International Paper Company Earning Presentation

First QuarterFirst QuarterJohn V Faraci First Quarter2009 ReviewFirst Quarter2009 Review

John V. FaraciChairman & Chief Executive Officer

April 30, 2009April 30, 2009Tim S. NichollsTim S. Nicholls

Senior Vice President & Chief Financial Officer

Forward-Looking StatementsForward-Looking Statements

These slides and statements made during this presentation contain forward-lookingstatements. These statements reflect management's current views and are subject to risksand uncertainties that could cause actual results to differ materially from those expressedand uncertainties that could cause actual results to differ materially from those expressedor implied in these statements. Factors which could cause actual results to differ relate to:(i) increases in interest rates and our ability to meet our debt service obligations; (ii)industry conditions, including but not limited to changes in the cost or availability of rawmaterials energy and transportation costs competition we face cyclicality and changes inmaterials, energy and transportation costs, competition we face, cyclicality and changes inconsumer preferences, demand and pricing for its products; (iii) global economic conditionsand political changes, including but not limited to the impairment of financial institutions,changes in currency exchange rates, credit availability, credit ratings issued by recognized

dit ti i ti th t f f t i f di bli ti dcredit rating organizations, the amount of our future pension funding obligation andpension and health care costs; (iv) unanticipated expenditures related to the cost ofcompliance with environmental and other governmental regulations and to actual orpotential litigation; and (v) whether we experience a material disruption at one of ourmanufacturing facilities and risks inherent in conducting business through a joint venture.We undertake no obligation to publicly update any forward-looking statements, whether asa result of new information, future events or otherwise. These and other factors that couldcause or contribute to actual results differing materially from such forward looking

2

g y gstatements are discussed in greater detail in the company's Securities and ExchangeCommission filings.

Statements Relating to Non-GAAP Financial MeasuresStatements Relating to Non-GAAP Financial Measures

During the course of this presentation, certain U S GAAP fi i l i f ti ill bnon-U.S. GAAP financial information will be

presented.A ili ti f th b t U SA reconciliation of those numbers to U.S. GAAP financial measures is available on the company’s website at internationalpaper.comcompany s website at internationalpaper.comunder Investors.

3

First Quarter 2009 Results SummarySolid Results Despite Weak EconomyFirst Quarter 2009 Results SummarySolid Results Despite Weak Economy

Solid Results $0.41

Input Cost Relief

E ll O i

$0.04

Excellent Operations

Integration Synergies $0.21

$0.37 $0.07

Reduced Overhead Expenses

St F C h Fl$0.14

$0 08Strong Free Cash Flow

Debt Refinancing & Reduction

$0.08

1Q08 4Q08 1Q09

O ti B i EPS

4Earnings from continuing operations before special items

Operating Business EPSForest Products EPS

1Q09 Financial Snapshot1Q09 Financial Snapshot

$ Billion 1Q08 4Q08 1Q09

Sales $5.7 $6.5 $5.7Sales $5.7 $6.5 $5.7

EBITDA $0.6 $0.7 $0.6

Free Cash Flow1 $0.2 $0.4 $0.7

Cash Balance $0.9 $1.1 $1.0

5Earnings from continuing operations before special items; 4Q08 & 1Q09 includes CBPR1 Cash provided by continuing operations less capital expenditures

Industrial Packaging Integration ProgressOn Track Despite Economic RecessionIndustrial Packaging Integration ProgressOn Track Despite Economic Recession

1 70 3$2.0

1.3

1.7

0.1

0.3

$1.5

$1.0

Bill

ion

$0.5

B

$0.0 1Q09 EBITDA Incremental Volume / Margin Original 3-Year

6

1Q09 EBITDA Annualized

Incremental Synergies

Volume / Margin Improvements

Original 3 Year Target

1Q09 vs. 4Q08 EPSWeak Volume , Input Cost Relief & Strong Operations1Q09 vs. 4Q08 EPSWeak Volume , Input Cost Relief & Strong Operations

$0.50

$ / Share$ / Share

.11 (.22)

$0.40

.23

( 04)

$0.30

.48Forest Products Earnings

.21

.04(.04)

(.04)(.06)

(.02) (.06)$0.20

.07

.08$0.10

.14

7

$0.004Q08 Price Input Costs Cost & Mix Volume / LOO Corporate &

OtherVicksburg Ins. Recov.

Interest Tax Ilim JV 1Q09

Earnings from continuing operations before special items

Global Input & Freight Costs by Segment $124MM, or $0.23/Share Favorable vs. 4Q08Global Input & Freight Costs by Segment $124MM, or $0.23/Share Favorable vs. 4Q08

81$90

$60

$75

n

$45

$60

Mill

ion

2023

$15

$30

$0 Consumer Packaging

Industrial Packaging

Printing Papers

8

Fiber Energy Chemicals Freight OCC

PackagingPackaging Papers

Input costs for continuing businesses

Lack of Order Downtime1.1 Million Tons in 1Q09Lack of Order Downtime1.1 Million Tons in 1Q09

702 729800(Thousand Tons)

1074

1 050

1,100

702

500

600

700998

1,000

1,050

300

400

500 950IP Total

127 120

14 35

152

48127

18100

200

300

14 35 180

Containerboard Uncoated Papers

NA Pulp Coated Paperboard

European Papers

9

4Q08 1Q09None of the businesses recorded LOO downtime in 1Q08.1Q09 LOO downtime excludes capacity from mills or machines that have been permanently or indefinitely shut down: Valliant #3 (97,000 tons), Franklin #3 (32,000 tons) and Louisiana mill (120,000 tons)

Industrial Packaging Earnings 1Q09 vs. 4Q08Industrial Packaging Earnings 1Q09 vs. 4Q08

1888141(32)

(3)$200 11Vicksburg Insurance 81 (32)

$150 145

Insurance Settlement

(11)33

$100Mill

ion

Mill

ion

112$50

$0

$

10

$04Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09

1 Excludes trade volume Earnings before special items

Industrial Packaging SynergiesAchieved Three-Year Run Rate after 8 MonthsIndustrial Packaging SynergiesAchieved Three-Year Run Rate after 8 Months

$405 MM$405 MM $400 MM$400 MM

$220 MM$220 MM

$96 MM$96 MM

$220 MM$220 MM

$96 MM$96 MM

1Q09 Original 2009 Target

March Run Rate Annualized

Original 3-Yr Target

11

Box Plants Mix Mills Overhead

Industrial Packaging Merger BenefitsAchieving Higher Savings at a Faster RateIndustrial Packaging Merger BenefitsAchieving Higher Savings at a Faster Rate

Total IPG # of Box Commercial I t

Total S iTotal IPG

Employees# of Box Plants Improvements

per CBPR TonSynergies

$MM

Base 23,700 120 -- --

Pl d 21 900 109 +$23 $400Planned 21,900 109 +$23 $400

Current Run Rate 20 700 108 +$19 $405Current Run Rate 20,700 108 +$19 $405

New 2010 Target 20,100 <108 +$23 $500*

12

g , $ $

* Excludes $80 million of procurement savings

Industrial Packaging Relative PerformanceOutperforming Competitors in 1Q09Industrial Packaging Relative PerformanceOutperforming Competitors in 1Q09

17.4%17.5% 17.2%18%20%

12.8%

16.2%

14.3%13.0%

17.2%15.3%

14%16%18%

9.1%

8%10%12%

4%6%8%

0%2%

IP Competitor A Competitor B

13IP EBITDA margins based on North American Industrial Packaging operating profit before special itemsCompetitor EBITDA margins obtained from public filings and IP analysis

IP Competitor A Competitor B1Q08 4Q08 1Q09

Printing Papers Earnings 1Q09 vs. 4Q08Printing Papers Earnings 1Q09 vs. 4Q08

11318

22(27)(17)

(8)

$125

10118 (17)$100

$75

Mill

ion

Mill

ion

$50

$0

$25

14

$04Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09

Earnings Before Special Items

Consumer Packaging Earnings 1Q09 vs. 4Q08Consumer Packaging Earnings 1Q09 vs. 4Q08

17 (48)$60

$70

17 (48)

$50

$60

26$40

Mill

ion

Mill

ion

22

13

13$20

$30

1

13

$10

15

1$0

4Q08 Price Input Costs Cost & Mix Volume & LOO Asian Inventory Adjustment

1Q09

Earnings Before Special Items

xpedxxpedx

$ Million 1Q08 4Q08 1Q09

Sales $1,985 $1,940 $1,590

E i $16 $26 ($7)Earnings $16 $26 ($7)

Weak paper and packaging demandWeak paper and packaging demand

Declining prices & gross margin dollars for coated freesheet & coated groundwood (>60% of total g (paper sales)

Reduced headcount by 4%, or 270 positions

16

Solid free cash flow

Forest ProductsForest Products

1Q08 4Q08 1Q09

Sales ($ Million) $25 $65 $5

Earnings ($ Million) $25 $38 $2

Acres Sold 13,000 30,000 2,000

Price / Acre $1,871 $2,106 $2,108$ , $ , $ ,

Pending sale of 143,000 acres now expected to close in3Q09. When that transaction closes, remaining NPV of land

17

gportfolio will be $60 - $80 million

Ilim Joint Venture1Q09Ilim Joint Venture1Q09

$ Million 1Q08 4Q08 1Q09

Sales (100%) $530 $530 $395

Earnings (IP Share) $17 $0 ($26)g ( ) ( )

1Q09 vs. 4Q08 1Q09 vs. 1Q08

Business Volume(000 Metric

Tons)

Price / Ton

Volume (000 Metric

Tons)

Price / Ton

Pulp (9%) ($139) (12%) ($103)Pulp (9%) ($139) (12%) ($103)

Containerboard 2% ($58) 3% ($5)

18

Ilim’s results are reported on a one-quarter lagIP’s shares of Ilim’s 1Q08, 4Q08 & 1Q09 earnings include $4 million, $11 million and $15 million of after-tax foreign exchange losses, respectively

Free Cash FlowFree Cash Flow

($ Million) 1Q08 4Q08 1Q09

Cash from Operations $434 $713 $649

Alternative Fuel Mixture Tax Credits - - $145

Cash Provided by Continuing Operations $434 $713 $794

Less Capital Investment ($215) ($270) ($128)

19

Free Cash Flow $219 $443 $666

Debt Reduction Progress$1.6 Billion in 9 MonthsDebt Reduction Progress$1.6 Billion in 9 Months

$14 Billion

12.70.6

0.6$12

$13

11.10.4

$11

$12

$9

$10

$8

$9

August 2008 2H08 1Q09 April April 30th

20

gPro Forma

with Acquisition

Q p pBalance

Cash & Committed Facilities$3.5 BillionCash & Committed Facilities$3.5 Billion

$ Billion Maturity Facility Cost

Quarter-End Cash - $1 0 -Quarter-End Cash - $1.0 -

$1.0B1 Accounts Receivables Program JAN 2010 Zero Drawn CP Rate2 + 150 bps

$1.5B Corporate Revolver MAR 2011 Zero Drawn LIBOR + 50 to 60 bps

Total Cash & Committed Facilities $3 5 -Total Cash & Committed Facilities $3.5

21

Cost includes commitment fees1 $871 million available at quarter-end based on eligible receivable balances2 Conduit’s rate

Debt Maturities by Quarter2009 - 2011Debt Maturities by Quarter2009 - 2011

$1,200

$800

$1,000

$400

$600

$200

$400

$ 0

$680 $550

$0

2009 2010 2011Q1 Q2 Q3 Q4 Monetization & Other

$50

22

Q1 Q2 Q3 Q4 Monetization & Other

U.S. debt as of April 30; foreign debt as of March 31Monetization & Other: Intend to rollover or refinance timber monetization debt, Sun JV debt and other foreign subsidiary debt

Pension Funding UpdateNo Cash Contributions Expected in 2009/10Pension Funding UpdateNo Cash Contributions Expected in 2009/10

December 2008 Legislation Funding Requirements94% of liability for 2009– 94% of liability for 2009

– 96% of liability for 2010– 100% of liability beyond 2010

All t thi hi h d f i t t l– Allows asset smoothing which defers investment loss

March 2009 Regulatory ReliefProvided relief in yield curve determination– Provided relief in yield curve determination

– Select discount rate between August 2008 – December 2008– Estimated 10 - 20% reduction in 2009 liability

Impact of Relief– IP credit balance likely to satisfy any 2009/10 funding requirements

N i d h t ib ti lik l til 2011

23

– No required cash contributions likely until 2011

Alternative Fuel Mixture Tax CreditsAlternative Fuel Mixture Tax Credits

IP generates >70% of integrated mill energy needs from renewable bio-fuelsrenewable bio fuels

Transforming pulping waste into bio-energy is environmentally b fi i lbeneficial

IP is not burning additional fossil fuel to qualify for these credits

Black liquor energy is sustainable & merits tax treatment similarBlack liquor energy is sustainable & merits tax treatment similar to other renewable energy sources

24

Alternative Fuel Mixture Tax Credits$558 Million Pre-Tax in 4Q08 & 1Q09Alternative Fuel Mixture Tax Credits$558 Million Pre-Tax in 4Q08 & 1Q09

Tax Credit Claims $ Millions

$Received in 1Q09 $145

A d i 1Q09 $413Accrued in 1Q09 $413

Total Credits 4Q08 1Q09 $558*Total Credits 4Q08 – 1Q09 $558*

25* Before $18 million of associated expenses and $210 million of taxes

First Quarter SummarySolid Results Despite RecessionFirst Quarter SummarySolid Results Despite Recession

Solid Results in Challenging Environment

1.1MM tons of Lack of Order Downtime

Excellent OperationsExcellent Operations

$96 Million in Integration Synergies

$30 Million in Overhead Expense Reduction

$124 Million Input Cost Relief$124 Million Input Cost Relief

$666 Million Free Cash Flow

26

$600 Million Debt Reduction

Second Quarter OutlookSecond Quarter Outlook

Challenging Economic EnvironmentChallenging Economic Environment

M j V i bl V l D ti & P i iMajor Variables - Volume, Downtime, & Pricing

Increased Maintenance Outages

Lower Ilim Equity Earnings

27

PrioritiesPriorities

Aggressively Manage Costgg y g

Match Supply to Customers’ Needs

Strengthen Balance Sheet

28

Questions & AnswersQuestions & Answers

I t R l ti C t tInvestor Relations ContactsThomas A. Cleves 901-419-7566

Emily Nix 901-419-4987

Media ContactKathleen Bark 901 419 4333Kathleen Bark 901-419-4333

29

Appendixpp

30

Special Items Net of Taxes1Q09Special Items Net of Taxes1Q09

$ Million EPS

Earnings from Continuing Operations & Before Special Items $34 $0.08

S i l It N t f TSpecial Items Net of Taxes:Alternative Fuel Mixture Credits $330Facilities Closure Costs ($33)Facilities Closure Costs ($33) Overhead Reduction Initiative ($32) Integration Costs ($22)Integration Costs ($22) Tax Adjustments ($20)

Total Special Items Net of Taxes $223 $0 53

31

Total Special Items Net of Taxes $223 $0.53Net Earnings $257 $0.61

Key Financial Statistics Key Financial Statistics

$ Billion 20071 2008 2009 EstimateEstimate

Capital Spending $1.3 $1.0 $0.6

Depreciation & Amortization $1.1 $1.3 $1.53

Net Interest Expense $0.3 $0.5 $0.7

Corporate Items2 $0 2 $0 1 $0 25Corporate Items2 $0.2 $0.1 $0.25

Effective Tax Rate2 30% 31.5% 32% - 34%

32

1 Excludes discontinued operations 2 Before special items and excluding Ilim3 Estimated depreciation impacted by extensive lack-of-order downtime

Maintenance Outages Expenses$58 Million Seasonal IncreaseMaintenance Outages Expenses$58 Million Seasonal Increase

$ Millions 1Q09 2Q09E 3Q09E 4Q09E

North America 19 38 39 28

Europe 7 19 13 0Europe 7 19 13 0

Brazil 5 0 3 0

Printing Papers Total $31 $57 $55 $28Printing Papers Total $31 $57 $55 $28

Industrial Packaging $44 $58 $6 $43

Consumer Packaging $4 $22 $11 $9

Total Impact $79 $137 $72 $80

33Dollar impact of planned maintenance outages are estimates and subject to changeIncludes CBPR outages

Business Segment Price RealizationBusiness Segment Price Realization

Average Selling Price RealizationsAverage Selling Price Realizations

Industrial Packaging ($/ton) 1Q08 4Q08 1Q09

Containerboard $545E $584 $551

Corrugated Boxes $785E $836 $846

Printing Papers ($/ton) 1Q08 4Q08 1Q09

Uncoated Freesheet $950 $1,005 $996U coated ees eet $950 $ ,005 $996

Pulp $646 $577 $538

34

Average IP U.S. selling price realizations (includes the impact of mix across all grades)Industrial Packaging price realizations include CBPR

Industrial PackagingIndustrial Packaging

1Q09 vs 4Q08 1Q09 vs 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08

Business Volume Price / Ton Volume Price /

Ton

N.A. Containerboard (23%) ($32) (49%)E $8E

N A Container (5%) $10 (17%)E $61EN.A. Container (5%) $10 (17%)E $61E

European Container (3%) (€21) (9%) (€26)

35Average IP price realization (includes the impact of mix across all grades)Includes CBPR

Printing PapersPrinting Papers

1Q09 4Q08 1Q09 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08

Business Volume Price / Ton Volume Price / Ton

N.A. Paper (7%) ($10) (24%) $46

N.A. Pulp (21%) ($39) (9%) ($108)

European Paper 3% (€56) (1%) (€72)European Paper 3% (€56) (1%) (€72)

Brazilian Paper (16%) ($39) (15%) $19

36Average IP price realization (includes the impact of mix across all grades)

Consumer PackagingConsumer Packaging

1Q09 4Q08 1Q09 1Q081Q09 vs. 4Q08 1Q09 vs. 1Q08

Volume Price/Ton Volume Price/Ton

U.S. Coated Paperboard (25%) $38 (28%) $107

Revenue Price Revenue Price

Converting Businesses (10%) NA (3%) NAConverting Businesses (10%) NA (3%) NA

37Average IP price realization (includes the impact of mix across all grades)

Special ItemsSpecial Items

Special Items Pre-Tax: 1Q08 4Q08 1Q09

Printing Alternative Fuel Mixture Credits $240Printing Papers

Alternative Fuel Mixture Credits $240

Facility Closure Costs ($153) ($29)

Alternative Fuel Mixture Credits $208Industrial Packaging Integration Costs ($26) ($36)

Facility Closure Costs ($8)

Consumer Packaging

Alternative Fuel Mixture Credits $92

Reorganization ($5) ($4) ($2)

CorporateRestructuring & Other Charges ($36) ($53) ($52)

Impairments of Goodwill ($1,777)

38

Total Special Items Pre-Tax ($41) ($2,021) $421

Debt CovenantsDebt Covenants

Covenant 1Q09Covenant 1Q09

Maximum Debt-to-Total Capital 60% 50.3%

Minimum Consolidated Net Worth $9B $11.4B

39

1Q09 EBITDAfrom Continuing Operations before Special Items1Q09 EBITDAfrom Continuing Operations before Special Items

Operating Profit

$ MillionsD & A

$ MillionsTons(000)

EBITDA per Ton$ Millions

Industrial Packaging

North American $175 $156 2,863 $116

European $13 $8 270 $78

Printing Papers

North American $84 $51 706 $191North American $84 $51 706 $191

European $25 $22 370 $127

Brazilian $20 $24 180 $244

U.S. Market Pulp ($28) $6 317 ($69)

Consumer Packaging

40

U.S. Coated Paperboard $6 $28 290 $117

Total $295 $295 4,996 $118

Operating Profits by Industry Segmentfrom Continuing Operations before Special ItemsOperating Profits by Industry Segmentfrom Continuing Operations before Special Items

$ Million 1Q08 4Q08 1Q09Industrial Packaging $97 $145 $188Printing Papers $185 $113 $101Consumer Packaging $14 $1 $22Distribution $16 $26 ($7)Distribution $16 $26 ($7)Forest Products $25 $38 $2Operating Profit $337 $323 $306Net Interest E pense ($81) ($186) ($164)Net Interest Expense ($81) ($186) ($164)Noncontrolling Interest / Equity Earnings Adjustment $4 ($13) $6

Corporate Items ($21) ($21) ($51)p ($ ) ($ ) ($ )Special Items ($41) ($2,021) $421Earnings (Loss) from continuing operations before income taxes, equity earnings & minority interest $198 ($1,918) $518

41

Equity Earnings, net of taxes - Ilim $17 $0 ($26)

Geographic Business Segment Operating Resultsfrom Continuing Operations before Special ItemsGeographic Business Segment Operating Resultsfrom Continuing Operations before Special Items

$ MillionSales Operating Profit

1Q08 4Q08 1Q09 1Q08 4Q08 1Q09

Industrial PackagingNorth American $1,050 $2,125 $1,885 $79 $130 $175European $315 $255 $240 $18 $15 $13Asian $80 $75 $55 $0 $0 $0

Printing PapersNorth American $885 $765 $705 $106 $73 $84European $435 $350 $325 $42 $36 $25Brazilian $225 $215 $170 $33 $44 $20U.S. Market Pulp $165 $170 $125 $4 ($39) ($28)A i $5 $5 $0 $0 ($1) $0Asian $5 $5 $0 $0 ($1) $0

Consumer PackagingNorth American $600 $635 $530 $2 $16 $4European $75 $70 $70 $9 $5 $14

42

European $75 $70 $70 $9 $5 $14Asian $95 $95 $115 $3 ($20) $4

Distribution $1,985 $1,940 $1,590 $16 $26 ($7)Excludes Forest Products

2009 Earnings from Continuing Operations2009 Earnings from Continuing Operations

Pre-Tax$MM

Tax$MM

Minority Interest

$MMEquity

EarningsNet

Income$MM

Estimated Tax Rate

Average Shares1

MMDiluted EPS2

$MM $MM MM

Before Special Items

1Q09 $97 ($32) ($4) ($27) $34 32% 423 $0 081Q09 $97 ($32) ($4) ($27) $34 32% 423 $0.08

Special Items

Q $ ($ ) $ $ $ % $1Q09 $421 ($198) $0 $0 $223 47% 423 $0.53

Earnings from Continuing Operations

1Q09 $518 ($230) ($4) ($27) $257 44% 423 $0.61

43

1 Assuming dilution 2 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at presentations

Total Cash Cost Components 1Q09Total Cash Cost Components 1Q09

Fiber28%Overhead 28%

9%

Energy12%

Materials14%Freight

12%

Labor

12%

44North American Mills Only

Labor13%Chemicals

13%

Global Input & Freight Costs by Input $124MM, or $0.23/Share Positive Impact vs. 4Q08Global Input & Freight Costs by Input $124MM, or $0.23/Share Positive Impact vs. 4Q08

44$50 Outside North America North America

31

44

28$30

21$30

Mill

ion

$10

M

($10)Fiber Chemicals Energy Freight

45

Fiber Chemicals Energy Freight

Input costs for continuing businesses

Global Input & Freight Costs by Input $28MM, or $0.05/Share Negative Impact vs. 1Q08Global Input & Freight Costs by Input $28MM, or $0.05/Share Negative Impact vs. 1Q08

$20 Outside North America North America

8

$0

(1)

$0

Mill

ion

(23)(12)

( )($20)

M

($40)Chemicals Fiber Energy Freight

46

Chemicals Fiber Energy Freight

Input costs for continuing businesses; does not include CBPR

1Q09 vs. 1Q08 EPS1Q09 vs. 1Q08 EPS

28 ( 33)

$0.80$ / Share$ / Share

.28 (.33)

$0.60

$0.70Forest

Products Earnings

.41.09 (.05)

(.05)$0.40

$0.50.48

.04 ( )(.13)

(.10)$0 20

$0.30

37

.08

( )

$0.10

$0.20 .37

47

$0.001Q08 Price Input Costs Cost & Mix Volume & LOO Corporate &

OtherInterest Ilim JV 1Q09

Earnings from continuing operations before special items; volume includes earnings from CBPR

Industrial Packaging Earnings 1Q09 vs. 1Q08Industrial Packaging Earnings 1Q09 vs. 1Q08

18882 2$200

$150

97

22 (1) (14)

$100illio

nill

ion

11

MM

$50

48

$01Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09

1 Excludes trade volume and includes CBPR earningsEarnings Before Special Items

Printing Papers Earnings 1Q09 vs. 1Q08Printing Papers Earnings 1Q09 vs. 1Q08

185 (8)(31)

$175

$200

(100)$150

10158 (3)$100

$125

Mill

ion

Mill

ion

$50

$75

$25

$

49

$01Q08 Price Input Costs Volume & LOO Cost & Mix Other 1Q09

Earnings Before Special Items

Consumer Packaging Earnings 1Q09 vs. 1Q08Consumer Packaging Earnings 1Q09 vs. 1Q08

393 (47)$60

$40

$50

$30

$40

Mill

ion

Mill

ion

14

2212 1$20

$10

50

$01Q08 Price Input Costs Volume & LOO Cost / Mix Other 1Q09

Earnings Before Special Items

Natural Gas Costs28% Decrease vs. 4Q08 Average CostNatural Gas Costs28% Decrease vs. 4Q08 Average Cost

250Index: Jan 2005 Natural Gas Costs = 100

200

150

100

50

2005 2006 2007 2008 2009

51

0Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan

NYMEX Natural Gas closing prices

U.S. Fuel Oil17% Decrease vs. 4Q08 Average CostU.S. Fuel Oil17% Decrease vs. 4Q08 Average Cost

220

Index: Jan 2006 Fuel Oil Costs = 100

180

200

140

160

100

120

60

80

2006 2007 2008 2009

52

40Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan

Delivered cost to U.S. facilities

U.S. Mill Wood Costs9% Decrease vs. 4Q08 Average CostU.S. Mill Wood Costs9% Decrease vs. 4Q08 Average Cost

125Index: Jan 2005 Wood Costs = 100

115

120

110

100

105

952005 2006 2007 20092008

53

90Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan

Delivered cost to U.S. facilities

U.S. Chemical Composite Index7% Decrease vs. 4Q08 Average Cost U.S. Chemical Composite Index7% Decrease vs. 4Q08 Average Cost

250Index: Q1’05 Chemical Composite= 100

200

225

150

175

100

125

75

100

2005 2006 2007 20092008

54

50Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

Delivered cost to U.S. facilities; includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid2005 - 2008 excludes CBPR

Global ConsumptionAnnual Purchase Estimates for Key InputsGlobal ConsumptionAnnual Purchase Estimates for Key Inputs

Commodity U. S. Non – U. S.

G ( ) 50 500 000 16 000 000

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 000Coal (Tons) 1,100,000 230,000

FiberWood (Tons) 50,000,000 8,400,000

Old Corrugated Containers (Tons) 3,500,000 310,000Old Corrugated Containers (Tons) 3,500,000 310,000

Caustic Soda (Tons) 330,000 60,000

Starch (Tons) 490,000 110,000

Chemicals Sodium Chlorate (Tons) 225,000 50,000

LD Polyethylene (Tons) 50,000 -

55Does not include Asian or Ilim consumption; excludes consumption by permanent & indefinite machine shutdownsEstimates are based on normal operations and may be impacted by downtime

Latex (Tons) 25,000 4,000