1. UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2005
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _______________ to
_______________
Commission File Number 1-3157
INTERNATIONAL PAPER COMPANY
(Exact name of registrant as specified in its charter)
New York 13-0872805
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
400 Atlantic Street, Stamford, CT 06921
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (203) 541-8000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2) of the
Exchange Act.
Yes X No _____
The number of shares outstanding of the registrant’s common stock as of July 29, 2005 was
490,498,543.

2. INTERNATIONAL PAPER COMPANY
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Consolidated Statement of Operations -
Three Months and Six Months Ended June 30, 2005 and 2004 1
Consolidated Balance Sheet -
June 30, 2005 and December 31, 2004 2
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 2005 and 2004 3
Consolidated Statement of Changes in Common Shareholders' Equity -
Six Months Ended June 30, 2005 and 2004 4
Condensed Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 18
Financial Information by Industry Segment 34
Item 3. Quantitative and Qualitative Disclosures About Market Risk 36
Item 4. Controls and Procedures 37
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 38
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders 39
Item 5. Other Information 40
Item 6. Exhibits 41
Signatures 42
* Omitted since no answer is called for, answer is in the negative or inapplicable.

3. PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL PAPER COMPANY
Consolidated Statement of Operations
(Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
$ 6,229 $ 12,367
Net Sales $ 6,514 $ 13,064
Costs and Expenses
Cost of products sold 4,630 9,250
4,893 9,797
Selling and administrative expenses 472 986
498 1,020
Depreciation, amortization and cost of timber harvested 375 753
390 782
Distribution expenses 260 518
264 531
Taxes other than payroll and income taxes 60 122
57 120
Restructuring and other charges 107 137
31 97
Insurance recoveries - -
(35) (35)
Net (gains) losses on sales and impairments of businesses
held for sale 36 27
(19) 60
Reversal of reserves no longer required, net (5) (12)
- -
Interest expense, net 184 380
166 345
Earnings From Continuing Operations Before Income Taxes and
269 110 206
Minority Interest 347
Income tax provision 15 46
180 198
Minority interest expense (benefit), net of taxes 33 47
12 (5)
62 113
Earnings From Continuing Operations 77 154
Discontinued operations, net of taxes and minority interest 131 153
- -
$ 193 $ 266
Net Earnings $ 77 $ 154
Basic and Diluted Earnings Per Common Share
Earnings from continuing operations $ 0.13 $ 0.23
$ 0.16 $ 0.32
Discontinued operations 0.27 0.32
- -
Net earnings $ 0.40 $ 0.55
$ 0.16 $ 0.32
488.2 487.8
Average Shares of Common Stock Outstanding - Assuming dilution 487.4 488.0
$ 0.25 $ 0.50
Cash Dividends Per Common Share $ 0.25 $ 0.50
The accompanying notes are an integral part of these financial statements.
1

4. INTERNATIONAL PAPER COMPANY
Consolidated Balance Sheet
(Unaudited)
(In millions)
June 30, December 31,
2005 2004
Assets
Current Assets
Cash and temporary investments $ 2,596
$ 1,251
Accounts and notes receivable, net 2,994
3,195
Inventories 2,718
2,830
Assets of businesses held for sale 229
61
Deferred income tax assets 470
422
Other current assets 312
272
Total Current Assets 9,319
8,031
Plants, Properties and Equipment, net 13,432
13,150
Forestlands 3,936
3,927
Investments 679
644
Goodwill 4,994
5,012
Deferred Charges and Other Assets 1,857
1,782
$ 34,217
Total Assets $ 32,546
Liabilities and Common Shareholders' Equity
Current Liabilities
Notes payable and current maturities of long-term debt $ 506
$ 571
Accounts payable 2,279
2,197
Accrued payroll and benefits 492
453
Liabilities of businesses held for sale 82
50
Other accrued liabilities 1,513
1,330
Total Current Liabilities 4,872
4,601
Long-Term Debt 14,132
12,812
Deferred Income Taxes 1,697
1,769
Other Liabilities 3,714
3,771
Minority Interest 1,548
1,497
Common Shareholders' Equity
Common stock, $1 par value, 490.5 shares in 2005 and 487.5 shares in 2004 487
490
Paid-in capital 6,562
6,593
Retained earnings 2,562
2,470
Accumulated other comprehensive loss (1,357)
(1,452)
8,254
8,101
Less: Common stock held in treasury, at cost, 2005 - 0.1 shares -
5
Total Common Shareholders' Equity 8,254
8,096
$ 34,217
Total Liabilities and Common Shareholders' Equity $ 32,546
The accompanying notes are an integral part of these financial statements.
2

5. INTERNATIONAL PAPER COMPANY
Consolidated Statement of Cash Flows
(Unaudited)
(In millions)
Six Months Ended
June 30,
2005 2004
Operating Activities
Net earnings $ 266
$ 154
Discontinued operations, net of taxes and minority interest (153)
-
Depreciation and amortization 753
782
Deferred income tax expense, net 14
110
Restructuring and other charges 137
97
Payments related to restructuring and legal reserves (111)
(90)
Insurance recoveries -
(35)
Reversal of reserves no longer required, net (12)
-
Net losses on sales and impairments of businesses held for sale 27
60
Other, net 168
101
Changes in current assets and liabilities
Accounts and notes receivable (309)
(118)
Inventories (17)
(123)
Accounts payable and accrued liabilities 4
(243)
Other (72)
(116)
695
Cash Provided by Operations 579
Investment Activities
Invested in capital projects
Continuing operations (558)
(506)
Businesses sold and held for sale (4)
(15)
Acquisitions, net of cash acquired -
(181)
Proceeds from divestitures 604
280
Other 110
42
152
Cash (Used for) Provided by Investment Activities (380)
Financing Activities
Issuance of common stock 110
19
Issuance of debt 2,033
559
Reduction of debt (3,148)
(1,761)
Change in book overdrafts (65)
1
Dividends paid (242)
(246)
Other (57)
(17)
(1,369)
Cash Used for Financing Activities (1,445)
21
Effect of Exchange Rate Changes on Cash (99)
(501)
Change in Cash and Temporary Investments (1,345)
Cash and Temporary Investments
Beginning of the period 2,363
2,596
End of the period $ 1,862
$ 1,251
The accompanying notes are an integral part of these financial statements.
3

6. INTERNATIONAL PAPER COMPANY
Consolidated Statement of Changes in Common Shareholders' Equity
(Unaudited)
(In millions, except share amounts in thousands)
Six Months Ended June 30, 2005
Accumulated Total
Other Common
Common Stock Issued Paid-in Retained Comprehensive Treasury Stock Shareholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount Equity
487,495 $ 487 $ 6,562 $ 2,562 $ (1,357) 16 $ - $ 8,254
Balance, December 31, 2004
Net issuance of stock for various plans 3,004 3 31 - - 126 5 29
Cash dividends - Common
stock ($0.50 per share) - - - (246) - - - (246)
Comprehensive income (loss):
Net income - - - 154 - - - 154
Change in cumulative foreign
currency translation adjustment
(less tax of $17) - - - - (101) - - (101)
Net gains (losses) on cash flow
hedging derivatives:
Net gain arising during the period
(less tax of $10) - - - - 26 - - 26
Less: Reclassification adjustment
for gains included in net income
(less tax of $9) - - - - (20) - - (20)
Total comprehensive income 59
Balance, June 30, 2005 490,499 $ 490 $ 6,593 $ 2,470 $ (1,452) 142 $ 5 $ 8,096
Six Months Ended June 30, 2004
Accumulated Total
Other Common
Common Stock Issued Paid-in Retained Comprehensive Treasury Stock Shareholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount Equity
485,162 $ 485 $ 6,500 $ 3,082 $ (1,690) 3,668 $ 140 $ 8,237
Balance, December 31, 2003
Net issuance of stock for various plans 901 1 (13) - - (3,662) (140) 128
Cash dividends - Common
stock ($0.50 per share) - - - (242) - - - (242)
Comprehensive income (loss):
Net income - - - 266 - - - 266
Change in cumulative foreign
currency translation adjustment
(less tax of $13) - - - - (101) - - (101)
Net gains (losses) on cash flow
hedging derivatives:
Net loss arising during the period
(less tax of $3) - - - - (7) - - (7)
Less: Reclassification adjustment
for gains included in net income
(less tax of $7) - - - - (14) - - (14)
Total comprehensive income 144
486,063 $ 486 $ 6,487 $ 3,106 $ (1,812) 6 $ - $ 8,267
Balance, June 30, 2004
The accompanying notes are an intergral part of these financial statements.
4

7. INTERNATIONAL PAPER COMPANY
Condensed Notes to Consolidated Financial Statements
(Unaudited)
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 (consisting only of
normal recurring accruals) that are necessary for the fair presentation of results for the interim periods.
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 Paper's (the Company) Annual Report on Form
10-K for the year ended December 31, 2004, which has previously been filed with the Securities and
Exchange Commission.
Financial information by industry segment is presented on page 34. Beginning with the 2005 first quarter,
Industrial Packaging and Consumer Packaging are reported as separate industry segments. Prior period
segment information has been restated to reflect this presentation.
See Note 12 for required pro forma and additional disclosures related to stock-based compensation awards.
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
NOTE 2 - EARNINGS PER COMMON SHARE
Earnings per common share from continuing operations are computed by dividing earnings from continuing
operations by the weighted average number of common shares outstanding. Earnings per common share from
continuing operations, assuming dilution, are computed assuming that all potentially dilutive securities,
including quot;in-the-moneyquot; stock options, are 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 when dilutive. Furthermore, as required by the Emerging Issues Task Force of the
Financial Accounting Standards Board (FASB), the computations of diluted earnings per share for all prior
periods have been restated on this basis. A reconciliation of the amounts included in the computation of
earnings per common share from continuing operations, and earnings per common share from continuing
operations, assuming dilution, is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
In millions, except per share amounts 2005 2004 2005 2004
$ 62 $ 113
Earnings from continuing operations $ 77 $ 154
Effect of dilutive securities - -
- -
$ 62 $ 113
Earnings from continuing operations - assuming dilution $ 77 $ 154
485.6 485.0
Average common shares outstanding 485.9 486.0
Effect of dilutive securities
Performance share plan - -
1.2 1.2
Stock options 2.6 2.8
0.3 0.8
488.2 487.8
Average common shares outstanding - assuming dilution 487.4 488.0
$ 0.13 $ 0.23
Earnings per common share from continuing operations $ 0.16 $ 0.32
Earnings per common share from continuing operations -
$ 0.13 $ 0.23
assuming dilution $ 0.16 $ 0.32
Note: If an amount does not appear in the above table, the security was antidilutive for the period presented.
5

8. NOTE 3 - RESTRUCTURING AND OTHER CHARGES
During the second quarter of 2005, a pre-tax charge of $31 million ($19 million after taxes) for
organizational restructuring charges, and a pre-tax credit of $35 million ($21 million after taxes) for
insurance recoveries related to the hardboard siding and roofing litigation were recorded. The organizational
restructuring charges included $17 million before taxes ($11 million after taxes) recorded in the Printing
Papers business segment for severance and other charges associated with the indefinite shutdown of three
U.S. paper machines, and $14 million before taxes ($8 million after taxes) in the Forest Products business
segment for costs associated with relocating the business headquarters to Memphis, Tennessee from
Savannah, Georgia. Additionally, a $94 million increase in the income tax provision was recorded, including
approximately $91 million for deferred taxes related to earnings repatriated during the quarter under the
American Jobs Creation Act of 2004.
During the first quarter of 2005, other charges totaling $66 million before taxes and minority interest ($36
million after taxes and minority interest) were recorded. Included in this amount were a $24 million charge
before taxes ($15 million after taxes) for losses on early extinguishment of high-coupon-rate debt and a $42
million charge before minority interest ($21 million after minority interest) for the impairment of goodwill
arising in connection with Carter Holt Harvey’s (CHH’s) purchase of Wadepack Limited. Also during the
2005 first quarter, a $19 million reduction in the income tax provision was recorded reflecting the favorable
settlement of a tax matter.
During the second quarter of 2004, restructuring and other charges totaling $107 million before taxes and
minority interest ($63 million after taxes and minority interest) were recorded. Included in this charge were
$42 million before taxes and minority interest ($23 million after taxes and minority interest) for
organizational restructuring programs and $65 million before taxes ($40 million after taxes) for losses on
early extinguishment of debt. The $42 million restructuring charge included $20 million of severance costs
covering the termination of 431 employees and other cash costs of $22 million, and included: Printing Papers
- $1 million, Industrial Packaging - $1 million, Consumer Packaging - $2 million, Forest Products - $1
million, Distribution - $2 million, Specialty Businesses - $11 million and Corporate - $24 million. In
addition, a $5 million credit before taxes and minority interest ($3 million after taxes and minority interest)
was recorded for the net reversal of restructuring and realignment reserves no longer required. Also, a $5
million net increase in the tax provision, after minority interest, was recorded reflecting a $32 million charge
for an adjustment of deferred tax balances and a $27 million credit from the reduction of valuation reserves
for capital loss carryovers.
During the first quarter of 2004, restructuring and other charges totaling $30 million before taxes ($19
million after taxes) were recorded. Included in this charge were $14 million before taxes ($9 million after
taxes) for organizational restructuring programs and $16 million before taxes ($10 million after taxes) for
losses on early extinguishment of debt. The $14 million charge covered the termination of 202 employees
and included: Printing Papers - $1 million, Industrial Packaging - $4 million, Consumer Packaging - $1
million, Forest Products - $4 million, Distribution - $2 million and Corporate - $2 million. In addition, a $7
million credit before taxes ($4 million after taxes) was recorded for the net reversal of restructuring and
realignment reserves no longer required.
During the last two quarters of 2004, restructuring and other charges totaling $74 million before taxes and
minority interest ($42 million after taxes and minority interest) were recorded. These charges included an
$18 million charge before taxes and minority interest ($11 million after taxes and minority interest) for a
corporate-wide organizational restructuring program, a $35 million charge before minority interest ($18
million after minority interest) for the impairment of goodwill arising in connection with CHH’s purchase of
Plantation Timber Products, a $10 million charge before taxes ($6 million after taxes) for legal settlements
and an $11 million charge before taxes ($7 million after taxes) for losses on early extinguishment of debt. In
addition, credits of $123 million before taxes ($76 million after taxes) for net insurance recoveries related to
6

9. the hardboard siding and roofing litigation and $23 million before taxes and minority interest ($15 million
after taxes and minority interest) for the net reversal of reserves no longer needed were recorded.
NOTE 4 – ACQUISITIONS
On April 28, 2005, International Paper’s 50.5% owned subsidiary, CHH, announced the completion of its
acquisition of Tenon Limited’s structural timber business for a purchase price of approximately NZ$165
million (approximately U.S. $120 million).
In the first quarter of 2005, CHH completed the previously announced acquisition of Wadepack Limited, an
Australian carton business, for approximately $65 million. In connection with this acquisition, CHH recorded
approximately $42 million of goodwill. Since International Paper wrote off all CHH goodwill in 2002 under
a newly adopted U.S. accounting standard, the goodwill arising in subsequent CHH acquisitions must be
evaluated for impairment in International Paper’s consolidated financial statements. Accordingly, at March
31, 2005, this newly recorded goodwill was evaluated for impairment and written off.
NOTE 5 - BUSINESSES HELD FOR SALE AND DIVESTITURES
Discontinued Operations:
In July 2004, International Paper reached an agreement to sell its Weldwood of Canada, Ltd. business. This
transaction was completed in December 2004. Additionally in the first quarter of 2004, International Paper’s
50.5% owned subsidiary, CHH, announced that it had entered into an agreement to sell its Tissue business.
The sale was completed in May 2004. In accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets,” International Paper has restated all periods prior to these transactions to
classify these businesses as discontinued operations.
Revenues associated with these discontinued operations were $293 million and $636 million, respectively,
for the three-month and six-month periods ended June 30, 2004. Earnings and earnings per share related to
these operations were as follows:
Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
In millions, except per share amounts
Earnings from discontinued operations
Earnings from operations $ 56 $ 94
Income tax expense (13) (26)
Minority interest expense, net of taxes (2) (5)
Earnings from discontinued operations, net of
taxes and minority interest 41 63
Gain on sale of CHH Tissue business 268 268
Income tax expense (69) (69)
Minority interest expense, net of taxes (109) (109)
Gain on sale, net of taxes and minority interest 90 90
Earnings from discontinued operations, net of taxes and
minority interest $ 131 $ 153
Earnings per common share from discontinued operations
Earnings from operations, net of taxes and minority interest $ 0.08 $ 0.13
Gain on sale, net of taxes and minority interest 0.19 0.19
Earnings per common share from discontinued operations,
net of taxes and minority interest $ 0.27 $ 0.32
7

10. Other Divestitures:
During the second quarter of 2005, the Company completed the sales of its Fine Papers and Industrial Papers
businesses and Papeteries de France for approximately $61 million, $180 million and $14 million,
respectively.
The accompanying consolidated statement of operations includes a $19 million pre-tax credit ($12 million
after taxes), including a $25 million credit before taxes ($15 million after taxes) from the collection of a note
receivable from the 2001 sale of the Flexible Packaging business, final charges related to the sale of Fine
Papers and Industrial Papers, as well as net adjustments of losses from businesses previously sold. In
addition, interest income of $11 million before taxes ($7 million after taxes) was collected on the Flexible
Packaging business note, which is included in Interest expense, net.
In June 2005, International Paper announced that it will explore strategic alternatives for its 50.5% stake in
CHH. Many of International Paper’s original plans for investment in CHH have changed, and the Company
has decided to reassess the role of CHH in its global portfolio. International Paper hopes to identify
acceptable strategic alternatives for its shares before the end of 2005.
In March 2005, International Paper announced an agreement to sell its Fine Papers business to Mohawk
Paper Mills, Inc. of Cohoes, New York. A $24 million pre-tax loss ($13 million after taxes) was recorded in
the first quarter to write down the net assets of the Fine Papers business to their estimated net realizable
value. Included in the sale were the Hamilton, Ohio paper mill with an annual production capacity of
approximately 65,000 tons; the Saybrook, Ohio converting center; and the Westfield, Massachusetts artist
papers converting operation. The sale also included the Strathmore®, Brite Hue®, VIA ® and Beckett®
brands.
Also in March 2005, International Paper announced that it had signed an agreement to sell its Industrial
Papers business to an affiliate of Kohlberg and Company, LLC. A $49 million pre-tax loss ($35 million after
taxes) was recorded in the first quarter to write down the net assets of the Industrial Papers business and
related corporate assets to their estimated net realizable value. The Industrial Papers business included
packaging and pressure sensitive papers and related converting assets.
Also in the first quarter of 2005, charges totaling $6 million before taxes ($4 million after taxes) were
recorded for adjustments to estimated losses on sales of certain smaller operations.
In the second quarter of 2004, a $27 million pre-tax loss ($27 million after taxes) was recorded to write down
the assets of the Company’s Anould mill to their estimated net realizable value. In addition, a $9 million loss
before taxes and minority interest ($5 million after taxes and minority interest) was recorded to write down
the assets of Food Pack S.A. in Chile to their estimated net realizable value.
In the first quarter of 2004, a $9 million pre-tax gain ($6 million after taxes) was recorded to adjust estimated
gains/losses of businesses previously sold.
At June 30, 2005, assets and liabilities of businesses held for sale totaled $61 million and $50 million,
respectively, consisting of certain smaller businesses held for sale. Assets and liabilities of businesses held
for sale at December 31, 2004 totaled $229 million and $82 million, respectively, and included the Fine
Papers business as well as certain smaller businesses.
8

11. NOTE 6 - SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
Inventories by major category were:
June 30, December 31,
In millions 2005 2004
Raw materials $ 371
$ 421
Finished pulp, paper and packaging products 1,796
1,770
Finished lumber and panel products 184
208
Operating supplies 351
385
Other 16
46
$ 2,718
Total $ 2,830
Temporary investments with an original maturity of three months or less are treated as cash equivalents and
are stated at cost. Temporary investments totaled $953 million and $2.1 billion at June 30, 2005 and
December 31, 2004, respectively.
Interest payments made during the six-month periods ended June 30, 2005 and 2004 were $392 million and
$417 million, respectively. Capitalized net interest costs were $5 million and $7 million for the six months
ended June 30, 2005 and 2004, respectively. Total interest expense was $396 million for the first six months
of 2005 and $424 million for the first six months of 2004. Distributions paid under all of International
Paper's preferred securities of subsidiaries were $8 million and $30 million during the first six months of
2005 and 2004, respectively. The decrease in 2005 was due to preferred securities redeemed in February
2005 and in 2004. The expense related to these preferred securities was included in minority interest expense
in the consolidated statement of operations, except for $3 million in 2005 and $19 million in 2004 related to
the Trust preferred securities that were deconsolidated in the last half of 2003 and redeemed in February
2005. Income tax payments of $117 million and $113 million were made during the first six months of 2005
and 2004, respectively.
Accumulated depreciation was $18.3 billion at June 30, 2005 and $18.2 billion at December 31, 2004. The
allowance for doubtful accounts was $116 million at June 30, 2005 and $128 million at December 31, 2004.
The following tables present changes in the goodwill balances as allocated to each business segment for the
six-month periods ended June 30, 2005 and 2004:
Balance Reclassifications Balance
December 31, and Additions/ June 30,
In millions 2004 Other (Reductions) 2005
Printing Papers $ 2,876 $ 3 $ - $ 2,879
Industrial Packaging 591 31 (a)
(5) 617
Consumer Packaging 1,014 5 (b)
(4) 1,015
Distribution 299 - - 299
Forest Products 190 1 - 191
Corporate and Other Businesses 24 (13) (c)
- 11
Total $ 4,994 $ (5) $ 23 $ 5,012
(a) Reflects the completion of the accounting for the acquisition of Box USA, which resulted in a $37 million increase in
goodwill, offset by a $6 million decrease resulting from the sale of the Industrial Papers business.
(b) Reflects a $5 million adjustment resulting from the acquisition of minority interest in Shorewood EPC Europe
Limited.
(c) Reflects the sale of International Paper's Fine Papers business.
9

12. Balance Reclassifications Balance
December 31, and Additions/ June 30,
In millions 2003 Other (Reductions) 2004
Printing Papers $ 2,878 $ (1) $ - $ 2,877
Industrial Packaging 345 5 (1) 349
Consumer Packaging 1,016 (4) - 1,012
Distribution 334 - - 334
Forest Products 190 1 - 191
Corporate and Other Businesses 30 (6) - 24
Total $ 4,793 $ (5) $ (1) $ 4,787
The following table presents an analysis of activity related to asset retirement obligations:
Six Months Ended
June 30,
2005 2004
In millions
Asset retirement obligations, January 1 $ 48
$ 41
New liabilities 2
9
Liabilities settled (3)
(3)
Net adjustments to existing liabilties (1)
(3)
Accretion expense 1
1
$ 47
Asset retirement obligations, June 30 $ 45
This obligation is included in Other liabilities in the accompanying consolidated balance sheet.
The following table presents changes in minority interest balances:
Six Months Ended
June 30,
In millions 2005 2004
Balance, January 1 $ 1,622
$ 1,548
Minority interest related to sale of CHH Tissue Business 307
-
Currency translation adjustment (24)
(22)
Reclassification of limited partnership interests to debt (163)
-
Dividends paid (37)
(23)
Minority interest (benefit) expense 23
(8)
Other, net -
2
$ 1,728
Balance, June 30 $ 1,497
NOTE 7 – RECENT ACCOUNTING DEVELOPMENTS
In May 2005, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 154, “Accounting
Changes and Error Corrections,” which changes the requirements for the accounting and reporting of a
change in accounting principle. SFAS No. 154 will be effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. This Statement does not change the transition
provisions of any existing accounting pronouncements, including those that are in a transition phase as of the
effective date of the Statement.
10

13. In March 2005, the FASB issued Interpretation No. 47, “Accounting for Conditional Asset Retirement
Obligations.” This Interpretation clarifies that the term “conditional asset retirement obligation” as used in
FASB Statement No. 143, “Accounting for Asset Retirement Obligations,” refers to the fact that a legal
obligation to perform an asset retirement activity is unconditional even though uncertainty exists about the
timing and (or) method of settlement. Uncertainty about the timing and (or) method of settlement of a
conditional asset retirement obligation should be factored into the measurement of the liability when
sufficient information exists to make a reasonable estimate of the fair value of the obligation. Interpretation
47 must be adopted no later than the fourth quarter of 2005. International Paper is currently evaluating the
effects of this Interpretation but believes that it will not have a material impact on its consolidated financial
statements.
In March 2005, the FASB also issued FASB Staff Position (FSP) FIN 46(R)-5 (FSP FIN 46(R)-5), “Implicit
Variable Interests Under FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities.” This
FSP states that implicit variable interests are implied financial interests in an entity that change with changes
in the fair value of the entity’s net assets exclusive of variable interests. An implicit variable interest acts the
same as an explicit variable interest except it involves the absorbing and (or) receiving of variability
indirectly from the entity (rather than directly). The identification of an implicit variable interest is a matter
of judgment that depends on the relevant facts and circumstances. International Paper has already adopted
FIN 46(R) and applied the provisions of FSP FIN 46(R)-5 in the second quarter of 2005, with no material
impact on its consolidated financial statements.
In December 2004, the FASB issued FASB Staff Position Financial Accounting Standards 109-1 and 109-2
relating to the American Jobs Creation Act of 2004 (the Act). The Act provides for a special one-time
deduction of 85% of certain foreign earnings that are repatriated. In the second quarter of 2005, International
Paper repatriated approximately $1.2 billion in cash from certain of its foreign subsidiaries, including
amounts eligible for this special deduction. The Company recorded income tax expenses associated with
these cash repatriations totaling approximately $91 million.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment,” which will
require compensation costs related to share-based payment transactions to be recognized in the financial
statements. The amount of the compensation cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability awards will be remeasured each reporting period.
Compensation cost will be recognized over the period that an employee provides service in exchange for the
award. This Statement will apply to all awards outstanding on its effective date, or awards granted, modified,
repurchased, or cancelled after that date. In April 2005, the Securities and Exchange Commission (SEC)
deferred the effective date of this Statement until the first fiscal year beginning after June 15, 2005.
International Paper believes that the adoption of SFAS No. 143 will not have a material impact on its
consolidated financial statements. See Note 12 for a further discussion of stock options.
In November 2004, the FASB issued SFAS No. 151, “Inventory Costs, an amendment of ARB No. 43,
Chapter 4,” which requires that abnormal amounts of idle facility expense, freight, handling costs and wasted
material be recognized as current-period charges. This Statement also introduces the concept of “normal
capacity” and requires the allocation of fixed production overheads to inventory based on the normal
capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period
in which they are incurred. This Statement will be effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. International Paper believes that the adoption of SFAS No. 151 will not have
a material impact on its consolidated financial statements.
11

14. NOTE 8 - COMMITMENTS AND CONTINGENCIES
International Paper has established reserves relating to certain liabilities associated with exterior siding and
roofing products manufactured by its former Masonite subsidiary, which were the subject of settlements in
three nationwide class action lawsuits. These lawsuits, which were settled during 1998 and 1999, are
discussed in detail in Note 10 to the Financial Statements included in International Paper's Annual Report on
Form 10-K for the year ended December 31, 2004.
The following table presents an analysis of the net reserve activity related to these lawsuits for the six months
ended June 30, 2005.
RESERVE ANALYSIS
Hard- Omni-
In millions board wood Woodruf Total
Balance, December 31, 2004 $ 158 $ 97 $ 4 $ 259
Payments (64) (12) (3) (79)
Balance, June 30, 2005 $ 94 $ 85 $ 1 $ 180
The following table shows an analysis of claims statistics related to these lawsuits for the six months ended
June 30, 2005.
CLAIMS STATISTICS
In thousands Hardboard Omniwood Woodruf Total
No. of Single Multi- Single Multi- Single Multi- Single Multi-
Claims Pending Family Family Total
Family Family Family Family Family Family
December 31, 2004 38.9 5.0 2.4 0.4 0.9 0.3 42.2 5.7 47.9
20.4 5.3 2.1 0.3 0.3 - 22.8 5.6 28.4
No. of Claims Filed
(17.1) (2.2) (2.1) - (0.2) - (19.4) (2.2) (21.6)
No. of Claims Paid
(9.8) (1.8) (0.1) - (0.1) - (10.0) (1.8) (11.8)
No. of Claims Dismissed
June 30, 2005 32.4 6.3 2.3 0.7 0.9 0.3 35.6 7.3 42.9
While additional reserve balances may be required for future payments under the Woodruf Lawsuit,
International Paper believes that the aggregate reserve balance for claims arising in connection with exterior
siding and roofing products, described above, is adequate, and that additional amounts will be recovered
from its insurance carriers in the future relating to these claims (described below). International Paper is
unable to estimate at this time the amount of additional charges, if any, that may be required for these matters
in the future.
The lawsuit commenced by International Paper and Masonite against certain of their insurance carriers for
recovery of amounts paid by International Paper and Masonite to property owners and others in connection
with the settlement of the hardboard siding class action lawsuit (the Indemnification Lawsuit) is discussed in
Note 10 to the Financial Statements included in International Paper’s Annual Report on Form 10-K for the
year ended December 31, 2004. In March 2005, the Court in the Indemnification Lawsuit issued a
preliminary decision that resolved a number of legal issues relating to the allocation of liabilities to the
various insurance policies involved. Based on this decision, the Company has asked the Court to enter a
judgment allocating damages, plus interest, to each of the carriers who have not settled with the Company. It
is difficult to predict when the judgment will be entered. The judgment will be subject to appeal. Because of
the uncertainties inherent in the litigation, the Company is unable to estimate the amount that it will
ultimately recover against its insurance carriers. See also Note 13.
12

15. In addition to the Indemnification Lawsuit, the Company is seeking indemnification from other insurance
carriers in arbitration proceedings as required by the applicable policies. As of June 30, 2005, International
Paper had received an aggregate of $274 million in settlement payments from certain of its insurance
carriers.
An alternative risk-transfer agreement with a third party, under which International Paper received $100
million at December 31, 2001, and a settlement of the parties’ rights and obligations with respect to that
agreement, are discussed in Note 10 to the Financial Statements included in International Paper’s Annual
Report on Form 10-K for the year ended December 31, 2004. Between January 1, 2005 and June 30, 2005,
International Paper paid approximately $9 million to the third party under the settlement, for total payments
to date of approximately $41 million.
International Paper is also involved in various other inquiries, administrative proceedings and litigation
relating to contracts, sales of property, environmental protection, tax, antitrust, personal injury and other
matters, some of which allege substantial monetary damages. While any proceeding or litigation has the
element of uncertainty, International Paper 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.
NOTE 9 - DEBT
In June 2005, International Paper used approximately $400 million of cash to repay a portion of a
subsidiary’s long-term debt with an interest rate of LIBOR plus 62.5 basis points and a maturity date of June
2007.
In February 2005, International Paper redeemed the outstanding $464 million aggregate principal amount of
International Paper Capital Trust 5.25% convertible subordinated debentures originally due in July 2025 at
100.5% of par plus accrued interest. Other reductions in the first quarter of 2005 included early payment of
approximately $295 million of principal on notes with coupon rates ranging from 4% to 7.875% and original
maturities from 2006 to 2015.
Pre-tax early debt retirement costs of $24 million related to first quarter 2005 debt reductions are included in
Restructuring and other charges in the accompanying consolidated statement of operations.
In June 2004, International Paper reclassified $168 million of limited partnership interests in Georgetown
Equipment Leasing Associates, L.P. and Trout Creek Equipment Leasing, L.P. from Minority interest to
Current maturities of long-term debt. These partnership interests were repurchased in August 2004. Also in
June 2004, an International Paper wholly-owned subsidiary issued $650 million of long-term debt with an
interest rate of LIBOR plus 62.5 basis points that can vary depending upon the credit rating of the Company,
with a maturity in June 2007, which refinanced $650 million of long-term debt with an interest rate of
LIBOR plus 100 basis points with a scheduled maturity date in August 2004.
In March 2004, International Paper issued $600 million of 4.00% notes due in April 2010 and $400 million
of 5.25% notes due in April 2016. The proceeds from these issuances were used to retire approximately $1.0
billion of 8.125% coupon rate debt in April 2004. Pre-tax early debt retirement costs of $65 million related to
the retired debt were included in Restructuring and other charges in the accompanying consolidated
statement of operations. In January 2004, approximately $1.0 billion of debt with an 8.05% blended coupon
rate was retired using $1.0 billion of proceeds from 4.875% coupon rate debt issued in December 2003. Pre-
tax early debt retirement costs of $16 million related to the retired debt were included in Restructuring and
other charges in the accompanying consolidated statement of operations.
13

16. Also in March 2004, International Paper replaced its maturing $750 million bank credit agreement with a
five-year, $1.25 billion bank credit facility maturing in March 2009. Concurrently, an existing three-year
bank credit agreement maturing in March 2006 was reduced from $1.5 billion to $750 million.
The holders of International Paper’s zero-coupon convertible debt have the option to require the Company to
repurchase these securities on June 20, 2006, at a price equal to the accreted principal amount of $1.2 billion
plus interest. The repurchase may be settled in International Paper common stock or cash, or a combination
of both, at the Company’s option, in an amount equal to 57% of each debenture’s principal amount at
maturity. The Company anticipates using a combination of cash from operations, from divestitures and from
new debt issuances if this repurchase in 2006 is required.
At June 30, 2005 and December 31, 2004, International Paper classified $1.25 billion and $87 million,
respectively, of tenderable bonds, commercial paper and bank notes and current maturities of long-term debt
as Long-term debt. International Paper has the intent and ability to renew or convert these obligations, as
evidenced by the credit facilities described above.
Maintaining an investment-grade credit rating is an important element of International Paper’s finance
strategy. In July 2005, subsequent to the Company’s announcement of a plan to transform its business
portfolio to concentrate on two key platform businesses (see Note 13), Standard & Poor’s (S&P) reaffirmed
the Company’s current long-term credit rating of BBB (negative outlook). On July 20, 2005, Moody’s
Investor Services (Moody’s) announced that it had placed the Company’s debt ratings (currently Baa2 for
long-term credit) on review for possible downgrade. Moody’s expects this review to be completed within 90
days, and expects that International Paper’s ratings will continue to be investment grade following the
completion of the review. The Company currently has short-term credit ratings by S&P and Moody’s of A-3
and P-2, respectively.
NOTE 10 – RETIREMENT PLANS
International Paper maintains pension plans that provide retirement benefits to substantially all domestic
employees hired prior to July 1, 2004. These employees generally are eligible to participate in the plans upon
completion of one year of service and attainment of age 21. Employees hired after June 30, 2004, who are
not eligible for this pension plan, will receive an additional company contribution to their savings plan.
The 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 15 to the Financial Statements included in International Paper’s
Annual Report on Form 10-K for the year ended December 31, 2004.
Net periodic pension cost for our qualified and nonqualified U.S. defined benefit plans comprised the
following:
14

17. Three Months Ended Six Months Ended
June 30, June 30,
In millions 2005 2004 2005 2004
Service cost $ 29 $ 58
$ 34 $ 65
Interest cost 117 234
120 237
Expected return on plan assets (148) (296)
(139) (278)
Actuarial loss 24 47
46 84
Amortization of prior service cost 6 12
7 14
Net periodic pension expense (a) $ 28 $ 55
$ 68 $ 122
(a) Excludes a $29 million charge in 2005 for curtailments and special termination benefits related to
Fine Papers, Industrial Papers and the Jackson Foodservice plant divestitures and organizational
restructuring recorded in Net (gains) losses on sales and impairments of businesses held for sale and
Restructuring and other charges, and a $1 million charge in 2004 for curtailments and special
termination benefits related to a company cost reduction initiative recorded in Restructuring and
other charges.
While International Paper may elect to make voluntary contributions to its U.S. qualified plan up to the
maximum deductible amount per Internal Revenue Service tax regulations in the coming years, it is unlikely
that any contributions to the plan will be required before 2007 unless International Paper changes its funding
policy to make contributions above the minimum requirements. The nonqualified plan is funded to the extent
of benefit payments which equaled $12.8 million through June 30, 2005.
NOTE 11 – POSTRETIREMENT BENEFITS
International Paper provides certain retiree health care and life insurance benefits covering a majority of U.S.
salaried and certain hourly employees. These employees are generally eligible for benefits upon retirement
and completion of a specified number of years of creditable service. Excluded from the company-provided
medical benefits are salaried employees whose age plus years of employment with the Company total less
than 60 as of January 1, 2004. International Paper does not fund these benefits prior to payment and has the
right to modify or terminate certain of these plans in the future. A detailed discussion of these benefits is
presented in Note 16 to the Financial Statements included in International Paper’s Annual Report on Form
10-K for the year ended December 31, 2004.
On January 21, 2005, final regulations for the implementation of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 were released resulting in a remeasurement of the plan as of
the release date. The remeasurement and final subsidy calculations reduced the accumulated postretirement
benefit obligation by $59 million, and reduced the 2005 periodic benefit costs for both the first and second
quarter by $3 million. The components of postretirement benefit expense were as follows:
15

18. Three Months Ended Six Months Ended
June 30, June 30,
In millions 2005 2004 2005 2004
Service cost $ 1 $ 3
$ - $ 1
Interest cost 14 28
9 19
Actuarial loss 9 20
4 10
Amortization of prior service cost (11) (20)
(10) (20)
Net postretirement benefit cost (a) $ 13 $ 31
$ 3 $ 10
(a) Excludes a $3 million credit in 2005 for curtailments and special termination benefits related to Fine Papers,
Industrial Papers and the Jackson Foodservice plant divestures and organizational restructuring recorded
in Net (gains) losses on sales and impairments of businesses held for sale and Restructuring and other
charges, and a $1 million credit in 2004 for curtailments and special termination benefits related to a company
cost reduction initiative recorded in Restructuring and other charges.
NOTE 12 - STOCK OPTIONS
International Paper has a Long-Term Incentive Compensation Plan (LTICP) that includes a Stock Option
Program, a Restricted Performance Share Program and a Continuity Award Program, administered by a
committee of independent members of the Board of Directors who are not eligible for awards. The Company
accounts for stock options granted under the plan using the recognition and measurement principles of APB
Opinion No. 25, quot;Accounting for Stock Issued to Employees,quot; and related interpretations and the disclosure
provisions of SFAS No. 123, quot;Accounting for Stock-Based Compensation.quot; A detailed discussion of these
plans is presented in Note 18 to the Financial Statements included in International Paper's Annual Report on
Form 10-K for the year ended December 31, 2004. No stock option-based employee compensation cost is
reflected in net earnings, as all options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following table illustrates the effect on net
earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock-based employee compensation.
Three Months Ended Six Months Ended
June 30, June 30,
In millions, except per share amounts 2005 2004 2005 2004
Net earnings, as reported $ 193 $ 266
$ 77 $ 154
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects (9) (21)
(15) (28)
Pro forma net income $ 184 $ 245
$ 62 $ 126
Earnings per common share
Basic and diluted - as reported $ 0.40 $ 0.55
$ 0.16 $ 0.32
Basic and diluted - pro forma $ 0.38 $ 0.51
$ 0.13 $ 0.26
During 2003, the Company decided to eliminate its stock option program for all U.S. employees with the
intent of minimizing the use of stock options globally in 2006. In the United States, the stock option program
was replaced with performance-based restricted shares for approximately 1,250 employees to more closely
tie long-term incentive compensation to Company performance on two key performance drivers: return on
investment (ROI) and total shareholder return (TSR). As part of this shift in focus away from stock options to
performance-based restricted stock, the Company accelerated the vesting of all 14 million unvested stock
options to July 12, 2005. The Company also considered the benefit to employees and the income statement
impact in making its decision to accelerate the vesting of these options. Based on the current market value of
the Company’s common stock on July 12, 2005, the exercise prices of all such stock options were above the
current market value and, accordingly, the Company will record no expense as a result of this action.
16

19. NOTE 13 – SUBSEQUENT EVENTS
Transformation Project:
On July 19, 2005, International Paper announced a plan to transform its business portfolio to concentrate on
two key platform businesses: Uncoated Papers and Packaging. In connection with this plan, the Company
announced it would evaluate strategic options for other businesses, including the possible sale or spin-off of:
• The Company’s 50.5 percent stake in Carter Holt Harvey,
• The Coated and Supercalendered Papers Business,
• The Beverage Packaging Business, including the Pine Bluff, Arkansas mill,
• The Kraft Papers Business, including the Roanoke Rapids, North Carolina mill,
• Arizona Chemical,
• The Wood Products Business, and
• Segments or potentially all of its 6.8 million acres of U.S. forestlands.
After-tax proceeds from any potential divestments will vary, but the Company estimates that the
range could be approximately $8 billion to $10 billion. Approximately 40-50% of such proceeds
would be used to reduce debt and another 25-30% used to return value to shareholders.
It is currently anticipated that the evaluation of Carter Holt Harvey Limited will be completed by the end of
2005. The evaluations of the other businesses are expected to be completed by the first quarter of 2006. Until
such time as management and the Board of Directors approve specific plans for the sale of one or more of
these businesses, they will continue to be reported as ongoing operations in the Company’s consolidated
financial statements.
In addition, the Company announced that it is evaluating the possible relocation of its Stamford, Connecticut
headquarters to Memphis, Tennessee, where its operational headquarters is currently located.
Other:
On July 15, 2005, Carter Holt Harvey Limited announced that it had entered into a number of agreements to
sell approximately 94,600 hectares of its forestlands for approximately NZ$441 million. Net proceeds after
transaction costs and taxes are expected to be approximately NZ$385 million. The sales, expected to be
completed in early October, are conditional on the approval of the Overseas Investment Commission and
other normal commercial conditions. International Paper currently estimates that the sale transactions will
result in a pre-tax loss after minority interest for U.S. reporting purposes of approximately $70 - $75 million
($40 - $45 million after taxes and minority interest) when completed.
In 2001, International Paper and Carter Holt Harvey Limited had each acquired a 25% interest in
International Paper Pacific Millennium Limited (IPPM). On August 1, 2005, International Paper purchased
the 50% outside interest of IPPM for $46.1 million. IPPM is a Hong Kong-based distribution and packaging
company with operations in China and other Asian countries. Beginning in August 2005, the financial
position and results of operations of IPPM will be consolidated in International Paper’s financial statements.
On August 3, 2005, International Paper entered into an agreement with a group of insurance carriers to settle
International Paper’s claims against those carriers in the Hardboard Lawsuit which is pending in a state court
in California. Under the settlement agreement, the carriers agreed to pay International Paper $242 million,
including $25 million within 90 days of execution of the agreement and the balance thereafter in 47 equal
monthly installments. In connection with this settlement, the Company will recognize income of
approximately $220 million in the 2005 third quarter, reflecting the present value of payments to be received.
17

20. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This item 2 contains forward-looking statements with respect to possible events, outcomes or results that are,
and are expected to continue to be, subject to risks, uncertainties and contingencies, including those
identified in this Item. See “Forward-Looking Statements” on pages 31 through 33.
Executive Summary
International Paper (the quot;Companyquot; or quot;International Paperquot;) had anticipated some modest improvement in
2005 second quarter operating results following the strongest first quarter in years. However, while average
prices were up slightly from the first quarter, sales volumes in the Printing Papers and Industrial Packaging
businesses were lower than expected, leading to more market-related downtime than expected. These factors,
combined with higher wood fiber, energy, caustic soda, and other raw material costs, offset benefits from
cost reduction initiatives and improved manufacturing operations, resulting in flat earnings from continuing
operations compared with the 2005 first quarter.
Entering the third quarter, demand and pricing for International Paper products look mixed. On July 19, the
Company announced a transformation plan that will focus the Company on two global platform businesses:
Uncoated Papers and Packaging. This plan includes debt repayment, returning value to shareholders, and
selective investments that will earn their cost of capital and provide solid returns to shareholders. At the same
time, the Company continues to be even more focused on efforts to improve productivity, reduce costs and
serve customers.
Results of Operations
For the second quarter of 2005, International Paper reported net sales of $6.5 billion, compared with $6.2
billion in the second quarter of 2004 and $6.6 billion in the first quarter of 2005.
Net earnings totaled $77 million, or $.16 per share, in the 2005 second quarter. This compared with net
earnings of $193 million, or $.40 per share, in the second quarter of 2004 and net earnings of $77 million, or
$.16 per share, in the first quarter of 2005. Amounts include the effects of special items in all periods.
Earnings From Continuing Operations
(after tax, in millions)
$300
$250
($88)
$37
$112
$200
$150 ($57)
$77
$5
$100 $6 $24
($24)
$62
$50
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18

21. Earnings from continuing operations were $77 million in the second quarter of 2005 compared with $62
million in the 2004 second quarter and $77 million in the 2005 first quarter. Earnings in the 2005 second
quarter benefited from higher average price realizations ($112 million), cost reduction initiatives and
improved mill operations ($37 million), and slightly higher gains from land sales ($6 million) compared with
the 2004 second quarter. These benefits were partially offset by higher energy, wood and caustic soda costs
($88 million), and the impact of lower sales volumes and increased market-related downtime ($57 million).
In addition, corporate items and other costs were higher ($24 million) primarily due to higher pension and
supply chain initiative costs, although these were offset by benefits from lower net interest expense ($5
million) and lower special charges ($24 million).
Compared with the first quarter of 2005, earnings from continuing operations in the second quarter benefited
from cost reduction initiatives and improved mill operations ($25 million) and higher average price
realizations ($19 million). These benefits were offset by lower sales volumes and increased market-related
downtime ($32 million), higher wood fiber, energy, caustic soda, and other raw material costs ($17 million),
and lower gains from land sales ($12 million). Additionally, compared with the 2005 first quarter, the 2005
second quarter was impacted by a higher effective tax rate ($15 million), which was offset by lower special
charges ($15 million) and lower corporate overhead costs ($17 million).
To measure the performance of the Company's business segments from period to period without variations
caused by special or unusual items, International Paper's management focuses on business segment operating
profit. This is defined as earnings before taxes and minority interest, excluding interest expense, corporate
charges and special items that include restructuring charges, early debt extinguishment costs, legal reserves,
insurance recoveries, gains (losses) on sales and impairments of businesses held for sale, and the reversal of
reserves no longer required. Prior year industry segment information has been restated to conform to minor
changes in the 2005 operational structure.
19