third quarter 2012 earnings | october 25,...

Third Quarter 2012 Earnings | October 25, 2012

Earnings Presentation | Third Quarter 2012 Earnings Presentation | Third Quarter 2012 2

Forward-Looking Statements

Certain statements in these slides and made during this presentation may be considered 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 include but are not limited to:

(i) the level of our indebtedness and 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, changes

in tax laws and 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; (v) whether we experience a material disruption at one of our manufacturing

facilities; (vi) risks inherent in conducting business through a joint venture; (vii) the failure to realize

synergies and cost savings from the Temple-Inland Inc. (“Temple-Inland”) transaction or delay in

realization thereof; and (viii) our ability to achieve the benefits we expect from all other strategic

acquisitions, divestitures and restructurings. 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 our Securities and Exchange Commission filings. We undertake no obligation to publicly

update any forward-looking statements, whether as a result of new information, future events or

otherwise.

Earnings Presentation | Third Quarter 2012 Earnings Presentation | Third Quarter 2012

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.

3


Ilim JV Information

All financial information and statistical measures regarding our 50/50 Ilim joint

venture in Russia (“Ilim”), other than historical International Paper Equity Earnings

and dividends received by International Paper, have been prepared by the

management of Ilim. International Paper has not verified or audited any of this

information. Ilim management has indicated that the financial information was

prepared in accordance with International Financial Reporting Standards and

extracted from Ilim’s financial statements. Any projected financial information and

statistical measures reflect the current views of Ilim management and are subject to

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

expressed or implied by such projections. See “Forward-Looking Statements.”

4


$977 $878

$976

3Q11 2Q12 3Q12

EBITDA ($MM)

Excellent cash generation

Increased dividend 14% and reduced balance

sheet debt by $800MM

Implemented containerboard price increase

Achieved $300MM run rate in TIN synergies

Continued successful ramp-up and qualification of

Franklin fluff pulp

Start-up of Sun JV paper machine

Lower mill maintenance outages

Higher quarter over quarter market-related

downtime in N.A. packaging businesses

Loss of $33MM in earnings associated with

containerboard mill divestiture

Inputs largely balanced, OCC favorable

Earnings from continuing operations before special items

5

Third Quarter 2012 Results | Strong Results in a Challenging Global Environment


3Q12 Financial Snapshot

3Q11 2Q12 3Q12

Sales ($B) $6.6 $7.1 $7.0

EBITDA1

Margin 14.7% 12.4% 13.9%

Cash From Operations ($MM)

$876 $6822 $863

EPS $0.81 $0.46 $0.75

1 Earnings from continuing operations before special items 2 Cash provided by continuing operations, excludes $44MM TIN pension plan contribution and $140MM received from unwinding a timber monetization

6

$6.6

$7.1 $7.0

3Q11 2Q12 3Q12

Sales ($B)


Balance Sheet | Debt Coverage

7

1Q12 2Q12 3Q12

$ B

illio

n

$2.71 Pension

Gap

3.8x

$2.71 Pension

Gap

3.7x

$11.6 Balance

Sheet

Debt

$11.3 Balance

Sheet

Debt

$1.2 Op. Lease Adj. $1.2 Op. Lease Adj.

$10.5 Balance

Sheet

Debt

$1.2 Op. Lease Adj..

$2.71 Pension

Gap

3.5x

[3.1x]2 [3.0x]2

Adjusted Debt reflects gross balance sheet debt plus pension gap and operating lease adjustment (Moody’s Methodology)

EBITDA based on 2012 Adjusted First Call EBITDA of $4.1B (Moody’s Methodology) 1 IP pension gap as of 12/31/2011; Temple-Inland pension gap as of 2/13/2012 2 Balance Sheet Debt / 2012 First Call EBITDA of $3.7B

Moody’s Target: Adjusted Debt < 3X Adjusted EBITDA

Significant year-to-date balance

sheet debt reduction - $800MM

in 3Q12

Since Temple-Inland acquisition,

through end of 3Q12, paid down

$1.5B of debt

On track to meet debt reduction

target by year-end 2013

[2.8x]2


.46

.75

(.05)

(.02) (.05)

.03

.22 .01 .01 .01

.13

2Q12 Volume & Market

Downtime

Price / Mix Divested Mills

Operations & Costs

Maintenance Outages

Input Costs Interest Tax Ilim JV 3Q12

3Q12 vs. 2Q12 EPS


8


North American Downtime | Market-Related Downtime up 192M tons vs. 2Q

51 114

23 39

129 94

19

79

93

21

52

214 78 143 300

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

Maintenance Vicksburg Flood Market

17 20

5 15 18

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

1 17 27

18 6

15

23

15

18 53

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

59

29 25 15

45

14

52

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

2

Containerboard1 Uncoated Papers

Market Pulp Coated Paperboard

144

50

214

253

75

Th

ou

sa

nd

To

ns

Th

ou

sa

nd

To

ns

Th

ou

sa

nd

To

ns

Thousand T

ons

207

1 1Q12 - 3Q12 include Temple-Inland mills

237

36

9

319


($14)

$0

$3

$18

Energy Freight Chemicals Fiber

North America Outside North America

$25

($21)

$3

Industrial Packaging

Printing Papers

Consumer Packaging

Wood Energy Chemicals Freight OCC

By Business By Input Type

10

Global Input Costs vs. 2Q12 | $7MM Favorable, or $0.01/Share


Industrial Packaging | 3Q12 vs. 2Q12


11 Earnings Presentation

367

342

(5) (44)

(33)

(35) 52

25 15

2Q12 Price & Mix Volume & Market

Downtime

Divested Mills Operations & Costs

Maintenance Outages

Input Costs

TIN Synergies 3Q12

$ M

illio

n


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 the Recycling business and revenue from trade volumes

20.9%

16.9%

19.4%

17.7% 19.3%

18.6%

IP Competitor A

3Q11 2Q12 3Q12

12


Temple-Inland Integration | More Synergies, Faster

13

300 300

400

0

100

200

300

400

500

September 2012

Year End 2013

Synergy Run Rate Ramp

Current Trajectory Original Plan

$M

M

Upside

February

2012


Temple-Inland Integration | More Synergies, Faster

Synergy Category Description

Current

Outlook

($MM)

3Q12

Run Rate

Annualized

S G & A Eliminate Duplication $115 ~80%

Achieved

Containerboard Mills / Supply

Chain

Grade / Machine Mix

Optimization

Efficiency Improvements

Logistics Optimization

$90 ~55%

Achieved

Box Plants

Efficiency Improvements

(Waste, Freight)

System Streamlining

Customer and Segment

Optimization

$150 ~85%

Achieved

Sourcing Purchasing Consolidation $45 ~75%

Achieved

Synergy Target $400 ~$300

14


63

67 (2) (7)

(2)

1

11 3


Downtime

Operations & Costs

Maintenance Outages

Input Costs

Other 3Q12

Consumer Packaging| 3Q12 vs. 2Q12 $

Mill

ion




N.A. Consumer Packaging Relative EBITDA Margins

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

Competitor adjusted EBITDA margins obtained from public filings and IP analysis; reflects Food & Beverage segment

18.8%

14.3% 15.3%

13.8%

17.7%

14.1%

IP Competitor A

3Q11 2Q12 3Q12

16


IP-Sun JV | Coated Paperboard Capital Expansion


PM26 Start-up on Sept. 19

Sheet on reel two months ahead of

plan

333 construction days

Machine tuning in progress

Start-up costs in 3Q

Incremental ramp-up costs in 4Q

~$300 MM investment

550M tons of annual capacity

IP-Sun JV,

Yanzhou


Printing Papers & Pulp | 3Q12 vs. 2Q12



106

201

(1)

(21)

(3)

14

28

78

2Q12 Price & Mix Volume Operations & Costs

Maintenance Outages

Input Costs

Other 3Q12

$ M

illio

n


Printing Papers & Pulp | Global volume up 5% year to date


N.A.

Papers

N.A.

Pulp

Europe

/Russia Brazil India

Volume

Change

ytd1

(3%) Domestic

14% 5%

13% Domestic

8%2

68% Export

(2%) Export

1 9M11 vs. 9M12 2 2011 provided by APPM


N.A. Printing Papers & Pulp | IP Customer Fluff Pulp Demand Ahead of Plan

20

0

100

200

300

400

2012 2013 2014 2015

Current Projection Original Plan

Franklin Incremental Fluff Pulp Sales

M s

ho

rt t

on

s


Distribution | 3Q12 vs. 2Q12

$ Million 3Q11 2Q12 3Q12

Sales $1,710 $1,500 $1,535

Earnings $27 $17 $24

Daily Sales Change vs. 3Q11 vs. 2Q12

Printing (12%) 8%

Packaging (2%) 5%

Facility Solutions (3%) 1%

Quarter over quarter volume improvement, particularly in

Printing and Packaging

Decline in commercial print margins; Packaging and Facility

Solutions margins up


21 xpedx


Ilim Joint Venture | 3Q12 vs. 2Q12


Sales Volume (M Tons) 652 672 644

Sales $580 $513 $471

Operational EBITDA1 $141 $81 $77

F/X (Impact of USD Debt2) ($85) ($100) $49

EBITDA $56 ($19) $126

IP Equity Earnings3 $1 ($25) $33

Ilim JV results are on an IFRS basis with the exception of IP Equity Earnings which is USGAAP 1 Before F/X impact 2 3Q12 Ilim JV USD-denominated debt balance of ~$1B; Ilim Group’s functional currency is the Ruble (RUR); Non-functional-denominated currency balances are

measured monthly using the month-end exchange rate

3 IP Equity Earnings for 3Q11 & 2Q12 include an after-tax f/x loss of $34MM and $41MM, respectively; 3Q12 earnings include an after-tax f/x gain of $21MM

22

Weaker export pricing, partially offset by domestic seasonality

Solid operations and forestry performance


3Q12 Financial Summary


Continued good progress with Temple-Inland integration

Achieved initial synergy target in less than one year

Building Products sale process proceeding well

Signed settlement agreement related to Guaranty Bank litigation

Implemented containerboard price increase

Seasonally lower maintenance outages

Favorable currency impact at Ilim JV

Higher market-related downtime in N.A. packaging businesses

Loss of earnings associated with three divested containerboard mills

Non-cash LIFO inventory valuation adjustment and Temple-Inland purchase accounting true-ups

23

Earnings Presentation | Third Quarter 2012 24

North America EMEA Brazil Asia

Volume Paper Stable Stable Seasonal Increase Stable

Packaging Seasonal Decrease Seasonal Increase Stable

Pricing / Mix Paper Export Price/Mix Stable

Seasonal Mix

Improvement Stable

Packaging Increase Stable Stable

Operations & Other

Paper Stable Stable Stable Stable

Packaging TIN Purchase

Acct. True-Up1 Stable

Sun JV PM Ramp-up Costs

Inputs & Freight

Paper Higher Wood &

Energy Stable Stable Stable

Packaging Higher Fiber &

Energy Stable Stable

Mill Maintenance Outages

Paper Increase

$35MM

Decrease $16MM

Decrease $2MM

None Scheduled

Packaging Increase

$65MM None Scheduled

Distribution Stable

ILIM JV Currency Impact1

Fourth Quarter Outlook | Changes from 3Q12

1 Impact of non-repeating item


4Q & 2013 Outlook | Momentum Continues in Challenging Global Environment

U.S. and global demand

More of the same

Earnings runway drivers ramp-up

NA Industrial Packaging trajectory

Franklin Fluff Pulp

IP-Sun JV PM26

Brazil Biomass Boiler

Ilim JV build-out

India optimization

Input cost inflation – fiber & energy

Higher non-cash pension expense


Continued balance sheet debt

reduction

Seasonally weaker volumes in North

America offset by Europe and Brazil

North America box price increase

realization – 4Q exit rate near 100%

Continued weak pricing in pulp and

export papers markets

Seasonally higher consumption and

input costs

Higher scheduled maintenance

outages of $82MM

Incremental ramp-up costs

associated with IP-Sun JV

4Q12 Outlook 2013 Outlook

Earnings Presentation | Third Quarter 2012

IP’s Balanced Use of Cash | Increasing Shareholder Value

26

Return Cash to Shareowners

14% Dividend Increase to $1.20/share

Debt Reduction

$1.5B Balance Sheet Debt Repayment

Selective Reinvestment

Temple-Inland

Olmuksa – Turkey

Grupo Orsa – Brazil

Free Cash Flow

Corrugated

Packaging


IP Latin America | Strengthening our Position in Brazil

27

Strategic Entry into Corrugated Packaging

Uncoated Freesheet Paper

Machine Option Extension

IP and Grupo Orsa have agreed to form a corrugated packaging business in Brazil, expanding IP’s leading global platform within Latin America

Grupo Orsa’s industrial packaging assets, including three mills and four box plants, will be separated from its pulp and forestry businesses and transferred to the new company

IP will hold a 75% stake, valued at approximately US$470MM

Expect to complete the transaction in the first quarter 2013

IP and Fibria have agreed to extend IP’s option to build a second uncoated freesheet paper machine at the Tres Lagoas mill site

The new agreement gives IP the option to start a second paper machine between 2016 and 2018, which better matches incremental capacity with our customers’ demand

Investment would add 250M tons and reinforce IP’s leadership in Latin America


Brazil Corrugated Packaging | Strategic Rationale

28

Growing Market

Core IP Business

Attractive acquisition, optimization

and build-out opportunities

Good Margins

Attractive Returns

IP Management in Place


7.2 8.7

19.6

29.1

36.6

Brazil China France Japan U.S.

16.0

26.0

54.0

63.0

77.0

Brazil China Germany Italy U.S.

2011 Per Capita Consumption (Kg per person per year)

Uncoated Freesheet Corrugated Boxes

Brazil Packaging & Paper | Attractive Growth Potential

Source: IP Analysis, Santander, Census, McKinsey Global Institute


Brazil Packaging & Paper | Attractive Growth Potential

30

3.9

1.4

4.9

1.7

0

2

4

6

Containerboard Uncoated Freesheet

Mil

lio

n M

etr

ic T

on

s

2011 2017

1

RISI Forecast of Brazilian Demand Growth

3.6% CAGR 3.4% CAGR

1 Includes Sack Kraft

Source: RISI


Grupo Orsa | Company at a Glance

31

Paulinia Mill

Manaus Box Plant

Box plant

Mill

Rio Verde Box Plant

Paulinia Box Plant Suzano Box Plant Franco da Rocha Mill

Nova Campina Mill

2011 Sales of US$380 Million1

2011 EBITDA of US$76 Million1

365 Thousand Tons of

Containerboard Capacity

Three Containerboard Mills

Four Box Plants

Corrugated Supply Position ~9%

Sustainable Fiber Supply

1 Financials provided by seller


Grupo Orsa | Purchase Overview

32

All figures translated at $ = 2.03 R$

Enterprise Value ($MM) R$1270 / ~US$625

Deal Structure IP investment in with current owner on a 75/25 basis

Purchase Price ($MM) R$952 / ~US$470

Financing ~50% cash on hand in Brazil; remainder financed locally

EBITDA Multiple (2011) 8.2x

IRR 18%


Grupo Orsa | Strategic Assessment

Creates Shareholder Value R

Consistent with Strategy R

Strengthens IP’s Portfolio R

Better than Cost of Capital Returns R

Greater Cash Flow Generation R

Quality Assets in High Demand Growth Market R

Attractive Optimization Opportunities R


Appendix Investor Relations Contacts

Glenn R. Landau 901-419-1731

Michele Vargas 901-419-7287

Media Contact

Tom Ryan 901-419-4333

34


Guaranty Bank | Settlement Agreement Update


We have reached a settlement with the Liquidation Trustee for the estate of

Guaranty Financial Group Inc. (“GFG”) and the Federal Deposit Insurance

Corporation (“FDIC”) to resolve liability associated with the spin-off and

subsequent failure of GFG and its subsidiary Guaranty Bank

The settlement agreement is conditioned upon and subject to bankruptcy court

approval

In exchange for this full release from liability, we have agreed to make $80 million

in payments; this amount was previously reserved in anticipation of this

agreement

The agreement protects our tax position and tax assets

We are seeking to recover a portion of the settlement amount from insurers


Key Financial Statistics

$ Million (Except as noted)

2010 2011 2012 Estimate

Capital Spending $775 $1.2 B ~ $1.5 B

Depreciation &

Amortization $1.5 B $1.3 B ~ $1.5 B

Net Interest Expense $608 $541 ~ $680

Corporate Items $226 $145 ~$210

Effective Tax Rate 30% 32% ~ 32%

Before special items and excluding Ilim

36



Cash Provided by Continuing Operations

$876 $6821 $863

Less Capital Investment ($315) ($420) ($296)

Free Cash Flow $561 $262 $567

1 Excludes $44 MM cash paid for Temple-Inland pension plan contribution and $140 MM cash received from unwinding a timber monetization

Free Cash Flow

37


Capital Investment | 9M12 vs. 9M11

38

726

1,001

71 84

80 18 22

9M11 Sun JV PM #26 Franklin Mill TIN Brazil Biomass Boiler

EMEA Box Plants 9M12

$ M

illio

n


Maintenance Outages Expenses | 2012

$ Million 1Q12 2Q12 3Q12 4Q12E 2012E

Industrial Packaging $67 $63 $11 $63 $204

Printing Papers Total $27 $102 $23 $45 $197

North America 27 60 5 40 132

Europe 0 33 11 0 44

Brazil 0 1 7 5 13

India 0 8 0 0 8

Consumer Packaging $0 $21 $11 $19 $51

North America 0 18 6 19 43

Europe 0 3 5 0 8

Total Impact $94 $186 $45 $127 $452

39


Special Items Pre-Tax ($Million) 3Q11 2Q12 3Q12


Acquisition and Integration Costs ($8) ($35) ($58)

Mill Divestiture Costs ($71) ($19)

European Packaging Restructuring ($16)

Other ($1) $6

Printing Papers

Facility Closure Costs $1

Other ($2) $1

Consumer Packaging

Fixed Asset Impairment or Adjustment ($82)

Shorewood Sale Adjustments ($6)

Reorganization $1

xpedx Reorganization ($18) ($12) ($9)

Corporate

Debt Extinguishment ($10) ($13)

Acquisition Costs ($16)

Restructuring & Other ($9) $1 ($2)

Total Special Items Before Tax & Noncontrolling Interest ($131) ($136) ($110)

40

Special Items Before Tax & Noncontrolling Interest | Continuing Operations


Special Items Net of Taxes

2Q12 3Q12

$ Million EPS $ Million EPS

Earnings Before Special Items $203 $0.46 $330 $0.75

Special Items Net of Taxes:

Tax Items ($3)

Debt Extinguishment Costs ($6) ($8)

Shorewood Sale Adjustments ($4)

Acquisition and Integration Costs ($24) ($33)

Mill Divestiture Costs ($43) ($49)

Reorganization ($8) ($16)

Other $2

Total Special Items Net of Taxes ($85) ($0.19) ($107) ($0.24)

Discontinued Operations Net of Taxes $16 $0.04 $14 $0.03

Net Earnings $134 $0.31 $237 $0.54

41


Operating Profit $ Million

D & A $ Million

Tons Thousand

EBITDA per Ton

EBITDA Margin


North America1 328 188 3,535 146 19%

Printing Papers & Pulp

N.A. Papers2 110 45 698 222 22%

Europe 51 17 326 209 20%

Brazil 45 31 290 262 27%

India (3) 9 59 102 13%

N.A. Pulp (3) 13 311 32 5%

Consumer Packaging

North America3 45 39 378 222 18%

Europe 21 5 93 280 27%

Earnings from continuing operations before special items 1 Excludes Recycling business and revenue from trade volumes; includes Saturating Kraft & Bag business 2 Includes Bleached Kraft business 3 Includes Foodservice business

42

3Q12 EBITDA | Integrated Mill Business Margins


Operating Profits by Industry Segment | Continuing Operations


Industrial Packaging $301 $367 $342

Printing Papers $238 $106 $201

Consumer Packaging $103 $63 $67

Distribution $27 $17 $24

Operating Profit $669 $553 $634

Net Interest Expense ($130) ($172) ($163)

Noncontrolling Interest / Equity Earnings Adjustment $7 $4 $0

Corporate Items ($34) ($45) ($41)

Special Items ($131) ($136) ($110)

Earnings from continuing operations before income taxes, equity earnings & noncontrolling interest $381 $204 $320

Equity Earnings, net of taxes - Ilim $1 ($25) $33

43


Geographic Business Segment Operating Results | Before Special Items

$ Million Sales Operating Profit

3Q11 2Q12 3Q12 3Q11 2Q12 3Q12


North America $2,210 $3,035 $2,935 $291 $354 $328

Europe $275 $255 $230 $9 $12 $12

Asia $175 $160 $170 $1 $1 $2

Printing Papers

North American $705 $670 $695 $127 $69 $110

Europe $350 $335 $345 $48 $20 $51

Brazil $290 $285 $280 $37 $51 $45

Asia / India $20 $60 $70 - ($8) ($2)

N.A. Pulp $185 $160 $190 $26 ($26) ($3)

Consumer Packaging

North America $640 $495 $475 $76 $37 $45

Europe $90 $90 $95 $19 $21 $21

Asia (Sun JV) $225 $195 $195 $8 $5 $1

xpedx $1,710 $1,500 $1,535 $27 $17 $24

Does not reflect total company sales and operating profit

44


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

2012 Earnings from Continuing Operations

Pre-Tax $MM

Tax $MM

Non-controlling

Interest $MM

Equity Earnings

Net Income

$MM

Estimated Tax Rate

Average Shares1

MM

Diluted EPS2

Before Special Items

1Q12 $305 ($98) ($4) $44 $247 32% 439 0.57

2Q12 $340 ($108) ($3) ($26) $203 32% 438 0.46

3Q12 $430 ($133) ($1) $34 $330 31% 440 0.75

Special Items

1Q12 ($92) $28 $0 $0 ($64) 30% 439 (0.15)

2Q12 ($136) $51 $0 $0 ($85) 38% 438 (0.19)

3Q12 ($110) $3 $0 $0 ($107) 2% 440 (0.24)

Earnings

1Q12 $213 ($70) ($4) $44 $183 33% 439 0.42

2Q12 $204 ($57) ($3) ($26) $118 28% 438 0.27

3Q12 $320 ($130) ($1) $34 $223 41% 440 0.51

45


.60

.53

.28

.05

.14 .12 .12

.32 .33

.14

.24 .23

.12

.43 .43

.36

.29

.12 .12

.40

.47 .45

.57

.73

.45

.41

.15

.07

.38

.22

.06

.85

.71

.77

.81

.72

.57

.75

.13

.35

.19

.33 .31

.35

.52 .49

.27

.46

.79

.46

.75 .42

.08

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

Operating Business EPS | Demonstrated Step Change in Performance

2003 2004 2005 2006 2007 2010 2002 2000 2001 2008

Impact of Mineral

Rights Gain

2009

Earnings from continuing operations and before special items

2000-2006 as originally reported

2007-2011 reflects earnings adjusted for elimination of the Ilim JV reporting lag

.83

2011

.93 Final

Land

Sale

Transformation

2012

46


.81

.75

(.13)

(.19) (.07)

(.05) (.01)

.06

.04

.10 .12 .07

3Q11 Volume / LOO

Price / Mix Operations & Costs

Maintenance Outages

Input Costs

Corporate & Other

TIN Synergies

Interest Tax Ilim JV 3Q12

3Q12 vs. 3Q11 EPS


47


Industrial Packaging | 3Q12 vs. 3Q11



301

342

(10) (104) 21

4

55

75


Downtime

Operations & Costs

Maintenance Outages

Input Costs

TIN Synergies 3Q12

$ M

illio

n


3Q12 vs. 2Q12 3Q12 vs. 3Q11

Business Volume Price /

Ton Volume

Price / Ton

N.A. Container1 (3%) ($6) (5%) ($5)

European Container2 (5%) €5 1% (€30)

Average IP volume and price realization (includes the impact of mix across all segments) 1 N.A. Container Volume on FBA reporting basis (excludes shipments from the Display & Bulk Segment and facilities in Mexico and Latin America but

includes shipments from domestic Sheet Plants); All periods include full quarter of Temple-Inland volume 2 European Container Volume reflects box shipments only (includes shipments from the non-consolidated joint venture in Turkey)

49

Industrial Packaging | Volume and Pricing Trends


238

201

(58)

(14) (5)

(17) 30

27

3Q11 Price & Mix Volume Operations & Costs

Maintenance Outages

Input Costs

Other 3Q12

Printing Papers | 3Q12 vs. 3Q11 $

Mill

ion




3Q12 vs. 2Q12 3Q12 vs. 3Q11

Business Volume Price / Ton Volume Price / Ton

N.A. Paper 4% ($1) 2% ($31)

N.A. Pulp1 21% ($30) 20% ($107)

European Paper 5% (€1) 13% (€34)

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

1 Reflects Fluff and Market pulp combined

51

Printing Papers | Volume and Pricing Trends



Sales $290 $285 $280

Earnings $37 $51 $45

EBITDA Margin 26% 29% 27%

3Q12 vs. 2Q12 3Q12 vs. 3Q11

Business Volume Price/Ton Volume Price/Ton

Uncoated Freesheet (2%) $8 3% ($14)

Domestic 21% $10 22% $54

Export (18%) $7 (12%) ($89)

IP Brazil results are reported in the Printing Papers segment

Earnings and EBITDA from continuing operations before special items

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

52

Printing Papers | IP Brazil


103

67

(19)

(5) (11)

(5)

(7) 11


Downtime

Operations & Costs

Maintenance Outages

Input Costs

Other 3Q12

Consumer Packaging | 3Q12 vs. 3Q11 $

Mill

ion




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

3Q12 vs. 2Q12 3Q12 vs. 3Q11

Volume Price/Ton Volume Price/Ton

N.A. Coated Paperboard 2% ($3) (4%) ($25)

Revenue Price Revenue Price

Converting Businesses (5%) NA 6% NA

54

Consumer Packaging | Volume and Pricing Trends


Ilim Joint Venture | Volume and Pricing Trends

3Q12 vs. 2Q12 3Q12 vs. 3Q11

Business Volume Price/Ton Volume Price/Ton

Pulp (5%) ($30) (2%) ($155)

Containerboard (3%) ($4) (1%) ($104)

55

Average Ilim JV (100%) volume and price realization (includes the impact of mix across all grades)


Total Cash Cost Components | 3Q12 YTD

Fiber 30%

Materials 15%

Labor 12%

Chemicals 10%

Freight 17%

Energy 8%

Overhead 8%

North American Mills Only (Including Temple Inland Mills)

56


($9) ($8)

$20

$58

Freight Chemicals Energy Fiber


$55

($4)

$10


Printing Papers

Consumer Packaging



Input costs for continuing businesses

Global Input Costs vs. 3Q11 | $61MM Favorable, or $0.10 per share

57


($45) ($32)

$62

$128

Chemicals Freight Energy Fiber


$114

($17)

$16


Printing Papers

Consumer Packaging



Input costs for continuing businesses

Global Input Costs vs. 9M11 | $113MM Favorable, or $0.18 per share

58


2006 2007 2008 2009 2010 2011 90

95

100

105

110

115

120

125

130

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

2012

U.S. Mill Wood Delivered Cost Trend | Flat vs. 2Q12 Average Cost

Cost Indexed to January 2006 values

59


2006 2007 2008 2009 2010 2011 60

80

100

120

140

160

180

200

220

240

260


2012

2006-2007 represents WY PKG delivered costs; 2008-2010 represents delivered costs to the integrated system Cost Indexed to January 2006 values

U.S. OCC Delivered Cost Trend | 22% Decrease vs. 2Q12 Average Cost

60


2006 2007 2008 2009 2010 2011 0

50

100

150


2012

NYMEX Natural Gas closing prices

Natural Gas Costs Trend | 26% Increase vs. 2Q12 Average Cost

Cost Indexed to January 2006 values

61


2006 2007 2008 2009 2010 2011 40

60

80

100

120

140

160

180

200

220

240


2012

U.S. Fuel Oil Trend | 11% Decrease vs. 2Q12 Average Cost

WTI Crude prices Cost Indexed to January 2006 values

62


2006 2007 2008 2009 2010 2011 75

100

125

150

175

200

225


2012

U.S. Chemical Composite Index Trend |1% Increase vs. 2Q12 Average Cost

Delivered cost to U.S. facilities: includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid 2006 - 2008 excludes WY PKG Cost Indexed to January 2006 values

63


2012 Global Consumption | Annual Purchase Estimates for Key Inputs

Commodity U. S. Non – U. S.

Energy

Natural Gas (MM BTUs) 67,000,000 12,000,000

Fuel Oil (Barrels) 850,000 400,000

Coal (Tons) 485,000 500,000

Fiber Wood (Tons) 53,000,000 12,000,000

Old Corrugated Containers (Tons) 3,700,000 100,000

Chemicals

Caustic Soda (Tons) 380,000 100,000

Starch (Tons) 400,000 97,000

Sodium Chlorate (Tons) 190,000 50,000

LD Polyethylene (Tons) 40,000 -

Latex (Tons) 22,000 7,000

Does not include Asian or Ilim JV consumption Estimates are based on normal operations and may be impacted by downtime Excludes consumption related to divested TIN mills and TIN Building Products

64

third quarter 2012 earnings | october 25,...

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