In millions, except per share amounts and stock prices

1^st

Quarter

2^nd

Quarter

3^rd

Quarter

4^th

Quarter

Year

2011

Net sales

6,387

6,648

6,632

6,367

26,034

Gross margin (a)

1,762

1,768

1,839

1,705

7,074

Earnings (loss) from continuing operations before income taxes and equity earnings

368

(b)

293

(e)

381

(f)

416

(h)

1,458

(b,e,f,h)

Gain from discontinued operations

(c)

Net earnings (loss) attributable to International Paper Company

342

(b-d)

224

(e)

518

(f,g)

257

(h,i)

1,341

(b-i)

Basic earnings (loss) per share attributable to International Paper Company common shareholders:

Earnings (loss) from continuing operations

0.68

(b,d)

0.52

(e)

1.20

(f,g)

0.59

(h,i)

2.99

(b,d,e,f,g,h,i)

Gain from discontinued operations

0.11

(c)

0.11

(c)

Net earnings (loss)

0.79

(b-d)

0.52

(e)

1.20

(f,g)

0.59

(h,i)

3.10

(b-i)

Diluted earnings (loss) per share attributable to International Paper Company common shareholders:

Earnings (loss) from continuing operations

0.67

(b,d)

0.52

(e)

1.19

(f,g)

0.59

(h,i)

2.96

(b,d,e,f,g,h,i)

Gain from discontinued operations

0.11

(c)

0.11

(c)

Net earnings (loss)

0.78

(b-d)

0.52

(e)

1.19

(f,g)

0.59

(h,i)

3.07

(b-i)

Dividends per share of common stock

0.1875

0.2625

0.975

Common stock prices

High

30.44

33.01

31.57

29.85

33.01

Low

24.88

26.25

22.90

21.55

2010

Net sales

5,807

6,121

6,720

6,531

25,179

Gross margin (a)

1,343

1,631

1,962

1,761

6,697

Earnings (loss) from continuing operations before income taxes and equity earnings

(175

)(j)

118

(l)

547

332

(m)

822

(j,l,m)

Net earnings (loss) attributable to International Paper Company

(162

)(j,k)

(l)

397

316

(m,n)

644

(j-n)

Basic earnings (loss) per share attributable to International Paper Company common shareholders

(0.38

)(j,k)

0.22

(l)

0.92

0.74

(m,n)

1.50

(j-n)

Diluted earnings (loss) per share attributable to International Paper Company common shareholders

(0.38

)(j,k)

0.21

(l)

0.91

0.73

(m,n)

1.48

(j-n)

Dividends per share of common stock

0.025

0.125

0.400

Common stock prices

High

28.61

29.25

25.79

27.50

29.25

Low

21.66

20.50

19.33

21.44

19.33

Note: Since basic and diluted earnings per share are computed independently for each period and category, full year per share amounts may not equal the sum of the four quarters.

Footnotes to Interim Financial Results

(a)	Gross margin represents net sales less cost of products sold, excluding depreciation, amortization and cost of timber harvested.

(b)

Includes a pre-tax charge of $32 million ($19 million after taxes) for early debt extinguishment costs, a pre-tax charge of $7 million ($4 million after taxes) for costs associated with the restructuring of the Company's xpedx operations, and a charge of $8 million (before and after taxes) for asset impairment costs associated with the Inverurie, Scotland mill which was closed in 2009.

(c)

Includes a pre-tax gain of $50 million ($30 million after taxes) for an earnout provision related to the sale of the Company's Kraft Papers business completed in January 2007. Also, the Company sold its Brazilian Coated Paper business in the third quarter 2006. Local country tax contingency reserves were included in the business' operating results in 2005 and 2006 for which the related statute of limitations has expired. The reserves were reversed and a tax benefit of $15 million plus associated interest income of $6 million ($4 million after taxes) was recorded.

(d)	Includes a gain of $7 million (before and after taxes) related to a bargain price adjustment on an acquisition by our joint venture in Turkey.

(e)

Includes a pre-tax charge of $27 million ($17 million after taxes) for an environmental reserve related to the Company's property in Cass Lake, Minnesota, a pre-tax gain of $21 million ($13 million after taxes) related to the reversal of environmental reserves due to the announced repurposing of a portion of the Franklin mill, a pre-tax charge of $10 million ($6 million after taxes) for costs associated with the restructuring of the Company's xpedx operations, and a pre-tax charge of $129 million ($104 million after taxes) for a fixed-asset impairment of the North American Shorewood business.

(f)

Includes a pre-tax charge of $16 million ($10 million after taxes) for costs associated with the acquisition of a majority share of Andhra Pradesh Paper Mills Limited in India, a pre-tax charge of $18 million ($13 million after taxes) for costs associated with the restructuring of the Company's xpedx operations, a pre-tax charge of $8 million ($5 million after taxes) for costs associated with signing an agreement to acquire Temple-Inland, a pre-tax charge of $6 million ($4 million after taxes) for costs associated with the sale of the Company's Shorewood operations, and a pre-tax charge of $82 million (a gain of $140 million after taxes) to reduce the carrying value of the Shorewood business based on the terms of the definitive agreement to sell this business.

(g)

Includes a tax benefit of $222 million related to the reduction of the carrying value of the Shorewood business and the write-off of a deferred tax liability associated with Shorewood, and noncontrolling interest income of $8 million (before and after taxes) associated with the fixed asset impairment of Shorewood Mexico.

(h)

Includes a pre-tax charge of $17 million ($13 million after taxes) for an inventory write-off, severance and other costs associated with the restructuring of the Company's xpedx operations, a pre-tax charge of $12 million ($7 million after taxes) for costs associated with the signing of an agreement to acquire Temple-Inland, a pre-tax gain of $4 million ($3 million after taxes) for an adjustment to the previously recorded loss to reduce the carrying value of the Company's Shorewood business, a charge of $3 million (before and after taxes) for asset impairment charges at our Inverurie, Scotland mill which was closed in 2009, and a gain of $6 million for interest associated with a tax claim.

(i)

Includes a $24 million expense related to internal restructurings, a $9 million expense for costs associated with our acquisition of a majority interest in Andhra Pradesh Paper Mills Limited, a $13 million tax benefit related to the release of a deferred tax asset valuation allowance, and a $2 million expense for other items.

(j)	Includes a pre-tax charge of $204 million ($124 million after taxes) for shutdown costs related to the Franklin, Virginia mill (including $190 million of accelerated depreciation).

(k)	Includes after-tax charges of $14 million and $32 million for tax adjustments related to incentive compensation and postretirement prescription drug coverage, respectively.

(l)

Includes a pre-tax charge of $111 million ($68 million after taxes) for shutdown costs related to the Franklin, Virginia mill (including $46 million of accelerated depreciation and $36 million of environmental closure costs), a pre-tax charge of $18 million ($11 million after taxes) for early debt extinguishment costs, and a pre-tax charge of $11 million ($7 million after taxes) for an Ohio Commercial Activity tax adjustment.

(m)

Includes a pre-tax charge of $18 million ($11 million after taxes) for an environmental reserve related to the Company's property in Cass Lake, Minnesota, a pre-tax charge of $7 million ($4 million after taxes) for closure costs related to the Bellevue, Washington container plant, a pre-tax charge of $13 million ($8 million after taxes) for early debt extinguishment costs, a pre-tax charge of $5 million ($3 million after taxes) for severance and benefit costs associated with the Company's S&A reduction initiative, a pre-tax charge of $4 million ($3 million after taxes) for costs associated with the reorganization of the Company's Shorewood operations, and a pre-tax gain of $25 million ($15 million after taxes) related to the partial redemption of the Company's interest in Arizona Chemical.

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