John V. FaraciChairman & CEOJohn V. FaraciChairman & CEO

UBS Global Paper and Forest Products Conference

September 16, 2008

2

Forward-Looking StatementsForward-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) the company's ability to realize anticipated profit improvement from its transformation plan, including our ability to realize the expected benefits of our acquisition of the assets of Weyerhaeuser Company’s containerboard, packaging and recycling business in light of integration difficulties and other challenges; (ii) increases in interest rates and our ability to meet our debt service obligations; (iii) industry conditions, including but not limited to changes in the cost or availability of raw materials and energy, transportation costs, competition we face, the company's product mix, demand and pricing for its products; (iv) global economic conditions and political changes, including but not limited to changes in currency exchange rates, credit availability, the company's credit ratings issued by recognized credit rating organizations and pension and health care costs; (v) unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations and to actual or potential litigation; and (vi) whether we experience a material disruption at one of our manufacturing facilities. 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 MeasuresStatements 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.comunder Investors.

4

The New International Paper CompanyThe New International Paper Company

More-Focused Portfolio

Improved Earnings & Cash Flow

Lower-Cost Manufacturing Assets

More Global Balance

Balanced Use of Cash

5

Printing PapersPrinting Papers

PackagingPackaging

xpedxxpedx

Carter Holt HarveyKraft Papers

Arizona ChemicalKraft Packaging

Coated PapersWood Products

Forestland

Carter Holt HarveyKraft Papers

Arizona ChemicalKraft Packaging

Coated PapersWood Products

Forestland

Printing PapersPrinting Papers

PackagingPackaging

xpedxxpedx

Forest ResourcesForest Resources

Forest ResourcesForest Resources

2005 - $24.1B2005 - $24.1B 2007 - $27.1B2007 - $27.1B

2007 revenue figures include Weyerhaeuser CBPR 2007 full-year revenues of $5.2 billion

Greater FocusPro Forma Sales RevenueGreater FocusPro Forma Sales Revenue

68%

98%

6

Geographic StrengthConcentrating our FocusGeographic StrengthConcentrating our Focus

#5#4#5Western Europe

#1

Softwood Market Pulp

#1

Distribution

#1#1#1Global

#2China

#1#1Eastern Europe

#1#1Russia*

#1Latin America

#1#1#2North America

Coated Bleached

Board

Container Board & Boxes

Uncoated FreesheetRegion

* Includes Ilim

7

Higher & Better EBITDAImproving Earnings QualityHigher & Better EBITDAImproving Earnings Quality

1,700

4,100

2,800

1,900

500

(1,100)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2005 DivestedBusinesses

Net 2005 Acquisitions & Business

Improvements

2007 ForestProducts

Actual

2007 ProForma

EBIT

DA

($ M

illio

ns)

Earnings from continuing operations before special items; 2007 Pro Forma includes Weyerhaeuser CBPR 2007 EBITDA of $0.7 billion and estimated run-rate synergies of 0.4 billion plus IP’s share of Ilim EBITDA estimate of $0.2 billion (reported in equity earnings)

8

Higher & Better EBITDAImproving Earnings QualityHigher & Better EBITDAImproving Earnings Quality

2005EBITDA - $2.8B

2007 Pro FormaEBITDA - $4.1B(1)

Printing Papers

Packaging

Forest Products

13%

Distribution

Arizona Chemical

Coated Papers

Wood Products

Beverage Packaging

Printing Papers

Packaging

Forest Products

28%

Distribution(1) Calculated as IP 2007 EBITDA of $2.8 billion plus Weyerhaeuser CBPR 2007 EBITDA of $0.7 billion and estimated run-rate synergies of 0.4 billion plus IP’s share of Ilim EBITDA estimate of $0.2 billion (reported in equity earnings)

Ilim

9

Strong EBITDA & Cash FlowExecuting our Transformation PlanStrong EBITDA & Cash FlowExecuting our Transformation Plan

($0.4)Forest Products – 2008 Estimate

($1.0)Capital Expenditure - 2008 Estimate

($0.7)Interest Expense - 2008 Annualized

($0.2)Cash Taxes - 2008 Estimate

$1.1WY CBPR 2007 EBITDA + Synergies Estimate

$3.0EBITDA - 2007 Actual + IP’s share of Ilim*

$4.1EBITDA 2007 Pro Forma($0.2)IP’s share of Ilim - 2007 EBITDA Estimate

$1.6Free Cash Flow$3.80

$ Billions

Free Cash Flow per Share

This is not a forecast; for Transformation Plan illustrative purposes only*IP’s share of Ilim EBITDA estimate of $0.2 billion (reported in equity earnings)Free cash flow assumes that 2009 working capital does not change from 2008 levels

10

Strong Cash FlowBalanced Use of CashStrong Cash FlowBalanced Use of Cash

Alternatives:Synergies

Business Improvement

High-Return InvestmentsReduced Overhead Expenses

Share RepurchasesCapacity Management

Dividend IncreaseReduced Capital Expenditures

Debt RepaymentWY Integration

Balanced Use of CashStrong Cash Flow

11

Workforce ChangesChanging our Cost StructureWorkforce ChangesChanging our Cost Structure

83

(5)

113

6514

(27)

(10)

(20)

0

20

40

60

80

100

120

2000 Divestments Productivity 2003 Divestments &Acquisitions

WeyerhaeuserCBPR

Acquisition

Productivity 2008 YTDActual

Thou

sand

s of

Em

ploy

ees

Excludes Ilim joint venture employees

12

10%

11%

12%

13%

14%

15%

16%

2003 2004 2005 2006 2007 6M2008YTD

Ove

rhea

d as

a %

of G

ross

Sal

esOverhead as % of SalesIncreasing our EfficiencyOverhead as % of SalesIncreasing our Efficiency

2010 Target = 11%

Overhead includes Selling & Administrative and Manufacturing Administrative expenses

13

$0.70

$1.33

$2.22

2005 2006 2007

Improving Absolute EPS From Core Business EarningsImproving Absolute EPS From Core Business Earnings

EPS from continuing operations before special itemsForest Products Earnings percentage based on operating incomeA reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at presentations

24%39%54%Forest Products Earnings

North American Industrial PackagingNorth American Industrial Packaging

15

Corrugated box plantContainerboard mill

Etienne, France

Kenitra, Morocco

Global Industrial Packaging BusinessGlobal Industrial Packaging Business

Europe / N. Africa27 box plants

2 recycled board mills

Asia10 box plants

North America140 box plants15 board mills

19 recycling plants

16

Source: Pöyry CostTrac – 1st Quarter, 200842# and 26# Global Kraft Linerboard cash cost per ton delivered to ChicagoHenderson, Savannah 8, Mansfield 3 and Pensacola based on 26#

0

200

400

600

800

1,000

0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 33,000

Cumulative Annual Capacity (000 Short Tons)

Man

ufac

turi

ng C

osts

($/S

hort

Ton

)

Mansfield 1Prattville 1

Mansfield 3Savannah 6

VicksburgPineville

Savannah 8Pensacola

Prattville 2

Cedar RapidsValliant 1 Pine Hill 1 Valliant 3

HendersonAlbany 3

Albany 2

Springfield

Former WY MillIP Mill

Containerboard Global Cost Curve80% of IP Capacity in 1st & 2nd QuartilesContainerboard Global Cost Curve80% of IP Capacity in 1st & 2nd Quartiles

Campti 2

Campti 1

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North American Containerboard Structural ChangesNorth American Containerboard Structural Changes

GP9%

JS7%

WY7%

IP7%TIN

7%

Other50%

SC13%

SSCC19%

GP10%

PCA6%

Other26%

TIN10%

IP29%

1995 Source: AF&PA, Company Reports, IP Analysis

1995 Producer PositionTop 2 = 22%Top 4 = 36%

2008 Producer PositionTop 2 = 48%Top 4 = 68%

2008 Source: RISI

18

310

360

410

460

510

560

610

$ / T

on

20022002 20032003 20042004 2007200720002000 20012001 20052005 20062006

North American Industry Selling Prices42 lb. Kraft LinerboardNorth American Industry Selling Prices42 lb. Kraft Linerboard

Sources: Selling Prices - RISI U.S. data, Margins – International Paper Industrial Packaging2008 margin does not reflect the $55 per ton price increase announced in July

Quarterly average sales price Trend

20082008

18% Margin10% Margin

6% Margin

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North American Coated Paperboard Producer PositionNorth American Coated Paperboard Producer Position

MWV14%TIN

10%

IP35%

Potlatch9%

Other32%

1995 Source: AF&PA, Company Reports, IP Analysis

1998 Producer PositionTop 2 = 49%Top 4 = 68%

2008 Source: RISI

MWV20%

GP10%

Other20%

Potlatch11%

Rank Group11%

IP28%

2008 Producer PositionTop 2 = 48%Top 4 = 70%

20

0

200

400

600

800

1000

1200

1400

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000Cumulative Annual Capacity (000 Short Tons)

Man

ufac

turi

ng C

osts

($/S

hort

Ton

)

Augusta 3

Augusta 1

Riegelwood 18

Texarkana 1

Riegelwood 15

Based on Poyry’s 2007 CostTrac model at 1st Quarter, 2008, Prices and Exchange Rates.57# Global Coated Paperboard cash cost per ton delivered to Chicago.

Coated Paperboard Global Cost CurveIP North American Capacity in 1st QuartileCoated Paperboard Global Cost CurveIP North American Capacity in 1st Quartile

North American Printing PapersNorth American Printing Papers

22

Uncoated Freesheet Global Cost Curve94% of IP Capacity in 1st & 2nd QuartilesUncoated Freesheet Global Cost Curve94% of IP Capacity in 1st & 2nd Quartiles

0

200

400

600

800

1000

1200

1400

0 3,000 6,000 9,000 12,000 15,000 18,000 21,000 24,000 27,000 30,000 33,000Cumulative Annual Capacity (000 Short Tons)

Man

ufac

turi

ng C

osts

($/S

hort

Ton

)

Cash + Delivery to Chicago

Georgetown 1

Based on Poyry’s 2007 CostTrac model at 1st Quarter, 2008, Prices and Exchange Rates.

Franklin 3

Franklin 4

Eastover 2

Eastover 1

Courtland 35

Courtland 30, 34

Franklin 5Franklin 6

Riverdale 16

Riverdale 15

Ticonderoga 7

Ticonderoga 8

23

North American Uncoated FreesheetStructural ChangesNorth American Uncoated FreesheetStructural Changes

GP17%

IP12%

Boise9%

Champion9%Willamette

9%

WY8%

Other36%

Domtar32%

IP26%

Boise10%

GP7%

Other25%

1998 Source: Company Reports, IP Analysis

1998 Producer PositionTop 2 = 29%Top 4 = 47%

2008 Producer PositionTop 2 = 58%Top 4 = 75%

2008 Source: RISI

24

700

750

800

850

900

950

1000

1050

1100

$ / T

on

20022002 20032003 2004200420002000 20012001 20052005 20062006

North American Industry Selling Prices20 lb. Copy PaperNorth American Industry Selling Prices20 lb. Copy Paper

Quarterly average sales price Trend

20072007 20082008

12% Margin 8% Margin

13% Margin

Sources: Selling Prices - RISI U.S. data, Margins – International Paper NA Printing Papers

25

IP

Return is Operating Income before Special ItemsEach competitors’ corporate expenses and special items have been adjusted for comparative purposes

Return on Sales Margins2Q08 IP vs. Peer PerformanceReturn on Sales Margins2Q08 IP vs. Peer Performance

IP

IP

NA Industrial Packaging

Coated Paperboard

NA Paper & Pulp

0%

2%

4%

6%

8%

10%

12%

14%

xpedxxpedx

27

xpedxLargest N.A. distributor and IP’s largest customer

xpedxLargest N.A. distributor and IP’s largest customer

PrintingPapers61%

2007 Sales Mix

Packaging20%

Other20%

Printing Papers

60%

28

xpedx Margin Improvementxpedx Margin Improvement

Operating Expenses% of Gross Profit

80%81%82%83%84%85%86%87%88%89%90%

2002 2003 2004 2005 2006 2007

Revenue PerWarehouse Square Foot

$0.50

$0.55

$0.60

$0.65

$0.70

$0.75

2002 2003 2004 2005 2006 2007

•• 400 BP improvement since 2002400 BP improvement since 2002•• Each 100 BP improvement increases profits Each 100 BP improvement increases profits by $13 millionby $13 million

•• 34% increase in productivity since 200234% increase in productivity since 2002•• 12% decrease in total warehouse space12% decrease in total warehouse space

29

xpedx Strategyxpedx Strategy

Organic growth

Increase packaging volumes

Higher sales on same footprint

Buy / Handle / Sell initiatives

Strategic acquisitions

OperationsOutside North AmericaOperationsOutside North America

31

25%

75%

IP 6M2008 Annualized + WY CBPR 2007 Earnings + Synergies

Global BalanceDiversifying our Earnings CapacityGlobal BalanceDiversifying our Earnings Capacity

Operating profits exclude Forest Products and Special Items, and include IP’s share of Ilim joint ventureSynergies estimated at $400MM

North America Non-North America

32

IP Brazil Transforming Earnings and MarginsIP Brazil Transforming Earnings and Margins

33%

$315

$960

20082

22%

$150

$684

20051

EBITDA Margin

EBITDA

Sales Revenue

Note: 1 2005 results include sales and earnings from divested business2 2008 represents 6M08 YTD annualized

High demand growthLow-cost manufacturing

33

Três Lagoas - 2009 Start Up200k MT Integrated Paper MachineTrês Lagoas - 2009 Start Up200k MT Integrated Paper Machine

Jan’07

Jan’08

Nov’06 Nov’07

Jul’08

34

Ilim Joint VentureIlim Joint Venture

Strong customer base in Russia & China– Solid economic growth– High demand growth

Low-Cost Manufacturing

Business performing at plan– 20%+ EBITDA margins– Many margin improvement opportunities

Ilim board of directors approved $2 billion capital plan for 2008 – 2013 (to be funded by Ilim)

Ilim EBITDA margin is on a 100% basis before IP adjustments

35

Sun Paper Joint VentureSun Paper Joint Venture

2 machines - 425,000 metric TPY

3rd machine - 380,000 metric TPY– World-class capacity at 40%

of traditional capital cost

High demand growth region

Low-cost manufacturing

New Sun Coated Paperboard Machine

IP-Sun JV,Yanzhou

36

International Paper SummaryInternational Paper Summary

Different Company

– More-Focused Portfolio

– Improved Earnings & Cash Flow

– Lower-Cost Manufacturing Assets

– More Global Balance

– Balanced Use of Cash

Ability to generate cost-of-capital returns

John V. FaraciChairman & CEOJohn V. FaraciChairman & CEO

UBS Global Paper and Forest Products Conference

September 16, 2008