<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
 
                             Washington, DC 20549
 
                                  FORM 10-Q

-------------------------------------------------------------------------------

 
                  Quarterly Report under Section 13 or 15(d)
                    of the Securities Exchange Act of 1934
 
For Quarter Ended June 30, 1997                   Commission file number:1-8859
 
                             IP TIMBERLANDS, Ltd.
            (Exact name of registrant as specified in its charter)
 
               Texas                                            13 3259241
    (State or other jurisdiction                              (I.R.S.Employer
  of incorporation or organization)                         Identification No.)

 Two Manhattanville Road, Purchase, NY                             10577 
(Address of principal executive offices)                         (Zip Code)
 
       Registrant's telephone number, including area code: 914-397-1500
 
    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 / /
 
       Class A Depositary Units outstanding on July 31, 1997: 46,445,729





<PAGE>

                             IP TIMBERLANDS, Ltd.
 
                                    INDEX
                                                                       PAGE NO.
                                                                       --------
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements..........................................        3

        Consolidated Statement of Earnings--
        Three Months and Six Months Ended 
        June 30, 1997 and 1996........................................        4

        Consolidated Balance Sheet--
        June 30, 1997 and December 31, 1996...........................        5

        Consolidated Statement of Cash Flows--
        Six Months Ended June 30, 1997 and 1996.......................        6

        Notes to Consolidated Financial Statements....................     7-10

Item 2. Management's Discussion and Analysis of 
        Financial Condition and Results of Operations.................    11-14


PART II. OTHER INFORMATION

Item 1. Legal Proceedings.............................................      *

Item 2. Changes in Securities.........................................      *

                                       


<PAGE>

Item 3. Defaults upon Senior Securities...............................        *

Item 4. Submission of Matters to a Vote of Security Holders...........        *

Item 5. Other Information.............................................        *

Item 6. Exhibits and Reports on Form 8-K..............................       15


SIGNATURES............................................................       16


*   Omitted since no answer is called for, answer is in the negative or
    inapplicable.
 
                                      2


<PAGE>

PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
    The accompanying unaudited financial statements have been prepared in
conformity with current Securities and Exchange Commission regulations governing
interim financial reporting. In the opinion of the managing general partner of
IP Timberlands, Ltd. (the "Registrant"), a Texas limited partnership, the
accompanying unaudited financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the financial
position of the Registrant as of June 30, 1997, and the results of operations
for the quarter and six months ended June 30, 1997. It is suggested that these
interim financial statements be read in conjunction with the audited financial
statements and notes thereto incorporated by reference in the Registrant's Form
10-K for the year ended December 31, 1996, which has been previously filed with
the Commission.
 
    The results for the interim period covered by this report are not
necessarily indicative of what the results will be for the remainder of the
year.

                                      3 


<PAGE>
 
                             IP TIMBERLANDS, Ltd.
 
                      CONSOLIDATED STATEMENT OF EARNINGS
                     (In thousands--except per unit data)
                                 (Unaudited)
 
<TABLE>
<CAPTION>
                                                                        Three Months Ended          Six Months Ended
                                                                             June 30,                     June 30,
                                                                     ----------------------    ----------------------
<S>                                                                      <C>         <C>         <C>         <C>
                                                                        1997         1996         1997          1996
                                                                     ----------  ----------    ----------  ----------
REVENUES
Stumpage sales
  International Paper...........................................  $    25,075    $  19,470   $   55,487    $   63,257
  Unaffiliated parties..........................................       25,125       29,171       70,702        62,881
Forestland sales................................................        1,126        4,102        1,261         5,972
Other income, net...............................................        4,460        4,056        5,704         5,797
                                                                     ----------  ----------  ----------    ----------
  Total revenues................................................       55,786       56,799      133,154       137,907
                                                                     ----------  ----------  ----------    ----------
OPERATING COSTS AND EXPENSES
Depletion
  International Paper...........................................        2,328        1,730        4,653         4,194
  Unaffiliated parties..........................................        4,638        3,454       13,444         7,136
Cost of forestlands sold........................................          106          254          122           368
Amortization of roads...........................................          438          428          873           983
Forest operations...............................................       12,269       10,876       23,242        21,936
General and administrative......................................        4,494        4,255        9,238         9,624
Property and severance taxes....................................        3,236        3,037        6,480         6,823
                                                                     ----------   ----------   ----------    --------
  Total operating costs and expenses............................       27,509       24,034       58,052        51,064
                                                                     ----------   ----------   ----------    --------
                                                                       28,277       32,765       75,102        86,843
Gains on Sales of Partnership Interests.........................                    18,449       15,000       656,654
                                                                     ----------   ----------   ----------    --------
OPERATING EARNINGS..............................................       28,277       51,214       90,102       743,497
INTEREST INCOME.................................................        6,978        5,721       13,279        11,571
INTEREST EXPENSE................................................       (9,553)         (20)     (16,959)      (11,369)
GENERAL PARTNERS' INTEREST IN IPTO..............................         (303)        (522)        (954)       (1,006)
                                                                     ----------   ----------   ----------    ---------
NET PARTNERSHIP EARNINGS........................................   $   25,399   $   56,393   $   85,468    $  742,693
                                                                     ----------   ----------   ----------    ---------
                                                                     ----------   ----------   ----------    ---------
EARNINGS PER CLASS A UNIT (NOTE 7)..............................   $     0.80   $     0.98   $     2.06    $     6.64
                                                                     ----------   ----------   ----------    ---------
                                                                     ----------   ----------   ----------    ---------

</TABLE>
 
  The accompanying notes are an integral part of these financial statements.
 
                                       4




<PAGE>
                              IP TIMBERLANDS, LTD.
                           CONSOLIDATED BALANCE SHEET
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>                                                                                 
                                                                                          June 30,   December 31,
                                                                                            1997         1996
                                                                                         ----------  ------------
<S>                                                                                      <C>         <C>
ASSETS
CURRENT ASSETS
  Cash and temporary investments.......................................................  $    9,011   $    7,843
  Notes receivable--International Paper................................................     311,636      259,351
  Due from International Paper.........................................................         107       15,071
  Accounts and notes receivable........................................................      19,841        8,228
                                                                                         ----------   ----------
    Total current assets...............................................................     340,595      290,493
 
NOTES RECEIVABLE.......................................................................         902           42
FORESTLANDS............................................................................     781,925      660,369
ROADS, net of accumulated amortization of 
  $32,861 (1997) and $31,994 (1996)....................................................      25,714       25,144
                                                                                         ----------   ----------
    Total Assets.......................................................................  $1,149,136   $  976,048
                                                                                         ----------   ----------
                                                                                         ----------   ----------
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
  Accounts payable and accrued liabilities.............................................  $    5,114   $    6,719
  Accrued interest.....................................................................       6,580        3,541
  Accrued property and severance taxes.................................................       7,961        5,550
  Customer advance payments............................................................       4,740        3,266
                                                                                          ---------   ----------
    Total current liabilities..........................................................      24,395       19,076
 
LONG-TERM DEBT.........................................................................     450,000      450,000
LEASE OBLIGATIONS......................................................................       1,228        1,241
SERIES A PREFERENCE UNITS IN IPTO......................................................     130,744
GENERAL PARTNERS' INTEREST IN IPTO.....................................................      30,996       30,536
PARTNERS' CAPITAL
  General partners.....................................................................      26,973       26,607
  Limited partners.....................................................................     484,800      448,588
                                                                                         ----------   ----------
    Total Liabilities and Partners' Capital............................................  $1,149,136   $  976,048
                                                                                         ----------   ----------
                                                                                         ----------   ----------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.


                                       5


<PAGE>
                              IP TIMBERLANDS, LTD.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                                                Six Months Ended
                                                                                                    June 30,
                                                                                             ----------------------
                                                                                                1997        1996
                                                                                             ----------   ---------
<S>                                                                                         <C>           <C>
OPERATING ACTIVITIES
Net Partnership earnings..................................................................  $    85,468   $ 742,693
Noncash items
  Depletion...............................................................................       18,097      11,330
  Cost of forestlands sold................................................................          122         368
  Amortization of roads...................................................................          873         983
  Gain on sale of partnership interest....................................................                 (638,205)
  Other, net..............................................................................        6,168       5,560
Changes in current assets and liabilities
  Accounts and notes receivable...........................................................      (12,473)     (9,839)
  Due to/from International Paper.........................................................       14,964      16,100
  Customer advance payments...............................................................        1,474        (671)
  Accrued interest payable................................................................        3,039      (5,983)
  Other, net..............................................................................          793      (3,611)
                                                                                             ----------   ---------
    Cash provided by operations...........................................................      118,525     118,725
                                                                                             ----------   ---------
 
INVESTMENT ACTIVITIES
Investment in forestlands and roads.......................................................      (15,688)    (17,358)
Loans to International Paper..............................................................     (160,188)   (342,482)
Repayment of loans by International Paper.................................................      107,903     780,367
                                                                                             ----------   ---------
    Cash (used for) provided by investment activities.....................................      (67,973)    420,527
                                                                                             -----------  ---------
 
FINANCING ACTIVITIES
Distributions to partners of IPT and IPTO.................................................      (49,384)   (540,130)
                                                                                             -----------  ---------
 
CHANGE IN CASH AND TEMPORARY INVESTMENTS..................................................        1,168        (878)
CASH AND TEMPORARY INVESTMENTS
  Beginning of the period.................................................................        7,843      11,899
                                                                                              ----------  ---------
  End of the period.......................................................................    $   9,011   $  11,021
                                                                                              ----------  ---------
                                                                                              ----------  ---------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       6


<PAGE>
                              IP TIMBERLANDS, LTD.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
1.  ORGANIZATION
 
    IP Timberlands, Ltd. (the "Registrant" or "IPT"), is a Texas limited
partnership. IP Forest Resources Company ("IPFR"), a wholly owned subsidiary of
International Paper, is the managing general partner of the Registrant and
International Paper is the special general partner.
 
    The Registrant operates through IP Timberlands Operating Company, Ltd.
("IPTO"), a Texas limited partnership, in which the Registrant holds a 99%
limited partner's interest, and IPFR and International Paper together hold a 1%
general partners' interest. IPFR is also the managing general partner of IPTO,
and International Paper is the special general partner.
 
2.  TRANSACTIONS WITH INTERNATIONAL PAPER

    The Registrant reimburses IPFR and International Paper for both direct 
and indirect costs and expenses associated with the management and operations 
of the Partnerships. Charges from International Paper for indirect expenses 
for the quarters ended June 30, 1997 and 1996 were $2.4 million and $2.2 
million, respectively, and for the six-month periods ended June 30, 1997 and 
1996 were $4.7 million and $5.1 million, respectively. The interim period 
charges are based upon estimates of the total charges for the year.
 
    Interest income from notes receivable from International Paper for the
quarters ended June 30, 1997 and 1996 was $4.5 million and $3.4 million,
respectively, and for the six-month periods ended June 30, 1997 and 1996 was
$8.3 million and $9.0 million, respectively. The increase in second quarter
interest income was due to higher average loan balances.
 
3.  TEMPORARY INVESTMENTS
 
    Temporary investments with a maturity of three months or less are treated as
cash equivalents and are stated at cost. Temporary investments at June 30, 1997
and December 31, 1996 were $6.4 million and $6.9 million, respectively.
 

                                       


<PAGE>

                              IP TIMBERLANDS, LTD.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)
 
4.  RECEIVABLES
 
    The major classifications of current receivables are shown below. No
allowance for doubtful accounts was considered necessary.

                                                 June 30,   December 31,
                                                   1997         1996
                                               -----------  ------------
                                                     (in thousands)

Notes receivable--trade..................       $15,541           $2,763
Accounts receivable--trade...............            47              965
Accrued interest and other receivables...         4,253            4,500
                                               ------------     --------

                                                $19,841           $8,228
                                               ------------     --------
                                               ------------     --------

                                       7

<PAGE>
 
    Notes receivable--trade at June 30, 1997 included $12.2 million of
short-term notes from sales in late March.
 
5. SERIES A PREFERENCE UNITS
 
    In March 1997, IPTO issued 13,074 Series A Preference Units with an 
agreed value of $130.7 million to Federal Paper Board Company ("Federal"), a 
wholly owned subsidiary of International Paper, in connection with the 
purchase from Federal of a timber deed covering approximately 116,000 acres. 
These units, which may be redeemed by IPTO at any time, require quarterly 
preferred return payments, based on an annual rate of 7.5% of the agreed 
value, that must be paid before distributions can be made to the 
Partnership's Class A or Class B unitholders. Preferred return payments of 
$2.4 million were included in interest expense for the quarter ended June 30, 
1997.
 
    Since it is expected that all of the acres under the timber deed will be
harvested prior to the end of the Initial Term, payment of the $130.7 million
redemption (or $2.81 per Class A Unit) will be made from the Primary Account.


                                      


<PAGE>


                              IP TIMBERLANDS, LTD.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                  (UNAUDITED)

6.  GAIN ON SALE OF PARTNERSHIP INTEREST
 
    In February 1997, the Partnership completed the sale of a special
partnership interest relating to 14,539 acres of pine plantations in Arkansas
and Texas. As a result of this sale, IPT recognized a gain of approximately $15
million. Approximately 14% of the earnings from this sale were attributed to the
Class A Units.
 
    In June 1996, the Partnership completed a sale of a special partnership
interest relating to 20,000 acres of pine plantations in the South. As a result
of this sale, IPT recognized a gain of approximately $18 million. Essentially
all of the earnings from this transaction were attributable to the Secondary
Account.
 
    On March 29, 1996, a subsidiary partnership of IPT completed the sale of a
98% general partnership interest to R-H Timber Co. As a result of this
transaction, IPT recognized a book gain of approximately $638 million,
approximately $203 million or $4.37 per unit of which was allocated to the Class
A Units. IPT retained a 1% interest in the partnership as well as a preferred
interest. Class A unitholders have approximately a 30% share of the retained
preferred interest, equal to about $.90 per Class A Unit.
 
                                      8


<PAGE>

7.  COMPUTATION OF EARNINGS PER CLASS A UNIT
 
    The Partnership Agreement provides for the allocation of Partnership
earnings among the general and limited partners. The following table presents
the computation of earnings per Class A Unit (in thousands, except per unit
data):

                                   Three Months Ended      Six Months Ended
                                         June 30,             June 30,
                                    -----------------   --------------------
                                         1997     1996      1997        1996
                                    --------  --------   --------  --------
Allocation to Primary Account.....  $ 40,066  $ 47,611   $101,526   $306,320
Allocation to Secondary 
  Account.........................   (14,667)    8,782    (16,058)   436,373
                                    --------  --------   --------   --------
Net Partnership Earnings..........    25,399    56,393     85,468    742,693
                                    --------   -------   --------   --------
95% of the Primary Account (1)....    38,063    45,230     96,450    291,004
4% of the Secondary Account (1)...      (587)      351       (643)    17,455
                                    --------   ------    --------   --------
Earnings Allocated to
    Class A Limited Partners
  Class A Limited Partners........  $ 37,476   $45,581   $ 95,807  $308,459(2)
                                    --------  -------    --------  --------
                                    --------  -------    --------  --------
Weighted Average Class A 
    Units Outstanding
  Units Outstanding...............    46,446    46,446      46,446    46,446
                                     -------    ------     -------   -------
Earnings Per Class A Unit.........  $   0.80   $  0.98    $   2.06   $  6.64(2)
                                     -------    ------     -------   -------
                                     -------    ------     -------   -------


(1) Class B units are allocated 4% of Primary Account and 95% of Secondary
    Account earnings. The general partners are allocated 1% of each account.
 
(2) Includes $203 million, or $4.37 per Class A Unit, from the sale of a
    subsidiary partnership interest.

                                      11


<PAGE>

8.  PARTNERS' CAPITAL
 
    The following tables present an analysis of the activity in Partners'
Capital (in thousands):
 
                                                     Partners' Capital
                                              -------------------------------
                                              General    Limited
                                              Partners   Partners     Total
                                              ---------  ---------  ---------
Six Months Ended June 30, 1997
-------------------------------
Balance--January 1, 1997................     $26,607      $ 448,588   $ 475,195
Net earnings for the period.............         855         84,613      85,468
Partner distributions...................        (489)       (48,401)    (48,890)
                                             -------      ---------   ---------
Balance--June 30, 1997..................     $26,973      $ 484,800   $ 511,773
                                             -------      ---------   ---------
                                             -------      ---------   ---------
Six Months Ended June 30, 1996
-------------------------------
Balance--January 1, 1996................    $ 25,786      $ 367,264   $ 393,050
Net earnings for the period.............       7,427        735,266     742,693
Partner distributions...................      (5,363)      (530,963)   (536,326)
                                            --------      ---------   ---------
Balance--June 30, 1996..................    $ 27,850      $ 571,567   $ 599,417
                                            --------      ---------   ---------
                                            --------      ---------   ---------


                                      9


<PAGE>

    The authorized and outstanding Class A and B Depositary Units at June 30,
1997 and 1996, which represent the limited partnership interests of IPT, are
presented below. The Class B Units are 100% owned by International Paper and
affiliates.

<TABLE>
<CAPTION>

                             
                             Class A Depositary Units Outstanding
                             -------------------------------------      Class B
                             International Unaffiliated                Depositary
                              Paper and       Third                      Units
                              Affiliates     Parties       Total      Outstanding
                             ------------  -----------  ------------  ------------
<S>                          <C>           <C>          <C>           <C>
Number of Units............   39,146,229    7,299,500     46,445,729    50,976,480
Percentage of total........           84%          16%           100%          100%
</TABLE>
 
    Under the terms of the Partnership Agreement, International Paper has the
right to purchase, at any time, all outstanding Class A Units at a price equal
to 133% of the market price at that time.
 
9.  SUBSEQUENT EVENT
 
    In August 1997, the Partnership entered into an agreement for the sale of
certain partnership interests, including a general partnership interest in a
subsidiary partnership that will control approximately 175,000 acres of
forestlands in Pennsylvania and New York. The sale will be completed through a
series of transactions over the next twelve to eighteen months and could
generate proceeds of up to approximately $200 million. Based on the projected
harvest schedule of the timber on these forestlands, IPT Class A Unitholders
will be credited with approximately 7 percent of the earnings from these
transactions. The initial transaction, scheduled for completion in late
September 1997, will result in a gain to IPT of approximately $38 million, or
$.08 per Class A Unit.
 
                                      10




<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS
 
RESULTS OF OPERATIONS
 
    Partnership revenues for the second quarter of 1997 were $55.8 million, down
slightly from 1996 second quarter revenues of $56.8 million. Revenues from
stumpage sales were $50.2 million for the 1997 second quarter compared with
$48.6 million in the same period of 1996. Net Partnership earnings for the
second quarter were $25.4 million compared with $56.4 million in the comparable
1996 quarter. Earnings in the prior year quarter included a $18.4 million gain
on a subsidiary partnership interest sale, while the 1997 second quarter
included a $9.5 million increase in interest expense and a $2.8 million decrease
in earnings from forestland sales.
 
    Stumpage sales revenues in the South were 3% above 1996 levels for the
second quarter due to slightly higher average prices. Harvest volumes in this
region were 4% below the prior year levels. Demand and pricing for both sawlogs
and pulpwood was strong during the second quarter of 1997, due to low mill
inventory levels caused by unusually wet weather. In the Northeast, 27% higher
average prices combined with a 14% increase in harvest volumes resulted in
stumpage sales revenues 45% above that for the comparable period of 1996.
 
    Forestland sales were minimal in both the 1997 and 1996 periods.
 
    Amounts attributable to the Primary and Secondary Accounts for major
categories in the statement of earnings were (in thousands):
 
                                Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                --------------------   ----------------------
                                    1997       1996        1997        1996
                                ---------  ---------   ------------  --------
Stumpage Sales
  Primary Account..........     $  50,200  $  48,641   $  126,189  $  126,138
  Secondary Account........
                                ---------  ---------   ----------  ----------
                                $  50,200  $  48,641   $  126,189  $  126,138
                                ---------  ----------  ----------  ----------
                                ---------  ----------  ----------  ----------
                                      


<PAGE>


Forestland Sales
  Primary Account.................  $     405  $    650   $     405  $    650
  Secondary Account...............        721     3,452         856     5,322
                                    ---------  ---------  ---------  ---------
                                    $   1,126  $  4,102   $   1,261  $  5,972
                                    ---------  ---------  ---------  ---------
                                    ---------  ---------  ---------  ---------
Operating Costs and Expenses
  Primary Account.................  $  15,666  $ 12,873   $  34,932  $ 30,772
  Secondary Account...............     11,843    11,161      23,120    20,292
                                    ---------  ---------  ---------   --------
                                    $  27,509  $ 24,034   $  58,052  $ 51,064
                                    ---------  ---------  ---------   --------
                                    ---------  ---------  ---------   --------

    Operating costs and expenses by category are shown in the consolidated
statement of earnings on page 4.
                                      11

<PAGE>
 
    Sales volumes attributable to timber sales were (in thousand cunits):
 
                                      12


<PAGE>
<TABLE>
<CAPTION>
                                                   Three Months Ended     Six Months Ended
                                                       June 30,                June 30,
                                                   ------------------     ------------------
                                                     1997       1996        1997       1996
                                                    -------    -------    ---------  -------
<S>                                                 <C>        <C>        <C>        <C>
Used by International Paper facilities.........         247       210         541        440
Resold by International Paper..................          50        57         128        214
Sold to unaffiliated parties...................         333       472       1,045        975
                                                        ---       ---     -------    --------
                                                        630       739       1,714      1,629
                                                        ---       ---     -------    --------
                                                        ---       ---     -------    --------
</TABLE>
 
    Total annual sales volumes for 1997 are expected to remain approximately the
same as for 1996.
 
    Depletion as a percent of stumpage sales increased in the 1997 second
quarter due to sales of higher cost timber acquired from Federal Paper Board
Company.
 
    Interest expense for the second quarter of 1997 included $7.1 million
related to $450 million of long-term debt and $2.4 million as a preferred return
on the Series A Preference Units issued to Federal Paper Board Company in March
1997.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    IPT had cash and temporary investments of $9.0 million, a current receivable
from International Paper of $.1 million, and notes receivable from International
Paper of $311.6 million, giving the Partnership $320.7 million in liquid assets
at June 30, 1997. Cash is either invested in temporary investments or loaned to
International Paper at market rates. The breakdown of liquid assets between the
Primary and Secondary Accounts was (in thousands):
 
                                                  June 30,   December 31,
                                                   1997         1996
                                                 ----------  ------------
Cash, temporary investments 
  and current receivables
    Primary Account............................  $  234,354   $  171,508
    Secondary Account..........................      86,400      110,757
                                                 ----------   -----------
                                                 $  320,754   $  282,265
                                                 ----------   -----------
                                                 ----------   -----------
Total per Class A Unit.........................  $     4.87   $     3.61
                                                 ----------   -----------
                                                 ----------   -----------

                                      


<PAGE>
 
    In addition, current assets at June 30, 1997 and December 31, 1996, included
$4.3 million and $5.5 million, respectively, of accounts receivable, and $15.5
million and $2.7 million, respectively, of notes receivable, from parties other
than International Paper, due within the next 12 months.


    In March 1997, IPTO issued 13,074 Series A Preference Units, with an agreed
value of $130.7 million, to Federal Paper Board Company in exchange for a timber
deed on approximately 116,000 acres. These units, which may be redeemed by IPTO
at any time, require quarterly preferred return payments, based on an annual
rate of 7.5% of the agreed value, that must be paid before distributions can be
made to the Partnership's Class A or Class B unitholders. Since it is expected
that the harvest from this timber deed will be prior to the end of the Initial
Term, payment of the $130.7 million redemption value (or $2.81 per Class A Unit)
will be made from the Primary Account.
 
                                      13


<PAGE>

    The following table reflects cash flow from operations, after capital
expenditures, attributable to the Class A Units (in thousands).
 
<TABLE>
<CAPTION>
                                                                                  Primary       Secondary      IPT
                                                                                  Account        Account      Total
                                                                                 ---------     -----------  ---------
<S>                                                                              <C>        <C>          <C>
SIX MONTHS ENDED JUNE 30, 1997
Cash provided by operations....................................................  $  120,102   $   (1,577)   $  118,525
Investment in forestlands and roads............................................        (398)     (15,290)      (15,688)
IPTO general partners' interest in above.......................................      (1,197)         169        (1,028)
                                                                                 ----------   ----------    ----------
Cash flow after capital expenditures...........................................     118,507      (16,698)   $  101,809
                                                                                 ----------   ----------    ----------
                                                                                                            ----------
Class A Unit allocation factor.................................................          95%           4%

Class A Unit cash flow
after capital expenditures.....................................................  $  112,582   $     (668)   $  111,914
                                                                                 ----------   ----------    ----------
                                                                                 ----------   ----------    ----------
Distributions declared for Class A Units.......................................  $   46,446                 $   46,446
                                                                                 ----------                 ----------
SIX MONTHS ENDED JUNE 30, 1996                                                                                        
Cash provided by operations....................................................  $  131,727   $  (13,002)   $  118,725
Investment in forestlands and roads............................................      (1,769)     (15,589)      (17,358)
IPTO general partners' interest in above.......................................      (1,300)         286        (1,014)
                                                                                 ----------   ----------    ----------
Cash flow after capital expenditures...........................................     128,658      (28,305)   $  100,353
                                                                                                            ----------
                                                                                                            ----------
Class A Unit allocation factor.................................................          95%           4%
                                                                                 ---------    ----------
Class A Unit cash flow
after capital expenditures.....................................................  $  122,226   $   (1,132)  $  121,094
                                                                                 ----------   ----------   ----------
Distributions declared for Class A Units.......................................  $  509,510                $  509,510
                                                                                 ----------                ----------
                                                                                 ----------                ----------
</TABLE>



<PAGE>

    In July 1997, IPT declared a regular quarterly cash distribution of $.50 per
Class A Unit for the second calendar quarter of 1997. This distribution is
payable on August 15, 1997 to holders of record as of July 31, 1997.
 
    In April 1996, IPT had declared a regular $.50 per Class A Unit distribution
and a $9.75 per Class A Unit special distribution. The payment of this
distribution was the result of management's evaluation that remaining cash
balances and projected future cash flows would be adequate for future asset
acquisition and operating requirements.
                                       13

<PAGE> 
    Capital expenditures, including expenditures for reforestation of harvested
forestland, acquisition of capitalized leases and road construction, are
expected to be approximately $185 million for 1997, including a $131 million
noncash expenditure in March 1997 for the Federal timber deed acquisition.


                                      14


<PAGE>

PART II.  OTHER INFORMATION
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
 
        (a) Exhibits 
 
            (27) Financial Data Schedule
 
                 (b) a current report on Form 8K was filed on July 9, 1997.

                                      15


<PAGE>
 
                                   SIGNATURES
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
                                       IP Timberlands, Ltd. 
                                       By: IP Forest Resources Company 
                                       Managing General Partner 
                                         (Registrant)
 
                                       Date: August  , 1997 
                                       By: /s/ James W. Guedry 
                                           ------------------------------
                                           James W. Guedry 
                                           Vice President and Secretary
 
                                       Date: August  , 1997  
                                       By: /s/Frederick L. Bleier 
                                           -------------------------------
                                           Frederick L. Bleier 
                                           Treasurer and Controller 
                                           and Chief Financial and 
                                           Accounting Officer
 
                                       16