International Paper (IP) 8-K International Paper Reports Fourth-Quarter and 2010 Earnings

Fourth Quarter

and Full Year

2010 Review

February 3, 2011

Fourth Quarter

and Full Year

2010 Review

February 3, 2011

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

our

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

and

changes

in

pension

and

health

care

costs;

(iv)

unanticipated

expenditures

related

to

the

cost

of

compliance

with

existing

and

new

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

Fourth Quarter 2010

Solid Finish in Transition Year

Fourth Quarter 2010

Solid Finish in Transition Year

Strong Earnings

Strong Free Cash Flow

Incremental price realization

offset seasonal volume declines

More Maintenance Outages

Increased Input Costs

Strong Ilim JV Contribution

Earnings from continuing operations

before special items

5

4Q10 Operating Business EPS

Strongest 4Q in more than a decade

4Q10 Operating Business EPS

Strongest 4Q in more than a decade

Earnings from continuing operations before special items as reported at the time

6

Strong Full-Year 2010 Results

Strong Full-Year 2010 Results

$3.3 B EBITDA

$1.7 B

Free Cash Flow

1

110 BPS EBITDA Margin Expansion

250 BPS ROI Improvement

Significant Debt Reduction Progress

Pension Funding Gap down $1.3 B

Net Debt down $550 MM

Annual Dividend Rate Increase

From $0.10 to $0.75

Earnings from continuing operations before special items

1

See slide #34 for a reconciliation of free cash flows

7

Strong Full-Year 2010 Results

Strong Full-Year 2010 Results

1

See slide #34 for a reconciliation of free cash flows

2

Earnings from continuing operations before special items

$ Billion

2009

2010

Sales

$23.4

$25.2

Free Cash Flow

1

$2.2

$1.7

Year-End Debt

$9.0

$8.7

Cash Balance

$1.9

$2.1

EBITDA

2

8

2010 Revenue

$1.8 Billion Increase

2010 Revenue

$1.8 Billion Increase

1

Reflects 100% of Ilim’s

revenues

2010 vs. 2009 Revenue Growth

U.S.

6%

Non-U.S.

13%

Ilim

Joint Venture

33%

Non-U.S., Inc. Ilim

1

18%

9

Earnings before special items

2010 vs. 2009 EPS

2010 vs. 2009 EPS

Earnings from continuing operations before special items

10

Step-Change

Improvement

in

Free

Cash

Flow

Step-Change

Improvement

in

Free

Cash

Flow

2000 –

2004 Average

$0.9 Billion

2008 –

2010 Average

$1.9 Billion

Transformation

Free cash flow, based on data in the 10-K for each year at the time of filing.

See slide #34 for a reconciliation of free cash flows

11

Transformation Enabling Improved Returns

Recovering from Global Recession

Transformation Enabling Improved Returns

Recovering from Global Recession

Cost of Capital

Return on Investment

12

4Q10 Financial Snapshot

Strong EBITDA & Free Cash Flow

4Q10 Financial Snapshot

Strong EBITDA & Free Cash Flow

4Q09

3Q10

4Q10

Sales ($B)

$6.0

$6.7

$6.5

EBITDA

1

($MM)

$669

$1,061

$872

EBITDA Margin

11%

16%

13%

Free Cash Flow

2

($MM)

$530

$753

$601

Debt ($B)

$9.0

$8.7

$8.7

Cash Balance ($B)

$1.9

$1.4

$2.1

1

Earnings from continuing operations before special items

2

4Q09 excludes cash received from alternative fuel credits of $388 MM; See slide #34 for a reconciliation of 3Q10 and 4Q10

free cash flows

13

Earnings before special items

4Q10 vs. 3Q10 EPS

4Q10 vs. 3Q10 EPS

Earnings before special items

14

Global Input Costs vs. 3Q10

$22 MM Unfavorable, or $0.03/Share

Global Input Costs vs. 3Q10

$22 MM Unfavorable, or $0.03/Share

By Business

By Input Type

15

Industrial Packaging Earnings

4Q10 vs. 3Q10

Industrial Packaging Earnings

4Q10 vs. 3Q10

Earnings before special items

16

N.A. Industrial Packaging Relative EBITDA Margins

N.A. Industrial Packaging Relative EBITDA Margins

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

Excludes revenue from trade volumes

4Q10

Sales

$2.0 B

$0.6 B

$1.6 B

17

N.A. Industrial Packaging Relative EBIT

N.A. Industrial Packaging Relative EBIT

Operating profit before special items.

Operating Profit up 13%

Operating Profit up 28%

18

Printing Papers Earnings

4Q10 vs. 3Q10

Printing Papers Earnings

4Q10 vs. 3Q10

Earnings before special items

19

Printing Papers EBITDA Margins

Strong Recovery in 2010 in all Regions

Printing Papers EBITDA Margins

Strong Recovery in 2010 in all Regions

2009

Margin

19%

15%

(6%)

24%

20

Consumer Packaging Earnings

4Q10 vs. 3Q10

Consumer Packaging Earnings

4Q10 vs. 3Q10

Earnings before special items

21

U.S. Coated Paperboard EBITDA Margins

Now similar to UFS & Containerboard Margins

U.S. Coated Paperboard EBITDA Margins

Now similar to UFS & Containerboard Margins

22

$ Million

4Q09

3Q10

4Q10

Sales

$1,675

$1,755

$1,770

Earnings

$31

$22

$9

xpedx

4Q10 vs. 3Q10

xpedx

4Q10 vs. 3Q10

2010 EBIT increased more than 40% vs. 2009

Average daily sales rates increased in all segments

4Q10 results include initial investments to improve results, including

charges to exit specific retail and printing equipment segments

Plans under development to significantly improve operating earnings

Daily Sales Change

vs. 3Q10

Printing

2.8%

Packaging

5.8%

Facility Supplies

6.0%

Earnings before special items

23

$ Million

4Q09

3Q10

4Q10

Sales (100%)

$350

$465

$490

Earnings (IP Share)

$6

$22

$31

1

1

Ilim

recorded an asset impairment charge (IP share was $12 million)

Ilim’s

results are reported on a one-quarter lag.

IP’s shares of Ilim’s

reported earnings for 4Q09 & 4Q10 include an after-tax foreign exchange gain of $2MM and $10MM,

respectively.  3Q10 earnings include an after-tax foreign exchange loss of $6MM.

Ilim

Joint Venture

4Q10

vs.

3Q10

Ilim

Joint Venture

4Q10

vs.

3Q10

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

Pulp

4%

($46)

7%

$217

Containerboard

7%

$61

(2%)

$185

24

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

Ilim Joint Venture

Three-Year Progress

Ilim Joint Venture

Three-Year Progress

2010

EPS accretive

Record earnings

2007 -

2010

$0.15 per share of equity earnings

$152 million in cash dividends

Current

Developed & implementing strategic

capital expansion program

25

IP Europe, Middle East & Africa

2010: 10% of IP Sales & 15% of IP EBITDA

IP Europe, Middle East & Africa

2010: 10% of IP Sales & 15% of IP EBITDA

Record earnings in 2010

Strong earnings in paper &

packaging segments

Strong returns in both

Western & Eastern Europe

Return on Investment

2010

European Papers, excl. Russia

18%

Russian Papers

15%

EMEA Container

11%

Total

Capital

Employed

(Billion)

$1.6

26

Debt Reduction Progress

Target: Adjusted Debt < 3X EBITDA

Debt Reduction Progress

Target: Adjusted Debt < 3X EBITDA

Adjusted Debt reflects gross balance sheet debt plus pension gap

1

Pension gap as of 12/31/08

2

Excludes debt repayments of $2.75 B from the proceeds of bonds issuances of $2.75 B

3

Pension gap as of 12/31/10

27

Capital Spending

2011 Estimate: $1.2 -

$1.3 Billion

Capital Spending

2011 Estimate: $1.2 -

$1.3 Billion

$ Million

Normalized Target 60-70% of Depreciation

% of

Depreciation

Reflects continuing operations

Cycle Capex

Target: ~$1B

28

Energy Efficiency Progress

Record-Low Purchased Energy Consumption

Energy Efficiency Progress

Record-Low Purchased Energy Consumption

U.S. Mill System 2010 Fossil Fuel

Consumption per Ton

8% less than 2009 ($75 MM)

45% less than 2000 ($360 MM)

Set new low-record for purchased

energy usage

5 mills set new records

2010 Most-Improved Mills

Saillat –

18% lower

Svetogorsk –

16% lower

29

Fourth-Quarter Summary

Fourth-Quarter Summary

Started with strong 3Q momentum

Seasonal volume decline offset by price realization

More maintenance outages

Input cost increases

Strong Ilim JV contribution

Strong 4Q Earnings & Free Cash Flow

30

First Quarter Outlook

Changes from 4Q10

First Quarter Outlook

Changes from 4Q10

North America

Europe

Brazil

Asia

Volume

Paper

Stable

Stable

Seasonal

Decrease

Packaging

Stable

Stable

Stable

Pricing

Paper

Stable

Stable

Stable

Packaging

Stable

Stable

Stable

Maintenance Outages

~$12MM

Increase

~$14MM

Decrease

Stable

Input & Freight Costs

Higher Fiber

& Chemicals

Slight Increase

Stable

Stable

xpedx

Increase

Ilim

Increase

31

1Q & 2011 Outlook

Momentum Continues

1Q & 2011 Outlook

Momentum Continues

1Q11 Outlook

Stable volumes

Stable prices (with some 

pressure on exports)

Increasing fiber & chemicals

costs

Strong Ilim

JV contribution

Strong 1Q EPS & FCF

2011 Outlook

Global economies continue

to recover

Demand growth in most IP

business segments

Inventories in good shape

Robust margin-improvement

initiatives

OCC costs to remain high

Strong EPS, FCF & ROI

32

Appendix

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Emily Nix

901-419-4987

Media Contact

Tom Ryan

901-419-4333

33

$ Million

(Except as noted)

2009

2010

2011

Estimate

Capital Spending

$534

$775

$1.2 -

$1.3 B

Depreciation &

Amortization

$1,472

$1,456

$1.4 B

Net Interest Expense

$669

$608

$575 -

$600

Corporate Items

$181

$226

$175 -

$200

Effective Tax Rate

30%

30%

32 -

34%

Before special items and excluding Ilim

Key Financial Statistics

Key Financial Statistics

34

Free Cash Flow

2010

Free Cash Flow

2010

$ Million

2008

2009

1Q10

2Q10

3Q10

4Q10

2010

Cash from Operations

$2,669

$2,766

1

$159

$509

$937

2

$919

3

$2,524

2,3

Cash Received from

AFMTC & CBTC

$0

$1,684

$0

$132

$0

$17

$149

Cash Provided by

Continuing Operations

$2,669

$4,655

$159

$641

$937

$936

$2,673

Less Capital Investment

($1,002)

($534)

($120)

($153)

($184)

($318)

($775)

Free Cash Flow

$1,667

$4,121

$39

$488

$753

$618

$1,898

Free Cash Flow

Excluding AFMTC, CBTC

& European AR Cash

$1,667

$2,232

$39

$356

$753

$601

$1,749

1

Includes $205 MM cash received under European accounts receivable securitization

2

Excludes $1,150 MM cash paid for voluntary pension contributions

3

Excludes

a

tax

receivable

of

$108

MM

collected

related

to

pension

contributions

IP received $1,684 MM cash from alternative fuel mixture tax credits (AFMTC) in 2009; $132 MM in 2Q10

IP received $17 MM cash from cellulosic biofuel

tax credits (CBTC) in 4Q10

35

Monetization & Other: Timber Monetization debt and other debt intended to be rolled over or refinanced,

(Sun joint venture debt and other foreign subsidiary debt)

Debt Maturity Profile

Maturities as of Year-End

Debt Maturity Profile

Maturities as of Year-End

36

Cash & Committed Facilities

$4.6 Billion

Cash & Committed Facilities

$4.6 Billion

Maturity

Facility

Cost

Quarter-End Cash

-

$2.1 B

-

$1 B

1

Accounts

Receivables Program

JAN 2012

Zero Drawn

CP Rate

2

+ 75 bps

$1.5 B Corporate Revolver 

NOV 2012

Zero Drawn

LIBOR + 300 bps

Total Cash & Committed Facilities

$4.6 B

-

Cost includes commitment fees

1

$877 MM available at quarter-end based on eligible receivable balances. Program renewed in January, 2011.

2

Conduit’s rate

37

Debt Covenants & Credit Ratings

Debt Covenants & Credit Ratings

Covenant

12/31/10

Actual

Maximum Debt-to-Total Capital

60%

41.2%

Minimum Consolidated Net Worth

$9 B

$12.4 B

Rating

Outlook

Standard & Poor’s

BBB

Stable

Moody’s

Baa3

Stable

38

Pension Update

Pension Update

Market value of assets

increased to $8.3 B

15.1% return on plan assets

in 2010

Pension benefits obligation

increased to $9.8 B

1

Unfunded obligation declined

from $2.8 B to $1.5 B

1

No cash contribution required

in 2011

1

US GAAP basis

Year-End Funded Status

39

Pension Plan

Pension Plan

Key Variables

2009

2010

2011E

Assumed Rate

of Return

8.25%

8.25%

8.25%

Discount Rate

6.0%

5.8%

5.6%

* Non-cash expense  for U.S. plans only

Pension expense reflects service cost, interest cost, amortization of actuarial losses and expected return on plan assets

Average Annualized Returns

2010

15.1%

Past Five Years

6.5%

Past Ten Years

7.2%

Portfolio Asset Allocation at 12-31-10

Target

Actual

Equity

40% -

51%

49%

Bonds

30% -

40%

31%

Real Estate

7% –

13%

8%

Other

9% -

18%

12%

40

$ Million

4Q10

1Q11E

2010

2011E

Industrial Packaging

$22

$41

$136

$149

North America

$29

$39

$131

$138

Europe

14

0

$38

$35

Brazil

0

0

$13

$15

Printing Papers Total

$43

$39

$182

$188

Consumer Packaging

$17

$0

$42

$44

Total Impact

$82

$80

$360

$381

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

Maintenance Outages Expenses

Maintenance Outages Expenses

~60% of 2011 outage expense planned for 1H11

41

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

N.A. Container

(5%)

$4

3%

$89

European Container*

13%

€7

7%

€76

Industrial Packaging

Industrial Packaging

* European Container volumes reflect box shipments only, including the shipments by the non-consolidated joint venture in

Turkey

42

Average

IP

price

realization

(includes

the

impact

of

mix

across

all

grades)

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price / Ton

Volume

Price / Ton

N.A. Paper

(6%)

$7

(12%)

$91

N.A. Pulp

(10%)

$3

(14%)

$211

European Paper

(2%)

€0

(7%)

€68

Printing Papers

Printing Papers

43

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

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Volume

Price/Ton

Volume

Price/Ton

U.S. Coated Paperboard

(7%)

$14

9%

$77

Revenue

Price

Revenue

Price

Converting Businesses

4%

NA

7%

NA

Consumer Packaging

Consumer Packaging

44

Cellulosic Biofuel

Tax Credit

4Q10

Cellulosic Biofuel

Tax Credit

4Q10

$40 million after-tax credit

1

$17

million cash benefit

IP cannot quantify the value of additional

CBTC because it depends on future taxable

earnings, but it could be significant

1

Reflects the after-tax value of 65 million gallons of black liquor processed in 2009 that was not submitted for alternative fuel mixture tax credits

45

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax

from Continuing Operations

Special Items Pre-Tax ($Million)

4Q09

3Q10

4Q10

Industrial

Packaging

Alternative Fuel Mixture Credits

$212

Facility & Machine Closure Costs

($670)

($10)

Integration Costs

($15)

Other

($2)

($3)

Printing

Papers

Alternative Fuel Mixture Credits

$221

Facility Closure Costs

($223)

Other

($2)

Consumer

Packaging

Alternative Fuel Mixture Credits

$83

Facility Closure Costs

($67)

Reorganization

($2)

($4)

xpedx

Reorganization

($5)

Corporate

Net Gain on Sale of Business

$25

Restructuring & Other Charges

($82)

($36)

Total Special Items Pre-Tax

($550)

$0

($30)

46

Special Items Net of Taxes

from Continuing Operations

Special Items Net of Taxes

from Continuing Operations

4Q10

2010

$ Million

EPS

$ Million

EPS

Earnings Before Special Items

$296

$0.68

$890

$2.05

Special Items Net of Taxes:

Mill & Machine Shutdowns

$1

($196)

Tax Adjustments

($46)

Debt Extinguishment Costs

($8)

($21)

Environmental Reserve

($11)

($11)

Box Plant Closures

($9)

($9)

Cellulosic Biofuel Tax Credit

$40

$40

Reorganization

($2)

($4)

Overhead Reduction Initiative

($3)

($4)

Other

($3)

($10)

Net Gain on Sale of Business

$15

$15

Total Special Items Net of Taxes

$20

$0.05

($246)

($0.57)

Net Earnings

$316

$0.73

$644

$1.48

47

4Q10 EBITDA

4Q10 EBITDA

Operating

Profit

$ Million

D & A

$ Million

Tons

Thousand

EBITDA

per Ton

EBITDA

Margin

Industrial Packaging

North America

1

$259

$128

2,463

$157

19.5%

Europe

$16

$10

272

$96

9.4%

Printing Papers

North America

2

$92

$49

663

$214

21.0%

Eastern Europe & Russia

3

$37

$21

306

$190

19.3%

Brazil

$63

$36

289

$343

31.6%

U.S. Market Pulp

$43

$14

250

$228

30.0%

Consumer Packaging

U.S. Coated Paperboard

$36

$36

341

$211

18.2%

1

Excludes Recycling & Bag businesses; includes Saturating Kraft business

2

Includes Bleached Kraft business

3

Excludes Market Pulp

48

Operating Profits by Industry Segment

from Continuing Operations

Operating Profits by Industry Segment

from Continuing Operations

$ Million

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

$84

$332

$274

$741

$845

Printing Papers

$139

$278

$236

$464

$798

Consumer Packaging

$49

$71

$64

$177

$215

Distribution

$31

$22

$9

$55

$78

Forest Products

$18

$49

($3)

$25

$94

Operating Profit

$321

$752

$580

$1,462

$2,030

Net Interest Expense

($163)

($152)

($150)

($669)

($608)

Noncontrolling Interest /

Equity Earnings Adjustment

$4

$5

($5)

$23

$15

Corporate Items

($40)

($58)

($63)

($181)

($226)

Special Items

($550)

$0

($30)

$564

($389)

Earnings from continuing operations

before income taxes, equity earnings &

noncontrolling interest

($428)

$547

$332

$1,199

$822

Equity Earnings, net of taxes -

Ilim

$6

$22

$31

($50)

$55

49

Geographic Business Segment Operating Results

Geographic Business Segment Operating Results

Excludes Forest Products

$ Million

Sales

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

North American

$1,855

$2,210

$2,135

$7,585

$8,355

European

$260

$235

$275

$980

$990

Asian

$95

$165

$160

$325

$495

Printing Papers

North American

$700

$715

$675

$2,815

$2,750

European

$340

$325

$345

$1,280

$1,305

Brazilian

$300

$275

$315

$960

$1,090

U.S. Market Pulp

$160

$210

$190

$575

$715

Asian

$25

$25

$15

$50

$80

Consumer Packaging

North American

$540

$615

$605

$2,200

$2,350

European

$85

$85

$95

$315

$430

Asian (Sun JV)

$160

$170

$180

$545

$620

Distribution

$1,675

$1,755

$1,770

$6,525

$6,730

50

Geographic Business Segment Operating Results

from Continuing Operations before Special Items

Geographic Business Segment Operating Results

from Continuing Operations before Special Items

Excludes Forest Products

$ Million

Operating Profit

4Q09

3Q10

4Q10

2009

2010

Industrial Packaging

North American

$65

$320

$261

$682

$776

European

$17

$14

$16

$57

$73

Asian

$2

($2)

($3)

$2

($4)

Printing Papers

North American

$70

$125

$92

$307

$333

European

$46

$58

$38

$115

$199

Brazilian

$33

$46

$63

$112

$159

U.S. Market Pulp

($11)

$49

$43

($71)

$107

Asian

$1

$0

$0

$1

$0

Consumer Packaging

North American

$22

$51

$38

$87

$105

European

$21

$17

$20

$66

$76

Asian (Sun JV)

$6

$3

$6

$24

$34

Distribution

$31

$22

$9

$55

$78

51

1

Assuming dilution

2

A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at Webcasts and Presentations

Pre-Tax

$MM

Tax

$MM

Non-

controlling

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

1

MM

Diluted

EPS

2

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

4Q09

$122

($27)

($4)

$10

$101

22%

427

$0.24

2009

$635

($190)

($18)

($49)

$378

30%

428

$0.88

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

4Q09

($550)

$348

$0

$0

($202)

63%

427

($0.48)

2009

$564

($279)

$0

$0

$285

49%

428

$0.67

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

4Q09

($428)

$321

($4)

$10

($101)

75%

427

($0.24)

2009

$1,199

($469)

($18)

($49)

$663

39%

428

$1.55

2009 Earnings from Continuing Operations

2009 Earnings from Continuing Operations

52

1

Assuming dilution

2

A reconciliation to GAAP EPS is available at www.internationalpaper.com

under the Investors tab at Webcasts and Presentations

Pre-Tax

$MM

Tax

$MM

Non-

controlling

Interest

$MM

Equity

Earnings

Net

Income

$MM

Estimated

Tax Rate

Average

Shares

1

MM

Diluted

EPS

2

Before Special Items

1Q10

$40

($13)

($9)

($2)

$16

32%

429

$0.04

2Q10

$262

($81)

($7)

$7

$181

31%

433

$0.42

3Q10

$547

($170)

($2)

$22

$397

31%

434

$0.91

4Q10

$362

($100)

($3)

$37

$296

28%

435

$0.68

2010

$1,211

($364)

($21)

$64

$890

30%

434

$2.05

Special Items

1Q10

($215)

$37

$0

$0

($178)

17%

429

($0.42)

2Q10

($144)

$56

$0

$0

($88)

39%

433

($0.21)

3Q10

$0

$0

$0

$0

$0

0%

434

$0

4Q10

($30)

$50

$0

$0

$20

167%

435

$0.05

2010

($389)

$143

$0

$0

($246)

37%

434

($0.57)

Earnings

1Q10

($175)

$24

($9)

($2)

($162)

14%

429

($0.38)

2Q10

$118

($25)

($7)

$7

$93

21%

433

$0.21

3Q10

$547

($170)

($2)

$22

$397

31%

434

$0.91

4Q10

$332

($50)

($3)

$37

$316

15%

435

$0.73

2010

$822

($221)

($21)

$64

$644

27%

434

$1.48

2010 Earnings from Continuing Operations

2010 Earnings from Continuing Operations

53

Earnings before special items

4Q10 vs. 4Q09 EPS

4Q10 vs. 4Q09 EPS

Earnings from continuing operations before special items

54

Industrial Packaging Earnings

4Q10 vs. 4Q09

Industrial Packaging Earnings

4Q10 vs. 4Q09

Earnings before special items

55

Printing Papers Earnings

4Q10 vs. 4Q09

Printing Papers Earnings

4Q10 vs. 4Q09

Earnings before special items

56

$ Million

4Q09

3Q10

4Q10

Sales

$300

$275

$315

Earnings

$33

$46

$63

EBITDA Margin

23%

29%

32%

IP Brazil results are reported in the Printing Papers segment

IP Brazil

IP Brazil

4Q10 vs. 3Q10

4Q10 vs. 4Q09

Business

Volume

Price /

Ton

Volume

Price /

Ton

Uncoated Freesheet

10%

($7)

(7%)

$93

Domestic

13%

($23)

5%

$7

Export

8%

$6

(15%)

$167

57

Consumer Packaging Earnings

4Q10 vs. 4Q09

Consumer Packaging Earnings

4Q10 vs. 4Q09

Earnings before special items

58

2010 Total North American Mills

Cash Cost Components

2010 Total North American Mills

Cash Cost Components

59

Global Input & Freight Costs vs. 2009

$643 MM Unfavorable, or $1.05/Share

Global Input & Freight Costs vs. 2009

$643 MM Unfavorable, or $1.05/Share

Input costs for continuing businesses

60

Global Input & Freight Costs vs. 4Q09

$168 MM Unfavorable, or $0.31/Share

Global Input & Freight Costs vs. 4Q09

$168 MM Unfavorable, or $0.31/Share

Input costs for continuing businesses

61

U.S. Mill Wood Delivered Cost Trends

2% Decrease vs. 3Q10 Average Cost

U.S. Mill Wood Delivered Cost Trends

2% Decrease vs. 3Q10 Average Cost

62

U.S. OCC Delivered Cost Trends

17% Increase vs. 3Q10 Average Cost

U.S. OCC Delivered Cost Trends

17% Increase vs. 3Q10 Average Cost

2005-2007 represents WY PKG delivered costs; 2008-2010 represents delivered costs to the integrated system

63

NYMEX Natural Gas closing prices

Natural Gas Costs

13% Decrease vs. 3Q10 Average Cost

Natural Gas Costs

13% Decrease vs. 3Q10 Average Cost

64

U.S. Fuel Oil

7% Increase vs. 3Q10 Average Cost

U.S. Fuel Oil

7% Increase vs. 3Q10 Average Cost

WTI Crude prices

65

U.S. Chemical Composite Index

7% Increase vs. 3Q10 Average Cost

U.S. Chemical Composite Index

7% Increase vs. 3Q10 Average Cost

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

Chlorate, Starch and Sulfuric Acid

2005 -

2008 excludes WY PKG

66

2011 Global Consumption

Annual Purchase Estimates for Key Inputs

2011 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)

42,000,000

13,000,000

Fuel Oil (Barrels)

1,500,000

500,000

Coal (Tons)

860,000

260,000

Fiber

Wood (Tons)

44,200,000

8,800,000

Old Corrugated Containers (Tons)

3,000,000

-

Chemicals

Caustic Soda (Tons)

250,000

70,000

Starch (Tons)

394,000

96,000

Sodium Chlorate (Tons)

180,000

40,000

LD Polyethylene (Tons)

39,000

-

Latex (Tons)

22,000

4,000