International Paper (IP) 8-K International Paper Reports Solid Third-Quarter Earnings

Third Quarter

2009 Review

October 28, 2009

Third Quarter

2009 Review

October 28, 2009

John V. Faraci

Chairman &

Chief Executive Officer

Tim S. Nicholls

Senior Vice President &

Chief Financial Officer

Exhibit 99.2

2

Forward-Looking

Statements

Forward-Looking

Statements

These slides and statements made during this presentation contain forward-looking

statements. These statements reflect management's current views and are subject to risks

and uncertainties that could cause actual results to differ materially from those expressed

or

implied

in

these

statements.

Factors

which

could

cause

actual

results

to

differ

relate

to:

(i)  increases in interest rates; (ii) industry conditions, including but not limited to changes in

the cost or availability of raw materials, energy and transportation costs, competition we

face, cyclicality and changes in consumer preferences, demand and pricing for its

products; (iii) global economic conditions and political changes, including but not limited to

the impairment of financial institutions, changes in currency exchange rates, credit ratings

issued by recognized credit rating organizations, the amount of our future pension funding

obligation, changes in tax laws and pension and health care costs; (iv) unanticipated

expenditures related to the cost of compliance with environmental and other governmental

regulations and to actual or potential litigation; and (v) whether we experience a material

disruption at one of our manufacturing facilities and risks inherent in conducting business

through a joint venture. We undertake no obligation to publicly update any forward-looking

statements, whether as a result of new information, future events or otherwise. These and

other factors that could cause or contribute to actual results differing materially from such

forward looking statements are discussed in greater detail in the company's Securities and

Exchange Commission filings.

3

Statements Relating

to Non-GAAP

Financial Measures

Statements Relating

to Non-GAAP

Financial Measures

During the course of this presentation, certain

non-U.S. GAAP financial information will be

presented.

A reconciliation of those numbers to U.S.

GAAP financial measures is available on the

company’s website at internationalpaper.com

under Investors.

4

Third Quarter 2009

Solid Results

Third Quarter 2009

Solid Results

Stabilized Volumes

Continued Margin Expansion

$1.3 Billion in Free Cash Flow*

$1.3 Billion Debt Reduction

Earnings from continuing operations before special items

•

* Cash provided by continuing operations less capital expenditures,

including alternative fuel mixture credits

5

3Q09 Financial Snapshot

3Q09 Financial Snapshot

•

Earnings from continuing operations before special items

•

*

Cash provided by continuing operations less capital expenditures, excluding alternative fuel credits of

$0.7B

in

2Q09

and

$0.5B

in

3Q09

and

cash

received

under

European

accounts

receivable

securitization

•

of

$0.2B in 3Q09

$ Billion

3Q08

2Q09

3Q09

Sales

$6.8

$5.8

$5.9

EBITDA

$1.0

$0.7

$0.8

Free Cash Flow

$0.7

$0.6*

$0.6*

Debt

$12.7

$10.9

$9.6

Cash Balance

$0.8

$1.7

$1.7

6

Overcoming Economic Challenges

EBITDA Margin Expansion in Difficult Markets

Overcoming Economic Challenges

EBITDA Margin Expansion in Difficult Markets

Operating profit before special items

Excludes Forest Products earnings

EBITDA Margins

EBITDA Margins exc. xpedx

7

Free Cash Flow

Free Cash Flow

$ Million

3Q08

2Q09

3Q09

Cash from Operations

$946

$707

$713*

Alternative Fuel Mixture

Tax Credits

-

$688

$463

Cash Provided by

Continuing Operations

$946

$1,395

$1,381

Less Capital Investment

($250)

($131)

($108)

Free Cash Flow

$696

$1,264

$1,273

* Excludes $205MM cash received under European accounts receivable securitization

8

Debt Reduction Progress

$3.1 Billion Reduction since Acquisition

Debt Reduction Progress

$3.1 Billion Reduction since Acquisition

1

Excludes

the

debt

repayment

of

$1B

from

the

proceeds

of

our

May

bond

issuance:

$1B

9.375%

notes

due

2019

2

Excludes the debt repayment of $1B from the proceeds of our August bond issuance: $1B 7.5% notes due 2021

9

1,056

676

459

97

97

97

100

192

97

903

35

60

72

50

3Q08

4Q08

1Q09

2Q09

3Q09

Maintenance

Valliant #3 LOO

Lack-of-Order

N.A. Lack of Order & Maintenance Downtime

15% of Capacity in 3Q, Down from 29% Peak in 1Q

N.A. Lack of Order & Maintenance Downtime

15% of Capacity in 3Q, Down from 29% Peak in 1Q

Lack-of-order & maintenance downtime for North American Containerboard, Uncoated Papers, Market Pulp, & Coated    

Paperboard.  See Appendix slide 33 for detail by business.

2009

LOO

downtime

excludes

capacity

from

mills

or

machines

that

have

been

permanently

shutdown

(Franklin

#3

-

32,000

tons

and

Louisiana

mill

-120,000

tons)

as

of

September

30,

2009

107

1,013

1,253

965

653

10

Capacity Management Summary

Adjusting

Mill

Capacity

to

Meet

our

Customers’

Needs

Capacity Management Summary

Adjusting

Mill

Capacity

to

Meet

our

Customers’

Needs

Mill

Products

Annual

Capacity

(Tons)

Number

of

Machines

% of IP

Capacity

Estimated

Closure

Franklin,

VA

Uncoated

Freesheet

600,000

1

3

19%

Spring

2010

Coated

Paperboard

140,000

1

7%

By 2009

Year-End

Albany,

OR

Containerboard

580,000

2

12%

Mid-

December

Pineville,

LA

Containerboard

390,000

1

Valliant,

OK

Containerboard

430,000

2

1

•

1

Does not include 150,000-ton capacity of #3 machine previously closed in November 2008

•

2

Capacity of #3 machine previously indefinitely idled in November 2008

11

80

58

66

(8)

WY

PKG

(4)

(24)

0

15

30

45

60

75

90

2005

Headcount*

Divestments

& Acquisitions

Headcount

Reduction

June

2008

Headcount

Reduction

September

2009

Aggressive Restructuring

& Cost Reduction

28% Headcount Reduction

Aggressive Restructuring

& Cost Reduction

28% Headcount Reduction

* At January 1, 2005

Excludes Ilim

joint venture employees

12

.20

.37

.09

.03

.03

.11

.02

.07

(.12)

(.06)

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

2Q09

Volume/

LOO

Price

Input

Costs

Operations/

Costs

Mix

Maintenance

Outages

Tax

Ilim JV

3Q09

Earnings before special items.

3Q09 vs. 2Q09 EPS

Volumes Improved, Strong Cost Management, Ilim

Recovery

3Q09 vs. 2Q09 EPS

Volumes Improved, Strong Cost Management, Ilim

Recovery

13

255

214

12

42

(74)

(9)

(3)

(9)

$0

$50

$100

$150

$200

$250

$300

2Q09

Volume/

LOO

Price

Input

Costs

Maintenance

Outages

Operations/

Costs

Mix

3Q09

Industrial Packaging

Earnings

3Q09 vs. 2Q09

Industrial Packaging

Earnings

3Q09 vs. 2Q09

Includes ($7MM) cost

of fire at Savannah Mill

Earnings before special items

14

N.A. Industrial Packaging

Relative EBITDA Margins

Outperforming Competitors in 2009

N.A. Industrial Packaging

Relative EBITDA Margins

Outperforming Competitors in 2009

IP EBITDA margins based on North American Industrial Packaging operating profit before special items

Competitor

EBITDA

margin

estimates

obtained

from

public

filings

and

IP

analysis

15

86

138

27

3

19

22

6

4

(29)

$0

$25

$50

$75

$100

$125

$150

$175

2Q09

Volume/

LOO

Price

Input

Costs

Operations/

Costs

Maintenance

Outages

Mix

Other

3Q09

Printing

Papers Earnings

3Q09 vs. 2Q09

Printing

Papers Earnings

3Q09 vs. 2Q09

Earnings Before Special Items

16

86

138

31

12

13

(4)

$0

$25

$50

$75

$100

$125

$150

2Q09

NA Paper

NA Pulp

Europe

Brazil

3Q09

Printing Papers Earnings

3Q09 vs. 2Q09

Printing Papers Earnings

3Q09 vs. 2Q09

Earnings Before Special Items

17

38

68

8

7

6

19

(8)

(2)

$0

$15

$30

$45

$60

$75

2Q09

Volume/

LOO

Price

Input

Costs

Operations/

Costs

Maintenance

Outages

Mix

3Q09

Consumer Packaging

Earnings

3Q09 vs. 2Q09

Consumer Packaging

Earnings

3Q09 vs. 2Q09

Earnings before special items

18

$ Million

3Q08

2Q09

3Q09

Sales

$2,075

$1,595

$1,665

Earnings

$35

$10

$21

xpedx

3Q09 vs. 2Q09

xpedx

3Q09 vs. 2Q09

Sales revenue up 5% vs. 2Q09

Cost savings driving the bottom line

Volume improvements in all segments

Printing, Packaging & Facility Supplies

Winning new business in National Accounts

19

$ Million

3Q08

2Q09

3Q09

Sales (100%)

$530

$290

$305

Earnings (IP Share)

$5

($30)

$0

Ilim’s results are reported on a one-quarter lag

IP’s shares of Ilim’s 3Q08, 2Q09 & 3Q09 earnings includes after-tax foreign exchange losses of

$3 million and $22 million, and an after-tax foreign exchange gain of $10 million, respectively

Ilim Joint Venture

Ilim Joint Venture

3Q09 vs. 2Q09

3Q09 vs. 3Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

Pulp

3%

$5

(4%)

($304)

Containerboard

7%

($26)

6%

($222)

20

IP Asia –

Building

Breadth & Scale

Surpassed $1 Billion Revenue Run Rate

IP Asia –

Building

Breadth & Scale

Surpassed $1 Billion Revenue Run Rate

Consumer Packaging -

Sun Joint Venture

•

3 machines with 900,000 tons capacity

•

#1 in coated paperboard

Shorewood & Foodservice

•

4 facilities

Industrial Packaging

•

12 corrugated plants

Printing & Communications Papers

•

UFS sales revenue up 50% over 2Q

Distribution

•

Sales volume up 50% over 2Q

Corrugator

Plant

Sheet Plant

Shorewood/ foodservice plant

IP-Sun JV

China

India

Korea

Thai

Indonesia

Beijing

Chengdu

Guangzhou

Shenyang

Chongqing

Shanghai

Tianjin

Dongguan

Yanzhou

Dalian

Wuxi

Guangzhou

Foshan

Sacheon

International Paper’s  Asian results are reported in the Industrial Packaging, Consumer Packaging and Printing Papers segments

21

IP Asia

Strong Growth

IP Asia

Strong Growth

International Paper’s  Asian results are reported in the Industrial Packaging, Consumer Packaging and Printing Papers segments.

$680

$845

$1,150

2007

2008

3Q09

Run-Rate

$15

$62

($27)

2007

2008

3Q09

Run-Rate

Sales

Change in Earnings

Contribution to IP

22

$ Million

3Q08

2Q09

3Q09

Sales

$255

$215

$275

Earnings

$58

$23

$36

EBITDA Margin

35%

24%

25%

IP Brazil results are reported in the Printing Papers segment

IP Brazil

IP Brazil

3Q09 vs. 2Q09

3Q09 vs. 3Q08

Business

Volume

(000 Metric

Tons) 

Price /

Ton

Volume

(000 Metric

Tons)

Price /

Ton

Uncoated Freesheet

21%

($37)

31%

($110)

Domestic

16%

($25)

2%

$16

Export

25%

($48)

69%

($211)

23

Third Quarter Summary

Solid Results Despite Recession

Third Quarter Summary

Solid Results Despite Recession

Stabilized Volumes

Margin Expansion

Strong Free Cash Flow

Accelerated Debt Reduction

24

Biomass Crop Assistance Program &

Cellulosic Ethanol Tax Credits

Biomass Crop Assistance Program &

Cellulosic Ethanol Tax Credits

Biomass

Crop

Assistance

Program

•

Investigating the program

•

Need final, written regulations to understand

•

Believe that the definition of biomass should be narrowly

defined to ensure level playing field for paper industry

•

Encourage implementation of Phase II to increase

biomass supply

Cellulosic

Ethanol

Tax

Credits

•

We believe that pulp & paper producers do not qualify

25

Fourth Quarter Outlook

Changes from 3Q09

Fourth Quarter Outlook

Changes from 3Q09

North America

Europe

Brazil

Russia -

Svetogorsk

Asia

Volume

Paper

Seasonally

Soft

Stable

Seasonal

Increase

Increasing

Stable

Packaging

Seasonal

Decrease

Seasonal

Increase

Stable

Pricing

Paper

Pulp Increasing,

Paper Stable

Improving

Stable

Stable

Stable

Packaging

Box Pricing

Margin

Pressure

Stable

Maintenance

Outages

$31MM

Unfavorable

$10MM

Favorable

Flat

Flat

Input & Freight

Costs

Increasing

Increasing

Flat

Increasing

Pulp Up

xpedx

Stable

Ilim

Joint

Venture

Improving

Forest

Products

Flat

26

Priorities

Priorities

Realize Restructuring & Cost Reduction

Benefits

Match our Supply to our Customers’

Needs

Optimize Industrial Packaging Business

Continue Debt Reduction

27

Appendix

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Emily Nix

901-419-4987

Media Contact

Kathleen Bark

901-419-4333

28

Special Items Net of Taxes

3Q09

Special Items Net of Taxes

3Q09

$ Million

EPS

Earnings Before Special Items

$157

$0.37

Special Items Net of Taxes:

Alternative Fuel Mixture Credits

$320

Debt Extinguishment Costs

($63)

Overhead Reduction Initiative

($24)

Integration Costs

($11)

Other Previously Announced Closures*

($8)

Total Special Items Net of Taxes

$214

$0.50

Net Earnings

$371

$0.87

*

Does not include closures announced on October 22, 2009

29

$ Billion

2007

1

2008

2009

Estimate

Capital Spending

$1.3

$1.0

$0.6

Depreciation &

Amortization

$1.1

$1.3

$1.5

3

Net Interest Expense

$0.3

$0.5

$0.7

Corporate Items

2

$0.2

$0.1

$0.2

Effective Tax Rate

2

30%

31.5%

30-32%

1

Excludes discontinued operations

2

Before special items and excluding Ilim

3

Estimated depreciation impacted by extensive lack-of-order downtime

Key Financial Statistics

Key Financial Statistics

30

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Debt Maturities

Monetization & Other

Monetization & Other: Intend to rollover or refinance timber monetization debt, Sun JV debt and other foreign subsidiary debt

Preferred Annual

Debt Ceiling

Debt Maturity Profile

Maturities as of Quarter-End

Debt Maturity Profile

Maturities as of Quarter-End

31

Cash & Committed Facilities

$4.2 Billion

Cash & Committed Facilities

$4.2 Billion

$ Billion

Maturity

Facility

Cost

Quarter-End Cash

-

$1.7

-

$1.0B

1

Accounts

Receivables Program

JAN 2010

Zero Drawn

CP Rate

2

+ 150 bps

$1.5B Corporate

Revolver 

MAR 2011

Zero Drawn

LIBOR + 50 to 60 bps

Total Cash & Committed Facilities

$4.2

-

Cost includes commitment fees

1

$942 million available at quarter-end based on eligible receivable balances

2

Conduit’s rate

32

Debt Covenants & Credit Ratings

Debt Covenants & Credit Ratings

Covenant

As of 9/30

Maximum Debt-to-Total Capital

60%

44.7%

Minimum Consolidated Net Worth

$9B

$11.9B

Rating

Outlook

Standard & Poor’s

BBB

Negative

Moody’s

Baa3

Negative

33

N.A. Lack of Order & Maintenance Downtime

15% of Capacity in 3Q, Improved from 22% in 2Q

N.A. Lack of Order & Maintenance Downtime

15% of Capacity in 3Q, Improved from 22% in 2Q

LOO

downtime

excludes

capacity

from

mills

or

machines

that

have

been

permanently

shutdown

(Franklin

#3

-

32,000

tons

and

Louisiana

mill

-

120,000

tons)

as

of

September

30,

2009

34

$ Millions

1Q09

2Q09

3Q09

4Q09E

Industrial Packaging

$44

$46

$4

$26

North America

19

33

34

25

Europe

7

19

10

0

Brazil

5

0

2

0

Printing Papers Total

$31

$52

$46

$25

Consumer Packaging

$4

$20

$1

$19

Total Impact

$79

$118

$51

$70

Dollar impact of planned maintenance outages are estimates and subject to change

Maintenance Outages Expenses

Maintenance Outages Expenses

35

Forest Products

3Q09

vs. 2Q09

Forest Products

3Q09

vs. 2Q09

3Q08

2Q09

3Q09

Sales ($ Million)

$55*

$10

$5

Earnings ($ Million)

$305

$3

$2

Acres Sold

33,000

2,900

3,200

Price / Acre

$1,564

$2,649

$1,994

The pending sale of 143,000 acres not expected to close in 4Q09.

Interested parties are continuing their due diligence efforts and

we will have a better view on this transaction later in 4Q09.

* Mineral rights sale is not reflected in sales but in Other Income

36

3Q09 vs. 2Q09

3Q09 vs. 3Q08

Business

Volume

Price /

Ton

Volume

Price /

Ton

N.A. Container

(2%)

($33)

(15%)

*

($15)

*

European Container

(6%)

(€14)

(4%)

(€92)

Industrial Packaging

Industrial Packaging

*

Estimate based on IP legacy plus WY PKG history

37

Average IP price realization (includes the impact of mix across all grades)

3Q09 vs. 2Q09

3Q09 vs. 3Q08

Business

Volume

Price / Ton

Volume

Price / Ton

N.A. Paper

8%

($24)

*

(13%)

($79)

N.A. Pulp

15%

$2

(8%)

($131)

European Paper

(8%)

(€18)

(14%)

(€101)

Printing

Papers

Printing

Papers

* The average selling price for 20# cut-size remained flat during the third quarter

38

Average IP price realization (includes the impact of mix across all grades)

3Q09 vs. 2Q09

3Q09 vs. 3Q08

Volume

Price/Ton

Volume

Price/Ton

U.S. Coated Paperboard

2%

($23)

(19%)

$31

Revenue

Price

Revenue

Price

Converting Businesses

0%

NA

(9%)

NA

Consumer Packaging

Consumer Packaging

39

Special Items

Special Items

Special Items Pre-Tax:

3Q08

2Q09

3Q09

Industrial

Packaging

Alternative Fuel Mixture Credits

$208

$221

Integration Costs

($58)

($18)

($18)

Facility Closure Costs*

($63)

($7)

Printing

Papers

Alternative Fuel Mixture Credits

$197

$226

Facility Closure Costs*

($107)

($4)

($1)

Consumer

Packaging

Alternative Fuel Mixture Credits

$77

$78

Reorganization

($8)

($1)

($2)

Corporate

Restructuring & Other Charges

($89)

($59)

($141)

Sale of Forestlands

$3

Total Special Items Pre-Tax

($259)

$337

$356

* Does not include closures announced on October 22, 2009

40

3Q09 EBITDA

before Special Items

3Q09 EBITDA

before Special Items

Operating

Profit

$ Million

D & A

$ Million

Tons

Thousand

EBITDA

$ per Ton

EBITDA

Margin %

Industrial Packaging

North America

$201

$156

2,469

$145

19.8%

Europe

$13

$8

252

$83

8.8%

Printing Papers

North America

$92

$58

775

$194

20.7%

Western Europe

($5)

$5

68

$0

0%

Eastern

Europe

&

Russia

$43

$15

236

$246

28.7%

Brazil

$36

$32

282

$241

24.8%

U.S. Market Pulp

($18)

$10

301

($27)

(5.2%)

Consumer Packaging

U.S. Coated Paperboard

$46

$35

324

$250

22.9%

1

Excludes Recycling & Bag businesses; includes Saturating Kraft business

2

Includes Bleached Kraft business

3

Excludes Market Pulp

3

3

2

1

41

Operating

Profits by Industry Segment

Operating

Profits by Industry Segment

$ Million

3Q08

2Q09

3Q09

Industrial Packaging

$153

$255

$214

Printing Papers

$210

$86

$138

Consumer Packaging

$6

$38

$68

Distribution

$35

$10

$21

Forest Products

$305

$3

$2

Operating Profit

$709

$392

$443

Net Interest Expense

($144)

($173)

($169)

Noncontrolling Interest /

Equity Earnings Adjustment

($1)

$8

$5

Corporate Items

($40)

($44)

($46)

Special Items

($259)

$337

$356

Earnings from continuing operations before income

taxes,

equity

earnings

&

noncontrolling

interest

$265

$520

$589

Equity Earnings, net of taxes -

Ilim

$5

($30)

$0

42

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

$ Million

Sales

Operating Profit

3Q08

2Q09

3Q09

3Q08

2Q09

3Q09

Industrial Packaging

North American

$1,935

$1,955

$1,890

$140

$241

$201

European

$285

$240

$240

$11

$14

$14

Asian

$100

$75

$100

$2

$0

$0

Printing Papers

North American

$905

$685

$725

$131

$61

$92

European

$425

$315

$300

$29

$16

$28

Brazilian

$255

$215

$275

$58

$23

$36

U.S. Market Pulp

$210

$135

$155

($9)

($14)

($18)

Asian

$5

$10

$15

$1

$0

$0

Consumer Packaging

North American

$645

$565

$565

$7

$17

$44

European

$80

$80

$80

$1

$14

$17

Asian

$105

$125

$145

($2)

$7

$7

Distribution

$2,075

$1,595

$1,665

$35

$10

$21

Excludes Forest Products

43

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

Pre-Tax

$MM

Tax

$MM

Minority

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

MM

Diluted

EPS

Before Special Items

1Q09

$97

($32)

($4)

($27)

$34

33%

423

$0.08

2Q09

$183

($61)

($4)

($32)

$86

33%

425

$0.20

3Q09

$233

($70)

($6)

$0

$157

30%

429

$0.37

Special Items

1Q09

$421

($198)

$0

$0

$223

47%

423

$0.53

2Q09

$337

($287)

$0

$0

$50

85%

425

$0.12

3Q09

$356

($142)

$0

$0

$214

40%

429

$0.50

Earnings

1Q09

$518

($230)

($4)

($27)

$257

44%

423

$0.61

2Q09

$520

($348)

($4)

($32)

$136

67%

425

$0.32

3Q09

$589

($212)

($6)

$0

$371

36%

429

$0.87

2009 Earnings

2009 Earnings

2

1

44

Earnings

from

continuing

operations

before

special

items;

volume

includes

earnings

from

WY

PKG

3Q09 vs. 3Q08 EPS

3Q09 vs. 3Q08 EPS

.48

45

153

214

144

7

99

(73)

(93)

(23)

$0

$50

$100

$150

$200

$250

$300

3Q08

Input

Costs

Price

Volume/

LOO

Mix

Maintenance

Outages

Operations/

Costs

3Q09

Industrial Packaging

Earnings

3Q09 vs. 3Q08

Industrial Packaging

Earnings

3Q09 vs. 3Q08

Earnings before special items

46

210

138

88

11

9

14

(141)

(32)

(21)

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

$300

$325

3Q08

Input

Costs

Price

Volume/

LOO

Mix

Maintenance

Outages

Operations/

Costs

Other

3Q09

Printing

Papers Earnings

3Q09 vs. 3Q08

Printing

Papers Earnings

3Q09 vs. 3Q08

Earnings before special items

47

6

68

58

18

12

9

4

(35)

(4)

$0

$15

$30

$45

$60

$75

$90

3Q08

Input

Costs

Price

Volume/

LOO

Mix

Maintenance

Outages

Operations/

Costs

Other

3Q09

Consumer Packaging

Earnings

3Q09 vs. 3Q08

Consumer Packaging

Earnings

3Q09 vs. 3Q08

Earnings before special items

48

Total Cash Cost Components

3Q09 YTD

Total Cash Cost Components

3Q09 YTD

North American Mills Only

Fiber

28%

Materials

14%

Labor

14%

Chemicals

12%

Freight

12%

Energy

11%

Overhead

9%

49

Global Input Costs by Segment

$17 Million, or $0.03/Share Favorable vs. 2Q09

Global Input Costs by Segment

$17 Million, or $0.03/Share Favorable vs. 2Q09

By Business

By Input Type

50

97

68

66

59

($5)

$10

$25

$40

$55

$70

$85

$100

Energy

Fiber

Chemicals

Freight

Global Input Costs by Input

$290MM, or $0.47/Share Favorable vs. 3Q08

Global Input Costs by Input

$290MM, or $0.47/Share Favorable vs. 3Q08

Input costs for continuing businesses; does not include WY PKG

51

0

50

100

150

200

250

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

2005

2006

2007

NYMEX Natural Gas closing prices

Index: Jan 2005 Natural Gas Costs = 100

Natural Gas Costs

3% Decrease vs. 2Q09 Average Cost

Natural Gas Costs

3% Decrease vs. 2Q09 Average Cost

2008

2009

52

90

95

100

105

110

115

120

125

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

U.S. Mill Wood Costs

Flat vs. 2Q09 Average Cost

U.S. Mill Wood Costs

Flat vs. 2Q09 Average Cost

Index: Jan 2005 Wood Costs = 100

2005

2006

2007

2009

Delivered cost to U.S. facilities

2008

53

Index: Jan 2005 OCC Costs = 100

U.S. Old Corrugated Containers Costs

36% Increase vs. 2Q09 Average Cost

U.S. Old Corrugated Containers Costs

36% Increase vs. 2Q09 Average Cost

2005-2007 represents WY PKG delivered costs; 2008-2009 represents the integrated system

54

Index: Jan 2006 Fuel Oil Costs = 100

U.S. Fuel Oil

5% Increase vs. 2Q09 Average Cost

U.S. Fuel Oil

5% Increase vs. 2Q09 Average Cost

WTI Crude prices

55

2005

2006

2007

2009

Index: 1Q05 Chemical Composite= 100

2008

Delivered cost to U.S. facilities; includes Caustic Soda, Sodium

Chlorate, Starch and Sulfuric Acid

2005 -

2008 excludes WY PKG

U.S. Chemical Composite Index

21% Decrease vs. 2Q09 Average Cost

U.S. Chemical Composite Index

21% Decrease vs. 2Q09 Average Cost

56

Global Consumption

Annual Purchase Estimates for Key Inputs

Global Consumption

Annual Purchase Estimates for Key Inputs

Does

not

include

Asian

or

Ilim

consumption

Estimates are based on normal operations and may be impacted by downtime

Commodity

U. S.

Non

–

U.

S.

Energy

Natural Gas (MM BTUs)

50,500,000

16,000,000

Fuel Oil (Barrels)

2,100,000

500,000

Coal (Tons)

1,100,000

230,000

Fiber

Wood (Tons)

50,000,000

8,400,000

Old Corrugated Containers (Tons)

3,500,000

310,000

Chemicals

Caustic Soda (Tons)

330,000

60,000

Starch (Tons)

490,000

110,000

Sodium Chlorate (Tons)

225,000

50,000

LD Polyethylene (Tons)

45,000

-

Latex (Tons)

25,000

4,000