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UBS Global Paper & Forest Products Conference | September 13, 2012
Forward-Looking Statements
2
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 and risks inherent in conducting business through a joint venture; (vi) the failure to realize
synergies and cost savings from the Temple-Inland Inc. (“Temple-Inland”) transaction or delay in
realization thereof; and (vii) 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.
2012 Global Paper & Forest Products Conference
Statements Relating to Non-GAAP Financial Measures
3
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”
2012 Global Paper & Forest Products Conference
Ilim JV Information
4
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.”
2012 Global Paper & Forest Products Conference
International Paper | Poised for Further Success
5
Significant runway with current portfolio
Balanced growth of revenue and EBITDA
North America consolidation and optimization
Emerging Market growth
Greater than cost of capital returns
Increasing cash generation enables both reinvestment and return of
capital to shareholders
2012 Global Paper & Forest Products Conference
International Paper Transformation | The Journey
6
International Paper Transformation Timeline/Plan
2005 2006 2007 2008 2009 2010 2011 2012 – 15
Transformation Plan
Divestitures & Strategic Reinvestment
Post Transformation
Strategic Moves
Global Recession Cost of Capital Returns
N.A. Weyco Pkg.
Acquisition
N.A. TIN
Acquisition
Russia
ILIM JV
India APPM
Acquisition
China
SUN JV
Reaching our Post Transformation
Potential
Brazil
VCP Land / Mill Swap
Luis Antonio – Tres Lagoas
Coated Papers
Wood Products
Forestland
Kraft Paper
Chemicals
Beverage Pkg.
$11B
Asset Sales
China
SCA Pkg.
2012 Global Paper & Forest Products Conference
Supplier Position
North America 2005 2012
Corrugated Packaging 3 1
Uncoated Papers 1 2
Coated Paperboard 1 1
Distribution 1 1
Emerging Markets
Brazil – Uncoated Papers 2 1
Russia – Paper, Pulp & Packaging 3 1
India – Uncoated Papers – 4
China – Coated Paperboard – 2
Repositioned & Well-Positioned
7 2012 Global Paper & Forest Products Conference
N.A. Packaging & Paper | Structural Improvements in Results
Corrugated Packaging
IP Industrial Packaging 2005 2011
EBITDA Margin 8% 20%
ROI (before special items) 2% 10%
$350
$400
$450
$500
$550
$600
$650
$700
$/short ton Containerboard Pricing
Linerboard Medium
2006
(RISI)
70%
75%
80%
85%
90%
95%
100%
105%
2,100 2,200 2,300 2,400 2,500 2,600 2,700 2,800 2,900 3,000 3,100 3,200
Operating Rate
Thousand Tons
Containerboard Shipments / Capacity
Capacity Shipments Operating Rate
2011 Excludes Recycling businesses; includes Saturating Kraft & Bag business
Source: AF&PA
8
2012
2012 2006
$700
$800
$900
$1,000
$1,100
$1,200
$/short ton Uncoated Freesheet Pricing Trends
RISI 20# Cutsize RISI 50# Offset
(RISI)
Uncoated Freesheet
IP Printing Papers 2005 2011
EBITDA Margin 10% 22%
ROI (before special items) 0.6% 13%
2006 2012
65%
75%
85%
95%
105%
700
800
900
1,000
1,100
1,200
1,300
Operating Rate
Thousand Tons
Shipments / Capacity
N.A. Cap NA Ship NA OpRt
Source: PPPC, RISI
2006 2012
2012 Global Paper & Forest Products Conference
Step-Change Improvement in EBITDA
2.8
3.7
(0.6)
(0.8)
1.2
0.4
0.4 0.2
0.1
2005 EBITDA Actual
Divested Businesses
Forest Products
N.A. Industrial Packaging
Emerging Markets
N.A. Printing Papers
N.A. Coated Paperboard
Corporate & Other
2011 EBITDA Actual
$B
9
Earnings before special items
2012 Global Paper & Forest Products Conference
Global Economic
Recession
Step-Change Improvement in Free Cash Flow
Free cash flow, based on data in the 10-K for each year at the time of filing.
Excludes net cash pension contributions impacting 2006, 2010 & 2011, cash flows under European accounts receivable securitization beginning
in 2009 and ending in 2011, and cash received from Black Liquor Tax Credits in 2009 and 2010.
Transformation
$0.7 Billion (average)
2008 – 2011
$1.8 Billion (average)
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2005 2006 2007 2008 2009 2010 2011
$ B
illio
ns
10 2012 Global Paper & Forest Products Conference
Global Economic
Recession
Improving Return on Investment
4%
5%
6%
5%
4%
6%
8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2005 2006 2007 2008 2009 2010 2011
ROI WACC
11 2012 Global Paper & Forest Products Conference
North America
Brazil
EMEA & Russia
India
China
North America - 75%
Recognized Leader in Core Segments:
Corrugated Pkg. Uncoated Papers
Coated Paperboard Distribution
Emerging Markets - 25% Build Leading Positions in Fiber-based Packaging
& Paper Segments in High-Growth Markets
Positioned in attractive markets with low-cost assets that can generate strong free cash flow and returns that exceed our cost-of-capital
$23.5B Total Sales
$1.2B Total Sales
$2.9B Total Sales
$1.6B Total Sales
$0.2B Total Sales
2011 IP + TIN total actual sales excluding Building Products
(India total sales are November and December 2011 actual sales annualized) 1 ILIM JV total actual sales are not consolidated (IP owns 50% of JV)
12
International Paper Today | Global Packaging and Paper with Revenues of ~$30B
$2.2B1 ILIM JV Total Sales
2012 Global Paper & Forest Products Conference
International Paper | Segment & Regional Earnings Profile
North America
75%
Russia 9%
Europe 8%
Brazil 7%
Asia 1%
Printing Papers
35%
Industrial Packaging
50% Consumer Packaging
13%
Distribution 2%
EBITDA
by Segment
EBITDA
by Region
Based on 2011 earnings from continuing operations before special items.
Combined EBITDA reflects TIN actual results less ($100) million for mill divestitures plus $300 million in synergies (2012 projected exit rate).
Russia includes the Svetogorsk mill and IP’s share of Ilim JV equity earnings.
IP’s share of Ilim JV equity earnings reflects approximate proportional adjustments for interest & tax.
13 2012 Global Paper & Forest Products Conference
Reaching Our Post Transformation EBITDA Potential
14
5,100
(505 )
(130 )
320
435 700
340
165
75
3,700
2011 EBITDA Actual
Non-Price Commercial
Initiatives
Cost Reduction Initiatives
Inflation & Papers Decline
Temple-Inland Non-Price Commercial
Initiatives
Cost Reduction Initiatives
Inflation APPM - India Mid-cycle Potential
$M
M
$950MM EBITDA Improvement ~1% Base Revenue Growth
Industry Leading Margins
$450MM EBITDA Improvement ~7% Base Revenue Growth
200 bps Margin Improvement
Grow w/Market ,
Mix Optimization &
Asset Repurposing
Cost Reduction
Initiatives & Capital
to Offset Inflation
Temple-Inland
Base Business +
Synergies
Reinvestment
for Growth in
Core Segments
Cost Reduction
Initiatives & Capital
to Offset Inflation
APPM - India
Base Business
& Optimization
North America
Emerging Markets
Earnings before special items
2012 Global Paper & Forest Products Conference
ILIM JV Progress
2007 - 2011
IP purchased 50% of ILIM Holding in 2007 ($640MM)
IP received $234 million in cash dividends to date
IP EPS accretive – cumulative $213MM in IP equity earnings to date
Record ILIM Holding earnings in 2011 - $530 million EBITDA
2012 - 2015
High return, strategic capital build out underway
Mid-Cycle EBITDA Potential of $720 million (ILIM Holding)
15 2012 Global Paper & Forest Products Conference
Reaching our Post Transformation Potential
16
2005 2011 Mid-Cycle
Potential
Revenue ($Billion) 24 26 33
EBITDA1 ($Billion) 2.8 3.7 5.1
EBITDA Margin 12% 14% 15%
Free Cash Flow2 ($Billion)
0.4 1.7 2.2
ROI 4% 8% 9%
Earnings before Special Items 1 2005 EBITDA includes discontinued operations. 2 Free cash flow before dividends; 2011 excludes a $209 MM increase in working capital related to the cessation of the European A/R securitization program,
$123 MM tax receivable collected related to pension contributions, $300 MM cash paid for voluntary pension contribution and $175 MM cash received from
unwinding a timber monetization. Mid-Cycle Potential excludes similar items.
2012 Global Paper & Forest Products Conference
International Paper’s Balanced Use of Cash
Maintain Strong
Balance Sheet &
Credit Rating
Appropriate Liquidity
& Debt Coverage
Prudent Contributions
to Pension Plan
Systematically Return
Cash to Shareholders
Maintain Sustainable
Dividend at 30-40%
of FCF
Share Repurchases
Effective Capital Spending
Maintenance & Regulatory
Capital Expenditures
High Return, Cost
Reduction Projects
Selective
Reinvestment
Improve Cost Position
in North America
Capitalize on Global
Demand Growth
Above Cost of Capital Returns
Capital Spending
Free
Cash
Flow
17 2012 Global Paper & Forest Products Conference
Systematically Return Cash to Shareholders | Sustainable Dividend
18
2011 Mid-Cycle Potential
%FCF 27% 30%-40%
Dividend per Share $1.05 ~$1.45-$1.95
Paid Dividends $MM $460 ~$650-$850
$3.7
$5.1
$1.7 $2.2
$0
$1
$2
$3
$4
$5
$6
EBITDA FCF EBITDA FCF
$B
Earnings before special items
2012 Global Paper & Forest Products Conference
Maintain Strong Balance Sheet & Credit Rating | Debt Coverage
19
1Q12 2Q12
$ 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.
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
Target: Adjusted Debt < 3X Adjusted EBITDA
Significant reduction in near term
required pension contributions
Current estimate is <$100MM in
2013 (vs. ~$500MM)
No change in accounting measure for
pension liability
No change in adjusted debt/credit
metrics
2012 Highway Law – Pension Implications
2012 Global Paper & Forest Products Conference
Effective Capital Spending | 2012-2015
20
25%
50%
75%
100%
125%
150%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2005 2006 2007 2008 2009 2010 2011 2012- 2015
Maintenance Regulatory Strategic Cost Reduction TIN
~1.5B Annually / ~95% Depreciation (85% excluding Boiler MACT)
2012 Global Paper & Forest Products Conference
ILIM JV – Phase 2
Franklin Fluff Pulp Brazil TL2
Sun JV – New PM India Build-Out
Temple-Inland
Integration ILIM JV Build-Out
xpedx Transformation India Optimization
Temple –Inland
Optimization
EB
ITD
A
Now
2012
Near Term
2013 – 2015
Future
2015+
21
Selective Reinvestment | Strategic Earnings Drivers
2012 Global Paper & Forest Products Conference
Temple-Inland Integration | More Synergies, Faster
Synergy Category Description
Current
Outlook
($MM)
2Q12
Run Rate
Annualized
S G & A Eliminate Duplication $115 ~80%
Achieved
Containerboard Mills / Supply
Chain
Grade / Machine Mix
Optimization
Efficiency Improvements
Logistics Optimization
$90 ~20%
Achieved
Box Plants
Efficiency Improvements
(Waste, Freight)
System Streamlining
Customer and Segment
Optimization
$150 ~70%
Achieved
Sourcing Purchasing Consolidation $45 ~55%
Achieved
Synergy Target $400 ~$240
22 2012 Global Paper & Forest Products Conference
Franklin, VA Pulp
Mill Conversion
Repurpose existing Asset
Status: Up and running
2H12-2013
xpedx
Transformation
Achieve Cost of Capital Returns in Distribution
Status: Early results favorable, offsetting print decline
2H12-2013
Mogi Guacu
Boiler
Generate Self-reliant Steam using Renewable Energy
Status: Ahead of schedule, on budget 2013
IP-Sun JV
CPB Capital
Expansion
Build Capacity to Grow with Market (China)
Status: PM installation underway; start-up on schedule 2013
Ilim JV Build-Out
NBSK (China) &
UFS (Russia)
Build Capacity to Grow with Market (Russia / China)
Status: Converting equipment running in Koryazhma; Woodyard complete and recovery boiler up in 4Q12
2013
India
Optimization
Leverage IP’s Expertise to Maximize Asset Utilization
Status: Significant planned outage completed in Q2
2013-2015
Strategic Project Updates | Ahead of Plan
23 2012 Global Paper & Forest Products Conference
N.A. Printing Papers & Pulp | Franklin Fluff Pulp Mill Start-up
24
Start-up June 29TH
Early productivity and
product quality better than
plan
Targeting accelerated fluff
pulp ramp
Optimizing Go-to-Market
plans relative to patch
testing and customer trials
2012 Global Paper & Forest Products Conference
Strategic Project Updates | A Closer Look
Mogi Guacu Boiler Installation
India
Sun JV PM Press Section & Dryer Section
Rajahmundry Mill Site Bratsk Pulp Mill Recovery Boiler
Mogi Guacu Biomass Boiler
25 2012 Global Paper & Forest Products Conference
International Paper | Poised for Further Success
26 2012 Global Paper & Forest Products Conference
Exited non-strategic businesses
Completed strategic acquisitions
Reduced structural capacity and fixed costs
Achieved industry-leading margins
Significantly improved balance sheet and FCF
What We’ve
Done
What We’ll
Do
What We’re
Doing
Managing our supply to meet customer demand
Maintaining strong balance sheet and increasing FCF
Capitalizing on global demand growth
Investing in high return projects and strategic acquisitions
Returning cash to shareholders
Continue to grow strong, sustainable FCF
Expand margins and earnings in all businesses
Achieve cycle-average ROI above cost-of-capital
Maintain strong balance sheet
Continue balanced cash allocation
Increase dividend over time