Slides of International Paper Company

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) industry conditions, including but not limited to changes in the cost or

availability of raw materials and energy, transportation costs, the company's product

mix, demand and pricing for its products; (ii) global economic conditions and political

changes,

particularly

Latin

America,

Russia,

Europe

and

Asia,

including

but

not

limited to changes in currency exchange rates, credit availability, and the company's

credit

ratings

issued

recognized

credit

rating

organizations;

(iii)

natural

disasters,

such as hurricanes and earthquakes; (iv) the company's ability to realize anticipated

profit improvement from its transformation plan, and (v) unanticipated expenditures

related to the cost of compliance with environmental and other governmental

regulations and to actual or potential litigation. We undertake no obligation to publicly

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

events

otherwise.

These

and

other

factors

that

could

cause

contribute

actual

results differing materially from such forward looking statements are discussed in

greater detail in the company's Securities and Exchange Commission filings.

•

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

www.internationalpaper.com

under

Investors.

Statements Relating to Non-GAAP

Financial Measures

Statements Relating to Non-GAAP

Financial Measures

Third Quarter 2007 Summary

Best Absolute Quarter in 7 Years

Third Quarter 2007 Summary

Best Absolute Quarter in 7 Years

•

Solid third quarter

•

Strong EBIT performances in:

•

NA Printing Papers

•

Brazil

•

xpedx

•

Improving price realizations

•

Improved mill operations

•

Successful Pensacola linerboard start-up

•

Increasing raw material costs

•

Flat volumes, land sales, tax rate

.60

.44

.25

.04

.03

.06

.14

.10

.27

.26

.11

.15

.11

.03

.02

.16

.30

.34

.27

.04

.12

.30

.47

.45

.57

.63

.45

.52

.26

.17

.20

2002

2003

2004

2005

2006

2007

2001

2000

Diluted EPS from Continuing Operations

and Before Special Items

Diluted EPS from Continuing Operations

and Before Special Items

* A

reconciliation

GAAP

EPS

available

www.internationalpaper.com

under

the

Investors

tab

presentations

* 2006 EPS restated to reflect new accounting guidelines for planned maintenance outages

1.54

.87

.15

.59

.22

.51

(.33)

(.03)

(.17)

(.19)

(.06)

(.02)

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

9M '06

Price

Volume

Cost/Mix

Pensacola

Input &

Distrib.Costs

Land Sales

Cash

Redeployment

Unallocated

Expenses /

Other

Plant

Closures

Divestitures

9M '07

EPS $ / Share

IPG .11

Coated Paperboard .05

P&C .25

Europe .10

Wood (.09)

Energy .02

Chemicals (.08)

Freight (.04)

Interest .32

Shares .16

Acquisitions .11

Cost/Mix .28

Outages (.06)

9M‘07 vs. 9M’06

EPS from continuing operations before special items

9M‘07 vs. 9M’06

EPS from continuing operations before special items

.57

.52

.04

.01

.04

(.02)

(.01)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

2Q '07

Price

Cost/Mix

Pensacola

Input Costs

Interest

Expense

Other

3Q '07

EPS $ / Share

3Q ‘07 vs. 2Q ’07

EPS from continuing operations before special items

3Q ‘07 vs. 2Q ’07

EPS from continuing operations before special items

Cost/Mix (.02)

Outages .06

(54)

(59)

(27)

(70)

(60)

(50)

(40)

(30)

(20)

(10)

Wood

Chemicals

Freight

Energy

$MM

Total of $129 million or $0.19 per share

negative impact in 9M’07 versus 9M’06

Higher Input & Distribution Costs

EBIT Impact 9M’07 vs. 9M’06

Higher Input & Distribution Costs

EBIT Impact 9M’07 vs. 9M’06

All costs include ongoing businesses

$MM

Printing Papers

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

$25

Brazilian Uncoated Papers

€15

(1%)

European Uncoated Papers

$19

U.S. Pulp

(1%)

N.A. Uncoated Papers

Price Realization

per Ton

Volume

Business

3Q’07 vs. 2Q’07

$249

$307

Earnings

$1,610

$1,660

Sales

2Q’07

3Q’07

$ Million

132

115

139

(10)

(7)

(1)

(6)

$70

$80

$90

$100

$110

$120

$130

$140

$150

2Q '07

European Cont.

Volume

All Other

3Q '07 before

One-time Costs

Pensacola

Conversion

NA Restructuring

3Q '07

$ MM

Industrial Packaging Earnings

3Q’07 vs. 2Q’07

Industrial Packaging Earnings

3Q’07 vs. 2Q’07

Special Items & Discontinued Operations

($0.01)

($3)

Total Discontinued Operations

($2)

Wood Products

($1)

Beverage Packaging

Discontinued Operations (Net of tax)

($0.05)

($23)

Total Special Items

($29)

Restructuring & Corporate

Divestitures

Special Items (Net of minority interest & tax)

$/Share

$ Million

3Q’07

Earnings Growth Outside North America

Diversifying Our Earnings Capacity

Earnings Growth Outside North America

Diversifying Our Earnings Capacity

North America

70%

2007 Estimated

2002 Actual

Non-

North America

30%

North America

80%

Non-

North America

20%

Business level EBITDA excluding Forest Products earnings and before unallocated expenses

1.54

.87

.16

.32

.69

(.33)

(.17)

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

9M '06

Core Business

EBIT

Land Sales

Divestitures*

Interest

9M '07

EPS $ / Share

* Includes Harvest and Recreation income, Coated Papers and Arizona Chemical

Transformation Plan

Yielding Results

Transformation Plan

Yielding Results

Fourth Quarter 2007 Outlook

•

Volume

•

N. A. Containerboard benefiting from Pensacola capacity

•

Seasonal pick-ups for European paper & packaging

•

Other segments seasonally slower at year-end

•

Price

•

Implementing IP’s previously announced North American price

increases in:

•

Printing Paper & Pulp

•

Containerboard & Corrugated Boxes

•

Increased wood, energy & transportation costs

•

Pensacola conversion expenses lower than 3Q’07

•

Forest Products earnings higher than 3Q’07

•

Higher interest expense and taxes

29%

$746 MM

$156 MM

$521 MM

$1.1 B

2006 ¹

Effective Tax Rate²

Unallocated Expenses

Supply Chain Expense

Net Interest Expense

Depreciation & Amortization

Capital Spending

20%

$607 MM

$135 MM

$595 MM

$1.2 B

$1.1 B

2005 ¹

30-31%

$710-$730 MM

$200 MM

$320 MM

$1.1 B

$1.3 B

2007 Estimate

1 Excludes discontinued operations results and Coated Papers

2 Before special items

Key Financial Statistics

Updated as of November 2, 2007

Key Financial Statistics

Updated as of November 2, 2007

Containerboard

Uncoated Papers

Pulp

Coated Paperboard

European Papers

*Includes indefinitely closed uncoated papers capacity at Pensacola, FL, Bastrop, LA and Jay, ME in 2Q05

(72,000 tons), 3Q05 (108,000 tons) and 4Q’05 (108,000 tons) which we permanently closed at end of 4Q’05.

Lack of Order Downtime

236

173

M Short Tons

2003

2004

2005

274*270*

180*

2006

2007

M Short Tons

$MM

Total of $10 million or $0.01

per share

negative impact in 3Q’07 versus 2Q’07

Raw Material & Distribution Costs

EBIT Impact 3Q’07 vs. 2Q’07

Raw Material & Distribution Costs

EBIT Impact 3Q’07 vs. 2Q’07

All costs include ongoing businesses

(3)

(6)

(2)

(7)

(6)

(5)

(4)

(3)

(2)

(1)

Chemicals

Wood

Freight

Energy

$MM

4Q’07 Forecast vs. 3Q’07

($10)

($5)

$20

Impact

($ Million)

Total Impact

Consumer Packaging

Industrial Packaging

Printing Papers

(2,000)

15,000

8,000

(25,000)

Maintenance

Outages

(Tons)

Maintenance

outages

and

dollar

impacts

are

estimated

and

are

subject

change

Incremental Maintenance Outages

($221)

($179)

($188)

Unallocated Expenses, net

$21

Other Businesses

$656

$572

$610

Operating Profit

($144)

($80)

($77)

Interest Expense, net

Minority Interest

$291

$166

$34

$62

$139

$234¹

3Q’06

$319

$98

$38

$48

$139

$249

2Q’07

Earnings from continuing operations before

income taxes, minority interest & special items

Forest Products

Distribution

Consumer Packaging

Industrial Packaging

Printing Papers

Earnings by Industry Segment ($ Million)

$349

$99

$40

$49

$115

$307

3Q’07

*Industry segment information has been reclassified to conform with minor changes in 2006 organizational structure

Excludes amounts for coated paper sales

Earnings by Industry Segment

Before Special Items

Earnings by Industry Segment

Before Special Items

Business Segment Operating

Results

Before Special Items

Business Segment Operating

Results

Before Special Items

Industrial Packaging

$955

$975

$128

$109

$99

North American

$250

$270

$265

$10

$28

$15

European

$45

$70

$65

Asian

N/A

$85

N/A

Asian

$60

$65

$70

$10

European

$645

$640

$620

$52

$37

$39

North American

Consumer Packaging

Sales

Operating Profit

$ Million

$170

$250

$370

$870

3Q’07

$160

$205

$370

$875

2Q’07

$21

$33

$28

$152

3Q’06

$130

$24

$25

U.S. Market Pulp

$72

$45

$165

3Q’07

$120

$57

Brazilian

$310

$55

European

$910¹

$113

North American

Printing Papers

3Q’06

2Q’07

Excludes amounts for coated papers

2007 Earnings from Continuing Operations

1 Assuming dilution

2 A

reconciliation

GAAP

EPS

available

www.internationalpaper.com

under

the

Investors

tab

presentations

$0.52

$0.46

$1.02

($0.05)

($0.06)

$0.57

$0.52

$0.45

Diluted

EPS

448

15%

$254

($44)

$298

1Q07

431

($23)

($25)

2Q07

426

32%

($23)

$11

($34)

3Q07

Earnings from Continuing Operations

426

28%

$220

($6)

($89)

$315

3Q07

431

30%

$200

($5)

($89)

$294

2Q07

448

24%

$457

($6)

($143)

$606

1Q07

$243

$223

$203

Net

Income

$MM

29%

32%

Estimated

Tax Rate

($6)

($5)

($6)

Minority

Interest

$MM

Special Items

$349

$319

$308

Pre-Tax

$MM

426

($100)

3Q07

431

($91)

2Q07

448

($99)

1Q07

Before Special Items

Average

Tax

$MM

Business Segment Price Realization

Industrial Packaging

Printing Papers

$62.2

$500

$551

$888

SEP ‘06

$61.2

$527

$605

$916

SEP ‘07

$502

$513

$521

Containerboard ($/ton)

$61.9

$61.4

$61.2

Corrugated boxes ($/MSF)

Average Selling Price Realizations

U. S. Business Segment

$546

$888

3Q’06

$605

$912

3Q’07

$586

Pulp ($/ton)

$904

Uncoated ($/ton)

2Q’07

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

2007 Capital Spending

$1.3 B of Projected Spending by Business

2007 Capital Spending

$1.3 B of Projected Spending by Business

100

125

150

175

200

225

250

Brazil

Europe

Industrial

Packaging

Uncoated

Papers

Coated

Paperboard

% of D&A

156%

189%

118%

161%

115%

66%

Capital Allocated in Excess of D&A

to Brazil and E. Europe

Pensacola

Mill

IP/Sun JV

Tres

Lagoas

Coated Paperboard includes Riegelwood fluff pulp project

2008 Estimated Capital Spending

100

125

150

175

200

225

250

Brazil

Europe

Industrial

Packaging

Uncoated

Papers

Coated

Paperboard

% of D&A

88%

220%

100%

78%

109%

47%

Capital Allocated in Excess of D&A

in Brazil and Asia

Tres

Lagoas

IP/Sun JV

Global Consumption

Annual Purchase Estimates for Key Inputs

Global Consumption

Annual Purchase Estimates for Key Inputs

Chemicals

Fiber

Energy

50,000

215,000

Sodium Chlorate (Ton)

40,000

LD Polyethylene (Ton)

4,000

24,000

Latex (Ton)

230,000

1,300,000

Coal (Ton)

8,000,000

40,000,000

Wood (Ton)

60,000

340,000

Caustic Soda (Ton)

310,000

600,000

Old Corrugated Containers (Ton)

Commodity

500,000

15,000,000

Non –

U. S.

4,100,000

#6 Fuel Oil (Barrel)

28,000,000

Natural Gas (MM BTU)

U. S.

2007 Run Rate Estimates

Includes only ongoing businesses