International Paper has reported second-quarter 2011 net earnings attributable to common shareholders totaling $224 million ($ $0.52 per share) compared with net earnings of $342 million ($0.78 per share) in the first-quarter of 2011 and $93 million ($0.21 per share) in the second-quarter of 2010. Amounts in all periods include the impact of special items.

Earnings from continuing operations and before special items in the 2011 second-quarter totaled $343 million ($0.80 per share), compared with $322 million ($0.74 per share) in the first- quarter of 2011 and $181 million ($0.42 per share) in the second-quarter of 2010.

Quarterly net sales were $6.6 billion in the second-quarter compared with $6.4 billion in the first-quarter of 2011 and $6.1 billion in the second-quarter of 2010.

Operating profits were $483 million in the second-quarter of 2011, compared with $585 million in the first-quarter of 2011 and $353 million in the second-quarter of 2010, all of which included special items.

“In what remains a slow and extended economic recovery, International Paper continues to demonstrate solid performance and strong free cash flow,” said John Faraci, Chairman and Chief Executive Officer. “We are the only paper and packaging company in the world with a truly global footprint, and it’s this balanced global portfolio, along with favorable cost management and a sharp focus on operations that have driven our results the last four quarters.”

SEGMENT INFORMATION
To measure the performance of the company’s business segments from quarter-to-quarter without variations caused by special items, management focuses on business segment operating profits excluding those items. Second-quarter 2011 segment operating profits and business trends, excluding special items, compared with the prior quarter are as follows:

Industrial Packaging operating profit was $269 million compared with an operating profit of $274 million ($279 million including special items) in the first-quarter of 2011. Second-quarter earnings were positively impacted by seasonally higher box shipments (generating 150 thousand tons of higher shipments), partly offset by increased mill outage costs. In addition, area flooding near the Vicksburg, Mississippi, mill caused a 49 day shutdown, approximately 80,000 tons of lost production and expenses of approximately $20 million in the quarter. Despite the lost production our domestic customers experienced no supply interruptions.

Printing Papers operating profit was $222 million ($243 million including special items) compared with an operating profit of $209 million ($201 million including special items) in the first-quarter of 2011. The second-quarter earnings improvement in North America of $32 million versus the first-quarter of 2011 reflected improved mill operations, lower planned maintenance expense, partially offset by continued increases for input and distribution fuel costs. Earnings in Europe and Brazil decreased primarily due to higher mill maintenance outage costs.

Consumer Packaging operating profit was $98 million (a loss of $33 million including special items) compared with an operating profit of $101 million ($100 million including special items) in the first-quarter of 2011. Further price realization and strong manufacturing performance helped mitigate escalating input costs in both North America and Asia and higher mill outage costs.

xpedx, the company’s North American distribution business, reported operating earnings of $14 million ($4 million including special items) compared with $12 million in the first-quarter of 2011 ($5 million including special items). The improvement in earnings was due to higher sales volumes and lower operating costs partially offset by lower margins.

Net corporate expenses for the 2011 second-quarter totaled $36 million, compared with $44 million in the first-quarter of 2011 and $54 million in the second-quarter of 2010. The decrease compared with both the 2011 first-quarter and 2010 second-quarter reflects lower supply chain project costs. The decrease compared with the 2010 second-quarter also reflects lower pension costs.

EFFECTIVE TAX RATE
The effective tax rate from continuing operations and before special items was 33% in both the second-quarter and first-quarter of 2011.

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