North American Uncoated FreesheetNorth American Uncoated Freesheet

H. Wayne BraffordSenior Vice President,Printing & Communications Papers

Credit Suisse Equity Research

December 2007

H. Wayne BraffordSenior Vice President,Printing & Communications Papers

Credit Suisse Equity Research

December 2007

2

Forward-Looking StatementsForward-Looking Statements

These slides and statements made during this presentation contaiThese slides and statements made during this presentation contain forwardn forward--looking statements. looking statements. These statements reflect management's current views and are subjThese statements reflect management's current views and are subject to risks and uncertainties ect to risks and uncertainties that could cause actual results to differ materially from those that could cause actual results to differ materially from those expressed or implied in these expressed or implied in these statements. Factors which could cause actual results to differ rstatements. Factors which could cause actual results to differ relate to: (i) industry conditions, elate to: (i) industry conditions, including but not limited to changes in the cost or availabilityincluding but not limited to changes in the cost or availability of raw materials and energy, of raw materials and energy, transportation costs, the company's product mix, demand and prictransportation costs, the company's product mix, demand and pricing for its products; (ii) global ing for its products; (ii) global economic conditions and political changes, particularly in Latineconomic conditions and political changes, particularly in Latin America, Russia, Europe and America, Russia, Europe and Asia, including but not limited to changes in currency exchange Asia, including but not limited to changes in currency exchange rates, credit availability, and the rates, credit availability, and the company's credit ratings issued by recognized credit rating orgacompany's credit ratings issued by recognized credit rating organizations; (iii) natural disasters, nizations; (iii) natural disasters, such as hurricanes and earthquakes; (iv) the company's ability tsuch as hurricanes and earthquakes; (iv) the company's ability to realize anticipated profit o realize anticipated profit improvement from its transformation plan, and (v) unanticipated improvement from its transformation plan, and (v) unanticipated expenditures related to the cost expenditures related to the cost of compliance with environmental and other governmental regulatiof compliance with environmental and other governmental regulations and to actual or potential ons and to actual or potential litigation. We undertake no obligation to publicly update any folitigation. We undertake no obligation to publicly update any forwardrward--looking statements, whether looking statements, whether as a result of new information, future events or otherwise. Thesas a result of new information, future events or otherwise. These and other factors that could e and other factors that could cause or contribute to actual results differing materially from cause or contribute to actual results differing materially from such forward looking statements are such forward looking statements are discussed in greater detail in the company's Securities and Exchdiscussed in greater detail in the company's Securities and Exchange Commission filings.ange Commission filings.

3

Latin & South America 3.7 MM tons, +1.9%

Latin & South America Latin & South America 3.7 MM tons, +1.9%3.7 MM tons, +1.9%

North America13.5 MM tons, (1.5)%

North AmericaNorth America13.5 MM tons, (1.5)%13.5 MM tons, (1.5)%

Europe12.8 MM tons

East & Russia +6.5% West +1.3%

EuropeEurope12.8 MM tons12.8 MM tons

East & Russia +6.5% East & Russia +6.5% West +1.3%West +1.3%

Africa & Middle East3.5 MM tons, +3.6%

Africa & Middle EastAfrica & Middle East3.5 MM tons, +3.6%3.5 MM tons, +3.6%

2006 Global Uncoated Freesheet DemandGlobal UFS demand continues to grow2006 Global Uncoated Freesheet DemandGlobal UFS demand continues to grow

Asia Pacific13.5 MM tons, +3-6%

Asia PacificAsia Pacific13.5 MM tons, +313.5 MM tons, +3--6%6%

Source: Poyry Consulting, RISI, EMGE

47 million short tons with a 2006 - 2011 CAGR of 1 - 2%

4

UFS is used in many applicationsUFS is used in many applications

Sources: GAPTRAC, CAPV

Desktop Papers Quick Print PapersForms EnvelopesCommercial Printing Direct MailBooks ConvertingTablets Other

5

Key Factors Influencing North American Uncoated Freesheet DemandKey Factors Influencing North American Uncoated Freesheet Demand

♦♦ Structural demand decline Structural demand decline

♦♦ Sawtooth demand patterns Sawtooth demand patterns

♦♦ Economic cycles Economic cycles

6

Structural Demand Decline - US Per Capita Purchases suggest a 1.2% declineStructural Demand Decline - US Per Capita Purchases suggest a 1.2% decline

Source: AF&PA, US Census Bureau

Population: 1.1%

Per Capita Usage: (2.3%)

100

150

200

250

300

350

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Mill

ions

of P

eopl

e

50

75

100

125

Usa

ge in

Pou

nds

7

8

9

10

11

12

13

14

15

16

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

MM

tons

A sawtooth demand pattern has emerged for North American UFS purchasesA sawtooth demand pattern has emerged for North American UFS purchases

Demand Trend (1.5%)

(2%) Case

Sources: AF&PA

8

Key factors influencing the year-over-year sawtooth pattern of NA UFS demandKey factors influencing the year-over-year sawtooth pattern of NA UFS demand

Sawtooth Demand Factors

2 - 3%8.7%05.4%07.9%US Postal Rate Increase

Summer NoWinterNoSummer NoOlympics

(~5.5%)0.5%(4.8%)1.6%(1.3%)NA UFS Purchases

1.9%(1.2%)2.4%3.7%5.5%3.2%US Print Ad Spending Growth

No

2007E

YesCongressNoYesNoUS Elections

2008F2006200520042003

Sources: AF&PA, USPS, Universal McCann.

9

Economic Cycles Impact on NA UFS DemandEconomic Cycles Impact on NA UFS Demand

1.9%2.1%2.9%3.1%3.6%2.5%US Economy (GDP)

Economic Cycles

(~5.5%)0.5%(4.8%)1.6%(1.3%)NA UFS Purchases

2007E 2008F2006200520042003

Sources: Global Insight, AF&PA, RISI

10

Key Factors Influencing North American Uncoated Freesheet DemandKey Factors Influencing North American Uncoated Freesheet Demand

♦♦ GDPGDPLimitedLimited3. Economic Cycles3. Economic Cycles

♦♦ ElectionsElections♦♦ Olympics Olympics ♦♦ Postal Rate IncreasesPostal Rate Increases

2% 2% -- (5%) (5%) 2. Sawtooth Demand 2. Sawtooth Demand PatternsPatterns

♦♦ Electronic Substitution Electronic Substitution ♦♦ Printer Placements Printer Placements ~ (1.5%) ~ (1.5%) 1. Structural Demand 1. Structural Demand

DeclineDecline

Sample IndicatorsSample IndicatorsUFS ImpactUFS ImpactFactorFactor

11

12,00012,50013,00013,50014,00014,50015,00015,50016,00016,500

2000 2001 2002 2003 2004 2005 2006 2007E 2008F

North American UFS capacity has declined in line with the demand decline

Source: AF&PA, Company Announcements

2000 – 2008 CAGR = (2.2%)

12

Summary of Announced Mill Shutdowns2007 – 2008 Capacity ReductionsSummary of Announced Mill Shutdowns2007 – 2008 Capacity Reductions

40Urbana, HousatonicJuly 2007Neenah350PensacolaMay 2007International Paper200WallulaApril 2007Boise

340Dryden, Port EdwardsFirst Half 2008 Domtar

2007 – ‘08 Total 2008 Total

First Half 2008January 2008January 2008

2007 Total September 2007

August 2007August 2007

July 2007

Shutdown Date

1,800720

1,085

25LockportValentine105GrovetonWausau

70Madawaska Fraser

100WaunaGeorgia-Pacific200Hull, Port Edwards, WoodlandDomtar

125NeenahGlatfelter

M TonsFacilityCompany

Bastrop 250International Paper

Source: AF&PA, Company Announcements

13

North American net UFS imports are at low levelsThe weak US$ suggests imports will remain lowNorth American net UFS imports are at low levelsThe weak US$ suggests imports will remain low

0

10

20

30

40

50

60

70

80

Jan-0

6Feb

-06Mar-

06Apr-

06May

-06Ju

n-06

Jul-0

6Aug

-06Sep

-06Oct-

06Nov-0

6Dec-0

6Ja

n-07

Feb-07

Mar-07

Apr-07

May-07

Jun-0

7Ju

l-07

Aug-07

Sep-07

Oct-07

M to

ns p

er M

o.

Imports Exports

Net Imports

Source: AF&PA, U.S. Department of Commerce

14

North American UFS Operating RatesNorth American UFS Operating Rates

Source: PPPC (Actual 2003-2007), RISI Forecast 2008

90%

93%91%

94% 93%

96%

2003 2004 2005 2006 2007 2008

15

0

200

400

600

800

1000

1200

0 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 30,000Cumulative Capacity (000 Short Tons)

Man

ufac

turin

g C

osts

$/S

hort

Ton

Cash + Delivery to Chicago

Riverdale 16

Riverdale 15

Georgetown 1

Ticonderoga 8

Ticonderoga 7

Courtland 35

Eastover 1

Franklin 6Courtland 30, 34

Franklin 4

Eastover 2

Franklin 5Franklin 3

Based on Poyry Consulting 2006 CostTrac At 1st Quarter 2007 Prices and Exchange Rates

IP has the lowest-cost North American UFS System80% of capacity in 1st & 2nd cost quartilesIP has the lowest-cost North American UFS System80% of capacity in 1st & 2nd cost quartiles

16

15.8%

8.1% 7.1%

3.0%

-1.5%

-10.8%-15%

-10%

-5%

0%

5%

10%

15%

20%

IP A B C D E

Source: Company 10Qs

North American Competitive PerformanceQ207 & Q307 Average EBIT ROS

North American Competitive PerformanceQ207 & Q307 Average EBIT ROS

17

SummarySummary

♦♦ NA UFS demand declining 1NA UFS demand declining 1--2% annually 2% annually

♦♦ NA UFS supply is declining at faster rate than demand NA UFS supply is declining at faster rate than demand

♦♦ Operating rates are strong Operating rates are strong

♦♦ International Paper is well positioned with low cost NA International Paper is well positioned with low cost NA capacity capacity