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Weighted Average Grant Date Fair Value</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Outstanding at December 31, 2008</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">102,000</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">35.11</TD></TR> <TR> <TD VALIGN="top"> Granted</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">5,000</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">11.80</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Shares Issued</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">(4,000</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">28.74</TD></TR> <TR> <TD VALIGN="top"> Forfeited</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">  </TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Outstanding at June 30, 2009</TD> <TD VALIGN="bottom">  </TD> <TD ALIGN="right" COLSPAN="1" VALIGN="bottom">103,000</TD> <TD COLSPAN="1" NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">34.23</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>

NOTE 13 - DERIVATIVES AND HEDGING ACTIVITIES International Paper periodically uses derivatives and other financial instruments to hedge exposures to interest rate, commodity and currency risks. International Paper does not hold or issue financial instruments for trading purposes. For hedges that meet the criteria under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, International Paper, at inception, formally designates and documents the instrument as a fair value hedge, a cash flow hedge or a net investment hedge of a specific underlying exposure, as well as the risk management objective and strategy for undertaking each hedge transaction. Derivatives are recorded in the consolidated balance sheet at fair value, determined using available market information or other appropriate valuation methodologies, in Other current assets, Deferred charges and other assets, Other accrued liabilities and Other liabilities. The earnings impact resulting from changes in the fair value of derivative instruments is recorded in the same line item in the consolidated statement of operations as the underlying exposure being hedged or in Other comprehensive income for derivatives that qualify as cash flow hedges. Any ineffective portion of a financial instruments change in fair value is recognized currently in earnings together with changes in the fair value of any derivatives not designated as hedges. Foreign exchange contracts are used by International Paper to offset the earnings impact relating to the variability in exchange rates on certain monetary assets and liabilities denominated in non-functional currencies and are not designated as hedges. Changes in the fair value of these instruments, recognized currently in earnings to offset the remeasurement of the related assets and liabilities, were not significant. Fair Value Hedges For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in earnings. International Paper utilizes interest rate swaps as fair value hedges of the benchmark interest rates of fixed rate debt. At June 30, 2009 and December 31, 2008, the outstanding notional amounts of interest rate swap agreements that qualify as fully effective fair value hedges under SFAS No. 133 were approximately $533 million and $484 million, respectively. In the second quarter of 2009, the Company entered into a series of fixed-to-floating interest rate swap agreements with a notional amount of $500 million. The fixed-to-floating rate swaps were effective in June 2009 and mature in June 2014. These interest rate swaps are being accounted for as fair value hedges in accordance with SFAS No. 133 as hedges of the benchmark interest rate. In the first quarter of 2009, an interest rate swap agreement designated as a fair value hedge with a notional value of $100 million was terminated. The termination was not in connection with early retirement of debt.   The resulting gain of $11 million was deferred and recorded in Long-term debt and will be amortized as an adjustment of interest expense over the life of the underlying debt through 2016. Cash Flow Hedges For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of Other comprehensive income (OCI) and reclassified into earnings in the same period or periods in which the hedged transaction affects earnings. Financial instruments designated as cash flow hedges are assessed both at inception and quarterly thereafter to ensure they are effective in offsetting changes in the cash flows of the related underlying exposures. The fair value of the hedge instruments are reclassified out of OCI to earnings if the hedge ceases to be highly effective or if the hedged transaction is no longer probable. International Paper utilizes interest rate swaps as cash flow hedges of the benchmark interest rate of future interest payments. At June 30, 2009 and December 31, 2008, the outstanding notional amounts of interest rate swap agreements that qualify as cash flow hedges under SFAS No. 133 were approximately $1 billion. As of June 30, 2009, these contracts had maturities of two years or less. Losses of $17 million after taxes are expected to be reclassified to earnings within the next 12 months. To minimize volatility in earnings due to large fluctuations in the price of commodities, International Paper utilizes swap contracts to manage risks associated with market fluctuations in energy prices. These contracts are designated as cash flow hedges of forecasted commodity purchases. As of June 30, 2009, the hedged volumes of these energy contracts totaled one million barrels of fuel oil and 24 million MMBTUs (Million British Thermal Units) of natural gas. As of December 31, 2008, the hedged volumes totaled one million barrels of fuel oil and 21 million MMBTUs of natural gas. These contracts had maturities of three years or less as of June 30, 2009. Losses of $24 million after taxes are expected to be reclassified to earnings within the next 12 months. Foreign exchange contracts (including forward, swap and purchase option contracts) are also used as cash flow hedges of certain forecasted transactions denominated in foreign currencies, to manage volatility associated with these transactions and to protect International Paper from currency fluctuations between the contract date and ultimate settlement. As of June 30, 2009, these contracts have maturities of two years or less. Gains of $4 million after taxes are expected to be reclassified to earnings within the next 12 months. As of June 30, 2009 and December 31, 2008, the following outstanding foreign exchange contracts were entered into as cash flow hedges of forecasted transactions:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="78%"></TD> <TD VALIGN="bottom" WIDTH="8%"></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="8%"></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">June 30, 2009</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">December 31, 2008</TD></TR> <TR> <TD VALIGN="bottom">Sell / Buy</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center">Sell Notional</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center">Sell Notional</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> European euro / Brazilian real</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">16</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">21</TD></TR> <TR> <TD VALIGN="top"> US dollar / Brazilian real</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">130</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">166</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> British pounds / Brazilian real</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">  </TD></TR> <TR> <TD VALIGN="top"> European euro / Polish zloty</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">96</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">96</TD></TR> </TABLE> Fair Value Measurements International Paper applies the provisions of SFAS No. 157 to its financial assets and liabilities that are recorded at fair value, which consist of derivative contracts, including interest rate swaps, foreign currency forward contracts, and other financial instruments that are used to hedge exposures to interest rate, commodity and currency risks. For these financial instruments, fair value is determined at each balance sheet date using an income approach, which consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts using current market information as of the reporting date, such as prevailing interest rates and foreign currency spot and forward rates. SFAS No. 157 sets out a fair value hierarchy that groups fair value measurement inputs into three classifications: Level 1, Level 2 and Level 3. Level 1 inputs are quoted prices in an active market for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. All of International Papers fair value measurements use Level 2 inputs. The following table provides a summary of the impact of our derivative instruments in the consolidated balance sheet: Fair Value Measurements Level 2 Significant Other Observable Inputs   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="56%"></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="9%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Assets</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Liabilities</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">June 30, 2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">December 31, 2008</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">June 30, 2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">December 31, 2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Derivatives designated as hedging instruments under SFAS 133</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Interest rate contracts fair value</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">13</TD> <TD NOWRAP VALIGN="bottom">  (a) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">27</TD> <TD NOWRAP VALIGN="bottom">  (b) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Interest rate contracts cash flow</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">32</TD> <TD NOWRAP VALIGN="bottom">  (c) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">39</TD> <TD NOWRAP VALIGN="bottom">  (c) </TD></TR> <TR> <TD VALIGN="top"> Commodity contracts cash flow</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">13</TD> <TD NOWRAP VALIGN="bottom">  (f) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">62</TD> <TD NOWRAP VALIGN="bottom">  (d) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">75</TD> <TD NOWRAP VALIGN="bottom">  (e) </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Foreign exchange contracts cash flow</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">14</TD> <TD NOWRAP VALIGN="bottom">  (f) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">27</TD> <TD NOWRAP VALIGN="bottom">  (f) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">9</TD> <TD NOWRAP VALIGN="bottom">  (g) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">47</TD> <TD NOWRAP VALIGN="bottom">  (g) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Total derivatives designated as hedging instruments under SFAS 133</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">40</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">54</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">103</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">161</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Derivatives not designated as hedging instruments under SFAS 133</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Interest rate contracts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">5</TD> <TD NOWRAP VALIGN="bottom">  (c) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  (c) </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Embedded derivatives</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">5</TD> <TD NOWRAP VALIGN="bottom">  (a) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  (a) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Foreign exchange contracts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">4</TD> <TD NOWRAP VALIGN="bottom">  (f) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">40</TD> <TD NOWRAP VALIGN="bottom">  (f) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">5</TD> <TD NOWRAP VALIGN="bottom">  (g) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">19</TD> <TD NOWRAP VALIGN="bottom">  (g) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total derivatives not designated as hedging instruments under SFAS 133</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">9</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">48</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">10</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">27</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Total derivatives</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">49</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">102</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">113</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">188</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Included in Deferred charges and other assets in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD> <TD ALIGN="left" VALIGN="top">Includes $2 million recorded in Other current assets, $3 million recorded in Accounts and notes receivable, net and $22 million recorded in Deferred charges and other assets in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(c)</TD> <TD ALIGN="left" VALIGN="top">Included in Other liabilities in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(d)</TD> <TD ALIGN="left" VALIGN="top">Includes $47 million recorded in Other accrued liabilities and $15 million recorded in Other liabilities in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(e)</TD> <TD ALIGN="left" VALIGN="top">Includes $47 million recorded in Other accrued liabilities and $28 million recorded in Other liabilities in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(f)</TD> <TD ALIGN="left" VALIGN="top">Included in Other current assets in the accompanying consolidated balance sheet. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(g)</TD> <TD ALIGN="left" VALIGN="top">Included in Other accrued liabilities in the accompanying consolidated balance sheet. </TD></TR></TABLE> The following table provides the change in Accumulated other comprehensive income, net of tax, related to derivative instruments:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="58%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD WIDTH="20%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Gain or (Loss) Recognized in OCI (Effective Portion)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ROWSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"> Location of Gain or (Loss) Reclassified from OCI into Income (Effective Portion)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="border-bottom:1px solid #000000">(Gain) or Loss Reclassified from OCI into Income (Effective Portion)</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Interest rate contracts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">(3</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">Interest expense, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">10</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Commodity contracts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(3</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">63</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">Cost of products sold</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">18</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(5</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Foreign exchange contracts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">37</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">Cost of products sold</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(32</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Total</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">9</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">101</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">29</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">(37</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE> Credit-Risk-Related Contingent Features International Paper evaluates credit risk by monitoring its exposure with each counterparty to ensure that exposure stays within acceptable policy limits. Credit risk is also mitigated by contractual provisions with the majority of our banks. Most of the contracts include a credit support annex that requires the posting of collateral by the counterparty or International Paper based on each partys rating and level of exposure. Based on the Companys current credit rating, the collateral threshold is generally $10 million. If the lower of the Companys credit rating by Moodys or S&P were to drop below investment grade, the Company would be required to post collateral for all derivatives in a net liability position, although no derivatives would terminate. The fair values of derivative instruments containing credit-risk-related contingent features in a net liability position were $74 million as of June 30, 2009 and $109 million as of December 31, 2008. In addition, existing derivative contracts provide for netting across all derivative positions in the event a counterparty defaults on a payment obligation. International Paper currently does not expect any of the counterparties to default on their obligations.

NOTE 9 - GOODWILL The following tables present changes in goodwill balances as allocated to each business segment for the six-month periods ended June 30, 2009 and 2008:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="64%"></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Balance December 31, 2008</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Reclassifications and Other (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Additions/ (Reductions)</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Balance June 30, 2009</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Industrial Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">989</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">140</TD> <TD NOWRAP VALIGN="bottom">  (b) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1,129</TD></TR> <TR> <TD VALIGN="top"> Printing Papers</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">537</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">84</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(11</TD> <TD NOWRAP VALIGN="bottom">) (c) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">610</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Consumer Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">102</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">102</TD></TR> <TR> <TD VALIGN="top"> Distribution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">399</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">399</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,027</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">84</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">129</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,240</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Represents the effects of foreign currency translations and reclassifications. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD> <TD ALIGN="left" VALIGN="top">Reflects purchase accounting adjustments related to the CBPR acquisition. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(c)</TD> <TD ALIGN="left" VALIGN="top">Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in Brazil. </TD></TR></TABLE>   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="65%"></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="6%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Balance December 31, 2007</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Reclassifications and Other (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Additions/ (Reductions)</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Balance June 30, 2008</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Industrial Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">683</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2</TD> <TD NOWRAP VALIGN="bottom">  (b) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">688</TD></TR> <TR> <TD VALIGN="top"> Printing Papers</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">2,043</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">69</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(14</TD> <TD NOWRAP VALIGN="bottom">) (c) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">2,098</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Consumer Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">530</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">6</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">5</TD> <TD NOWRAP VALIGN="bottom">  (d) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">541</TD></TR> <TR> <TD VALIGN="top"> Distribution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">394</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">395</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">3,650</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">78</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">(6</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">3,722</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Represents the effects of foreign currency translations and reclassifications. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD> <TD ALIGN="left" VALIGN="top">Reflects a purchase accounting adjustment related to the Compagnie Marocaine des Cartons et des Papiers (CMCP) exchange. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(c)</TD> <TD ALIGN="left" VALIGN="top">Reflects a reduction from tax benefits generated by the deduction of goodwill amortization for tax purposes in Brazil. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(d)</TD> <TD ALIGN="left" VALIGN="top">Reflects additional goodwill related to joint ventures in China. </TD></TR></TABLE>   In the fourth quarter of 2008, the Company performed an interim test for possible goodwill impairment as of December 31, 2008, and recorded preliminary estimated impairment charges of $379 million, representing all of the goodwill for the U.S. Coated Paperboard business, and $1.3 billion, representing all of the goodwill for the U.S. Printing Papers business. During the first quarter of 2009, the Company finalized the testing for these businesses resulting in no changes to the recorded impairment charges.

-189000000

386000000 828000000 173000000 81000000 337000000 162000000

<A NAME="toc43488_7"></A>INTERNATIONAL PAPER COMPANY Financial Information by Industry Segment (Unaudited) (In millions) Sales by Industry Segment   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="74%"></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="2%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Industrial Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,270</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1,470</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">4,450</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2,915</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Printing Papers</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,360</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,790</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">2,685</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3,505</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Consumer Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">770</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">795</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,485</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,565</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Distribution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,595</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,970</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3,185</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3,955</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Forest Products</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">10</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">55</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">80</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Corporate and Inter-segment Sales</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(203</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(273</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(350</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(545</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net Sales</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">5,802</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">5,807</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">11,470</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">11,475</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE> Operating Profit by Industry Segment   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="80%"></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="3%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Industrial Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">382</TD> <TD NOWRAP VALIGN="bottom">(2,3,4) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">87</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">742</TD> <TD NOWRAP VALIGN="bottom">(2,3,4) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">184</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Printing Papers</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">279</TD> <TD NOWRAP VALIGN="bottom">(2,5) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">226</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">591</TD> <TD NOWRAP VALIGN="bottom">(2,5) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">411</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Consumer Packaging</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">114</TD> <TD NOWRAP VALIGN="bottom">(2,6) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">13</TD> <TD NOWRAP VALIGN="bottom">(6) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">226</TD> <TD NOWRAP VALIGN="bottom">(2,6) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">22</TD> <TD NOWRAP VALIGN="bottom">(6) </TD></TR> <TR> <TD VALIGN="top"> Distribution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">10</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">26</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">42</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Forest Products</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">41</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">5</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">66</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Operating Profit (1)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">788</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">393</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,567</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">725</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Interest expense, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(173</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(81</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(337</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(162</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR> <TD VALIGN="top"> Noncontrolling interests/equity earnings adjustment (7)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">14</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">12</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Corporate items, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(44</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(21</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(95</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(42</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR> <TD VALIGN="top"> Restructuring and other charges</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(59</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(111</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(37</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Sale of forestlands</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Net gains on sales and impairments of businesses</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Earnings from continuing operations before income taxes and equity earnings</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">520</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">302</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">1,038</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">500</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Equity earnings (loss) in Ilim Holding S.A., net of taxes (1)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">(30</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">32</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">(56</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">49</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(1)</TD> <TD ALIGN="left" VALIGN="top">In addition to the operating profits shown above, International Paper recorded equity losses, net of taxes, of $30 million and $56 million for the three months and six months ended June 30, 2009, respectively, and equity earnings, net of taxes of $32 million and $49 million for the three months and six months ended June 30, 2008, respectively, related to its equity investment in Ilim Holding S.A., a separate reportable industry segment. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(2)</TD> <TD ALIGN="left" VALIGN="top">Includes gains of $208 million and $416 million for the Industrial Packaging segment, $197 million and $437 million for the Printing Papers segment, and $77 million and $169 million for the Consumer Packaging segment for the three months and six months ended June 30, 2009, respectively, relating to alternative fuel mixture credits. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(3)</TD> <TD ALIGN="left" VALIGN="top">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. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(4)</TD> <TD ALIGN="left" VALIGN="top">Includes a charge of $18 million and $54 million for the three months and six months ended June 30, 2009, respectively, for CBPR integration costs. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(5)</TD> <TD ALIGN="left" VALIGN="top">Includes charges of $4 million and $10 million for the three months and six months ended June 30, 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 six months ended June 30, 2009 for the closure of the Inverurie, Scotland, mill. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(6)</TD> <TD ALIGN="left" VALIGN="top">Includes charges of $1 million and $13 million for the three months ended June 30, 2009 and 2008, respectively, and $3 million and $18 million for the six months ended June 30, 2009 and 2008, respectively, related to the reorganization of the Companys Shorewood operations. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(7)</TD> <TD ALIGN="left" VALIGN="top">Operating profits for industry segments include each segments 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 included here to present consolidated earnings before income taxes and equity earnings. </TD></TR></TABLE>

NOTE 4 - EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS Basic earnings per common share from continuing operations are computed by dividing earnings from continuing operations by the weighted average number of common shares outstanding. Diluted earnings per common share from continuing operations are computed assuming that all potentially dilutive securities, including in-the-money stock options, were converted into common shares at the beginning of each period. In addition, the computation of diluted earnings per share reflects the inclusion of contingently convertible securities in periods where dilutive. A reconciliation of the amounts included in the computation of earnings per common share from continuing operations, and diluted earnings per common share from continuing operations is as follows: <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="72%"></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30,</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions, except per share amounts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Earnings from continuing operations</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right"> 136</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right"> 228</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right"> 393</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right"> 378</TD></TR> <TR> <TD VALIGN="top"> Effect of dilutive securities (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Earnings from continuing operations assuming dilution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">136</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">228</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">393</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">378</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> <TR> <TD VALIGN="top"> Average common shares outstanding</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">425.3</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">421.1</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">424.2</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">420.9</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Effect of dilutive securities</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Restricted stock performance share plan (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">0.1</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1.5</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3.0</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Stock options (b)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR> <TD VALIGN="top"> Average common shares outstanding assuming dilution</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">425.4</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">422.6</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">424.2</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">423.9</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Earnings per common share from continuing operations</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.32</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.54</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.93</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.90</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> <TR> <TD VALIGN="top"> Diluted earnings per common share from continuing operations</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.32</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.54</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.93</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">0.89</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Securities are not included in the table in periods when antidilutive. </TD></TR></TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(b)</TD> <TD ALIGN="left" VALIGN="top">Options to purchase 23.1 million shares and 25.9 million shares for the three months ended June 30, 2009 and 2008, respectively, and options to purchase 23.1 million shares and 25.9 million shares for the six months ended June 30, 2009 and 2008, respectively, were not included in the computation of diluted common shares outstanding because their exercise price exceeded the average market price of the Companys common stock for each respective reporting period. </TD></TR></TABLE> 1144000000 905000000

-326000000

-648000000

5764000000

5845000000

436000000

434000000

2009-06-30

136000000

228000000

393000000

378000000

508000000

459000000

1008000000

931000000

8000000

0 18000000

236000000

232000000

1165000000

1363000000

1326000000

1456000000

NOTE 10 - INCOME TAXES At December 31, 2008, cumulative unrecognized tax benefits totaled $435 million. During the first quarter of 2009, due to current period transactions, unrecognized tax benefits increased by $9 million and accrued estimated interest and tax penalties increased by $4 million. In the second quarter of 2009, unrecognized tax benefits decreased by $166 million to $278 million, and accrued interest and tax penalties decreased by $4 million to $74 million, primarily as a result of an agreement reached with the U.S. Internal Revenue Service on the Companys 2004 and 2005 U.S. federal income tax audits. The Company currently estimates that, as a result of ongoing discussions, pending tax settlements and expirations of statutes of limitations, the amount of unrecognized tax benefits could be reduced by approximately $40 million during the next 12 months. During the 2009 second quarter, in connection with the ongoing evaluation of the Companys Etienne mill in France, the Company determined that the future realization of previously recorded deferred tax assets in France, including net operating loss carryforwards, no longer met the more likely than not standard for asset recognition. Accordingly, a charge of $156 million, before and after taxes, was recorded in the quarter to establish a valuation allowance for 100% of these assets. Additionally during the quarter, as a result of the agreement on the 2004 and 2005 U.S. federal income tax audit and related state income tax effects, a $26 million credit was recorded. These two items are included in the Income tax provision for the three months and six months ended June 30, 2009 in the accompanying consolidated statement of operations. During the 2009 first quarter, the Company recorded in income tax expense charges totaling $20 million, consisting of a $14 million adjustment of deferred income taxes relating to incentive compensation payments during the quarter and a $6 million charge relating to recent state income tax legislation.

1476000000 3135000000

-165000000

137000000

81000000

218000000

1701000000

1430000000

1068000000

1274000000

NOTE 6 - ACQUISITIONS, EXCHANGES AND JOINT VENTURES On August 4, 2008, International Paper completed the acquisition of the assets of Weyerhaeuser Companys Containerboard, Packaging and Recycling business (CBPR) for $6 billion in cash, subject to post-closing adjustments. In June 2008, the Company had issued $3 billion of unsecured senior notes in anticipation of the CBPR business acquisition. The remainder of the purchase price was financed through borrowings under a $2.5 billion bank term loan, $0.4 billion of borrowings under a receivables securitization program and existing cash balances. CBPRs financial position and operating results have been included in International Papers North American Industrial Packaging business from the date of acquisition. The following table summarizes the final allocation of the purchase price, plus direct acquisition costs, to the fair value of assets and liabilities acquired.   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="91%"></TD> <TD VALIGN="bottom" WIDTH="5%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD COLSPAN="2" VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Cash and temporary investments</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">2</TD></TR> <TR> <TD VALIGN="top"> Accounts and notes receivable, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">655</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Inventory</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">568</TD></TR> <TR> <TD VALIGN="top"> Other current assets</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">11</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Plants, properties and equipment, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">4,816</TD></TR> <TR> <TD VALIGN="top"> Goodwill</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">445</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Other intangible assets</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">65</TD></TR> <TR> <TD VALIGN="top"> Deferred charges and other assets</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">63</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total assets acquired</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">6,625</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR> <TD VALIGN="top"> Accounts payable and accrued liabilities</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">463</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Other liabilities</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">85</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR> <TD VALIGN="top"> Total liabilities assumed</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">548</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net assets acquired</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">6,077</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD></TR> </TABLE>   The identifiable intangible assets acquired in connection with the CBPR acquisition included the following:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="76%"></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="7%"></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Estimated Fair Value</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="center" STYLE="border-bottom:1px solid #000000">Average Remaining Useful Life (at acquisition date)</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Asset Class:</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Trade names</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">4 -12 years</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Patented technology</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">4 -12 years</TD></TR> <TR> <TD VALIGN="top"> Proprietary software</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">16</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">4 - 5 years</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Power agreements</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">20</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">1 - 7 years</TD></TR> <TR> <TD VALIGN="top"> Water rights</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">6</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" ALIGN="right">Indefinite</TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Total</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">65</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD></TR> </TABLE> Selling and administrative expenses for the three months and six months ended June 30, 2009 included charges of $18 million before taxes ($11 million after taxes) and $54 million before taxes ($33 million after taxes), respectively, of costs related to the integration of the CBPR business. The following unaudited pro forma information for the three months and six months ended June 30, 2008, presents the results of operations of International Paper as if the CBPR acquisition had occurred on January 1, 2008. This pro forma information does not purport to represent International Papers actual results of operations if the transaction described above would have occurred on January 1, 2008, nor is it necessarily indicative of future results.   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="65%"></TD> <TD VALIGN="bottom" WIDTH="13%"></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="13%"></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions, except per share amounts</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30, 2008</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30, 2008</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net sales</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">7,153</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">14,083</TD></TR> <TR> <TD VALIGN="top"> Earnings from continuing operations</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">191</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">315</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net earnings (1)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">190</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">297</TD></TR> <TR> <TD VALIGN="top"> Earnings from continuing operations per common share</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">0.45</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">0.74</TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net earnings per common share (1)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">0.45</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">0.70</TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="8%"> </TD> <TD WIDTH="5%" VALIGN="top" ALIGN="left">(1)</TD> <TD ALIGN="left" VALIGN="top">Attributable to International Paper Company common shareholders. </TD></TR></TABLE>

NOTE 3 - EQUITY A summary of the changes in equity for the six month periods ended June 30, 2009 and 2008 is provided below:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="50%"></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="22" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="10" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Total International Paper Shareholders Equity</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Noncontrolling Interest</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Total Equity</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Total International Paper Shareholders Equity</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Noncontrolling Interest</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">Total Equity</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Balance, January 1</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">4,169</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">232</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">4,401</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">8,672</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">228</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">8,900</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Issuance of stock for various plans, net</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">68</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">68</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">80</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">80</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Repurchase of stock</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(10</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(10</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(47</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(47</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR> <TD VALIGN="top"> Common stock dividends ($0.275 per share in 2009 and $0.50 per share in 2008)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(122</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(122</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(218</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(218</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Dividends paid to noncontrolling interests by subsidiary</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(4</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(4</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(5</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(5</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR> <TD VALIGN="top"> Noncontrolling interests of acquired entities</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">6</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">6</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Comprehensive income:</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Net earnings</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">393</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">401</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">360</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">12</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">372</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Amortization of pension and post-retirement prior service costs and net loss:</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> U.S. plans</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">54</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">54</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">41</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">41</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Non-U.S. plans</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">7</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">7</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">3</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Change in cumulative foreign currency translation adjustment</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">246</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">246</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">548</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">4</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">552</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Net losses / gains on cash flow hedging derivatives:</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD></TR> <TR> <TD VALIGN="top"> Net gains arising during the period</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">9</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">9</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">101</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">101</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Less: Reclassification adjustment for losses (gains) included in net income</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">29</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">29</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(37</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">  </TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(37</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Total comprehensive income</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">746</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">1,032</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Balance, June 30</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">4,843</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">236</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">5,079</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">9,503</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">245</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">9,748</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE>

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NOTE 14 RETIREMENT PLANS International Paper maintains pension plans that provide retirement benefits to substantially all salaried U.S. employees hired prior to July 1, 2004 and substantially all hourly and union employees regardless of hire date. These employees generally are eligible to participate in the plans upon completion of one year of service and attainment of age 21. Salaried employees hired after June 30, 2004, who are not eligible for these pension plans, receive an additional company contribution to their individual savings plans. The pension plans provide defined benefits based on years of credited service and either final average earnings (salaried employees), hourly job rates or specified benefit rates (hourly and union employees). A detailed discussion of these plans is presented in Note 16 to the financial statements included in International Papers 2008 10-K. Net periodic pension expense for our qualified and nonqualified U.S. defined benefit plans consisted of the following:   <TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" ALIGN="center"> <TR> <TD WIDTH="76%"></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD> <TD VALIGN="bottom" WIDTH="4%"></TD> <TD></TD> <TD></TD> <TD></TD></TR> <TR> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Three Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000">Six Months Ended June 30,</TD> <TD VALIGN="bottom"> </TD></TR> <TR> <TD VALIGN="bottom" NOWRAP> In millions</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2009</TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000">2008</TD> <TD VALIGN="bottom"> </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Service cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">29</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">23</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">60</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">48</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR> <TD VALIGN="top"> Interest cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">131</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">136</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">268</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">269</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Expected return on plan assets</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(158</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(168</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(316</TD> <TD NOWRAP VALIGN="bottom">) </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">(335</TD> <TD NOWRAP VALIGN="bottom">) </TD></TR> <TR> <TD VALIGN="top"> Actuarial loss</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">36</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">30</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">80</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">60</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR BGCOLOR="#cceeff"> <TD VALIGN="top"> Amortization of prior service cost</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">8</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" ALIGN="right">15</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:1px solid #000000"> </TD> <TD> </TD></TR> <TR> <TD VALIGN="top"> Net periodic pension expense (a)</TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">46</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">29</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">107</TD> <TD NOWRAP VALIGN="bottom">  </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom">$</TD> <TD VALIGN="bottom" ALIGN="right">57</TD> <TD NOWRAP VALIGN="bottom">  </TD></TR> <TR STYLE="font-size:1px"> <TD VALIGN="bottom"></TD> <TD VALIGN="bottom">  </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD> <TD VALIGN="bottom"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD VALIGN="bottom" STYLE="border-top:3px double #000000"> </TD> <TD> </TD></TR> </TABLE>   <TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%"> <TR> <TD WIDTH="4%" VALIGN="top" ALIGN="left">(a)</TD> <TD ALIGN="left" VALIGN="top">Excludes charges of $17 million and $48 million for the three-month and six-month periods ended June 30, 2009, respectively, for termination benefits related to cost reduction programs recorded in Restructuring and other charges in the consolidated statement of operations. </TD></TR></TABLE> The $15 million decrease in pension expense in the 2009 second quarter compared with the 2009 first quarter reflects the finalization of full-year 2009 pension expense based on actual versus estimated year-end census data. Full-year 2009 pension expense for these plans is now expected to total approximately $215 million. The Companys funding policy for its qualified pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that the Company may determine to be appropriate considering the funded status of the plan, tax deductibility, the cash flows generated by the Company, and other factors. The Company has no obligation to fund its domestic qualified plan in 2009. The Company continually reassesses the amount and timing of any discretionary contributions. The nonqualified defined benefit plans are funded to the extent of benefit payments, which totaled $11 million through June 30, 2009.

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