Good morning. My name is [Lorrie] and I will be your conference operator. At this time, I would like to welcome everyone to the International Paper third quarter 2008 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. I will now turn the call over to Tom Cleves, Vice President, Investor Relations.

Thanks, Lorrie. Good morning everyone and thanks for joining our third quarter earnings conference call. This call is also being webcast. John Faraci, our Chairman and Chief Executive Officer and I will also conduct the call. Tim Nicholls will not be with us today. Tim was injured in a bicycle accident and currently he is in outpatient surgery to repair his shoulder. During this call, we will make forward-looking statements that are subject to risks and uncertainties, which are outlined on slide two of our earnings presentation. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP measures is available on our website. Our website contains copies of the third quarter earnings press release and today's presentation slides. I will now turn the call over to John Faraci.

Thanks, Tom and good morning everybody and thanks for joining us. Today, Tom and I with Tom was standing in for Tim, we will cover our third quarter results. The performance of individual businesses and we will also talk about business conditions and our outlook going ahead. So, just turning to the third quarter and I am now on page four. Despite continuing input cost escalation and tough market conditions, we delivered solid results. The third quarter earnings from continuing operations before special items are $0.84 a share which is 47% higher than the third quarter of 2007. Revenues in the third quarter compared to the second quarter are up $1 billion dollars. That is mostly the result of having Weyerhaeuser and part of our revenue base for the quarter. We achieved these strong results despite input cost that increased $0.47 a share since the third quarter of 2007 that is the quarter-to-quarter comparison. The sale of our Haynesville Shale mineral rights increased our earnings substantially, which we told you about on the second quarter conference call. Earnings from our Operating Businesses that is businesses excluding Forest Products were $0.36 per share. Our solid third quarter results reflect the increased selling prices, some weakening in volumes and addition of Weyerhaeuser’s packaging earnings, as well as reduced operating cost. Finally, I think, very important, we generated nearly $700 million of free cash flow during the quarter more than twice that we delivered in the second quarter. So, slide five here compares our third quarter results with the third quarter 2007. We achieved $0.56 of improvement in price, volume; cost and mix, but these improvements were largely offset by the $0.47 of increased input costs, which I talked about a minute ago. So, in essence, despite price increases, we continue to have…

Thanks, John. Slide, eight please. Third quarter Printing Paper earnings declined to $210 million reflecting input costs inflation that exceeded the selling price increases by $50 million. North American Paper earnings were flat, but North American market Pulp earnings declined by $27 million. Higher pulp selling prices were offset by higher manufacturing costs. Escalating input and trade costs and the costs for the two week market related shutdown of our Louisiana mill. Brazilian earnings increased $4 million benefiting from higher prices and $16 million in foreign exchange gains, but hurt by input costs, lower export demand and a nine day maintenance outage at our Luiz Antonio mill. European earnings declined slightly as higher prices were offset by lower volumes, higher raw material costs and foreign exchange losses of $26 million. I would like to mention that in October, we announced that we will begin a consultative process with our employees to conduct a review of the strategic alternatives for our uncoated freesheet mill in Scottland. Inverurie is a high cost, unprofitable mill competing in oversupplied markets. We will study the options for this mill and we will be prepared to discuss our plans for this facility late in the first quarter of 2009. Slide nine, please. Year-over-year, North American Printing Papers volume declined due to the conversion of Louisiana mill from uncoated freesheets to market pulp production. This conversion led to the 22% increase in North American market pulp volume. By the way, on Monday, we announced that we will take at least seven weeks of market related downtime at the Louisiana mill in November and December. This downtime is necessary to continuing to match our productions with our customers pulp needs. Brazilian Paper shipments declined due to lower demand in export markets. Selling prices were higher in all regions…

Thanks, Tom. Before I talk about the fourth quarter, I would like to talk a bit about the recent deceleration of global economic activity and its expected impact on our fourth quarter. There is no question from my perspective that the world changed in the third quarter and International Paper was not immune from these changes. If you ever wanted to make a case for how Wall Street is connected to Main Street, I think the impact of the credit markets freezing up, as ultimate impact on what is happened to economies around the world is a good indication of how close the connection is. So, for us, we experienced a sharp decline in demand for our paper and packaging products in North America and mostly around the world and also for market pulp globally. Market pulp prices declined during the quarter. We do not think they hit the bottom yet. The combination of decreased economic activity and really we saw this start to happen about the second week of September. So, more or less, we had 10 weeks of continued weak economic activity which is to happen all year, last two weeks of September, and last two weeks of the third quarter and the first three and half weeks of October had been dramatically weaker than the prior nine months. Despite these challenges we are going to continue to manage our capacity to meet our customers’ needs and to maximize or generate positive cash flow. We are going to produce the volumes required by our customers. We are not going to tie up working capital inventories and as a result of taking the significant market downtimes in the fourth quarter are included in our North American uncoated freesheet system and our North American Industrial Packaging business. Currently, we are…

Thank you, John. Lorrie, we are now ready to entertain questions please.

(Operator Instructions) Your first question comes from the line of Claudia Hueston of J.P. Morgan.

Thanks very much. Good morning.

Good morning.

I was hoping you could talk just a little bit about trade flows across your business just given the changes that we have seen in currency and obviously just a globally slower economy. Have things changed at all on uncoated or bleached board or containerboard at this point?

Not, as of yet. Just to remind you, how volatile the currency is. The euro was 124 three days ago and now it’s 20, it was over $1.30. So, we are going to see a lot of volatility in currency and as of yet, Brazil, Russia, North America. China, we haven't seen change in trade frees. I would say in China, there is no question that exports from China, but the rest of the world has slowed down that’s not currency related. That’s reflective of what’s happening in Western Europe and North America as far as demands goes.

Thanks. And then just looking at the Consumer Packaging business, you cross sell a little bit more significant than I had expected. I was just wondering, if you can provide a little bit more color on what’s the cost input pressures are specifically in that business?

We have got more polyethylene, polystyrene costs in that business. Wood costs are sharply up in that business relative to others based on geography. And we are using more coal, which is lower cost, but costs for coal are going up, well prices for oil and gas has been coming down.

Okay. And you talked a little about restructuring some of your contacts in that business. Is there an opportunity there to maybe better match some of the cost measures you are seeing?

Yes, yes, and yes.

And most of that will show up in the first quarter of 2009.

Okay. And then just lastly on free cash flow, it’s just very strong in the quarter. Your working capital has improved a lot over the last several quarters. How much more room do you feel like you have to go on that side of things?

We don't know. That’s a great question. And I think, we will keep up pushing it because on that one, I don’t think, we know how far we can take it with our supply chain capabilities now. We really had the ability to manage our inventory down to levels, we thought weren’t able both in containerboard and in freesheet. There is going to be pressure on accounts receivable, but we will have to manage that.

Okay. Thank you very much.

Your next question comes from the line of Peter Ruschmeier of Barclays capital.

Thanks. Good morning.

Hi, Pete.

John, I was hoping, you could help us with the $286 million of cost pressures you indicated, if we were to assume that cost pressures remained flat today, how long would it take to feed in and how much would drop?

That’s right. Say that again, Pete.

So the $286 million of cost, if oil prices stay constant from here, how much benefit could you get from that overtime? And how long, do you think it would take given the lag effect?

Well, there is a lag effect on the fuel surcharges, which is 10 to 30 days. I am just still not sure of what you are asking about in terms of the flow through effect. I mean our pricing, we are not asked more than a month or quarter on any of the big commodities. So, we will see a change and with gas, we are buying gas every month. We are doing a bit of hedging that were partially in the stock market, partially hedged. And you will see on the page 50, the last sheet, it’s got our consumption of inputs costs. So you can make your own assumptions about pricing because you have the quantities there.

Okay. I am not sure what you are asking.

I didn’t answer your question because really I am not sure what you are asking.

Well, I guess, I am suggesting that the oil price today is down 50% and a lot of these costs are going to be direct and indirect derivatives of oil.

Well, chemical products are still remained very high. Caustic soda is five times what it was a couple of years ago and hasn’t come down yet. Now, if we have a significant global recession, you would expect that impact commodity chemical costs. So, I think it is a question of how much inventory exists in those businesses and some of them got disrupted by the hurricanes. Its $106 barrel oil, we didn't see that go in right away and it was almost like $1,000 pulp. Remember, when we had $1000 pulp and everyone said only one container probably in the world sort of 1000 bucks and then the price went down. I am not sure; we are able to saw that the full impact of $150 barrel oil because it didn't stick around long enough.

Okay, that’s helpful. And then shifting to the containerboard integration. I am curious, if you can remind us John on the amount and timing of the packaging synergies that you targeted and maybe share some if you could of what you have learned so far through the integration process maybe positive and negative surprises, and how that would impact your thinking on those synergies going forward?

Well, I have got Carol Roberts sitting right here, who has joined the middle of that business. So I will ask her to comment. But I will just say, from my perspective, we are getting more merger benefits faster and Carol just wanted to briefly talk about what you are seeing.

Yes. Sure, John. And Pete thanks for the question. As you might recall, we had said that our target synergies for Weyerhaeuser, was $400 million with the first 12 month target of $175 million. What I would say there is that we are off to a very good start. So, I feel very confident about the durability of that goal. We are off to a good start. Relative to the acquisition, I am very pleased. The good news is that the separation was a non-event and what I would be most pleased with it’s the strong best start we have gotten. Now, we fielded our leadership team on day one, which speaks to the positive attitude of the employees out of the Weyerhaeuser packaging business. They are actually very pleased to join forces with them and to build a strong business. That’s gone very good. The assets are very good and probably the profile that we got as we continue to anticipate this market will be and we will manage through that. So, I think, we are doing very well. One of the big areas that we have got a great opportunity is on the S&A side and we have been aggressive there and we already added $90 million annualized write-off on S&A reduction rate. So all in all, it’s gone very well.

Pete that S&A came from all the planning we did. There was a whole of bunch of Weyerhaeuser S&As stayed with Weyerhaeuser. It served their business, but we didn’t take on. So, we didn’t have the severance costs. We didn’t have any of that because we have got ourselves organized to run without it.

Okay, that’s helpful. And just last one please, and I will turn it over. John, I know, you have had a lot of discipline on running to demand. And I am curious without showing your hand, and what you may or may not do given the macro environment can you remove enough tons in containerboard, if needed to stabilize the market? Or do you think that you have really done what you need to do for now?

Well, we are going to run our system to match demand and manage our own. For instance I don't want to speculate about what we might do or others might do or what the industry situation might be. This is just not something we can do. But we are committed to manage our capacity. And I think, what I have told you, we are doing right now that’s not a forecast, what we are doing right now. We are doing it. And we would expect our inventories to stay in checking. Industry inventories are in good shape. In fact our inventories will come down in the fourth quarter.

Very good. I will turn it over. Thanks.

Your next question comes from the line of Richard Skidmore of Goldman Sachs.

Good morning. John, can you talk a little bit about what you are seeing in the uncoated freesheet markets, the volumes there is for the industry, we are pretty weak, for the first part of the quarter. And as you look out how you see that business evolving here in North America?

Well. Shipments are down at 6% year-to-date that’s kind of an aggregate across the board. If you look at the different grades, it’s different in some of the different grades. Imaging papers were up. Some of our key brands like HP are up. We will align with some of the stronger merchants and some of the strong retail channels, where we are down less than the market. But there is no question in the last six weeks, the same thing I talked about in terms of what’s happened to demand and packaging is happened in paper. Commercial printing has had a sharp pullback. And as you know, envelope and direct mails really have been hurt by what’s going in the financial services market.

Okay. And did you give a number for downtime, you are taking in uncoated freesheet or it’s the downtime number was that just in containerboard?

The downtime number was just in container board.

Okay. And then just on the uncoated freesheet maybe in Brazil as you look at what’s happening in Brazil with some of the large market pulp producers there. Any concern with regards to supply of pulp for your paper machines there. And any view about maybe doing something strategic in Brazil in front of those pulp producers maybe [now] a little bit more distressed.

But we are glad. We are only a net pulp seller. I think about 100,000 tons in Brazil out of Luiz Antonio. So, I think, right now, we are in the right business. We are in paper not in pulp. And the paper businesses, I was in Brazil about 10 days ago. I would have to say all around the world probably that the demand dynamic is best in Latin America then it is anywhere else in the world now then I isolate it from what’s going on. But I was with a 150 of our customers in the region and they were feeling pretty good about their business, which was two weeks ago, but not today. There are lower exports going out of Brazil, little bit of weakness in the surrounding economies, but the Real strengthening has helped us. So, as regarded to opportunities for the pulp market down there. Our focus right now is to run what we have. Pay down debt, generate strong free cash flow and manage through this downtown and come out of this better, stronger.

Thanks, John.

Your next question comes from the line of George Staphos of Bank of America Securities.

Thanks. Hi everyone. Good morning. Hey, congratulations on the Weyerhaeuser integration thus far and the cash flow generation. I guess, first question maybe piggybacking off Pete’s question. Did you mention what the Weyerhaeuser synergies were if any in the quarter?

What they are going to be for the year, Carol?

For the year…

This calendar year.

Calendar year about $50 million, $60 million.

So, $50 million in the first four, five months.

Okay. So, you would say you that you got about pro rata amount of that in the quarter if I am implying correctly what you are saying.

Yes. Basically, but those are billed into the fourth quarter (inaudible).

Okay.

We got $6 million, $7 million a month right away, which was the impact of not taking on the Weyerhaeuser S&A. so in a way, we got it, a whole bunch of it kind of day one. Some of the other stuff takes a little while to ramp up like transportation getting the system realigned and we have announced four box plants to shutdown and the savings of those who will come as we take those plants down.

Right. John, Carol, given your experience and your conversations with customers in recent weeks the pullback that you are seeing in boxes and paper for that matter as well. Does it match what you have seen in past recessions or at this juncture, does the downturn seemed better or worse than what you have seen in other periods?

I think, George that it is worse than we have seen in prior period because it was so sudden and the magnitude was so large. As you would expect some segments were hit less than others. If you look at say processed foods, the processed foods are off a percent or two, not real bad. But durables fell off much dramatically and they were already down, due to very slow housing and other impacts. So, I wouldn't say that it’s deeper and quicker, which really speaks to the behavior of the consumer. They just made decision not to shop. The good news is, it won't last forever and they will be come back when things settle down.

This is a much sharper downturn than we have seen in the last six weeks. I mean our box business is off double-digits.

John does that in turn if we hold input costs constant sequentially. You have got some pricing momentum in your businesses, but obviously the demand is weak. Should we expect that within your paper, paperboard and packaging businesses that earnings should be flat to down in the fourth quarter? Or do you think with the Weyerhaeuser synergies and benefits that in total you would be up sequentially. Or is it too hard to call it at this juncture?

Well, I think, when I went through the other, I said we expect earnings to be down.

Okay. I didn’t catch up then.

We got a fourth quarter with negative 4% to 5% GDP growth versus basically flat GDP growth in the third quarter. It’s probably the scenario is that their earnings go up, but I don't know what it is.

Okay.

Now Consumer Packaging is probably the one bright spot in terms of demand. We are seeing still good backlogs there, good order book and we are running full, but that I think reflect the fact that most of its customer base is in the processed foods and fast consumer good staples as supposed to that kind of stuff. There are some places where golf balls are off but by and large our Consumer Packaging business is pretty solid.

Okay. Two quick ones in sequential turnover. The decision on the supply chain system in the U.S box network, can you give us some color in terms of why you decided not to roll it out? And then any additional impressions with Ilim? What things can you do in the business as markets slow to continue the progress there? Thanks, guys.

George, let me answer this why we changed the decision. When we were pre-Weyerhaeuser, we were working on building that capability and its going to add a lot value. But I think it is quite simply that with Weyerhaeuser, we just had much higher priorities right now and where our resources need to be applied. One thing we did learn about Weyerhaeuser, a lot of the supply chain benefit comes from both through the roll rooms and the box plants with some tools that we are going to continue with. So, while we are stopping on their overall deployment of the big operating model, we are going to continue to get a lot of benefit out of the things that link our mills to the box plants. But we just had some higher needs right now and better opportunity to improve the business.

George, would you repeat your question about Ilim, please?

Yes. Just obviously, markets around the world have gotten soft or volatile. Ilim what are your impression with it thus far. What do you do to continue the progress and improve the performance there in light of the slowdown? Thanks.

George, Mary Laschinger is here, who is right in the middle of that business. So I am going to ask her especially from Russia to talk about what’s going on there.

Well, first of all, George, on the more positive note demand as we have look forward for the next outlook has been strong domestically. And so, we are seeing the shortfall more coming to us from the Asian market. And we are dealing with that on a daily basis in terms of how we are responding to that. Our operations are solid. But again we are starting to see some weakness in demand and pricing in export market and some of that being offset by continued good demand in pricing domestically.

Okay.

Currencies probably have had the biggest impact on the business.

All right. Thanks for all the details. Good luck on the quarter, guys.

Thanks, George.

Your next question comes from the line of Mark Connelly of Credit Suisse.

Thank you. Two questions. I mean, following on that last question about Ilim your partner over there has made some comments suggest that the expansion might not go forward. We have learned not to believe everything we hear out of Russia. But I wonder if you could comment of that? And second, I wonder John, if could you talk broadly about the competitive position of your white paper system? Certainly, as pulp prices were going up, integrated producers, like yourself, were getting some real competitive advantage. How much do you think declining prices are going to affect you competitively? I mean, obviously demand is lousy, but where does that really hit you.

Well, I will let Mary, Mark to talk about Russia and then I will come back and answer the printing paper side.

All right. Mark, with regarding the expansion plans, again things have changed dramatically in Russia. To say that, it’s not going forward, I think is a fairly bold comment. The way we were looking at this today is that, we are going to make decisions based on what we see, what the market condition and/or ability to secure financing. But we still feel strongly that this is, if we have, it’s more likely to be delays versus stocks and we will look at prioritizing projects in terms of providing the best generation tools to improve the business.

Looking at printing papers market, for me to look at it around the world. In Brazil, in Russia and in Poland, we have got very low cost systems. So and we are not competing in Russia and in Poland against nonintegrated producers. But we are very low cost delivered in those countries. And that's where most of the product goes. In Western European, it is not a big deal for us. In Brazil, we are very low cost. And with a significant market position again we are not competing with nonintegrated producers. In Brazil, we are competing with other integrated producers and there is not much in the way of exports or imports coming into Brazil. In the U.S., you can look at our numbers, where our return on sales is about 500 basis points better than the next best. And I haven't calculated that’s probably four digits better than the nonintegrated. Some of that will get eaten up by lower pulp prices for sure. But I can't see where some of the smaller nonintegrated is going to have better margins than we have, given that we are thousand basis better than they are now. 500 basis points better than one of the big players that we compete with. But you are right. The pulp prices will give them some cost release.

But is it fair to say that, both domestically and globally, the decline in pulp prices isn't going to hurt you that much. Is that fair? I mean competitively.

I don't think so.

Okay.

It is going to hurt us in our pulp business obviously, but not in the paper business.

Thanks John.

Your next question comes from the line of Steve Chercover of D.A. Davidson.

Thank you, just two quick questions. First of all given your significant exposure both in Brazil and in Europe, are you doing any hedging to mitigate the change in currencies?

Steve, it is Tom. You cut off for a minute there. Could you repeat the question.

Sure, sorry. Just wondering whether you are doing any hedging to avoid any losses or exposure to currency changes both in Brazil and in Europe?

First of all with regard to Europe, we are doing some hedging more related to the zloty and Euro, but not a significant amount.

In Brazil. Let me say very emphatically that we don't have some of the positions that you probably read about some of the industrial companies in Brazil. So, you know, we have done some hedging on a small portion of our export receivables, which are dollar dominated but it is not significant at all. And we have looked at, we have got none of what you are reading about.

Yes, I was kind of thinking of some of those folks. And secondly, and I realize the delicate position. But with respect to Inverurie I know that one of the folks in your midst will say, you will never see IP selling a mill for pennies on the dollar. And having a turnaround and compete with us. Do you have the same viewpoint for your European assets?

We will not be selling this facility to manufacturing paper. We are looking at strategic other alternatives for other industrial uses.

Perfect. I am glad you are consistent in different continents. Thank you.

Your next question comes from the line of Mark Weintraub of Buckingham Research.

Hi Mark.

Good morning, John. When you were talking about operating profits being lower in the fourth quarter, was that just an overall statement. Or would that be applicable to each of the segments?

That was not broad statement there the profitability in the fourth quarter.

So, I would assume that since you got another month on Weyerhaeuser, and you got pricing your Industrial Packaging business would be better in the fourth quarter than third quarter..

I was talking about International Paper overall. If get in the segment we have got pluses and minuses. But international paper overall -- and on this is a function of how weak does the economy get in the fourth quarter. And I think we are going to be surprised with how weak this economy is. I really do. I mean we are going to be shocked at how weak it is.

And presumably, you are tacking the – you’re supply to demands and hence that is….

We are taking 350,000 tons of down time industrial packing right now. You can figure our what that annualized number is. Its huge.

So I ask you what was that number in the third quarter. You’ve been moving parts in Vicksburg. I am not fully sure how to interpret that 350?

35,000 tons plus Vicksburg wasn't running.

Okay. So if I try and go from Q3 to Q4, obviously, I have got a downside small hopefully but uncertain on the operating line, and then I don't have my $0.42 for mineral rights. If I understand it rightly lands sales would be about half. So that's another $0.03-cents. And then there just two other items, I was real unclear about. And one is interest expense. If I look at the slide on the key financial statistics, it looks like that is going to be up like $40 million or $45 million in the fourth quarter. Is that about right?.

If it is on the slide, I think you should assume it is about right. Why don't you call up [Steve] and he can take you through that Mark.

Okay. Then lastly on the corporative. It looks like there is a significant increase expected in the fourth quarter and I wasn't sure what that would have been about?

I think again, I would ask you to give a call to Tom and he can give you clarity on that.

But bottom line, if I take all the numbers I just put together the $0.42 for mineral rights, and just without the land sales, the interest expense, I am kind of in the low 30s and what ever I can do operationally. Are there any other big drivers that could move this different from that for the fourth quarter?

Absolutely. Volume. And down time. Absolutely.

Okay. That’s where the risk is operationally?

Yes.

Okay. Fair enough. Thank you.

Your next question comes from the line of Mark Wilde from Deutsch Bank.

Good morning. I have got a couple of questions for Carol and then one for John. Carol, can you just talk about with all the changes in these input costs, it looks like OCC and the yellow sheet is down another 30 to $60 in November. With that, and gas prices, is it changing where you are thinking about taking downtime or any kind of longer term capacity decisions that you might make. And can you talk just generally about this process of renegotiating some of the box contracts.

Yeah. Mark, thanks you are absolutely right on the inputs and that’s one of the reasons, why we are actually quite glad, we are going to be facing the headwinds with the largest system because, as you can image, we have a lot of options. Lot of (inaudible) use a combination of both OCC with fiber. So, we had a chance to try and figure out how to balance and how to take the highest marginal costs out and how to balance it back into the mills to get good energy efficiencies. And so, we are looking at that and we have got a lot of engagement on the part of our manufacturing team with our commercial team. And we are working it, I wouldn’t say daily, but certainly weekly, as we figure out what to do. On the short term, we can manage that and what’s happening make it think hard about any long term decisions we make factoring that volatility, we want to make the right long term decision. And regarding customers. My comment there would be that, we had good dialogue with the customers and we of course, that was one of the things we did was get out in front of the new customers and with our existing customers and quite honestly, we feel very good about our ability to deliver great value to them and be a very valued supplier, and we are having very good conversation on that. So, I think that's going to go fine. We are in the midst of raising prices, which has gone very well as John commented on. So, I think there is a lot of work to do there. But we are having a good dialogue with our customers right now.

I wondered Carol, it looked like A, maybe your prices are up a little more than other folks prices so far. But B, that double-digit decline in boxes that John mentioned, was bigger than a lot of your public competitors have reported and so I just, trying to get a sense of is, the economy is hitting you harder or is that shutting off some marginal business.

Mark, nobody has reported buying it for October, have they?

Lot of people have mentioned, the numbers that they have seen through the first three weeks of October on their calls. And I would say the average probably been running 6% to 8%.

Yes, Mark, we looked hard at that. First let me comment on the pricing. I think one of the reason that our pricing realization is good is, our principals around the business are -- we don't do fixed pricing, we were mindful of contract structures on having to --so we didn't have any barriers in our legacy business on our ability to push for pricing. That's been very helpful on the realization side. And regarding the [optional], I thought about that at a 29% or 30% supply position. To me, it would be hard to believe that we would be significantly different than the marketplace, because we are in everything. And some markets are hit more than others, but we kind of done a sensitivity on the segments. So, I don't believe we lost share and I don't believe we are significantly different than what the market should be experiencing.

The one thing we say is, having a strategy to run our box plants full, it makes absolutely no sense.

Okay. John, just from a bigger picture perspective. We are looking at a much bigger backdrop than when you made the Weyerhaeuser acquisition announcement earlier in the year or when the deal closed in early August. Can you just step back a couple of steps and tell us what you are doing differently right now to deal with this environment. You already mentioned downtime here. You have mentioned the closure in Europe and you mentioned throttling back a little on capital in Ilim but other things that you are doing to weather this environment.

We are throttling back more on capital around the company and we will share that with you when we have our next conference call. I am very glad that we get to start it back in April, frankly on something called belt tightening, which is an effort to just look at discretionary spending and save us about $10 million a months and beyond that, I think I mentioned in this last conference call. We got an initiative again that we started last December before Weyerhaeuser to take about $400 million of our cost our S&A cost. That would be the same number as Weyerhaeuser merger benefit. But 200 of it comes from Weyerhaeuser and the other 200 comes from IP. So there’s a big chunk of cost savings is going to come to International Paper and some our businesses are already implemented those plans. So, that just going on around rest of the company. And Carol just talked about what we are doing in Weyerhaeuser. We have got more levers to pull. I really believe that what we want to have in a time of difficulty is lots of options to improve your cost structure. With Weyerhaeuser, we have a lot more options than we had with just the legacy industrial packaging business we had before Weyerhaeuser So, yes, the world has changed and we are getting more and more to benefits faster. We are running our system differently than we were. As you pointed out, OCC prices are dropping. So we have got lots of options to be looking at.

Okay, very good, John. Good luck.

Our final question today will come from the line of Gail Glazerman of UBS.

Hi, Gail.

Hi, thank you. Sticking on containerboard for a minute, you have talked about the domestic volumes and what's happening there. Can you talk a little about your key export market for liner board?

Yes, Gail. We haven't seen any big change relative to demand. The markets that we participate in are generally much that require crack liner. They tend to be agricultural market. So from a demand perspective while obviously things are slowing, we haven't seen any significant decline in our market access or demand for our products. Of course, that is something that we will monitor very carefully but so far it's okay.

Okay. And when you look at the July, August, price increase. It has already been commented, you had good experience. I am just wondering, do you think you can pass through more than the board price increase into boxes and several other competitors have mentioned.

I feel very good. Of course, I talked or Tom mentioned that point-to-point, we had already seen $45 and then we saw booking more in the fourth quarter. So I feel very confident that we will get some box price higher than the board price.

Okay. And just a couple of quick questions for Mary. Mary, given what has happened in the economy over the last month or so, do you think there is any change in Russia and how they consider the wood export tariff and just a reminder if you think that is going to really make a difference for you it that goes through?

With regards to the wood expert tariff, we do not anticipate that there will be a directional change from the government in terms of their intentions around the log export tariff. As it relates to (inaudible) we actually further anticipate that to be a benefit to our business.

Okay. And just final question. Are the comments you made about the demand environment of Russia, do those hold for the rest of the Eastern European business?

Eastern European business has been strong for us and continued to be strong. We are anticipating some back off of demand but it's still robust relative to other regions of Europe.

You just might talk about box packaging business.

Packaging business is a different situation. The packaging business, we are in fact seeing a drop off, in particular, in the industrial segment, double-digit drop offs. Our volume should not drop off that much because we are anticipating a more robust fruit and vegetable season then what we saw last year. We talked of course, what Carol was saying around the crack liner, as the crack liner goes into that fruit and vegetable segment.

Okay. Thank you.

I will now turn the call to Tom Cleves for any final remarks.

Thank you, Lorrie. Thanks for joining our call today. If you have additional questions Emily Ann-Marie and I will be available via phone. This wraps up today’s call.. Thank you.

That does conclude today's International Paper Third Quarter 2008 Earnings Conference Call. You may now disconnect.