<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 1997 Commission file number 1-3157
INTERNATIONAL PAPER COMPANY
UNFUNDED SAVINGS PLAN
(Full title of the plan)
INTERNATIONAL PAPER COMPANY
Two Manhattanville Road
Purchase, NY 10577
Telephone: (914) 397-1500
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
13-0872805
(I.R.S. Employer Identification No.)
================================================================================
<PAGE>
Financial Statements.
Financial statements for the International Paper Company Unfunded Savings Plan
and the report of Arthur Andersen LLP with respect thereto are as follows:
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Public Accountants 2
Statements of Net Assets Available for Benefits,
with Fund Information
- December 31, 1997 and 1996 3-4
Statements of Changes in Net Assets Available for Benefits,
with Fund Information
- Years Ended December 31, 1997 and 1996 5-6
Notes to Financial Statements 7-16
</TABLE>
1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Plan Administrator of the International Paper Company
Unfunded Savings Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of the International Paper Company Unfunded
Savings Plan (the "Plan") as of December 31, 1997 and 1996, and the related
statements of changes in net assets available for benefits, with fund
information, for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statements of
net assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The fund information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 26, 1998.
2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
---------------------------------------------------------------------
DECEMBER 31, 1997
-----------------
(in thousands)
Fund Information
-----------------------------------------------------------------------------
Stable Balanced S&P 500 International Growth Company
Value Fund Fund Index Fund Stock Fund Fund Stock Fund
Equivalent Equivalent Equivalent Equivalent Equivalent Equivalent Total
----------- ---------- ----------- ------------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Receivable from International
Paper Company $9,490 $3,924 $8,577 $889 $1,190 $18,238 $42,308
------ ------ ------ ---- ------ ------- -------
NET ASSETS AVAILABLE
FOR BENEFITS $9,490 $3,924 $8,577 $889 $1,190 $18,238 $42,308
------ ------ ------ ---- ------ ------- -------
------ ------ ------ ---- ------ ------- -------
The accompanying notes are an integral part of this financial statement.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
---------------------------------------------------------------------
DECEMBER 31, 1996
-----------------
(in thousands)
Fund Information
----------------------------------------------------------------
Fixed Balanced Diversified Company
Income Fund Fund Equity Fund Stock Fund
Equivalent Equivalent Equivalent Equivalent Total
------------ ----------- ----------- ----------- -------
<S> <C> <C> <C> <C> <C>
Receivable from International
Paper Company $7,786 $2,557 $5,518 $17,557 $33,418
------ ------ ------ ------- -------
NET ASSETS AVAILABLE
FOR BENEFITS $7,786 $2,557 $5,518 $17,557 $33,418
------ ------ ------ ------- -------
------ ------ ------ ------- -------
The accompanying notes are an integral part of this financial statement.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
----------------------------------------------------------
WITH FUND INFORMATION
---------------------
YEAR ENDED DECEMBER 31, 1997
----------------------------
(in thousands)
Fund Information
-------------------------------------------------------------------------------
Stable Company
Value Balanced S&P 500 International Growth Stock
Fund Fund Index Fund Stock Fund Fund Fund
Equivalent Equivalent Equivalent Equivalent Equivalent Equivalent Total
---------- ---------- ----------- -------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) attributable to:
Investment income $ 530 $ 613 $ 1,972 $ 48 $ 119 $ 1,518 $ 4,800
Participant deferrals 865 828 1,669 391 693 463 4,909
Company matching deferrals
(net of forfeitures of $4) - - - - - 997 997
Interfund transfers 1,151 81 (353) 480 404 (1,763) -
Transfers from other plans 9 - 40 - - 667 716
Distributions to participants (851) (155) (269) (30) (26) (1,201) (2,532)
-------- ------- ------- ------- ------- -------- --------
Increase in net assets 1,704 1,367 3,059 889 1,190 681 8,890
Net assets available for benefits:
December 31, 1996 7,786 2,557 5,518 - - 17,557 33,418
------- ------- ------- ------- ------- -------- --------
December 31, 1997 $ 9,490 $ 3,924 $ 8,577 $ 889 $ 1,190 $ 18,238 $ 42,308
-------- ------- ------- ------- ------- -------- --------
-------- ------- ------- ------- ------- -------- --------
The accompanying notes are an integral part of this financial statement.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
----------------------------------------------------------
WITH FUND INFORMATION
---------------------
YEAR ENDED DECEMBER 31, 1996
----------------------------
(in thousands)
Fund Information
--------------------------------------------------------
Fixed Diversified Company
Income Balanced Equity Stock
Fund Fund Fund Fund
Equivalent Equivalent Equivalent Equivalent Total
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Increase (decrease)
attributable to:
Investment income $ 377 $ 259 $ 811 $ 1,598 $ 3,045
Participant deferrals 461 713 1,640 3,000 5,814
Company matching deferrals
(net of forfeitures of $63) - - - 1,346 1,346
Interfund transfers 3,772 477 637 (4,886) -
Distributions to participants (163) (116) (103) (437) (819)
------- ------- ------- -------- --------
Increase in net assets 4,447 1,333 2,985 621 9,386
Net assets available for benefits:
December 31, 1995 3,339 1,224 2,533 16,936 24,032
------- ------- ------- -------- --------
December 31, 1996 $ 7,786 $ 2,557 $ 5,518 $ 17,557 $ 33,418
------- ------- ------- -------- --------
------- ------- ------- -------- --------
The accompanying notes are an integral part of this financial statement.
</TABLE>
6
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
--------------------------------------------------------------------
The following description of the International Paper Company Unfunded Savings
Plan (the "Plan") provides general information about the provisions of the Plan.
Participants should refer to the Plan's Summary Plan Description for detailed
Plan provisions.
General
- -------
The Plan is an unfunded deferred compensation plan providing employees an
opportunity to save through employee deferrals and Company matching deferrals.
The Plan is available to senior managers and certain highly compensated
employees of International Paper Company (the "Company") and certain of its
subsidiaries who participate in the International Paper Company Salaried Savings
Plan ("SSP"). The Plan was amended, effective January 1, 1995, as a continuation
of two prior unfunded deferred compensation plans: the International Paper
Company Supplemental Unfunded Savings Plan for Senior Managers and the
International Paper Company Supplemental Unfunded Thrift Plan, both established
January 1, 1987.
All deferred amounts and all Plan benefits are paid directly by the Company from
its general assets at the time benefits become due and payable under the Plan.
It is the Company's intention to continue the Plan. However, it reserves the
right to amend, suspend or terminate the Plan at any time. In the event of
termination, Plan benefits will be used solely for the benefit of the
participants and their beneficiaries.
Deferrals
- ---------
The Plan provides employee deferrals in addition to employee before-tax
contributions to the SSP. Eligible employees may contribute 1% - 85% of their
total pay to the SSP and the Plan on a combined basis. The percentage of
contributions designated as basic and supplemental varies by location. The
Company matches basic contributions; the amount of the matching contributions
also varies by location.
Prior to 1997, all employee basic deferrals were invested in the Company Stock
Fund Equivalent. Effective January 1, 1997, employee basic contributions may be
invested among six fund equivalents: Stable Value Fund Equivalent (formerly the
Fixed Income Fund Equivalent), Balanced Fund Equivalent, S&P 500 Index Fund
Equivalent (formerly the Diversified Equity Fund Equivalent), International
Stock Fund Equivalent, Growth Fund Equivalent and Company Stock Fund Equivalent.
Company matching deferrals are invested in the Company Stock Fund Equivalent.
Supplemental deferrals may be invested in any of the six fund equivalents.
7
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
(Continued)
--------------------------------------------------------------------
A participant becomes vested in the Company matching deferrals as follows:
<TABLE>
<CAPTION>
Vesting Years of Service Percent Vested
------------------------ --------------
<S> <C>
Less than 3 0%
3 but less than 4 35%
4 but less than 5 70%
5 or more 100%
</TABLE>
A participant also becomes fully vested if one of the following occurs: (1)
attainment of age 65 while employed by the Company; (2) the participant's death
or total disability; (3) layoff for more than 12 consecutive months; or (4)
termination of employment due to permanent closing of the work facility.
Participation
- -------------
Participation in the Plan is voluntary. An eligible employee may defer pay under
the Plan each year (1) once the statutory maximum on before-tax contributions to
the SSP is reached; (2) once the statutory limit on annual additions or maximum
recognizable compensation in the SSP is reached; or (3) if the employee is
contributing the maximum 11% before-tax contributions to the SSP. If a
participant transfers to a subsidiary or group which does not participate in the
Plan, the participant is no longer eligible to make deferrals under the Plan.
However, his or her account will remain in the Plan until the designated
distribution date. As of December 31, 1997 and 1996, there were 438 and 448
employees, respectively, participating in the Plan.
Valuation of Participants' Accounts
- -----------------------------------
Separate accounts are maintained to report each participant's interest in the
Plan and are adjusted monthly to reflect each participant's deferrals and
Company matching deferrals. Deferrals to the Plan are not placed in investment
funds; however, at the end of each month, each participant's account is adjusted
for the investment experience of the related fund equivalents. The investment
experience is based on the investment income, realized and unrealized gains and
losses, expenses and all other transactions during such month of the actual
investment funds.
8
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 1. DESCRIPTION OF THE INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
(Continued)
--------------------------------------------------------------------
Distributions and Withdrawals
- -----------------------------
Distributions are normally made when a participant retires, terminates
employment or dies. All distributions are paid in cash.
In the event of retirement or disability, a participant may choose to defer
distribution up to age 70 1/2 and may elect to receive payment in the form of a
lump-sum or installments over 5 to 20 years. If the participant fails to make
an election before retirement, distribution is made in a lump-sum in the January
following retirement or disability.
For any other termination of employment, distribution is made in a lump-sum at
termination. Death benefits to a beneficiary are paid in a lump-sum.
Additionally, a participant may make partial or full withdrawals of the value of
basic or supplemental deferrals as described below.
At initial plan participation, an eligible employee may designate specific
dollar amounts to be paid at specific future dates. These withdrawal
designations are irrevocable. There are no penalties associated with this type
of withdrawal.
After initial plan participation, a participant may request a withdrawal of a
specific dollar amount to be paid at a date in the year following the request. A
participant's deferrals to the Plan are suspended during the year in which the
withdrawal is paid. Any designated withdrawal amount is reduced by 10%
(forfeiture) prior to payment.
Forfeitures
- -----------
Any unvested Company matching deferrals forfeited by an employee upon
termination of employment or any forfeiture arising from a withdrawal reduces
the Company's liability to the Plan.
Reclassifications
- -----------------
Certain prior year balances have been reclassified to conform with current
year presentation.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The financial statements of the Plan have been prepared on the accrual basis of
accounting. The Plan's net assets available for benefits consist of a receivable
from the Company as all Plan benefits are paid directly from the Company's
general assets. The Company bears all administrative costs of the Plan.
9
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
------------------------------------------------------
As of December 31, 1997 and 1996, the Plan had approximately $800,000 and
$900,000, respectively, of pending distributions to participants. These amounts
are not recorded as liabilities in the accompanying financial statements, in
accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 3. INVESTMENTS
-----------
The Company matching deferrals are credited with a return based on the rate of
return earned in the SSP Company Stock Fund. Employee basic deferrals and
supplemental deferrals are credited with the rate of return earned by each
respective fund in accordance with the direction of the deferral chosen by the
participants.
The Company Stock Fund Equivalent is based on the SSP Company Stock Fund which
is invested in International Paper Company common stock. Dividends are
reinvested in additional shares of International Paper Company common stock. The
value of the SSP Company Stock Fund fluctuates depending on dividends paid and
the market value of the stock.
The Stable Value Fund Equivalent (formerly the Fixed Income Fund Equivalent)
is based on the SSP Stable Value Fund (formerly the SSP Fixed Income Fund)
which is primarily invested in investment contracts and investment-grade
fixed income securities. At December 31, 1997 and 1996, the SSP Stable Value
Fund held U.S. Treasury Notes futures used primarily to enhance portfolio
returns. The futures represent approximately 6.1% and 4.5% at December 31,
1997 and 1996, repectively, of the total Stable Value Fund of the Defined
Contribution Plans Master Trust. Futures contracts are contracts for delayed
delivery of securities in which the seller agrees to make delivery on a
specified date of a specified instrument at a specified price. The futures
contracts are recorded on the statement of net assets available for benefits
with no cost or market value, because they are marked-to-market on a daily
basis.
The Balanced Fund Equivalent is based on the SSP Balanced Fund which is
primarily invested in the Vanguard Wellington Fund, a mutual fund sponsored by
the Vanguard Group of Investment Companies ("Vanguard").
10
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 3. INVESTMENTS (Continued)
-----------------------
The S&P 500 Index Fund Equivalent (formerly the Diversified Equity Fund
Equivalent) is based on the SSP S&P 500 Index Fund (formerly the SSP Diversified
Equity Fund) which is primarily invested in the Vanguard Institutional Index
Fund, a diversified common stock fund managed by Vanguard.
The International Stock Fund Equivalent is based on the SSP International Stock
Fund which is primarily invested in a diversified mutual fund of stocks of
companies outside the United States.
The Growth Fund Equivalent is based on the SSP Growth Fund which is primarily
invested in a managed mutual fund of common stocks of mid to large
capitalization companies exhibiting above average prospects for growth.
Note 4. FEDERAL INCOME TAXES AND ERISA CLASSIFICATION
---------------------------------------------
Because the Plan is unfunded with benefits paid solely out of the general assets
of the Company, no provision for federal income taxes has been made in the
accompanying financial statements. The Plan is not required to maintain its
assets in a trust. The Plan is an unfunded employee pension benefit savings plan
which is maintained by the Company "for the purpose of providing deferred
compensation for a select group of management or highly compensated employees";
and the Plan is, therefore, exempt from Parts 2, 3 and 4 of Subtitle B of Title
I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
which pertain to participation, vesting, funding and fiduciary responsibilities.
Pursuant to regulations issued by the Secretary of Labor in 29 CFR 2520.104-23,
the Plan is exempt from the reporting and disclosure provisions of Part 1 of
Subtitle B of Title I of ERISA, except for providing Plan documents to the
Secretary of Labor upon request. Title IV of ERISA relating to plan termination
insurance does not apply to the Plan. The Plan is a nonqualified plan for
Federal income tax purposes and is not subject to the qualification requirements
of Section 401 of the Internal Revenue Code of 1986, as amended.
11
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 5. PLAN AMENDMENTS
---------------
Effective January 1, 1997, the following changes were made to the Plan. Two
additional investment fund equivalents, the Growth Fund Equivalent and the
International Stock Fund Equivalent, were added, and the names of the Fixed
Income Fund Equivalent and the Diversified Equity Fund Equivalent were changed
to the Stable Value Fund Equivalent and the S&P 500 Index Fund Equivalent,
respectively. Future basic deferrals may now be invested among the six
investment fund equivalents at the participant's election. Diversification of
the deferrals restricted to investment in the Company Stock Fund Equivalent
was amended so that a participant may diversify up to 20% a year beginning
with the year in which the participant attains age 55.
12
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 6. Selected Financial Data of the Defined Contribution Plans Master Trust
----------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
---------------------------
DEFINED CONTRIBUTION PLANS MASTER TRUST
---------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
---------------------------------------------------------------------
DECEMBER 31, 1997
-----------------
(in thousands)
Fund Information
---------------------------------------------------------------
Inter-
Stable Company S&P 500 USG national
Value Stock Index Balanced Stock Stock Growth
Fund Fund Fund Fund Fund Fund Fund Total
-------- -------- -------- -------- ----- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Guaranteed investment contracts $1,279 $ - $ - $ - $ - $ - $ - $ 1,279
Investments in International Paper
Company common stock (cost $508,283) - 926,452 - - - - - 926,452
Investments in S&P 500 Index
Fund (cost $255,024) - - 268,411 - - - - 268,411
Investments in Balanced Fund (cost $103,795) - - - 125,998 - - - 125,998
Investments in USG Stock Fund (cost $354) - - - - 114 - - 114
Investments in International Stock Fund (cost $25,082) - - - - - 25,957 - 25,957
Investments in Growth Fund (cost $43,930) - - - - - - 43,110 43,110
Investments, at contract value*:
Guaranteed investment contracts 487,273 - - - - - - 487,273
-------- -------- -------- -------- ----- ------- ------- ----------
Total investments 488,552 926,452 268,411 125,998 114 25,957 43,110 1,878,594
-------- -------- -------- -------- ----- ------- ------- ----------
Receivables:
Dividends and interest 2,612 92 - - - - - 2,704
Receivables for investments sold 12,217 - - - - - - 12,217
-------- -------- -------- -------- ----- ------- ------- ----------
Total receivables 14,829 92 - - - - - 14,921
-------- -------- -------- -------- ----- ------- ------- ----------
Total assets 503,381 926,544 268,411 125,998 114 25,957 43,110 1,893,515
-------- -------- -------- -------- ----- ------- ------- ----------
LIABILITIES
Payable for investments purchased (2) (28) (6) (5) - (1) - (42)
-------- -------- -------- -------- ----- ------- ------- ----------
Total liabilities (2) (28) (6) (5) - (1) - (42)
-------- -------- -------- -------- ----- ------- ------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $503,379 $926,516 $268,405 $125,993 $ 114 $25,956 $43,110 $1,893,473
-------- -------- -------- -------- ----- ------- ------- ----------
-------- -------- -------- -------- ----- ------- ------- ----------
</TABLE>
*The aggregate fair value of these contracts was approximately $504,084 as of
December 31, 1997.
13
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 6. Selected Financial Data of the Defined Contribution Plans Master Trust
----------------------------------------------------------------------
(Continued)
-----------
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
---------------------------
DEFINED CONTRIBUTION PLANS MASTER TRUST
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
--------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------
(in thousands)
Fund Information
----------------------------------------------------------------------
Inter-
Stable Company S&P 500 USG national
Value Stock Index Balanced Stock Stock Growth
Fund Fund Fund Fund Fund Fund Fund Total
-------- -------- -------- -------- ----- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Change attributable to:
Investment activities:
Dividend and interest income $ 32,993 $ 22,298 $ 6,253 $ 10,686 $ - $ 870 $ 6,132 $ 79,232
Unrealized appreciation (depreciation)
of investments - 10,452 (31,845) 9,837 77 875 (820) (11,424)
Net gain (loss) on sale of investments - 60,269 93,161 2,758 (42) 228 237 156,611
Other income 4 17 - - - - - 21
-------- -------- -------- -------- ----- ------- ------- ----------
Net investment income 32,997 93,036 67,569 23,281 35 1,973 5,549 224,440
Employee contributions 33,375 26,016 19,074 8,529 - 4,201 8,802 99,997
Employer contributions 9,411 32,937 21 8 - - - 42,377
Transfers,net 70,319 (26,038) 34,356 16,165 (3) 21,194 30,035 146,028
-------- -------- -------- -------- ----- ------- ------- ----------
Total 146,102 125,951 121,020 47,983 32 27,368 44,386 512,842
-------- -------- -------- -------- ----- ------- ------- ----------
Distributions and withdrawals (61,679) (100,610) (22,230) (11,669) (5) (1,364) (1,206) (198,763)
Administrative fees (2,034) (3,132) (691) (328) - (48) (70) (6,303)
-------- -------- -------- -------- ----- ------- ------- ----------
Total (63,713) (103,742) (22,921) (11,997) (5) (1,412) (1,276) (205,066)
-------- -------- -------- -------- ----- ------- ------- ----------
Net increase (decrease) in net assets 82,389 22,209 98,099 35,986 27 25,956 43,110 307,776
NET ASSETS AVAILABLE FOR BENEFITS:
December 31, 1996 420,990 904,307 170,306 90,007 87 - - 1,585,697
-------- -------- -------- -------- ----- ------- ------- ----------
December 31, 1997 $503,379 $926,516 $268,405 $125,993 $ 114 $25,956 $43,110 $1,893,473
-------- -------- -------- -------- ----- ------- ------- ----------
-------- -------- -------- -------- ----- ------- ------- ----------
</TABLE>
14
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 6. Selected Financial Data of the Defined Contribution Plans Master Trust
----------------------------------------------------------------------
(Continued)
-----------
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
---------------------------
DEFINED CONTRIBUTION PLANS MASTER TRUST
---------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
---------------------------------------------------------------------
DECEMBER 31, 1996
-----------------
(in thousands)
Fund Information
---------------------------------------------------------
Fixed Company Diversified USG
Income Stock Equity Balanced Stock
Fund Fund Fund Fund Fund Total
--------- --------- --------- --------- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value:
Interest-bearing cash and temporary
investments $ 19,911 $ 1,776 $ 33 $ 28 $ 1 $ 21,749
Guaranteed investment contracts 12,974 - - - - 12,974
Investments in International Paper
Company common stock (cost $511,207) - 902,316 - - - 902,316
Investments in Diversified Equity
Fund (cost $125,031) - - 170,261 - - 170,261
Investments in Balanced Fund (cost $77,608) - - - 89,971 - 89,971
Investments in USG Stock Fund (cost $409) - - - - 86 86
Investments, at contract value*:
Guaranteed investment contracts 388,092 - - - - 388,092
--------- --------- --------- --------- ----- -----------
Total investments 420,977 904,092 170,294 89,999 87 1,585,449
--------- --------- --------- --------- ----- -----------
Receivables:
Dividends and interest 16 215 15 10 - 256
--------- --------- --------- --------- ----- -----------
Total receivables 16 215 15 10 - 256
--------- --------- --------- --------- ----- -----------
Total assets 420,993 904,307 170,309 90,009 87 1,585,705
--------- --------- --------- --------- ----- -----------
LIABILITIES
Administrative fees (3) - (3) (2) - (8)
--------- --------- --------- --------- ----- -----------
Total liabilities (3) - (3) (2) - (8)
--------- --------- --------- --------- ----- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 420,990 $ 904,307 $ 170,306 $ 90,007 $ 87 $ 1,585,697
--------- --------- --------- --------- ----- -----------
--------- --------- --------- --------- ----- -----------
</TABLE>
*The aggregate fair value of these contracts was approximately $390,572 as of
December 31, 1996.
15
<PAGE>
INTERNATIONAL PAPER COMPANY UNFUNDED SAVINGS PLAN
-------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
Note 6. Selected Financial Data of the Defined Contribution Plans Master Trust
----------------------------------------------------------------------
(Continued)
-----------
<TABLE>
<CAPTION>
INTERNATIONAL PAPER COMPANY
---------------------------
DEFINED CONTRIBUTION PLANS MASTER TRUST
---------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
--------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
(in thousands)
Fund Information
---------------------------------------------------------
Fixed Company Diversified USG
Income Stock Equity Balanced Stock
Fund Fund Fund Fund Fund Total
---------- ---------- ---------- -------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Change attributable to:
Investment activities:
Dividend and interest income $ 26,016 $ 24,811 $ 5,651 $ 6,966 $ - $ 63,444
Unrealized appreciation of
investments - 57,234 22,608 4,517 5 84,364
Net gain (loss) on sale of
investments - 2,034 910 318 (1) 3,261
Other income 14 29 60 35 - 138
---------- ---------- ---------- -------- ------ -----------
Net investment income 26,030 84,108 29,229 11,836 4 151,207
Employee contributions 22,768 54,135 6,502 2,864 - 86,269
Employer contributions 10,077 29,089 358 169 39,693
Interfund transfers (2,022) (35,487) 26,789 10,728 (8) -
Transfers, net 3,620 1,930 14,548 15,502 - 35,600
---------- ---------- ---------- -------- ------ -----------
Total 60,473 133,775 77,426 41,099 (4) 312,769
---------- ---------- ---------- -------- ------ -----------
Distributions and withdrawals (54,900) (76,501) (12,820) (8,207) (1) (152,429)
Administrative fees (1,415) (2,161) (411) (217) - (4,204)
---------- ---------- ---------- -------- ------ -----------
Total (56,315) (78,662) (13,231) (8,424) (1) (156,633)
---------- ---------- ---------- -------- ------ -----------
Net increase (decrease) in net assets 4,158 55,113 64,195 32,675 (5) 156,136
NET ASSETS AVAILABLE FOR BENEFITS:
December 31, 1995 416,832 849,194 106,111 57,332 92 1,429,561
---------- ---------- ---------- -------- ------ -----------
December 31, 1996 $ 420,990 $ 904,307 $ 170,306 $ 90,007 $ 87 $ 1,585,697
---------- ---------- ---------- -------- ------ -----------
---------- ---------- ---------- -------- ------ -----------
</TABLE>
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the person
who administers the Plan has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
INTERNATIONAL PAPER COMPANY
UNFUNDED SAVINGS PLAN
By /s/ ROBERT M. BYRNES
Robert M. Byrnes, Senior Vice President
and Administrator of the Plan
Date: June 26, 1998
Purchase, New York
17
<PAGE>
Exhibit 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 26, 1998, included in this Annual Report on
Form 11-K of the International Paper Company Unfunded Savings Plan, into the
Company's previously filed Form S-8 Registration No. 33-11117.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
June 26, 1998
