Second Quarter

2008 Review

July 31, 2008

Second Quarter

2008 Review

July 31, 2008

Tim S. Nicholls

Senior Vice President &

Chief Financial Officer

John V. Faraci

Chairman &

Chief Executive Officer

Exhibit 99.2

2

Forward-Looking Statements

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) 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 Measures

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.

4

Second Quarter 2008 Results Summary

EPS up 8% vs. 2Q07

Second Quarter 2008 Results Summary

EPS up 8% vs. 2Q07

Input costs escalated

EPS excluding land sales up

35% vs. 2Q07

Prices improved

Reduced mill operating costs

Benefited from global balance

$0.37

$0.37

$0.50

$0.15

$0.04

$0.06

2Q07

1Q08

2Q08

Forest Products EPS

Operating Business EPS

$0.52

$0.41

$0.56

Earnings from continuing operations before special items

5

Diluted EPS from Continuing Operations before Special Items

Best

nd

-Quarter

Results

since

2000

Diluted EPS from Continuing Operations before Special Items

Best

nd

-Quarter

Results

since

2000

2008

2

2

2004

2005

2006

2007

2003

2002

.10

.27

.26

.11

.15

.11

.03

.02

.16

.30

.34

.27

.04

.12

.30

.47

.41

.56

.20

.17

.26

.52

.45

.57

.45

.69

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

6

(.03)

.52

.50

.08

.24

.14

.06

.08

(.02)

(.34)

(.02)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

2Q07

Price

Volume

Cost / Mix

Materials &

Freight

Corporate /

Other

Ilim

Vicksburg

Tax

2Q08

$ / Share

$ / Share

IPG        .05

CPG     

.03

P&C     

.12

Europe 

.04

Fiber           (.07)

Chemicals 

(.09)

Energy        (.12)    

Freight       

(.06)

Cost / Mix    .16 

Outages      (.02)

2Q08 vs. 2Q07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

2Q08 vs. 2Q07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

.37

.15

Earnings from continuing operations before special items

Forest Products Earnings

.56

2Q08   33%

2Q07   29%

7

Global Sales Revenues

2Q08 vs. 2Q07

Global Sales Revenues

2Q08 vs. 2Q07

15%

11%                   12%

7%                   10%

xpedx includes the addition of Central Lewmar revenues in 2Q08

*Includes Forest Products and inter-segment sales eliminations

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

xpedx

Printing

Papers

Industrial

Packaging

Consumer

Packaging

Cumulative*

2Q07

2Q08

8

(43)

(40)

(57)

(71)

($80)

($60)

($40)

($20)

$0

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$211MM, or $0.34/Share Impact vs. 2Q07

Increasing Global Input & Freight Costs

$211MM, or $0.34/Share Impact vs. 2Q07

Input costs for continuing businesses

Percentage change reflects estimated North American input cost increases

N.A.

34%                                                    

17%

9%

34%

9

($200)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2003 vs.

2002

2004 vs.

2003

2005 vs.

2004

2006 vs.

2005

2007 vs.

2006

6M08 vs.

6M07

Cumulative

Price Increases / Decreases         

Input Cost Increases

Recovering North American Input Cost Increases

Increasing Prices to Recover Costs

Recovering North American Input Cost Increases

Increasing Prices to Recover Costs

North American Papers & Packaging

10

Printing Papers Earnings

$38 Million Increase

Printing Papers Earnings

$38 Million Increase

226

188

8

95

3

51

(119)

$0

$50

$100

$150

$200

$250

$300

2Q07

Price

Materials &

Freight

Volume

Cost / Mix

Outages

2Q08

11

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

$22

€18

$65

$84

Price/ton

6%

5%

18%

(8%)

Volume

2Q08 vs. 2Q07

Price/ton

2Q08 vs. 1Q08

0%

0%

22%

(4%)

Volume

$10

Brazilian Uncoated Papers

€3

European Uncoated Papers

$5

U.S. Pulp

$38

N.A. Uncoated Papers

Business

$226

$1,790

2Q08

$185

$1,715

1Q08

$188

$1,610

2Q07

Earnings

Sales

$ Million

Printing Papers

Margin Expansion

Printing Papers

Margin Expansion

12

108

87

28

6

6

32

(21)

(15)

(57)

$0

$25

$50

$75

$100

$125

$150

2Q07

Price

Materials

& Freight

Volume*

Cost / Mix

Outages

Vicksburg

Other

2Q08

Industrial Packaging Earnings

Cost Inflation Exceeded Price Increases

Industrial Packaging Earnings

Cost Inflation Exceeded Price Increases

*Excludes trade volume

13

€48

$60

$43

Price / Ton

(3%)

(1%)

8%

Volume

2Q08 vs. 2Q07

€5

(3%)

European Container

2Q08 vs. 1Q08

2%

(2%)

Volume

$5

N.A. Container

$2

N.A. Containerboard

Price / Ton

Business

$87

$1,470

2Q08

$97

$1,445

1Q08

$108

$1,315

2Q07

Earnings

Sales

$ Million

Industrial Packaging

U.S.

Margins Under Pressure

Industrial Packaging

U.S.

Margins Under Pressure

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

14

26

30

5

12

(1)

(38)

18

$0

$10

$20

$30

$40

$50

2Q07

Price

Materials

& Freight

Volume

Cost / Mix

Other

2Q08*

Consumer Packaging Earnings

Cost Inflation Exceeded Price Increases

Consumer Packaging Earnings

Cost Inflation Exceeded Price Increases

*Excludes a special item of ($13) million related to the reorganization of Shorewood’s Canadian operations

15

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

1

Excludes

a

special

item

of

($5)

and

($13)

million

in

1Q08

and

2Q08,

respectively,

related

to

the

reorganization

of

Shorewood’s Canadian operations

NA

Price

$44

Price/Ton

2%

Revenue

1%

Volume

2Q08 vs. 2Q07

Price

Revenue

Business

2Q08 vs. 1Q08

7%

0%

Volume

NA

Converting Businesses

$15

U.S. Coated Paperboard

Price/Ton

Business

$795

2Q08

$770

1Q08

$30

$745

2Q07

Earnings

Sales

$ Million

Consumer Packaging

Margins Under Pressure

Consumer Packaging

Margins Under Pressure

$26

1

$14

1

16

$21

$19

$15

Fuel & Freight

$26

$1,970

2Q08

$16

$1,985

1Q08

$30

$1,720

2Q07

Earnings

Sales

$ Million

xpedx

Focus on Cost Reduction

xpedx

Focus on Cost Reduction

Weak demand for commercial printing and packaging

Growth from price increases and national accounts

Benefiting from cost reductions

Offset by fuel costs despite fewer miles & deliveries

17

xpedx

Product Diversity Overcoming Market Conditions

xpedx

Product Diversity Overcoming Market Conditions

Revenue dollars and growth percentages are based on 6M08 vs. 6M07 results

$0

$1

$2

$3

Merchant Printing

National Accounts

Merchant Packaging

Central Lewmar

Publishing

Saalfeld

Billions

Printing

Packaging

Facility Supplies

All Segments

6%

0%

2%

6%

22%

12%

18

Forest Products

Focusing on Maximizing Value   

Forest Products

Focusing on Maximizing Value   

30,000

13,000

37,000

Acres Sold

$1,872

$1,871

$2,144

Price / Acre

$41

$55

2Q08

$25

$25

1Q08

$94

$90

2Q07

Earnings

Sales

($ Million)

($ Million)

19

$15

$415

6M08

$10

$315

6M07

Earnings

Sales

$ Million

Asia

Building New Capabilities

Asia

Building New Capabilities

This slide includes the Asian business segments in Printing Papers, Industrial Packaging, and Consumer

Packaging as well as Asian sales and operating profits reported in Foodservice and Shorewood results

Strong sales and earnings growth

High demand growth for board

and boxes

Focus on domestic consumption

20

Asia

World-Class Assets, Low Capital Costs

Asia

World-Class Assets, Low Capital Costs

Heated Belt Calender

Forming Section

Film Size Press

Start-up of 420,000-ton Sun joint venture coated

board machine

Chinese cartonboard demand growing at 7%

annually

Box plant and folding carton plant start ups

Folio Sheeter

21

IP’s share of Ilim’s 1Q08 earnings include a $14 million after-tax foreign exchange gain and a $3 million after-tax

charge to write off a share repurchase option

1Q08 vs. 4Q07

2%

0%

Volume

(000 Metric Tons)

$13

Containerboard

$42

Pulp

Price / Ton

Business

$32

$555

1Q08

$17

$529

4Q07

Earnings (IP Share)

Sales (100%)

$ Million

Ilim Joint Venture 1Q08 Results

IP’s After-Tax Share: $32MM or $0.08 EPS

Ilim Joint Venture 1Q08 Results

IP’s After-Tax Share: $32MM or $0.08 EPS

22

Ilim Joint Venture

Sale of KPK Mill

Ilim Joint Venture

Sale of KPK Mill

Ilim Holding S. A. signed an agreement to sell its 56%

interest in the KPK recycled paperboard mill to Knauf,

its joint venture partner in this mill

After the transaction has been completed, Knauf

will

own the 220,000-TPY mill

The transaction is expected to close in 3Q08

After the divestiture, Ilim will continue to focus on its

market pulp,  industrial packaging, and paper

businesses

23

Free Cash Flow Improvement

Free Cash Flow Improvement

$309

($267)

$576

2Q08

$528

($482)

$1,010

6M08

$93

($299)

$392

2Q07

$219

Free Cash Flow

($215)

Less Capital Investment

$434

Cash Provided by

Continuing Operations

1Q08

Free Cash Flow

($ Million)

24

(132)

(103)

(80)

(63)

($150)

($125)

($100)

($75)

($50)

($25)

$0

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$378MM, or $0.60/Share Impact vs. 6M07

Increasing Global Input & Freight Costs

$378MM, or $0.60/Share Impact vs. 6M07

Input costs for continuing businesses

Percentage change reflects North American input costs

N.A.

28%                                                    

13%

6%

30%

25

$ / Share

$ / Share

6M08 vs. 6M07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

6M08 vs. 6M07 EPS

Higher Costs,

Higher Prices,

Lower Forest Products Earnings

.07

Earnings from continuing operations before special items

IPG     

.10

CPG    

.05

P&C     

.22

Europe 

.08

Fiber           (.13)

Chemicals

(.16)

Energy        (.21)    

Freight     

(.10)

Cost / Mix  

.17

Outages        .02

Forest Products

Earnings

2008A   32%

2007A   30%

.97

.97

.66

.86

.45

.19

.11

.09

.04

(.01)

(.02)

(.60)

(.03)

(.02)

.31

.11

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

6M07

Price

Volume

Cost /

Mix

Vicksburg

Materials

& Freight

Interest

Ilim

Corporate

/ Other

Tax

Shares

6M08

26

Weyerhaeuser CBPR Acquisition Update

Weyerhaeuser CBPR Acquisition Update

On schedule for August close

Management team in place

Expecting more merger benefits at faster pace

Expect acquisition to be cash positive in 2008

27

Weyerhaeuser CBPR Acquisition Update

Financing in Place

Weyerhaeuser CBPR Acquisition Update

Financing in Place

Original Financing Plan

$2 Billion

5-Year Term Loan

$2.5 Billion

5-Year Term Loan

$4 Billion

18-Month Bridge Loan

$3.0 Billion

Bond Offering

$0.5 Billion

Cash & Short-Term Debt

Current Financing

28

Weyerhaeuser CBPR Acquisition

Key Financial Statistics

Weyerhaeuser CBPR Acquisition

Key Financial Statistics

$50 million in 2008 merger benefits

$80 million one-time costs in 2008

–

Establish data center and IT systems

–

Severance and relocation expenses

–

Transition costs

$35 million one-time, non-cash charge in 3Q08 due to

the write up of inventory in connection with the asset

purchase

$160 -

$180 million in 2008 incremental interest expense

Also targeting $150 -

$200 million in incremental IP

overhead reduction by 2010

29

3Q08 Outlook

Changes from 2Q08

3Q08 Outlook

Changes from 2Q08

Increase

Increase

Input & Freight Costs

Ex-North America

North America

Steady

Slight Increase

Flat

Slight Increase

Under Pressure

Improving

Steady

Operations

Volume

Pricing

Flat

Packaging

Improving

Paper

Decrease

Maintenance Outages

Flat

Improving

Paper

Packaging

30

2008 Forest Products Earnings

2008 Forest Products Earnings

Signed agreement to sell mineral rights in northwest

Louisiana for $263 million

Expect transaction to close in 3Q08

At end of 2Q08, portfolio includes 270,000 acres of

land and mineral rights with an NPV of $675 million

to $775 million

Expect 2008 Forest Products earnings of $350 million

to $400 million

31

Summary

2Q08 Solid Results in Tough Market Conditions

Summary

2Q08 Solid Results in Tough Market Conditions

•

8% year-over-year earnings increase

•

$0.34 per share of increased input costs

•

Announced price increases to recover costs

•

Reduced mill operating costs

•

Benefit of global operations

32

Questions & Answers

Questions & Answers

Investor Relations Contacts

Thomas A. Cleves

901-419-7566

Ann-Marie Donaldson

901-419-4967

Emily Nix

901-419-4987

Media Contact

Patty Neuhoff

901-419-4052

33

Appendix

34

Special Items & Discontinued Operations

2Q08

Special Items & Discontinued Operations

2Q08

$0.00

($1)

Total Discontinued Operations

$0.54

$227

Net Earnings

$0.56

$235

Earnings from Continuing Operations &

Before Special Items

Special Items

Earnings

per Share

$ Million

($9)

Shorewood Canadian Reorganization

$2

Adjustment to Gain on Sale of Forestlands

($0.02)

($7)

Total Special Items

$0.54

$228

Earnings from Continuing Operations

35

$0

$24

$9

$0

Europe

$19

$28

$41

$28

North America

$63

$8

$3

$52

3Q08E

$103

$13

$40

$50

2Q08

$43

$13

$11

$19

4Q08E

Total Impact

Consumer Packaging

Industrial Packaging

Printing Papers Total

$ Millions

$53

$1

$24

$28

1Q08

Dollar

impact

of

planned

maintenance

outages

are

estimates

and

subject

to

change

Planned Maintenance Outages

Planned Maintenance Outages

36

Operating Profits by Industry Segment

from Continuing Operations before Special Items

Operating Profits by Industry Segment

from Continuing Operations before Special Items

$302

$198

$294

Earnings from continuing operations before income

taxes, equity earnings & minority interest

$32

$17

$0

Equity Earnings, net of taxes -

Ilim

($21)

($21)

($57)

Corporate Items

($25)

$6

($80)

$450

$0

$94

$30

$30

$108

$188

2Q07

($10)

$8

($81)

$406

$0

$41

$26

$26

$87

$226

2Q08

($41)

Special Items

$0

Other Businesses

$337

Operating Profit

($81)

Net Interest Expense

$4

Minority Interest / Equity Earnings Adjustment

$25

$16

$14

$97

$185

1Q08

Forest Products

Distribution

Consumer Packaging

Industrial Packaging

Printing Papers

$ Million

37

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Geographic Business Segment Operating

Results

from Continuing Operations before Special Items

Operating Profit

Sales

$ Million

$16

$3

$9

$2

$0

$18

$79

$0

$4

$33

$42

$106

1Q08

$30

$3

$6

$21

$1

$23

$84

$0

$18

$41

$44

$85

2Q07

$5

$95

$95

$85

Asian

$26

$8

$13

$2

$20

$65

$0

$11

$51

$39

$125

2Q08

$1,970

$75

$625

$95

$315

$1,060

$5

$205

$255

$445

$880

2Q08

$1,985

$75

$600

$80

$315

$1,050

$5

$165

$225

$435

$885

1Q08

$1,720

$65

$595

$70

$270

$975

$5

$155

$205

$370

$875

2Q07

Asian

Industrial Packaging

North American

European

Asian

Distribution

European

North American

Consumer Packaging

U.S. Market Pulp

Brazilian

European

North American

Printing Papers

Excludes Forest Products

38

2008 Earnings from Continuing Operations

2008 Earnings from Continuing Operations

1

Assuming dilution

2

A

reconciliation

to

GAAP

EPS

is

available

at

www.internationalpaper.com

under

the

Investors

tab

at

presentations

$0.35

423

30%

$150

$16

($5)

($59)

$198

1Q08

($0.06)

423

39%

($25)

$0

$0

$16

($41)

1Q08

$0.41

423

31.5%

$175

$16

($5)

($75)

$239

1Q08

$30

$0

$30

Equity

Earnings

$0.54

($0.02)

$0.56

Diluted

EPS

423

30%

($7)

$0

$3

($10)

2Q08

Earnings from Continuing Operations

423

32%

$228

($7)

($97)

$302

2Q08

$235

Net

Income

$MM

32.5%

Estimated

Tax Rate

($7)

Minority

Interest

$MM

Special Items

$312

Pre-Tax

$MM

423

($100)

2Q08

Before Special Items

Average

Shares  

MM

Tax

$MM

2

1

39

Business Segment Price Realization

Business Segment Price Realization

$851

$556

2Q08

$651

$988

2Q08

$846

$554

1Q08

$646

$950

1Q08

$791

$513

2Q07

$586

$904

2Q07

Average Selling Price

Realizations

Industrial Packaging ($/ton)

Printing Papers ($/ton)

Containerboard

Corrugated Boxes

Market Pulp

Uncoated Freesheet

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

40

226

188

10

(4)

40

(8)

$0

$50

$100

$150

$200

$250

$300

2Q07

North

America

Paper

North

America

Pulp

Europe

Brazil

2Q08

Printing Papers Earnings

2Q08 vs. 2Q07

Printing Papers Earnings

2Q08 vs. 2Q07

Brazilian earnings include a one-time, $6 million gain from the sale of government credits

41

87

108

(3)

(19)

1

$0

$20

$40

$60

$80

$100

$120

2Q07

North

America

Europe

Asia

2Q08

Industrial Packaging Earnings

2Q08 vs. 2Q07

Industrial Packaging Earnings

2Q08 vs. 2Q07

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

42

26

30

2

2

(2)

2

(8)

$0

$10

$20

$30

2Q07

US Coated

Paperboard

Shorewood

Food

Service

Europe

Asia

2Q08*

Consumer Packaging Earnings

2Q08 vs. 2Q07

Consumer Packaging Earnings

2Q08 vs. 2Q07

*Excludes a special item of ($13) million related to the reorganization of Shorewood’s Canadian operations

43

.50

.37

.16

.03

.06

.05

.03

(.08)

(.01)

(.02)

(.09)

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

1Q08

Price

Volume

Cost / Mix

Materials /

Freight

Corporate

/ Other

Ilim

Outages

Vicksburg

Tax

2Q08

$ / Share

$ / Share

2Q08 vs. 1Q08 EPS

Higher Costs,

Higher Prices,

Higher

Maintenance Outages

2Q08 vs. 1Q08 EPS

Higher Costs,

Higher Prices,

Higher

Maintenance Outages

.04

.06

.56

.41

Earnings from continuing operations before special items

Forest Products Earnings               

44

Printing Papers Earnings

2Q08 vs. 1Q08

Printing Papers Earnings

2Q08 vs. 1Q08

226

185

12

12

44

31

(38)

(20)

$0

$50

$100

$150

$200

$250

$300

1Q08

Price

Volume

Cost / Mix

Materials

& Freight

Outages

Other

2Q08

45

87

97

19

8

(15)

(16)

(6)

$0

$20

$40

$60

$80

$100

$120

$140

1Q08

Volume*

Cost / Mix

Materials

& Freight

Outages

Vicksburg

2Q08

Industrial Packaging Earnings

2Q08 vs. 1Q08

Industrial Packaging Earnings

2Q08 vs. 1Q08

*Excludes trade volume

46

14

26

(11)

(13)

1

25

4

6

$0

$10

$20

$30

$40

$50

$60

1Q08*

Price

Volume

Cost /

Mix

Materials

& Freight

Outages

Other

2Q08*

Consumer Packaging Earnings

2Q08 vs. 1Q08

Consumer Packaging Earnings

2Q08 vs. 1Q08

*

Excludes

a

special

item

of

($5)

and

($13)

million

in

1Q08

and

2Q08,

respectively,

related

to

the

reorganization

of

Shorewood’s Canadian operations

47

North American Industry Capacity Closures

Uncoated Freesheet

North American Industry Capacity Closures

Uncoated Freesheet

12,000

13,000

14,000

15,000

16,000

2000

2001

2002

2003

2004

2005

2006

2007

2008E

2000 –

2008

Demand CAGR = (2.4%)

Capacity closures = (18%)

Source: AF&PA, RISI, IP Analysis

48

North American Industry Capacity Closures

Containerboard

North American Industry Capacity Closures

Containerboard

38,000

39,000

40,000

41,000

42,000

2000

2001

2002

2003

2004

2005

2006

2007

2008E

Source: AF&PA, RISI, IP Analysis

2008E includes Pratt’s new machine in Shreveport, LA:  360 M Tons

2000 –

2008

Demand CAGR = (0.4%)

Capacity closures = (3%)

49

Total Cash Cost Components

6M08

Total Cash Cost Components

6M08

North American Mills Only

Energy

11%

Materials

13%

Labor

14%

Fiber

27%

Freight

13%

Overhead

9%

Chemicals

12%

50

Energy

Substituting Lower-Cost Energy

Energy

Substituting Lower-Cost Energy

0%

20%

40%

60%

80%

100%

2001

2002

2003

2004

2005

2006

2007

2008P

Coal

Gas

Wood Waste

Fuel Oil

Power

Other

*Other includes shredded tires, recycled oil, and any other fossil fuels

51

($120)

($100)

($80)

($60)

($40)

($20)

$0

Wood

Energy

Chemicals

Freight

OCC

Global Input & Freight Costs by Segment

$211 Million Global Impact vs. 2Q07

Global Input & Freight Costs by Segment

$211 Million Global Impact vs. 2Q07

Consumer

Packaging

($37)

Industrial

Packaging

($56)

Printing

Papers

($118)

52

(24)

(17)

(2)

(19)

($35)

($25)

($15)

($5)

$5

Energy

Chemicals

Fiber

Freight

North America

Outside North America

Increasing Global Input & Freight Costs

$62MM, or $0.10/Share Impact vs. 1Q08

Increasing Global Input & Freight Costs

$62MM, or $0.10/Share Impact vs. 1Q08

Input costs for continuing businesses

Percentage change reflects North American input costs

N.A.

18%

15%

1%

7%

53

0

50

100

150

200

250

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2005

2006

2007

NYMEX Natural Gas closing prices

Index: Jan 2005 Natural Gas Costs = 100

Natural Gas Costs

45% increase vs. 2Q07 average cost

Natural Gas Costs

45% increase vs. 2Q07 average cost

2008

54

50

70

90

110

130

150

170

190

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2006

2007

Index: Jan 2006 #6 Fuel Costs = 100

Delivered cost to U.S. facilities

U.S. #6 Fuel Oil

75% increase vs. 2Q07 average cost

U.S. #6 Fuel Oil

75% increase vs. 2Q07 average cost

2008

55

90

95

100

105

110

115

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

U.S. Mill Wood Costs

9% increase vs. 2Q07 average cost

U.S. Mill Wood Costs

9% increase vs. 2Q07 average cost

Index: Jan 2005 Wood Costs = 100

2005

2006

2007

2008

Delivered cost to U.S. facilities

56

75

100

125

150

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2005

2006

2007

2008

Index: Jan 2005 Caustic Soda Costs = 100

Delivered cost to U.S. facilities

U.S. Caustic Soda Costs

52% increase vs. 2Q07 average cost

U.S. Caustic Soda Costs

52% increase vs. 2Q07 average cost

57

100

125

150

175

200

225

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

2006

2007

Index: Jan 2006 Corn Starch Costs = 100

Delivered cost to U.S. facilities

U.S. Corn Starch Costs

10% increase vs. 2Q07 average cost

U.S. Corn Starch Costs

10% increase vs. 2Q07 average cost

2008

58

110,000

350,000

Corn Starch (Tons)

Chemicals

Fiber

Energy

50,000

240,000

Sodium Chlorate (Tons)

-

40,000

LD Polyethylene (Tons)

4,000

24,000

Latex (Tons)

230,000

1,300,000

Coal (Tons)

8,200,000

43,000,000

Wood (Tons)

60,000

300,000

Caustic Soda (Tons)

310,000

600,000

Old Corrugated Containers (Tons)

Commodity

500,000

15,000,000

Non –

U. S.

3,000,000

#6 Fuel Oil (Barrels)

28,000,000

Natural Gas (MM BTUs)

U. S.

Global Consumption

2008 Purchase Estimates for Key Inputs

Global Consumption

2008 Purchase Estimates for Key Inputs

Includes only continuing businesses; does not include Asian or Weyerhaeuser consumption