First Quarter 2012 Reviews1.q4cdn.com/597881801/files/doc_presentations/2012/1Q12... · 2015. 11....

First Quarter 2012 Review April 27, 2012

John V. Faraci

Chairman &

Chief Executive Officer

Carol L. Roberts

Senior Vice President &

Chief Financial Officer

2

Forward-Looking Statements

Certain statements in these slides and made during this presentation may be considered

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

include but are not limited to: (i) the level of our indebtedness and 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, changes in tax laws and pension and health

care costs; (iv) unanticipated expenditures related to the cost of compliance with existing and

new environmental and other governmental regulations and to actual or potential litigation; (v)

whether we experience a material disruption at one of our manufacturing facilities and risks

inherent in conducting business through a joint venture; (vi) risks and uncertainties associated

with the divestitures required by the U.S. Department of Justice consent decree that allowed the

Temple-Inland Inc. (“Temple-Inland”) transaction to proceed; (vii) the failure to realize synergies

and cost savings from the Temple-Inland transaction or delay in realization thereof; and (viii) our

ability to achieve the benefits we expect from all other strategic acquisitions, divestitures and

restructurings. 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 our Securities

and Exchange Commission filings. We undertake no obligation to publicly update any forward-

looking statements, whether as a result of new information, future events or otherwise.

3

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

$0.77

$0.72

$0.57

1Q11 4Q11 1Q12

Earnings per Share

First Quarter 2012 Results

Continued Strong Free Cash Flow

Solid Volumes Despite Seasonally

Slower Quarter in the Americas

Off to Excellent Start Integrating Temple-

Inland Operations

Lower Price Realizations in Pulp and Export

Markets

Franklin and Sun JV Startup Costs

Fiber and Energy Input Relief

Higher Pension Expense

Positive Currency Impact at Ilim JV

Adjusted Prior Periods for Elimination of Ilim

JV Reporting Lag Earnings from continuing operations before special items

5

$897 $895 $835

1Q11 4Q11 1Q12

EBITDA1 ($MM)

1Q12 Financial Snapshot

1Q11 4Q11 1Q12

Sales ($B) $6.4 $6.4 $6.7

EBITDA1

Margin 14% 14% 13%

Free Cash Flow

($MM) $4192 $3282 $3572

Cash Balance

($B) $2.0 $4.03 $1.3

1 Earnings from continuing operations before special items 2 See slide #27 for a reconciliation of free cash flows

3 Includes $1.5B cash raised for TIN acquisition

6

.77

.57

(.20)

(.02) (.05)

(.04)

.02

.01 .02 .05

.01

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

1Q11 Volume Price & Mix

Operations & Costs

Input Costs

Corporate & Other

TIN EBIT

Interest Tax Ilim JV 1Q12

1Q12 vs. 1Q11 EPS

Earnings from continuing operations before special items

7

($24)

($17)

$17

$36

Chemicals Freight Energy Fiber

North America

Outside North America

$27

($15)

$0

Industrial Packaging

Printing Papers

Consumer Packaging

Wood Energy Chemicals

Freight OCC

Global Input Costs vs. 1Q11 $12 MM Favorable, or $0.02/Share

By Business By Input Type

Input costs for continuing businesses

8

51 114

23 39

129

79

93

21

52

214 78

1Q11 2Q11 3Q11 4Q11 1Q12

Maintenance Vicksburg Flood Market

North American Downtime Operating Rates: 95% in 1Q12, 91% in 4Q11

17 20

5 15

1Q11 2Q11 3Q11 4Q11 1Q12

17 27

15

23

15

1Q11 2Q11 3Q11 4Q11 1Q12

29 25 15

45

14

1Q11 2Q11 3Q11 4Q11 1Q12

Containerboard Uncoated Papers

Market Pulp Coated Paperboard

144

50

214

253

75

Th

ou

sa

nd

To

ns

T

ho

us

an

d T

on

s

Th

ou

san

d T

on

s

T

ho

us

an

d T

on

s

207

1Q12 includes Temple-Inland mills

9

274 278 (37)

(19)

(14)

15 26

33

1Q11 Price & Mix

Volume Operations & Costs

Maintenance Outages

Input Costs

TIN EBIT

1Q12

Industrial Packaging 1Q12 vs. 1Q11

$ M

illi

on


10

N.A. Industrial Packaging Relative EBITDA Margins

IP EBITDA margins based on North American Industrial Packaging operating profit before special items. Competitor EBITDA margin estimates obtained from public filings and IP analysis Excludes the Recycling business and revenue from trade volumes

19.9%

17.0%

19.0%

22.0%

16.9%

13.9%

17.3% 17.1%

11.3%

IP Competitor A Competitor B

1Q11 4Q11 1Q12

11

Results from Temple-Inland Operations Neutral to Slightly Positive

$ Million 1Q12

EBIT $331

Synergies Included in EBIT $10

Interest Expense ($30)

Pre-tax Income $3

1 Industrial Packaging segment includes results from Temple-Inland Operations post-close

Before Special Items and One-Time Costs

12

Temple-Inland Integration Deliverables Next 90 Days

Deliver Incremental Synergies

Execute Box Plant Rationalizations

Continue Business Integration

Improve Box Plant Quality & Service Experience

Mill / Supply Chain System Optimization

Sell Divestiture Mills

Continue Work on Building Products Divestiture

13

101 96

(8)

(9)

1 1

10

1Q11 Price & Mix


Input Costs

Other 1Q12

Consumer Packaging 1Q12 vs. 1Q11

$ M

illi

on


14

N.A. Consumer Packaging Relative EBITDA Margins

IP EBITDA margins based on North American Consumer Packaging operating profit before special items. Competitor adjusted EBITDA margins obtained from public filings and IP analysis; reflects Food & Beverage segment

18.4%

14.6%

12.4%

5.9%

20.0%

11.6%

IP Competitor A

1Q11 4Q11 1Q12

15

Foodservice Record Quarterly Earnings


0%

20%

40%

60%

80%

100%

120%

1Q11 4Q11 1Q12

EBIT Indexed to 1Q11 Baseline EBIT

ROI 9% 5% 10%

16

209

145

(82)

(15)

15 6

12

1Q11 Price & Mix


Maintenance Outages

Input Costs

1Q12

Printing Papers 1Q12 vs. 1Q11

$ M

illi

on


17

N.A. Paper Strong Results Driven by Volume & Operations

Earnings from continuing operations before special items Excludes Pulp

$88 $83 $100

$0

$25

$50

$75

$100

1Q11 4Q11 1Q12

EB

IT

ROI 12% 12% 14%

18

IP India Update

Record 1Q volume – up 15% year over year

Focus on reliability improvements; improving mill OME

Cost headwinds in raw materials and energy

Integration on-track; preparing for outage in 2Q

2011 1Q12

Annualized

Sales (USD $MM) $170 $232

Volume (M Short Tons) 223 316

EBITDA $36

EBITDA Margin 16%


19

$ Million 1Q11 4Q11 1Q12

Sales $1,640 $1,625 $1,475

Earnings $12 $33 $19

xpedx 1Q12 vs. 4Q11

Daily Sales Change vs. 1Q11 vs. 4Q11

Printing (17%) (16%)

Packaging 2% (10%)

Facility Solutions (4%) (9%)

Year over year coated freesheet market decline

Quarter over quarter volumes impacted by

seasonality and strategic exit decisions

The benefits of the strategic transformation

continue to positively impact results


20

• Off to Excellent Start Integrating Temple-Inland Operations • Achieved $10MM Synergies

• Solid Volumes Despite Seasonally Weaker Demand in the Americas

• Fiber and Energy Input Relief

• Positive Currency Impact at Ilim JV

• India’s Results on Track

1Q12 Summary

• Lower Price Realizations in Pulp and Export Markets

• Franklin Fluff Pulp and Sun JV Coated Paperboard

Machine Startup Costs

• Higher Pension Expense

21

IP Global Pricing

$ / Ton March ‘12 vs.

December ‘11 IP Price March ‘12 vs.

1Q12 Avg. IP Price Recent IP Pricing

Actions

U.S. Packaging

Containerboard - Domestic stable stable -

Containerboard - Export ($55) ($15) Prices Negotiated Monthly1

(Realizations lag 2-3 months) +$20-40 April (RISI S. Europe CIF)

Boxes stable stable -

Coated Paperboard ($5) stable -

Global Paper – Uncoated Freesheet

North America ($5) $5 +$60 April (Offset Rolls)

+$30 April (Forms/Envelopes) +$40 May (Cut-Size)

Europe ($5) stable -

Russia $40 $30 ~100RUR (+5%) Feb. (Cut-Size)

Brazil - Domestic $30 $35 +$60 Feb. (Cut-Size) +$55 April (Offset)

Brazil - Export ($60) $10 +$40-60 April in LatAm depending

on country (C-S & Offset)

Global Pulp

Global Fluff Pulp ($45) stable +$30 March +$30 May

Chinese Softwood Pulp (ILIM JV) $40 $20 +$10 March +$20 April

1 Production Month Intent

22

Second Quarter Outlook Changes from 1Q12

North America EMEA Brazil Asia

Volume

Paper Stable Stable Seasonal Increase

Stable

Packaging Seasonal Increase

Stable Stable

Pricing

Paper Increase Increase (Russia)

Increase Stable

Packaging Stable Stable Stable

Maintenance Outages Increase $60MM

Increase $39MM

Stable Increase

$6MM (India)

Input & Freight Costs Increased OCC,

Chemicals &

Freight Stable Stable Stable

Mfg. Operations & Other Costs

Improvement Stable Stable Stable

xpedx Slight

Decrease ILIM

Currency Impact

TIN Impact

Full Quarter & Increased Synergies

23

2Q12 Outlook Full Quarter of Temple-Inland Results and

Continued Synergy Ramp-up

Highest Maintenance Outage Quarter of Year

Seasonal Volume & Mix Improvement

Realization of Announced Price Increases

Input Costs Increasing for OCC, Chemicals & Freight, Somewhat Offset by Lower Natural Gas

Expect Less Favorable Currency Impact from Ilim JV

Improved Manufacturing Operations and Reduced Costs

Franklin, Sun JV and Mogi Guacu Capital Projects on Track

24

Investor Day Conference May 24

Theme: Reaching our Potential

Global Business Strategy

Earnings and Cash Flow Capability of

Current Portfolio

Live Webcast Begins at 11:45 am EDT

Listen at internationalpaper.com by clicking

on the Investors tab and then clicking on

the Webcasts and Presentations link

25

Appendix Investor Relations Contacts

Glenn R. Landau 901-419-1731

Emily Nix & 901-419-4987

Michele Vargas

Media Contact

Tom Ryan 901-419-4333

26

$ Million (Except as noted)

2010 2011 2012 Estimate

Capital Spending $775 $1.2 B ~ $1.5 B

Depreciation &

Amortization $1.5 B $1.3 B ~ $1.5 B

Net Interest Expense $608 $541 ~ $700

Corporate Items $226 $145 ~ $220

Effective Tax Rate 30% 32% ~ 32%

Before special items and excluding Ilim

Key Financial Statistics

27

Free Cash Flow


Cash Provided by Continuing Operations

$6001 $7622 $6423

Less Capital Investment ($181) ($434) ($285)

Free Cash Flow $419 $328 $357

1 Excludes a $209 MM increase in working capital related to the cessation of the European A/R securitization program and a $123 MM tax

receivable collected related to pension contributions 2 Excludes $300 MM cash paid for voluntary pension contribution and $175 MM cash received from unwinding a timber monetization 3 Excludes $120 MM cash paid for Temple-Inland change-in-control agreements and $111 MM cash received from unwinding a timber monetization

28

$3.12

$0.3

$0.4 $3.3

$6

$7

$8

$9

$10

$11

$12

$13

$14

$15

$16

2008 2009 2010 2011 + TIN Acquisition

Debt

December 2011

Pro Forma with

Acquisition

1Q12 March 31 Debt Balance

Billi

on

$2.93 Pension

Gap

$3.21 Pension

Gap

$15.3 $14.9

$2.73 Pension

Gap

$14.3

$12.1 Balance

Sheet

Debt

$12.0 Balance

Sheet

Debt

$11.6 Balance

Sheet

Debt

3X EBITDA

3X EBITDA

Strong Balance Sheet Target: Adjusted Debt < 3X EBITDA

Adjusted Debt reflects gross balance sheet debt plus pension gap

3X EBITDA based on 2008 actual EBITDA of $3.0 B and 2013 First Call EBITDA of $4.3 B 1 Pension gap as of 12/31/08 2 Excludes debt repayments of $2.75 B from the proceeds of bonds issuances of $2.75 B 3 IP + Temple-Inland pension gap; March 31 pension gap reflects the remeasurement of Temple-Inland’s pension on February 13.

Contributed $0.3 B to

pension plan

Contributed $1.2 B to

pension plan

29

$ Million 1Q12 2Q12E 3Q12E 4Q12E 2012E

Industrial Packaging $67 $72 $23 $67 $229

Printing Papers Total $27 $108 $32 $43 $210

North America $27 $63 $4 $40 $134

Europe 0 39 17 0 56

Brazil 0 0 11 3 14

India 0 6 0 0 6

Consumer Packaging $0 $19 $6 $24 $49

Total Impact $94 $199 $61 $134 $488

Dollar impact of planned maintenance outages are estimates and subject to change – Includes Temple-Inland Mills

Maintenance Outages Expenses 2012

30

1Q12 vs. 4Q11 1Q12 vs. 1Q11

Business Volume Price /

Ton Volume

Price / Ton

N.A. Container incl. TIN1 1.4% $0 0.6% ($15)

European Container2 1% (€20) (3%) €18


1 Volumes reflect FBA reporting basis, which excludes Display and Bulk products and shipments from facilities in Mexico and Latin

America; but includes domestic sheet plant shipments; all periods include the full quarter of TIN’s volume 2 European Container volumes reflect box shipments only. These shipments include the non-consolidated joint venture in Turkey.

31

1Q12 vs. 4Q11 1Q12 vs. 1Q11

Business Volume Price / Ton Volume Price / Ton

N.A. Paper 7% ($26) 4% ($21)

N.A. Pulp1 11% ($52) 21% ($147)

European Paper 0% (€16) 0% (€26)

Printing Papers

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

1 Reflects Fluff and Market pulp combined

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

1Q12 vs. 4Q11 1Q12 vs. 1Q11

Volume Price/Ton Volume Price/Ton

N.A. Coated Paperboard 6% ($4) (12%) $9

Revenue Price Revenue Price

Converting Businesses 2% NA 9% NA

Consumer Packaging

33

Special Items Before Tax & Noncontrolling Interest From Continuing Operations

Special Items Pre-Tax ($Million) 1Q11 4Q11 1Q12


Acquisition Costs ($12) ($63)

Facility & Machine Closure Costs ($2) $2

Other $7

Printing Papers

Facility Closure Costs $2

Other ($8) ($3) $1

Consumer Packaging

Fixed Asset Impairment or Adjustment $4

Shorewood Sale Adjustments $7

Reorganization ($1)

xpedx Reorganization ($7) ($17) ($21)

Corporate

Acquisition Costs ($2)

Debt Extinguishment ($16)

Restructuring & Other ($35) $12

Total Special Items Before Tax & Noncontrolling Interest ($46) ($14) ($92)

34

Special Items Net of Taxes

1Q12

$ Million EPS

Earnings Before Special Items $247 $0.57

Special Items Net of Taxes:

Tax Items ($3)

Debt Extinguishment Costs ($10)

Shorewood Sale Adjustments $6

Acquisition Costs ($41)

Reorganization ($16)

Total Special Items Net of Taxes ($64) ($0.15)

Discontinued Operations Net of Taxes $5 $0.01

Net Earnings $188 $0.43

35

1Q12 EBITDA

Operating Profit

$ Million

D & A $ Million

Tons Thousand

EBITDA per Ton

EBITDA Margin


North America1 $258 $160 3,249 $129 16%

Europe $19 $7 266 $98 10%

Printing Papers

North America2 $100 $42 692 $205 20%

Europe3 $48 $19 311 $215 22%

Brazil $23 $36 274 $215 22%

India $1 $8 79 $114 16%

U.S. Market Pulp ($23) $13 277 ($36) (6%)

Consumer Packaging

N.A. Coated Paperboard $51 $35 378 $228 22%

Earnings from continuing operations before special items 1 Excludes Recycling businesses; includes Saturating Kraft & Bag business 2 Includes Bleached Kraft business 3 Excludes Market Pulp

36

Operating Profits by Industry Segment from Continuing Operations


Industrial Packaging $274 $316 $278

Printing Papers $209 $190 $145

Consumer Packaging $101 $62 $96

Distribution $12 $33 $19

Operating Profit $596 $601 $538

Net Interest Expense ($136) ($144) ($168)

Noncontrolling Interest / Equity Earnings Adjustment $5 $4 $4

Corporate Items ($44) ($31) ($69)

Special Items ($53) ($14) ($92)

Earnings from continuing operations before income taxes, equity earnings & noncontrolling interest $368 $416 $213

Equity Earnings, net of taxes - Ilim $56 $25 $40

37

Geographic Business Segment Operating Results Before Special Items

$ Million Sales Operating Profit

1Q11 4Q11 1Q12 1Q11 4Q11 1Q12


North American $2,115 $2,060 $2,690 $256 $294 $258

European $280 $280 $270 $17 $19 $19

Asian $160 $170 $155 $1 $3 $1

Printing Papers

North American $690 $670 $700 $88 $83 $100

European $360 $340 $335 $57 $55 $44

Brazilian $285 $320 $270 $48 $45 $23

India - $35 $58 - ($3) $1

U.S. Market Pulp $175 $170 $175 $16 $10 ($23)

Consumer Packaging

North American $620 $595 $520 $65 $33 $63

European $95 $95 $100 $27 $24 $28

Asian $190 $215 $190 $9 $5 $5

xpedx $1,640 $1,625 $1,475 $12 $33 $19

Does not reflect total company sales and operating profit

38

1 Assuming dilution 2 A reconciliation to GAAP EPS is available at www.internationalpaper.com under the Investors tab at Webcasts and Presentations

Pre-Tax $MM

Tax $MM

Non-controlling

Interest $MM

Equity Earnings

Net Income

$MM

Estimated Tax Rate

Average Shares1

MM

Diluted EPS2

Before Special Items

1Q12 $305 ($98) ($4) $44 $247 32% 439 0.57

Special Items

1Q12 ($92) $28 $0 $0 ($64) 30% 439 (0.15)

Earnings

1Q12 $213 ($70) ($4) $44 $183 33% 439 0.42

2012 Earnings from Continuing Operations

39

.75

.53

.28

.13 .14 .12

.35 .32

.33

.19

.24 .23

.33

.43 .43

.31 .29

.12

.35

.40

.47 .52

.57

.69

.56

.42

.21 .20

.37

.24

.42

.83

.68

.79 .81

.72

.60

.05

.12 .14 .12

.36

.12

.45 .41

.08 .04

.77

.57

.42

.08

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

Operating Business EPS Demonstrated Step Change in Performance

2003 2004 2005 2006 2007 2010 2002 2000 2001 2008

Impact of Mineral Rights

Gain

2009 Earnings from continuing operations before special items as reported at the time 2000-2010 as originally reported 2011 reflects earnings adjusted for elimination of the Ilim JV reporting lag

.84

2011

.91 Final Land Sale

Transformation

2012

40

.72

.57

(.11)

(.16)

(.06) (.04)

.07

.03 .04 .05 .03

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

4Q11 Volume & Market

Downtime

Price & Mix

Operations & Costs

Maintenance Outages

Input Costs

Corporate & Other

TIN EBIT

Interest Ilim JV 1Q12

Earnings before special items

1Q12 vs. 4Q11 EPS


41

316

278

(15) (76)

(25)

30

15

33

4Q11 Price & Mix

Volume & Market

Downtime

Operations & Costs

Maintenance Outages

Input Costs

TIN EBIT

1Q12

Industrial Packaging 1Q12 vs. 4Q11

$ M

illi

on


42

190

145

(53)

(25) (2) 16 13

6

4Q11 Price & Mix


Maintenance Outages

Input Costs

Other 1Q12

Printing Papers 1Q12 vs. 4Q11

$ M

illi

on


43


Sales $285 $320 $270

Earnings $48 $45 $23

EBITDA Margin 30% 26% 22%

IP Brazil results are reported in the Printing Papers segment

Earnings and EBITDA from continuing operations before special items

IP Brazil

1Q12 vs. 4Q11 1Q12 vs. 1Q11


Ton Volume

Price / Ton

Uncoated Freesheet (10%) ($33) 0% ($53)

Domestic (29%) $19 (2%) ($19)

Export 8% ($66) 2% ($74)

44

62

96

(8) 8

29 5

4Q11 Price & Mix

Volume Maintenance Outages

Input Costs

1Q12

Consumer Packaging 1Q12 vs. 4Q11

$ M

illi

on


45


Sales (100%) $580 $500 $490

Earnings (IP Share) $56 $25 $40

IP’s share of Ilim’s reported earnings for 1Q11 & 1Q12 include an after-tax foreign exchange gain of $9MM and $30MM, respectively.

4Q11 earnings include an after-tax foreign exchange loss of $8MM.

Ilim Joint Venture 1Q12 vs. 4Q11

1Q12 vs. 4Q11 1Q12 vs. 1Q11


Ton Volume

Price / Ton

Pulp 6% ($67) 1% ($166)

Containerboard (5%) ($48) (10%) ($117)

USD-denominated debt balance of ~$1 billion at Ilim JV

Ilim JV’s functional currency is the Ruble (RUR)

Non-functional-denominated currency balances are

remeasured monthly using the month end exchange rate

46

Fiber 32%

Materials 14%

Labor 12%

Chemicals 11%

Freight 15%

Energy 8%

Overhead 8%

1Q12 Total North American Mills Cash Cost Components

Does not include Temple-Inland mills

47

($4)

($1)

$12

$20

Freight Chemicals Energy Fiber

North America

Outside North America

$15

$6 $6


Printing Papers

Consumer Packaging

Wood Energy Chemicals

Freight OCC

Global Input Costs vs. 4Q11 $27 MM Favorable, or $0.04/Share

By Business By Input Type

48

2006 2007 2008 2009 2010 2011 90

95

100

105

110

115

120

125

130

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan

2012

U.S. Mill Wood Delivered Cost Trends 2% Increase vs. 4Q11 Average Cost

Cost Indexed to January 2006 values

49

2006 2007 2008 2009 2010 2011 60

80

100

120

140

160

180

200

220

240

260


2012

U.S. OCC Delivered Cost Trends 5% Decrease vs. 4Q11 Average Cost

2006-2007 represents WY PKG delivered costs; 2008-2010 represents delivered costs to the integrated system Cost Indexed to January 2006 values

50

2006 2007 2008 2009 2010 2011 0

50

100

150


2012

NYMEX Natural Gas closing prices

Natural Gas Costs 23% Decrease vs. 4Q11 Average Cost


51

2006 2007 2008 2009 2010 2011 40

60

80

100

120

140

160

180

200

220


2012

U.S. Fuel Oil 5% Increase vs. 4Q11 Average Cost

WTI Crude prices


52

2006 2007 2008 2009 2010 2011 75

100

125

150

175

200

225


2012

U.S. Chemical Composite Index 1% Increase vs. 4Q11 Average Cost

Delivered cost to U.S. facilities; includes Caustic Soda, Sodium Chlorate, Starch and Sulfuric Acid 2006 - 2008 excludes WY PKG


53

2012 Global Consumption Annual Purchase Estimates for Key Inputs

Does not include Asian or Ilim JV consumption Estimates are based on normal operations and may be impacted by downtime Excludes volumes related to mills expected to be divested and TIN Building Products

Commodity U. S. Non – U. S.

Energy

Natural Gas (MM BTUs) 54,000,000 13,000,000

Fuel Oil (Barrels) 1,100,000 380,000

Coal (Tons) 700,000 500,000

Fiber Wood (Tons) 53,400,000 8,700,000

Old Corrugated Containers (Tons) 3,900,000 100,000

Chemicals

Caustic Soda (Tons) 350,000 100,000

Starch (Tons) 420,000 56,000

Sodium Chlorate (Tons) 200,000 50,000

LD Polyethylene (Tons) 41,000 -

Latex (Tons) 24,000 7,000

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