John V. Faraci

Chairman &

Chief Executive Officer

UBS Global Paper and Forest Products Conference

A Stronger, Better-Positioned International Paper Company

September 2010

2

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 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

During the course of this presentation, certainnon-U.S. GAAP financial information will bepresented.

A reconciliation of those numbers to U.S.GAAP financial measures is available on thecompany’s website at internationalpaper.comunder Investors.

4

Repositioned and Well-PositionedFor Value Creation & Earnings Growth

Focused our business portfolio

Replaced divested businesses’ earnings with

higher, more-sustainable earnings

Reduced costs– Operating costs & productivity gains

– Overhead costs

– Fixed costs

Reduced debt

Reduced capex

Investments in strategic businesses &

emerging economies

Increased earnings, free cash flow & returns

5

Free Cash Flow2000 – 2010 First Call

$0

$500

$1,000

$1,500

$2,000

$2,500

2000 – 2004 Average

$910 Million

2008 – 2010 First Call Average

$1.85 Billion

Transformation

FCF

Yield2000 – 2004 Average = 5% 2008 – 2010 First Call Average = 23%

Free cash flow before dividends, based on data in the 10-K for each year at the time of filing.2006 represents free cash flow before $1 billion pension contribution.

6

Achieving Cost-of-Capital Returns

All Leading to Cost of Capital Returns in Current Environment

4%

5%

6%

7%

4%

8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2000 -2005 Avg

2006 2007 3Q08 Run Rate

2009 JUN-AUG 2010

Run Rate

RO

I

7

2010 Not a Mid-Cycle YearDemand Recovering

Source: Fibre Box Association

373378

390396

405 401

380 379 380

391 391 395390

381374

344

356

250

275

300

325

350

375

400

425

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Jan

-Au

g2

00

8 R

ate

2008

2009

20

10

YT

DA

nn

ua

lize

d

U.S. Box Shipments (BSF)

8

Improving Earnings Quality & SustainabilityReplaced Land Sales Earnings

54%

71%

47%

56%

72%76%

98%92%

46%29%

53%44%

28% 24%8%

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2Q10YTD

% of EBIT from Operating Businesses

EBIT before special items including discontinued operations; Forest Products EBIT excludes Wood Products

Earnings based on data reported in the 10-K for each year at time of filing

Forest Products

EBIT ($B) $0.6 $0.5 $0.7 $0.7 $0.5 $0.4 < $0.1 < $0.1

9

Streamlined Business PortfolioImproved Positions in More-Profitable Segments

Segment Position

Market Segment 2004 2010

U.S. Linerboard #3 #1

U.S. Uncoated Papers #1 #2

U.S. Coated Paperboard #1 #1

Global Market Pulp Secondary #4

U.S. Coated Papers Secondary Exited

U.S. Wood Products Secondary Exited

U.S. Forestland #2 Exited

U.S. Kraft Paper Secondary Exited

U.S. Chemicals Secondary Exited

U.S. Beverage Packaging Secondary Exited

10

2005 capital employed represents January 1, 2005

Packaging includes Consumer Packaging & Industrial Packaging

2005Capital Employed

$30B

June 2010Capital Employed

$21B

Printing Papers

28% Packaging25%

ForestProducts

11%Distribution4%

Corporate & Other

17%

CHH6%

Printing Papers

32%

Corporate & Other

11%

Packaging50%

ForestProducts

1%

Distribution6%

Streamlined Business PortfolioSmaller, Higher-Returning Capital Base

Coated Papers9%

Outside N.A.

N.A.

Outside N.A.

N.A.

Outside N.A.

N.A.

Outside N.A.

N.A.

11

Increasing Free Cash Flow25% Headcount Reduction

8066

60WYPKG

(11)5

(24)

(4)

2005 Headcount*

Divestments & Acquisitions

Headcount Reduction

June 2008

Headcount Reduction

SCA AsianPackagingAcquisition

June 2010

Th

ou

san

ds o

f E

mp

loyees

* At January 1, 2005Excludes Ilim joint venture employees

12

$3.2

$2.8

$3.4

$2.9 $2.9

$0.6 ($0.5)

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

2005 2007 WY PKGAcquisition

2008Pro Forma

WY PKGReductions& Synergies

2009 2010P

Overh

ead

Co

st

$ B

illio

n

% of Sales 12% 12% 13% 12% 11%

Increasing Free Cash FlowSystematic Overhead Cost Reductions

Includes discontinued operations

13

Increasing Free Cash FlowLower, More-Focused Capex

25%

50%

75%

100%

125%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2005 2006 2007 2008 2009 2010P

Maintenance Regulatory Strategic Cost Reduction

$ Million Normalized Target 60-70% of Depreciation% of

Depreciation

Reflects continuing operations

Cycle Capex Target: ~$1B

14

Progress on WY PKG Acquisition

Metric Performance

Cash FlowWill have recovered one-third of our $6B

investment by the end of 2010

EarningsProject acquisition to be earnings accretive

cumulatively by the end of 2010

Return on

Investment

Expect cost-of-capital returns for the

acquisition for 2010

15

Prices Returning to Pre-Recession Levels

1.00

0.84

1.00

0.50

0.60

0.70

0.80

0.90

1.00

1.10

Year End 2008

Year End 2009

August2010

42# Linerboard Corrugated Boxes

1.00

0.93

1.03

0.50

0.60

0.70

0.80

0.90

1.00

1.10

Year End 2008

Year End 2009

August2010

16

2010 Not a Mid-Cycle YearDemand Recovering

Source: Fibre Box Association

373378

390396

405 401

380 379 380

391 391 395390

381374

344

356

250

275

300

325

350

375

400

425

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Jan

-Au

g2

00

8 R

ate

2008

2009

20

10

YT

DA

nn

ua

lize

d

U.S. Box Shipments (BSF)

17

Accelerating Industrial Packaging Progress

$0.5

$0.8

$1.3

$1.0

$1.7

2007 2008 2009 1H10Run Rate

JUN - AUG2010

Run Rate

NA

In

du

str

ial P

ac

ka

gin

g

Earnings before special items

June - August EBITDA Run Rate of $1.7 Billion and 9% ROI

ROI 7% 5% 5% 3% 9%

18

IP Increasing Free Cash Flow

$0.8

$1.6

$2.4

$1.8

2004 - 2007Average

2008 2009 JUN - JUL2010

Annualized

FC

F $

Billi

on

Free cash flow before dividends

2009 and 2Q10 YTD exclude $1.7 B and $0.1 B, respectively, in alternative fuel mixture tax credits

19

Targeting Higher Levels of PerformanceEBITDA & ROI

2005

~$4.5

Cost of Capital8% - 9%

> $4.0

~$3.0

CurrentRun Rate

Mid-Cycle Peak Trough

$2.8

EBITDA$ Billion

$3.8

20

Debt ReductionTargeting < 3X Adjusted Debt-to-EBITDA

$12.7

$8.9

$3.81 $2.82

PensionGap

$8 - $10

$0

$2

$4

$6

$8

$10

$12

$14

August 2008 Pro Forma

with Acquisition

Debt Reduction

2Q10Balance

Target < 3X Adjusted Debt

to EBITDA

Billi

on

1 Excludes debt repayments totaling $2.75 B from the proceeds of bond issuances2 Pension gap as of 12/31/09

21

Portfolio UpgradesEmerging Market Investments

Attractive, low-cost assets

Growing markets

Geographic & currency balance

Good earnings, cash flow & return potential

22

Strategic Investments Sun Joint Venture

2009: 4 MM tons of coated paperboard demand in China

Projected 2010 – 2013 Demand CAGR: 8% - 9%

3 existing board machines

915,000 tons of capacity

Sold out since March 2009

1H10 EBITDA of $53MM

1H10 ROI of 13%

New 4th board machine approved by Sun & IP boards

550,000-ton annual capacity

~$300 MM investment

Yanzhou, China

Start up in 1Q12

5th board machine in planning stage

IP-Sun JV,

Yanzhou

23

Ilim

$ Million

2007 IP Investment $650

EBITDA – Three-Year Average $275*

EBITDA Multiple 6X

IP has received a total of $152 million of cash dividends from Ilim

* Represents 100% of Ilim’s EBITDA

4.8X

24

IlimRecovering from Economic Crisis

($0.12)

($0.08)

($0.04)

$0.00

$0.04

$0.08

$0.12

2008 2009 2010Projected

Cumulative

EP

S

IP Share of Operating Earnings

25

Strategic InvestmentsIlim JV - Resuming Capital Investment Plan

1. Expand Siberian pulp business

790,000-ton NBSK pulp line at Bratsk

550,000-ton net increase in capacity

$700 MM in capital

Recovery boiler start-up in 3Q11

Pulp line start-up in 2Q12

Projected return >20%

2. Integrate Koryazhma pulp into domestic market

Install paper machine at Koryazhma

165,000 tons of UFS; 55,000 tons of coating base

$270 MM in capital

Shift from export pulp to uncoated freesheet

Evaluating 75,000-ton off-line coater

Paper machine start-up in 2012

Projected return > 20%

26

Balanced Capital AllocationIncreasing Shareowner Value

Free Cash Flow

Return Cash to Shareowners

Increased dividend to $0.50

Debt Reduction

$500 MM Pension Contribution

$100 MM Debt Reduction

Selective Reinvestment

SCA Packaging Acquisition

Sun JV Coated Paperboard Machine

27

Increasing Shareowner ValueCapital Allocation Progress

During

Economic Crisis

Post

Economic Crisis

Reduce Debt Primary Focus Still a Priority

Build Cash Balance Primary FocusNeed Less

Cash on Hand

Return Cash

to ShareownersReduced to Strengthen

Balance SheetIncreasing Emphasis

Capital InvestmentPrimarily Maintenance &

Regulatory

High-Return

Cost Reduction &

Maintenance & Regulatory

Strategic Reinvestment NoneAcquisitions to Strengthen

Core Businesses

28

Looking ForwardIncreasing Shareowner Value

1. Strong free cash flow

2. Cost-of-capital returns over the cycle

3. Manage our supply to meet customer demand

4. Balanced free cash flow allocation