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International Paper Releases Second Quarter Earnings

             International Paper Releases Second Quarter Earnings

Solid Results and Strong Free Cash Flow Driven by Expanded Margins, Seasonally
Strong Volumes and Good Operational Performance

PR Newswire

MEMPHIS, Tenn., July 25, 2013

MEMPHIS, Tenn., July 25, 2013 /PRNewswire/ -- International Paper (NYSE: IP)
today reported second quarter 2013 net earnings attributable to common
shareholders totaling $259 million ($0.57 per share) compared with net
earnings of $318 million ($0.71 per share), in the first quarter of 2013 and
$134 million ($0.31 per share) in the second quarter of 2012. Amounts in all
periods include the impact of special items.

(Logo: http://photos.prnewswire.com/prnh/20020701/IPLOGO)



Diluted Earnings Per Share Attributable to International Paper Shareholders
                                                    First
                                     Second                     Second
                                     Quarter        Quarter      Quarter
                                     2013                        2012
                                                    2013
Net Earnings                         $0.57          $0.71        $0.31
Less – Discontinued           (0.05)         (0.06)       (0.04)
Operations Gain
Net Earnings from                    $0.52          $0.65        $0.27
Continuing Operations
Add Back – Net Special               0.01           (0.11)       0.19
Items Expense (Income)
Add Back – Non-Operating             0.11           0.11         0.07
Pension Expense
Operating Earnings*                  $0.64          $0.65        $0.53
* Operating Earnings is defined as net earnings from continuing operations
(GAAP) excluding special items and non-operating pension expense.

Operating Earnings were $288 million ($0.64 per share) in the second quarter
of 2013, compared with $292 million ($0.65 per share) in the first quarter of
2013 and $232 million ($0.53 per share) in the second quarter of 2012.

Quarterly net sales were $7.3 billion compared with $7.1 billion in the first
quarter of 2013 and $7.1 billion in the second quarter of 2012.

Business segment operating profits before special items in the second quarter
of 2013 were $622 million, compared with $571 million in the first quarter of
2013.

"International Paper delivered strong results this quarter. We expanded
margins and benefited from seasonally stronger volumes and solid operating
performance despite higher planned maintenance outage costs" said John Faraci,
Chairman and Chief Executive Officer. "As we move into the second half of the
year, the company is well positioned to significantly improve earnings and
free cash flow for the balance of 2013."

SEGMENT INFORMATION
The performance of the company's business segments are measured quarter to
quarter without variations caused by special items, as management focuses on
business segment operating profits excluding those items. Second quarter 2013
business segment operating profits and business trends compared with the prior
quarter are as follows:

Industrial Packaging operating profits in the second quarter of 2013 were $477
million ($474 million including special items) compared with $369 million
($355 million including special items) in the first quarter of 2013. In North
America, higher selling prices for boxes and containerboard, increased box
shipments and lower operating costs drove improved results. In Europe,
performance was weaker in challenged Western European markets.

Printing Papers operating profits were $76 million (before and after special
items) in the second quarter of 2013 versus $149 million (before and after
special items) in the first quarter of 2013. The earnings decrease of ($73
million) was due to significantly higher planned annual outage costs in the
second quarter in North America and Europe and the establishment of a reserve
($28 million) to cover potential credit exposure related to the National
Envelope bankruptcy. Brazil's results improved compared to the first quarter
due to seasonally stronger domestic volume and price.

Consumer Packaging operating profits were $52 million ($51 million including
special items) in the second quarter of 2013 compared with $51 million ($7
million including special items) in the first quarter of 2013. Earnings were
impacted by higher sales volumes and lower manufacturing costs in North
America, offset by higher annual outage costs in both North America and
Europe.

xpedx, the company's North American distribution business, reported operating
profits of $17 million (break-even including special items) in the second
quarter of 2013 compared with $2 million (a loss of $5 million including
special items) in the first quarter of 2013. The second quarter results
reflect lower costs, partly from the business's strategic restructuring
efforts.

International Paper recorded Ilim joint venture equity losses of $34 million
in the second quarter of 2013, compared with equity losses of $11 million in
the first quarter of 2013. Based on a stronger dollar versus the ruble, the
after-tax impact of a foreign exchange loss in the second quarter of 2013 was
$23 million compared with an $11 million loss in the first quarter. The
impact in both quarters was due to non-cash adjustments associated with the
Ilim Group joint venture's U.S. dollar denominated debt. Earnings were also
negatively impacted by start-up costs related to two major capital projects.

Net corporate expenses, excluding non-operating pension expense, for the 2013
second quarter were $0 million compared with $22 million in the first quarter
of 2013 and $3 million in the second quarter of 2012.

Effective Tax Rate
The effective tax rate before special items for the second quarter of 2013 was
30%, compared with an effective tax rate before special items of 21% in the
first quarter of 2013. The primary reason for the lower first quarter rate
was due to the inclusion of a benefit of approximately $35 million related to
the enactment into law of The American Taxpayer Relief Act of 2012 on January
2, 2013 (the "Act").The Act retroactively restored several expired business
tax provisions including the research and experimentation credit and the
Subpart F controlled foreign corporation look-through exception.

Effects of Special Items
Special items in the second quarter of 2013 included a net pre-tax gain of $4
million ($2 million after taxes) for restructuring and other charges and
pre-tax charges of $14 million ($8 million after taxes) for integration costs
related to the Temple-Inland acquisition. Also included are a pre-tax charge
of $6 million ($4 million after taxes) for an environmental reserve related to
the Company's property in Cass Lake, Minnesota and a pre-tax charge of $9
million ($5 million after taxes) to adjust the value of two Company airplanes
to fair value. In addition, a gain of $13 million (before and after taxes)
was recorded for a net bargain purchase gain on the first quarter 2013
acquisition of a majority share of our Packaging operations in Turkey.
Restructuring and other charges included a pre-tax gain of $30 million ($19
million after taxes) for insurance reimbursements related to the 2012 Guaranty
Bank legal settlement, pre-tax charges of $17 million ($10 million after
taxes) for costs associated with the restructuring of our xpedx operations,
pre-tax charges of $3 million ($2 million after taxes) for debt extinguishment
costs, pre-tax charges of $3 million ($2 million after taxes) for costs
associated with the announced potential spin-off of the xpedx operations and
charges of $3 million (before and after taxes) for other items.

Special items in the first quarter of 2013 included pre-tax charges of $59
million ($36 million after taxes) for restructuring and other charges and
pre-tax charges of $12 million ($8 million after taxes) for integration costs
related to the Temple-Inland acquisition. Also included are pre-tax interest
income of $6 million ($4 million after taxes) and a tax benefit of $93 million
both associated with the closing of a U.S. federal income tax audit and a net
tax expense of $2 million related to internal restructurings. Restructuring
and other charges included pre-tax charges of $44 million ($27 million after
taxes) for costs related to the permanent shutdown of a paper machine at our
Augusta, Georgia mill, pre-tax charges of $6 million ($4 million after taxes)
for debt extinguishment costs, pre-tax charges of $7 million ($4 million after
taxes) for costs associated with the restructuring of our xpedx operations and
pre-tax charges of $2 million ($1 million after taxes) for other items.

Special items in the second quarter of 2012 included pre-tax charges of $21
million ($13 million after taxes) for restructuring and other charges, a
pre-tax charge of $62 million ($38 million after taxes) to adjust the value of
the long-lived assets of the Hueneme mill in Oxnard, California to their fair
value in anticipation of its divestiture, pre-tax charges of $35 million ($22
million after taxes) for integration costs related to the Temple-Inland
acquisition, pre-tax charges of $9 million ($5 million after taxes) for costs
associated with the announced third-quarter 2012 divestiture of the Hueneme
mill and two other containerboard mills, and pre-tax charges of $9 million ($7
million after taxes) for other items. Restructuring and other charges included
pre-tax charges of $10 million ($6 million after taxes) for debt
extinguishment costs, pre-tax charges of $10 million ($6 million after taxes)
for costs associated with the restructuring of our xpedx operations and
charges of $1 million (before and after taxes) for other items.

Discontinued Operations
Discontinued operations in the second and first quarters of 2013 and in the
second quarter of 2012 included the Operating Earnings of Temple-Inland's
Building Products business. Also included are pre-tax charges of $13 million
($8 million after taxes) in the second quarter of 2013 and $4 million ($3
million after taxes) in the first quarter of 2013 for the write-off of capital
investments and expenses associated with pursuing the divestiture of this
business.

EARNINGS WEBCAST
The company will hold a webcast to review earnings at 9:00 a.m. EST / 8:00
a.m. CST today. All interested parties are invited to listen to the webcast
live and view the slides to be presented at the webcast via the company's
Internet site at http://www.internationalpaper.com by clicking on the
Investors tab and going to the presentations page. A replay of the webcast
will also be available beginning approximately two hours after the call.
Parties in the U.S. who wish to participate in the webcast via teleconference
may dial (877) 316-2541. Those outside the U.S. should dial +1 (706) 679-8242
and ask to be connected to the International Paper second quarter earnings
call. The conference ID number is 13659244. Participants should call in no
later than 8:45 a.m. EST/7:45 a.m. CST. An audio-only replay will be available
for four weeks following the call. To access the replay, dial +1 (404)
537-3406 or, within the U.S. only, (855) 859-2056, and when prompted for the
conference ID, enter 13659244.

International Paper (NYSE: IP) is a global leader in packaging and paper with
manufacturing operations in North America, Europe, Latin America, Russia, Asia
and North Africa. Its businesses include industrial and consumer packaging and
uncoated papers, complemented by xpedx, the company's North American
distribution company. Headquartered in Memphis, Tenn., the company employs
approximately 70,000 people and is strategically located in more than 24
countries serving customers worldwide. International Paper net sales for 2012
were $28 billion. For more information about International Paper, its
products and stewardship efforts, visit internationalpaper.com.

Certain statements in this press release may be considered forward-looking
statements. These statements reflect management's current views and are
subject to risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in these statements. Factors which
could cause actual results to differ include but are not limited to: (i) the
level of our indebtedness and increases in interest rates; (ii) industry
conditions, including but not limited to changes in the cost or availability
of raw materials, energy and transportation costs, competition we face,
cyclicality and changes in consumer preferences, demand and pricing for our
products; (iii) global economic conditions and political changes, including
but not limited to the impairment of financial institutions, changes in
currency exchange rates, credit ratings issued by recognized credit rating
organizations, the amount of our future pension funding obligation, changes in
tax laws and pension and health care costs; (iv) unanticipated expenditures
related to the cost of compliance with existing and new environmental and
other governmental regulations and to actual or potential litigation; (v)
whether we experience a material disruption at one of our manufacturing
facilities; (vi) risks inherent in conducting business through a joint
venture; (vii) our ability to reach a definitive agreement on a mutually
acceptable transaction combining xpedx with Unisource, the receipt of
governmental and other approvals and favorable rulings associated with such a
transaction and the successful fulfillment or waiver of all other closing
conditions for such a transaction without unexpected delays or conditions, and
the successful closing of such a transaction within the estimated timeframe;
and (viii) our ability to achieve the benefits we expect from all strategic
acquisitions, divestitures and restructurings. These and other factors that
could cause or contribute to actual results differing materially from such
forward-looking statements are discussed in greater detail in the company's
Securities and Exchange Commission filings. We undertake no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise.



INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
Preliminary and Unaudited
(In millions, except per share amounts)
                                                Three
                                                Months
               Three Months Ended               Ended           Six Months Ended
               June 30,                         March           June 30,
                                                31,
               2013            2012             2013            2013                   2012
Net Sales      $              $               $            $                      $ 
               7,335          7,077            7,090         14,425                 13,732
Costs and
Expenses
 Cost of      5,414   (a)   5,270   (f)    5,220           10,634 (a)           10,254 (p)
products sold
 Selling and
administrative 515     (b)   474     (g)    567     (j)   1,082  (n)           987    (q)
expenses

Depreciation,
amortization   396     (c)   366              379             775    (c)           728
and cost of
timber
harvested
 Distribution 449             448              422             871                    795
expenses
 Taxes other
than payroll   47              44               49              96                     85
and income
taxes

Restructuring  (4)     (d)   21      (h)    59      (k)   55     (o)           55     (r)
and other
charges
 Net losses
on sales and   -               78      (i)    -               -                      71     (s)
impairments of
businesses
 Net bargain
purchase gain  (13)    (e)   -                -               (13)   (e)           -
on acquisition
of business
 Interest     168             172              164     (l)   332    (l)           340
expense, net
Earnings From
Continuing
Operations
Before Income
Taxes and
 Equity       363     (a-e) 204     (f-i)  230     (j-l) 593    (a,c,e,l,n,o) 417    (p-s)
Earnings
 Income tax
(benefit)      94              57               (69)    (m)   25     (m)           127
provision
 Equity
earnings       (36)            (26)             (10)            (46)                   18
(loss), net of
taxes
Earnings From
Continuing     233     (a-e) 121     (f-i)  289     (j-m) 522    (a,c,e,l-o)   308    (p-s)
Operations
 Discontinued
operations,    24              16               26              50                     21
net of taxes
               $            $             $            $                    $  
Net Earnings 257     (a-e) 137     (f-i)        (j-m)  572  (a,c,e,l-o)    329 (p-s)
                                                315
 Less: Net
earnings
(loss)
attributable   (2)             3                (3)             (5)                    7
to
noncontrolling
interests
Net Earnings
Attributable   $            $             $            $                    $  
to             259     (a-e) 134     (f-i)        (j-m)  577  (a,c,e,l-o)    322 (p-s)
International                                   318
Paper Company
Basic Earnings
Per Common
Share
Attributable
to

International
Paper Common
Shareholders
 Earnings                                      $   
from           $     (a-e) $     (f-i)        (j-m) $    (a,c,e,l-o)   $    (p-s)
continuing     0.53           0.27            0.66            1.19                   0.69
operations
 Discontinued 0.05            0.04             0.06            0.11                   0.05
operations
               $             $              $            $                    $  
 Net earnings 0.58   (a-e) 0.31   (f-i)        (j-m) 1.30  (a,c,e,l-o)    0.74 (p-s)
                                                0.72
Diluted
Earnings Per
Common Share
Attributable
to

International
Paper Common
Shareholders
 Earnings                                      $   
from           $     (a-e) $     (f-i)        (j-m) $    (a,c,e,l-o)   $    (p-s)
continuing     0.52           0.27            0.65            1.18                   0.68
operations
 Discontinued 0.05            0.04             0.06            0.11                   0.05
operations
 Net          $             $              $            $                    $  
earnings     0.57   (a-e) 0.31   (f-i)        (j-m) 1.29  (a,c,e,l-o)    0.73 (p-s)
                                                0.71
Average Shares
of Common
Stock          448.5           438.2            446.1           447.9                  439.3
Outstanding -
Diluted
Cash Dividends $               $                $            $                      $ 
Per Common     0.3000         0.2625          0.3000          0.6000                 0.5250
Share
Amounts Attributable
to International Paper
Common Shareholders
 Earnings
from           $            $             $            $                    $  
continuing     235     (a-e) 118     (f-i)        (j-m)  527  (a,c,e,l-o)    301 (p-s)
operations,                                     292
net of tax
 Discontinued
operations,    24              16               26              50                     21
net of tax
 Net          $            $             $            $                    $  
Earnings      259     (a-e) 134     (f-i)        (j-m)  577  (a,c,e,l-o)    322 (p-s)
                                                318
The accompanying notes are an integral part of this consolidated
statement of operations.

    Includes a pre-tax charge of $6 million ($4 million after taxes) for an
(a) environmental reserve related to the Company's property in Cass Lake,
    Minnesota.
(b) Includes a pre-tax charge of $14 million ($8 million after taxes) for
    integration costs associated with the acquisition of Temple-Inland.
(c) Includes a pre-tax charge of $9 million ($5 million after taxes) to adjust
    the value of two Company airplanes to fair value.
    Includes a pre-tax gain of $30 million ($19 million after taxes) for
    insurance reimbursements related to the 2012 Guaranty Bank legal
    settlement, a pre-tax charge of $3 million ($2 million after taxes) for
    debt extinguishment costs, a pre-tax charge of $17 million ($10 million
(d) after taxes) for costs associated with the restructuring of our xpedx
    operations, a pre-tax charge of $3 million ($2 million after taxes) for
    costs associated with the announced possible spin-off of the xpedx
    operations, and charges of $3 million (before and after taxes) for other
    items.
    Includes a gain of $13 million (before and after taxes) related to a
(e) bargain purchase adjustment on the first-quarter 2013 acquisition of a
    majority share of our operations in Turkey.
(f) Includes a charge of $2 million (before and after taxes) for an inventory
    write-off related to the xpedx reorganization.
(g) Includes a pre-tax charge of $35 million ($22 million after taxes) for
    integration costs associated with the acquisition of Temple-Inland.
    Includes apre-tax charge of $10 million ($6 million after taxes) for debt
(h) extinguishment costs, a pre-tax charge of $10 million ($6 million after
    taxes) for costs associated with the restructuring of our xpedx operations
    and charges of $1 million (before and after taxes) for other items.
    Includes a pre-tax charge of $62 million ($38 million after taxes) to
    adjust the long-lived assets of the Hueneme mill in Oxnard, California to
    their fair value in anticipation of its divestiture, a pre-tax charge of
(i) $9 million ($5 million after taxes) for costs associated with the
    announced third-quarter 2012 divestiture of the Hueneme mill and two other
    containerboard mills, a pre-tax charge of $6 million ($4 million after
    taxes) for an adjustment related to the sale of Shorewood, and charges of
    $1 million (before and after taxes) for other items.
(j) Includes a pre-tax charge of $12 million ($8 million after taxes) for
    integration costs associated with the acquisition of Temple-Inland.
    Includes a pre-tax charge of $44 million ($27 million after taxes) for
    costs associated with the permanent shutdown of a paper machine at our
    Augusta mill, a pre-tax charge of $6 million ($4 million after taxes) for
(k) debt extinguishment costs, a pre-tax charge of $7 million ($4 million
    after taxes) for costs associated with the restructuring of our xpedx
    operations, and pre-tax charges of $2 million ($1 million after taxes) for
    other items.
(l) Includes interest income of $6 million ($4 million after taxes) related to
    the closing of a U.S. federal income tax audit.
    Includes a tax benefit of $93 million associated with the closing of a
    U.S. federal income tax audit and a net tax expense of $2 million related
(m) to internal restructurings. In addition, the first quarter tax rate
    includes a benefit of approximately $35 million related to the enactment
    into law of The American Taxpayer Relief Act of 2012 in January 2013.
(n) Includes a pre-tax charge of $26 million ($16 million after taxes) for
    integration costs associated with the acquisition of Temple-Inland.
    Includes a pre-tax gain of $30 million ($19 million after taxes) for
    insurance reimbursements related to the 2012 Guaranty Bank legal
    settlement, a pre-tax charge of $9 million ($6 million after taxes) for
    debt extinguishment costs, a pre-tax charge of $24 million ($14 million
    after taxes) for costs associated with the restructuring of our xpedx
(o) operations, a pre-tax charge of $3 million ($2 million after taxes) for
    costs associated with the announced possible spin-off of our xpedx
    operations, a pre-tax charge of $45 million ($28 million after taxes) for
    costs associated with the permanent shutdown of a paper machine at our
    Augusta mill, and pre-tax charges of $4 million ($3 million after taxes)
    for other items.
    Includes a pre-tax charge of $20 million ($12 million after taxes) related
(p) to the write-up of the Temple-Inland inventories to fair value and a
    charge of $4 million (before and after taxes) for an inventory write-off
    related to the xpedx reorganization.
(q) Includes a pre-tax charge of $78 million ($55 million after taxes) for
    integration costs associated with the acquisition of Temple Inland.
    Includes a pre-tax charge of $26 million ($16 million after taxes) for
(r) debt extinguishment costs, and a pre-tax charge of $29 million ($20
    million after taxes) for costs associated with the restructuring of our
    xpedx operations.
    Includes a pre-tax charge of $62 million ($38 million after taxes) to
    adjust the long-lived assets of the Hueneme mill in Oxnard, California to
    their fair value in anticipation of its divestiture, a pre-tax charge of
(s) $9 million ($5 million after taxes) for costs associated with the
    announced third-quarter 2012 divestiture of the Hueneme mill and two other
    containerboard mills, a pre-tax gain of $1 million ($2 million after
    taxes) for adjustments related to the sale of the Shorewood business and
    charges of $1 million (before and after taxes) for other items.



International Paper Company
Reconciliation of Operating Earnings to Net Earnings
Attributable to International Paper Company
Preliminary and Unaudited
(In millions except for per share amounts)
                                        Three
              Three Months Ended        Months       Six Months Ended
                                        Ended
              June 30,                  March        June 30,
                                        31,
              2013         2012         2013         2013         2012
              $          $          $          $          $  
Operating                                                
Earnings      288          232                    580          504
                                         292
Non-Operating (51)         (29)         (51)         (102)        (54)
Pension
Special Items (2)    (a) (85)   (b) 51     (c) 49     (d) (149)  (e)
Earnings from
Continuing    235          118          292          527          301
Operations
Discontinued  24           16           26           50           21
operations
              $          $          $          $          $  
Net Earnings                                             
as Reported   259          134                    577          322
                                         318
                                        Three
              Three Months Ended        Months       Six Months Ended
                                        Ended
              June 30,                  March        June 30,
                                        31,
Diluted
Earnings per  2013         2012         2013         2013         2012
Common Share
Operating     $          $          $          $          $  
Earnings Per                                               
Share        0.64        0.53                  1.30        1.14
                                        0.65
Non-Operating (0.11)       (0.07)       (0.11)       (0.23)       (0.12)
Pension
Special Items (0.01)       (0.19)       0.11         0.11         (0.34)
 Continuing  0.52         0.27         0.65         1.18         0.68
Operations
Discontinued  0.05         0.04         0.06         0.11         0.05
operations
Diluted       $          $          $          $  
Earnings per                                              $  
Common Share  0.57        0.31                  1.29         0.73
as Reported                             0.71

Notes:
(a) See footnotes (a) - (e) on the Consolidated Statement of
Operations
(b) See footnotes (f) - (i) on the Consolidated Statement of
Operations
(c) See footnotes (j) - (m) on the Consolidated Statement of
Operations
(d) See footnotes (a), (c), (e), and (l) - (o) on the Consolidated
Statement of Operations
(e) See footnotes (p) - (s) on the Consolidated Statement of
Operations
(1) The Company calculates Operating Earnings by excluding the after-tax
effect of non-operating pension expense and items considered by management to
be unusual from the earnings reported under U.S. generally accepted
accounting principles ("GAAP"). Management uses this measure to focus on
on-going operations, and believes that it is useful to investors because it
enables them to perform meaningful comparisons of past and present operating
results. International Paper believes that using this information, along with
net earnings, provides for a more complete analysis of the results of
operations by quarter. Net earnings is the most directly comparable GAAP
measure.
(2) Since diluted earnings per share are computed independently for each
period, six-month per share amounts may not equal the sum of the respective
quarters.



International Paper
Sales and Earnings by Industry Segment
Preliminary and Unaudited
(In Millions)
 Sales by
 Industry
 Segment
                  Three Months            Three         Six Months
                                           Months
                  Ended                    Ended         Ended
                  June 30,                 March         June 30,
                                           31,
                  2013        2012         2013          2013         2012
 Industrial     $ 3,780     $ 3,450      $ 3,560       $ 7,340      $ 6,565
 Packaging
 Printing         1,540       1,510        1,540         3,080        3,070
 Papers
 Consumer         855         780          830           1,685        1,590
 Packaging
 Distribution     1,405       1,500        1,385         2,790        2,975
 Corporate and
 Inter-segment    (245)       (163)        (225)         (470)        (468)
 Sales
 Net Sales      $ 7,335     $ 7,077      $ 7,090       $ 14,425     $ 13,732
 Operating
 Profit by
 Industry
 Segment
                  Three Months            Three         Six Months
                                           Months
                  Ended                    Ended         Ended
                  June 30,                 March         June 30,
                                           31,
                  2013        2012         2013          2013         2012
 Industrial     $ 474   (1) $ 260   (4)  $ 355     (1) $ 829    (1) $ 475    (4)
 Packaging
 Printing         76          104   (5)    149           225          250    (5)
 Papers
 Consumer         51    (2)   57    (6)    7       (2)   58     (2)   160    (6)
 Packaging
 Distribution     -     (3)   5     (7)    (5)     (3)   (5)    (3)   3      (7)
 Operating        601         426          506           1,107        888
 Profit
 Interest         (168)       (172)        (164)   (8)   (332)  (8)   (340)
 expense, net
 Noncontrolling
 interest/equity  4           4            -             4            8
 earnings
 adjustment (9)
 Corporate        -           (3)          (22)          (22)         (35)
 items, net
 Restructuring
 and other        9           (9)          (6)           3            (25)
 charges
 Net gains
 (losses) on
 sales and        -           -            -             -            -
 impairments
 of businesses
 Non-operating
 pension          (83)        (42)         (84)          (167)        (79)
 expense
 Earnings
 (Loss) From
 Continuing
 Operations
  Before
 Income Taxes   $ 363       $ 204        $ 230         $ 593        $ 417
 and Equity
 Earnings
 Equity
 Earnings in
 Ilim Holdings
 S.A.,
  Net of     $ (34)      $ (25)       $ (11)        $ (45)       $ 15
 Taxes

    Includes charges of $14 million and $12 million for the three months
    ended June 30, 2013 and March 31, 2013, respectively, and a charge of $26
    million for the six months ended June 30, 2013 for integration costs
    associated with the acquisition of Temple-Inland, gains of $13 million
    and $1 million for the three months ended June 30, 2013 and March 31,
(1) 2013, respectively, and a gain of $14 million for the six months ended
    June 30, 2013 for a bargain purchase adjustment on the first quarter 2013
    acquisition of a majority share of our operations in Turkey, and charges
    of $2 million and $3 million for the three months ended June 30, 2013 and
    March 31, 2013, respectively, and $5 million for the six months ended
    June 30, 2013 for other items.
    Includes charges of $1 million and $44 million for the three months ended
(2) June 30, 2013 and March 31, 2013, respectively, and a charge of $45
    million for the six months ended June 30, 2013 for costs associated with
    the permanent shutdown of a paper machine at our Augusta mill.
    Includes charges of $17 million and $7 million for the three months ended
(3) June 30, 2013 and March 31, 2013, respectively, and a charge of $24
    million for the six months ended June 30, 2013 for costs associated with
    the restructuring of the Company's xpedx operation.
    Includes a charge of $62 million for the three months and six months
    ended June 30, 2012 to adjust the value of the long-lived assets of the
    Hueneme mill in Oxnard, California to their fair value in anticipation of
    its divestiture, charges of $35 million for the three months ended June
    30, 2012 and $78 million for the six months ended June 30, 2012 for
    integration costs associated with the Temple-Inland acquisition, charges
(4) of $9 million for the three months and six months ended June 30, 2012 for
    costs associated with the announced third-quarter 2012 divestiture of the
    Hueneme mill and two other containerboard mills, a charge of $1 million
    for the three months and six months ended June 30, 2012 related to the
    closure of the Etienne mill in France, and a charge of $20 million for
    the six months ended June 30, 2012 related to the write-up of the
    Temple-Inland inventory to fair value.
    Includes a loss of $2 million for the three months ended June 30, 2012
(5) and a loss of $1 million for the six months ended June 30, 2012 related
    to the acquisition of the majority interest in Andhra Pradesh Paper Mills
    Limited.
    Includes a loss of $6 million for the three months ended June 30, 2012
(6) and a gain of $1 million for the six months ended June 30, 2012 for
    adjustments related to the sale of the Shorewood business.
    Includes charges of $12 million for the three months ended June 30, 2012
(7) and $33 million for the six months ended June 30, 2012 for costs
    associated with the restructuring of the Company's xpedx operation.
(8) Includes a gain of $6 million for interest related to the settlement of
    an IRS tax audit.
    Operating profits for industry segments include each segment's percentage
    share of the profits of subsidiaries included in that segment that are
(9) less than wholly owned. The pre-tax noncontrolling interest and equity
    earnings for these subsidiaries are adjusted here to present consolidated
    earnings before income taxes and equity earnings.



International Paper Company
Reconciliation of Operating Profit to Operating Profit Before Special Items
(In millions)
                 Three Months Ended June 30, 2013
                 Industrial    Printing    Consumer
                 Packaging     Papers      Packaging   Distribution   Total
Operating                      $      $                     $   
Profit Before    $     477 76          52          $      17  622
Special Items
Special Items    (3)           -           (1)         (17)           (21)
(a)
Operating                      $      $      $        $   
Profit as        $     474 76          51          -               601
Reported
                 Three Months Ended June 30, 2012
                 Industrial    Printing    Consumer
                 Packaging     Papers      Packaging   Distribution   Total
Operating                      $       $                     $   
Profit Before    $     367 106         63          $      17  553
Special Items
Special Items    (107)         (2)         (6)         (12)           (127)
(b)
Operating                      $       $      $        $   
Profit as        $     260 104         57          5              426
Reported
                 Three Months Ended March 31, 2013
                 Industrial    Printing    Consumer
                 Packaging     Papers      Packaging   Distribution   Total
Operating                      $       $      $        $   
Profit Before    $     369 149         51          2              571
Special Items
Special Items    (14)          -           (44)        (7)            (65)
(a)
Operating                      $       $      $        $   
Profit as        $     355 149          7        (5)             506
Reported
                 Six Months Ended June 30, 2013
                 Industrial    Printing    Consumer
                 Packaging     Papers      Packaging   Distribution   Total
Operating                      $       $       $         $  
Profit Before    $     846 225         103         19            1,193
Special Items
Special Items    $         $      $       $          $   
(a)              (17)          -         (45)       (24)           (86)
Operating                      $       $      $         $  
Profit as        $     829 225         58          (5)           1,107
Reported
                 Six Months Ended June 30, 2012
                 Industrial    Printing    Consumer
                 Packaging     Papers      Packaging   Distribution   Total
Operating                      $       $                      $  
Profit Before    $     645 251         159         $      36 1,091
Special Items
Special Items    (170)         (1)         1           (33)           (203)
(b)
Operating                      $       $       $        $   
Profit as        $     475 250         160         3              888
Reported

(a) See footnotes (1) - (3) on Sales and Earnings by
Industry Segment
(b) See footnotes (4) - (7) on Sales and Earnings by
Industry Segment
(1) The Company calculates Operating Profit Before Special Items by excluding
the pre-tax effect of items considered by management to be unusual from the
earnings reported under U.S. generally accepted accounting principles
("GAAP"). Management uses this measure to focus on on-going operations, and
believes that it is useful to investors because it enables them to perform
meaningful comparisons of past and present operating results. International
Paper believes that using this information, along with net earnings, provides
for a more complete analysis of the results of operations by quarter. Net
earnings is the most directly comparable GAAP measure.



International Paper
Sales Volume by Product (1)
Preliminary and Unaudited
International Paper Consolidated
                                       Three Months   Three      Six Months
                                                      Months
                                       Ended          Ended       Ended
                                       June 30,       March 31,   June 30,
                                       2013   2012    2013        2013   2012
Industrial Packaging (In thousands of
short tons)
  Corrugated Packaging (2)             2,679  2,795   2,549       5,228  5,257
  Containerboard (2)                   861    828     858         1,719  1,577
  Recycling                           580    597     581         1,161  1,134
  Saturated Kraft                      49     45      40          89     83
  Gypsum /Release Kraft (2)            36     31      30          66     52
  Bleached Kraft                       40     32      31          71     55
  European Industrial Packaging (3)    332    260     339         671    526
  Asian Box                           101    100     100         201    198
  Brazilian Packaging (4)              82     0       41          123    0
            Industrial Packaging       4,760  4,688   4,569       9,329  8,882
Printing Papers (In thousands of short
tons)
  U.S. Uncoated Papers                624    637     630         1,254  1,322
  European & Russian Uncoated Papers   366    311     329         695    622
  Brazilian Uncoated Papers            279    295     264         543    569
  Indian Uncoated Papers              57     47      60          117    126
            Uncoated Papers           1,326  1,290   1,283       2,609  2,639
  Market Pulp (5)                      427    356     432         859    741
Consumer Packaging (In thousands of
short tons)
  North American Consumer Packaging    410    388     369         779    761
  European Coated Paperboard           90     88      91          181    185
  Asian Coated Paperboard              338    240     360         698    477
            Consumer Packaging         838    716     820         1,658  1,423

(1) Sales volumes include third party and inter-segment sales and exclude
    sales of equity investees.
(2) Includes Temple-Inland volumes from date of acquisition in February
    2012.
(3) Includes volumes for Turkish box plants beginning in Q1 2013 when a
    majority ownership was acquired
(4) Includes volumes for Brazil Packaging from date of acquisition in
    mid-January 2013
(5) Includes North American, European and Brazilian volumes and internal
    sales to mills.



INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
Preliminary and Unaudited
(In Millions)
                                        June 30,             December 31,
                                        2013                 2012
Assets
Current Assets
 Cash and Temporary Investments        $              $       
                                        1,205               1,302
 Accounts and Notes Receivable, Net    3,946                3,562
 Inventories                           2,745                2,730
 Deferred Income Tax Assets            322                  323
 Assets held for sale                  774                  759
 Other                                 276                  229
 Total Current Assets                9,268                8,905
Plants, Properties and Equipment, Net   13,838               13,949
Forestlands                             578                  622
Investments                            730                  887
Financial Assets of Special Purpose     2,118                2,108
Entities
Goodwill                                4,437                4,315
Deferred Charges and Other Assets       1,576                1,367
Total Assets                            $      32,545  $      
                                                             32,153
Liabilities and Equity
Current Liabilities
 Notes Payable and Current Maturities
 of Long-Term Debt                    $              $        
                                        1,068               444
 Liabilities held for sale             54                   44
 Accounts Payable and Accrued          4,555                4,510
Liabilities
 Total Current Liabilities           5,677                4,998
Long-Term Debt                          9,057                9,696
Nonrecourse Financial Liabilities of    2,040                2,036
Special Purpose Entities
Deferred Income Taxes                   3,137                3,026
Pension Benefit Obligation              4,089                4,112
Postretirement and Postemployment       453                  473
Benefit Obligation
Other Liabilities                       1,067                1,176
Equity
 Invested Capital                      2,740                2,642
 Retained Earnings                     3,967                3,662
 Total Shareholders' Equity          6,707                6,304
 Noncontrolling interests             318                  332
 Total Equity                        7,025                6,636
Total Liabilities and Equity            $      32,545  $      
                                                             32,153



INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
Preliminary and Unaudited
(In Millions)
                                                Six Months Ended
                                                June 30,
                                                2013            2012
Operating Activities
 Net earnings                                  $     572  $     329
 Discontinued operations, net of taxes and     (50)            (21)
noncontrolling interests
 Earnings from continuing operations           $     522  $     308
 Depreciation, amortization and cost of timber 775             728
harvested
 Deferred income tax expense (benefit), net    36              110
 Restructuring and other charges               55              55
 Pension plan contribution                    (31)            (44)
 Net (gains) losses on sales and impairments   -               71
of businesses
 Net bargain purchase gain on acquisition of   (13)            -
business
 Equity (earnings) loss, net                   46              (18)
 Periodic pension expense, net                 279             170
 Other, net                                    (36)            (16)
 Changes in current assets and liabilities
 Accounts and notes receivable               (334)           276
 Inventories                                 (32)            33
 Accounts payable and accrued liabilities    78              (243)
 Interest payable                            (17)            20
 Other                                       (89)            (39)
Cash Provided By (Used For) Operations -        1,239           1,411
Continuing Operations
Cash Provided By (Used For) Operations -        40              (36)
Discontinued Operations
Cash Provided by (Used For) Operations          1,279           1,375
Investment Activities
 Invested in capital projects - continuing     (488)           (705)
operations
 Acquisitions, net of cash acquired            (501)           (3,734)
 Proceeds from divestitures                    -               5
 Other                                    (61)            (93)
Cash Provided By (Used For) Investment          (1,050)         (4,527)
Activities - Continuing Operations
Cash Provided By (Used For) Investment          (3)             (53)
Activities - Discontinued Operations
Cash Provided By (Used For) Investment          (1,053)         (4,580)
Activities
Financing Activities
 Repurchases of common stock and payments of   (51)            (35)
restricted stock tax withholding
 Issuance of common stock                      243             21
 Issuance of debt                              168             1,919
 Reduction of debt                             (160)           (1,135)
 Change in book overdrafts                     (79)            (46)
 Dividends paid                                (266)           (229)
 Redemption of preferred securities            (150)           -
 Other                                       (12)            (37)
Cash Provided By (Used for) Financing           (307)           458
Activities
Effect of Exchange Rate Changes on Cash        (16)            (19)
Change in Cash and Temporary Investments        (97)            (2,766)
Cash and Temporary Investments
 Beginning of the period                       1,302           3,994
 End of the period                             $    1,205   $    1,228

SOURCE International Paper

Website: http://www.internationalpaper.com
Contact: Media: Thomas J. Ryan, 901-419-4333; Investors: Jay Royalty,
901-419-1731 and Michele Vargas, 901-419-7287
 
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