Glenn Landau - Vice President of Investor Relations John V. Faraci - Chairman, Chief Executive Officer and Chairman of Executive Committee Carol L. Roberts - Chief Financial Officer and Senior Vice President Mark Stephan Sutton - Senior Vice President of Industrial Packaging Thomas Gustave Kadien - Senior Vice President - Consumer Packaging and Ip Asia Timothy S. Nicholls - Senior Vice President of Printing & Communications Papers

Phil M. Gresh - JP Morgan Chase & Co, Research Division Gail S. Glazerman - UBS Investment Bank, Research Division Chip A. Dillon - Vertical Research Partners Inc. Mark Wilde - Deutsche Bank AG, Research Division Mark A. Weintraub - The Buckingham Research Group Incorporated George L. Staphos - BofA Merrill Lynch, Research Division Albert T. Kabili - Crédit Suisse AG, Research Division Kurt Schoen - Credit Agricole Securities (USA) Inc., Research Division Anthony Pettinari - Citigroup Inc, Research Division Steven Chercover - D.A. Davidson & Co., Research Division Paul C. Quinn - RBC Capital Markets, LLC, Research Division

Good morning. My name is Christy, and I will be your conference operator today. At this time, I would like to welcome everyone to the International Paper Second Quarter 2012 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Landau, you may begin your conference.

Thank you, Christy, and good morning. And thank you for joining International Paper's Second Quarter Earnings Conference Call. Our key speakers this morning are John Faraci, Chairman and Chief Executive Officer; and Carol Roberts, Senior Vice President and Chief Financial Officer. On Page 2, during this call, we will make forward-looking statements that are subject to risks and uncertainties, which are outlined on Slide 2 of our presentation. We will also present certain non-U.S. GAAP financial information. A reconciliation of those figures to U.S. GAAP financial measures are available on our website. Our website also contains copies of the second quarter 2012 earnings press release and today's presentation slides. Lastly, given our expanded disclosure around our Ilim JV, Slide 4 provides some context around the joint venture's financial information and statistical measures. So with that, I will now turn the call over to John Faraci.

Thanks, Glenn, and good morning, everybody. And thanks for calling in. Okay, let me just start off by saying the second quarter was a solid result for International Paper. Temple is -- the integration is going very, very well. The acquisition was meaningfully accretive in the second quarter. That's only 3.5 months -- 4.5 months into the acquisition. The world is going sideways in terms of the environment we're operating in. I think kind of everybody understands that. But the good thing is, International Paper isn't done. We've got a lot of headroom, a lot of levers we're pulling. We're running our business and executing well, but we're laying the platform and the groundwork, and we'll talk about the during the call, for things that are going to meaningfully improve International Paper as we move out of 2012 and into 2013. Just looking at our results for the quarter, we increased our EBITDA in the second quarter to close to $880 million, continued to generate strong free cash flow from operations. The biggest single lever during the quarter was the impact of the Temple integration. And as Carol will outline shortly, we're well ahead of plan and exceeding our targets on most all metrics. In the 5 months since closing, we can say the acquisition is meaningfully accretive. We've got all of our peak outages behind us. Second quarter was a peak quarter. We executed just about flawlessly during the quarter on those outages and operated our assets well, saw some modest price recovery that was in line with our expectations. Didn't see much change in the demand environment you all [ph] netted out. The Franklin fluff pulp mill came up as we expected it would late in the second quarter, and we continued to make a lot of progress…

Thanks, John, and good morning, everyone. Let me move you to Slide 7. And taking a look at the second quarter financial bridge from the first quarter, we earned $0.46 per share from continuing operations before special items. While volume in our consolidated businesses was flat, we did see modest price improvement of about $0.05 per share across our global Paper and Packaging business. This was largely driven by the partial pass-through of our announced North American Printing Papers increases, as well as successful paper increases that we implemented in Brazil and Russia. And on a positive, we also saw the pass-through of our announced export containerboard price increase, which was very much in line with our expectations. If you take a look at the operations and cost line, we did have higher startup costs at Franklin, and I'll come back to that on a later slide, but they were more than offset by what I would characterize as very good global mill operations and some lower corporate expenses. A key point that John mentioned and is going to be a theme of today is relative to Temple-Inland, full quarter earnings were really meaningfully accretive as we added $50 million in synergy or $0.08 per share in the quarter. Two headwinds that we had that stand out pretty clearly were the incremental outage-related expenses, and this was our peak quarter for that, as well as our share of the Ilim JV earnings, which were unfavorably impacted by currency exchange. And I have a very good chart on Ilim that will really clearly lay that out. If I take a look at the global input costs on Slide 8, costs were largely balanced quarter-over-quarter, and we saw, clearly, the benefit of lower natural gas prices, which were offset by higher recovered…

Thanks, Carol. Let me just go through some of these strategic projects because I think they are, as I said, are setting the stage for more levers for International Paper to pull to improve our business as we move out of 2012 into '13. And I'll talk to what we expect to be happening during the third quarter. First, Franklin, we're up and running, as Carol said. In xpedx, which is not a big capital project, it's more of a strategic repositioning, we're making -- starting to ramp up on both the procurement side and the realignment of warehouse side. The sales side is a struggle because of what's happening in commercial print, but Mary Laschinger will be on the call at the end when we do the third quarter to give you an update on that. But we're starting to see -- get some traction there. We've got a big boiler project going on down in Mogi Guaçu, which moves us close to energy self-sufficiency at that facility in Brazil. And as we move into the third quarter, we're on schedule and are ahead of schedule and on budget. We may be able to bring that up before the end of the year. At the Sun JV, where we've -- building our fourth coated board machine, the project is well underway. There's a picture on the next page that shows what's happening there. As you can see, we just about got the machine built. We'll be starting that up on schedule during the third quarter. At Ilim, where we got 2 big capital projects going on, one a new paper machine at Koryazhma, in the third quarter, we'll be running the converting equipment. The fourth quarter, we expect to be starting up the paper machine. At Bratsk, where we're…

[Operator Instructions] And your first question comes from Phil Gresh of JPMorgan. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Just on Temple-Inland synergies, obviously, off to a great start here. The $400 million that you've talked about, how conservative would you say that is at this stage, just given what you've been able to do so far? I know you talked about the $200 million in optimization opportunities later on, but is there upside to the $400 million as well? Or should we be shifting to the optimization from here?

Well, I'll let Mark Sutton talk about how he feels about that because he's sitting right across from me and is running the business. But I'd say we revised our target up. We had Investor Day in May, and we feel pretty good about -- we feel very good about where we're at. And we'll take a look as we go through the quarters, where we're at. And if we have more good news to tell you about, we will.

Yes. Phil, if you remember what we said at Investor Day when we broke out the $400 million in synergies, some of those synergies were -- we had line of sight to and we thought we could do it in 24 months, and we happened to be doing it a little bit quicker than we thought. But there were some other things we talked about that have either mill outages tied to them on the manufacturing side or it could be in the commercial area where you just take -- it takes more time. And so we talked about that being in the post-synergy but merger benefit and optimization time period. I think that's where we still feel it'll be. Carol mentioned, 80% of the synergies are in -- so far, in our overhead reduction and fixed cost and operating improvements in the box business. And so, of course, that overhead reduction is not going to continue limitlessly. We've done a lot of that a lot quicker than we thought because we were able to execute, for example, pulling the supply chain teams together, but faster than we thought we could. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay, helpful. And then just again on containerboard, maybe you could talk about the trends you're seeing here in July, both from a demand and from a supply standpoint for your own system. Would your expectation be in July that inventories will be up or down? Just kind of how are you progressing here? And also, are you seeing any demand pull forward as a result of the announced price increases?

So with respect to what we've seen so far in July, it's about what we expected for our business. Carol mentioned earlier that we have a pretty big position in fresh food and produce, and, of course, that strong season is in the second quarter. So we see some seasonal changes in our mix and demand. We expected that, and we're seeing that. As far as how we're looking at inventories, most of our outages are behind us, so we don't see any reason to build inventories. And we're going to continue to make the board we need for the orders we have in the box system. And what we see is about what we expected as we start the third quarter.

Do you want to comment about export demand?

That's a good point, John. Export demand, I would say, has been a bright spot. We had a very strong second quarter. We see export demand for kraft liner, I'm speaking about, actually, continuing to improve pretty much in all the regions we serve: Latin America, Europe and the Mediterranean region and Asia. And pricing is also improving in those regions. So we feel good about the export demand. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. And this is my last question for John. Things have slowed a bit since -- even since the Analyst Day just globally. I'm just kind of wondering if this makes you think at all -- think any differently at all about growth CapEx moving forward, particularly in emerging markets where some of that slowing is occurring.

Well, most of our growth CapEx, Phil, is, just what I talked about, is currently underway. I mean, we're at the -- probably 80% done at the Sun JV, 70% done at Bratsk and somewhere -- probably 70% to 80% done at Kotlas. We need paper in Russia. The Russia paper market is growing at 5%. So we're sold out both at IP and at Ilim. So we need that capacity. The Sun joint venture is -- we're going to bring on a lot of capacity. We've done that before. We'll sell that over time, ramp up maybe a little slower than last time, but we're not worried about that. And the project in Brazil is really a cost reduction project. It's not aimed at more capacity. So we don't have a big agenda of a repeat of these growth projects right behind what's currently underway. So don't be thinking about that we're going to continue to be piling on these projects. We've got a number that are underway now that are either ramping up or going to ramp up. And in the fluff pulp area, we're basically sold out -- as we can get the fluff pulp qualified with customers, we're sold out because most of that product is going into the export markets where fluff pulp is growing at a faster rate than it is in North America. Phil M. Gresh - JP Morgan Chase & Co, Research Division: Okay. Just to be clear, I was talking kind of more of the 2013 to 2015 that you talked about in the Analyst Day, but I'll turn it over.

Yes, we still see. Remember, there's not a lot of growth CapEx going in there, but there's more CapEx in that 2013 to '15 period because of Boiler MACT.

Your next question comes from Gail Glazerman of UBS.

To follow up on the pension comments, are you just not looking at the change from the highway bill as a reduction in debt at all and you're still sticking to the $3 billion, 24-month target, but it's just going to be weighted more towards fixed, actual debt versus pension?

Yes, Gail. Yes. Clearly, the highway bill, it only changes the funding requirements. It doesn't change the accounting. So we recognized that. But rather than putting the money into the pension plan, we'll just push it towards the balance sheet debt. And that's a little bit of a shift of what we had talked about. But we still have our target of getting to 3x, so debt repayment is our goal, and -- but we'll move it towards the balance sheet debt versus the pension.

Okay. And can you talk a little bit about, I guess, the price trajectory during the second quarter? There were a lot of movements. I guess a couple of specific questions. You referenced some improvement on coated freesheet. Can you talk a little more specifically about what you saw? And in terms of the export containerboard price increase, initially, you were expecting that to be a little bit weighted towards the end of the second quarter, and I'm just wondering what that would imply for third quarter pricing.

Yes, Gail, I'll give you a generic answer because I know in the Appendix, we provide the information by the segments. And so I'm not going to paw through the pages. But I think in the paper segment, I think we saw a $17 improvement in paper prices. We saw a pulp improvement. We don't specifically call out containerboard in the Appendix. We do actually do boxes there. But, Mark, I don't know if you want to comment about containerboard.

Sure. Gail, on containerboard on the export market, we saw an exit rate from the second quarter that was about $40 a ton higher than what we exited the first quarter.

Okay, that's helpful. And then just one last one. Can you give any update on the status of the marketing of the building products business?

We're going to be going out in the market with offering the building products business very shortly. And at this point, it's too soon to say what's going -- what the response is going to be, but we've had a lot of interest. So that'll be in the market in the third quarter and very shortly.

Your next question comes from Chip Dillon of Vertical Research.

Question on the Wood Products business. And I just want a quick one, is when you look at the discontinued operations' results, it looks like it did quite well. Can you just give us an idea of kind of how it did in the second quarter?

It did a lot better than we thought it was going to do, and we put it in discontinued operations.

Yes, Chip, this is Carol. John Balboni, who is heading up the overall integration for Temple-Inland from the corporate side and system side and also looking after building products, it was a positive quarter, and he would categorize it as all 3 segments were a bit better, demand was better, pricing was better and we ran well. And there's a very good team over there that's been running that business well. It's a Temple-Inland team. They're onboard. They're aligned, engaged. So it's been a positive outcome for us. [indiscernible]...

And can we infer that EBIT was around $25 million?

Yes, the EBITDA is -- I think the run rate in the second quarter is about $80 million, in that range. And if we can be doing that in a 700,000s housing start environment, that business is very well positioned for an improving housing environment over the next several years.

Got you. And then looking back at the -- your target adjusted debt ratio, maybe I missed this in the past, but you've added this $1.2 billion operating lease adjustment. Is that something you've had for a long time? And I guess more importantly, you're down to 3.7x, and we would expect with the sale of the Wood Products business, that would push that down lower. But we wouldn't expect you to be below 3 until, I guess, well into next year would be my guess, depending on how fast EBITDA comes up. Are you going to wait until you get to 3x before you would consider a dividend increase or a buyback?

Chip, let me answer the first part. That operating lease adjustment has always been there. The metric we use for this is we generally use the Moody's metric. So this is just the Moody's methodology, so it's always there. And yes, the goal is 3, and if you do the math, it's going to take into next year, and it's going to take a little bit of time to do that. The good news is, we're generating strong cash. We sold the mills, we've got the building products. Relative to timing, as we said at Investor Day, we don't view these things as sequential. We view them as in parallel, and we'll continue to look at our cash and capital allocation strategy and keep everything in front of us at all times. I don't know, John, if you want to add anything else.

You said it very well.

So in other words, you don't have to get to that level, but if you're moving close to it, it might give you -- you'll feel the flexibility to do what I mentioned, either a dividend increase or a buyback?

It's all around your trajectory and the outlook and where you're going. And given the positive trends we see in some of the businesses, as well as the levers we have, we feel good about our cash flow generation potential going forward.

And then quickly on the Boiler MACT, I know you, and I believe you're the only major company in the industry that actually included it in your projections of CapEx in future years, but we're still, I guess, a ways from when you actually have to commit to those funds. Or should I read something differently? Is it something you're going to do no matter what? Or do you think as regulations could evolve into next year, there could be some change in that guidance?

We pretty much have our arms around what it's going to be. EPA hasn't come out with the final regulations. They probably won't until after the election. But at this point in time, I think based on the conversations we've had with EPA and the association has had, we can put a pretty close set of parameters around the capital we're going to spend. And the time frame is really going to be 3 to 4 years, depending upon the states, for when the regulations get issued. So it may get pushed out a couple of months, but we know what we're going to need to do. And when those regulations come out, we'll start to do it.

Okay. And last quick question. In Latin -- in Brazil, where you have an option, I believe, to build another uncoated machine down there, I believe that option is stated to have to be exercised by year-end. But given you're probably the only option for the other party, is there a chance you might be able to push that out? Or are there any further thoughts you can give us about the possibility of that next machine?

Well, I would just say this, Chip, it's premature to kind of speculate on what we're going to do there, but we've got a very good relationship with Fibria. They're running the pulp mill. We've got the paper mill right next door. And so we're having an ongoing dialogue with them about their future plans and our future plans. And I think we're looking -- whatever we do will be in the best interest of both parties.

Your next question comes from Mark Wilde of Deutsche Bank.

Carol, just a couple of questions for you to start off. Can you just help us think about the delta at Franklin going from the second quarter to the third quarter? And then can you also just clarify what you mean with that sort of greenlight signal on Ilim and FX going from the second quarter to the third quarter?

Yes. And I know Glenn can follow up with some more of the specifics, but think about Franklin as a cost in the second quarter with no revenue, and then think about Franklin now running and producing revenue. So it's this nice, positive swing, and I think I'm getting the signal that it's okay to talk about it in the $0.03 range from second to third.

Yes, there's a cumulative impact there, Mark. If you look at their ramp curve, we're not going to be making much fluff pulp in the third quarter, so we've got to qualify it with customers. So you'll start to see Franklin really swing as we move into the fourth quarter and first quarter of next year.

Relative to Ilim, Ilim is just assuming that the ruble stays where it is. We just don't have to pay for the marking, the debt to market again. So that just goes away. We don't have the hit.

Okay. All right. Got that. Another question, John, for either you or for Mark Sutton. I'm just kind of curious with this containerboard hike out in the market. Why is it that you wouldn't just announce the box hike at the same time? At the end of the day, you sell more boxes than containerboard and at the -- or you sell mostly boxes. If the containerboard hike is going in place, aren't the boxes going up anyway?

Well, we announced, I think, the containerboard price increase late last week and the box price increase earlier this week. So it wasn't -- I'll let Mark comment on that, but I wouldn't say there was much time between the 2 of them. We wanted to make sure we had a good plan to let customers know what was going on.

Yes, I think that's right, John. And Mark, the real concern is properly communicating to our customers in an appropriate way, whether it's on the board side or on the box side. And as John said, we're only talking a few days' difference here.

Okay. I wasn't aware you had the box hike out there in the market. And then finally, John, can we just talk a little bit about sort of acquisitions? We've talked about the potential for further -- the likelihood of further debt reduction, as well as buybacks and dividends, but I know that you have been continuing to look at growth opportunities offshore. I'm just curious, with these emerging markets slowing down now, whether that prospectively creates a little better environment for you in looking at where you want to grow long term?

Well, first of all, Mark, we don't [indiscernible] on acquisitions or investments or portfolio realignments. And we're in the business for the long term, committed to a balanced use of cash, which we talked about at Investor Day. So I don't think -- I don't want investors to think that we're on an acquisition -- on the acquisition hunt. We're not. We've still got very clear metrics about what we -- the criteria for making acquisitions. We have made some, and we've stuck to that criteria. And then if we don't find anything that meets our criteria, we won't do anything. But we're committed to a balanced use of cash, which means cash back to shareowners, debt repayment, a strong balance sheet. And selectively and carefully, where we think there's an opportunity and a good value to do something that improves International Paper, improves our businesses, we'll do it. We'll look at it.

Your next question comes from Mark Weintraub of Buckingham Research.

And first of all, congratulations, really is a lot of visibility on bringing those Temple-Inland synergies to the bottom line, and that's very impressive. Couple of clarification questions. One, on the box price, can you give us what the specifics are? Start there.

Sure, Mark. We informed our customers of a 8% increase on boxes and a 10% increase on sheets, effective September 1.

Okay. And second, and I apologize, I know you were saying something about $80 million on the building products, is that what the -- was that the EBIT or the EBITDA run rate? And what is the EBITDA run rate of building products in the second quarter?

That's EBITDA run rate, Mark.

Okay. That was EBITDA. And then lastly, you had mentioned that you are $40 higher on the containerboard export exiting 2Q versus 1Q. Can you tell us what the difference was exiting the quarter versus the average for the second quarter?

I think for the quarter, the second quarter, the average price second quarter to first quarter was up about $15.

Okay. So you're -- I'm sorry. So how much higher exiting the second quarter were you than the average for the second quarter? Do you know?

Let me let Glenn follow up with that. What I have on the top of my head is the exit-to-exit price. What I don't remember is what the average was in the first quarter. But we can get you that.

Okay. And actually, if I could just...

Mark, this is Carol. There's no doubt that the export price recovery is a very positive. The only headwind we have there is, when you're looking at price, we have to also consider the exchange rate and how that exchange rate might move through the quarter. And, of course, that does influence the pricing on a dollar basis a little bit.

Understood. And then actually, lastly, John, you had mentioned in your remarks that you thought that OCC and gas would neutralize each other, yet on the slide, it was green when you have the lower fiber versus higher energy. Is that because of wood being down? Or can you just clarify that?

I think what I was referring to was expectations for the third quarter. The slide was showing the second quarter.

Your next question comes from George Staphos of Bank of America Merrill Lynch.

I wanted to go back to Temple-Inland a little bit in terms of the progress you've seen, and congratulations with the efforts thus far. When you think about what's gone better than expected, you mentioned getting the supply chain teams together more quickly, which, in turn, enabled maybe a bit more quicker reduction in overhead. Are there any other things that have gone a bit better than expected relative to what you were talking to and seeing at the Analyst Day?

George, I think the number one thing I would highlight, and I mentioned it at Analyst Day, but we just know so much more about it now, is the talent level that we have with the new Temple team members and their ability to get aligned with what is a different business model than they were used to. And that has led us to, for example, operational improvements at a much faster rate than we thought. I can think of waste improvement in our box system, for example, freight optimization, and then the streamlining of the operations, whether it was plant rationalizations and moving the business, because, of course, when we rationalize a plant, the goal is to keep 95% of the revenue and the customers. And that's a tough -- a tall order to do and do it quickly, and then also changing the scheduling concept of some of the larger plants so that we optimize what customers those plants serve. That takes a lot of people alignment, and I think that people alignment has gone better and faster than we probably anticipated.

George, I was at a Temple, a state where there were Temple and IP box plants, and now they're all IP box plants, the first week. And the plant managers were already talking 3 days into it about how they were going to move business around after they inform the customers, to take the logistics costs out. And remember, this is something I don't think people appreciate. Our logistics costs are higher than our labor costs in the box business. So we have huge opportunities on logistics that weren't available to us because we have a new system, and we've gotten after those very, very quickly. And the waste reduction that Mark Sutton referred to has just been really remarkable. The -- just getting those metrics out in front of people, and they've jumped on that really quickly.

And, Mark, one more -- or George, one more thing. Mark is being a little modest, too. I mean, the leadership that's been provided has been great, but the depths of the bench at International Paper, we didn't get a lot of the senior talent from Temple-Inland, but the people down in the facilities are very aligned. But we were able to come in with the team that we had and are running it and absorbed it very quickly.

On the waste issue, was it a function that people just didn't have the data in front of them, or it was not necessarily the focus of the prior organization? I know it's maybe not the fairest thing to talk about on a conference call, but I nonetheless want to pose question.

Yes, it's a fair question because -- I think it was in 2 areas. One, it wasn't a tremendously high focus, but also, the way that the business was run before had higher structural waste. So part of it is improving the way the business is run. And the principle there is what we talked about in our strategy, and that is, we believe a box business can be profitable and that each plant should have a P&L focus. And then you have to put, as John said, the metrics in front of people to see all the sources of waste in the box plant, and they are many, and then put systems in place, which we already have and are easy to roll out, and educate people. And then it make sense when you look at the data, and people get on board pretty quickly. So that's really the 2 issues: focus and structurally running the business a bit differently.

I appreciate the comments. I have one last one on Temple and then one for Tom Kadien, if he's there. It sounds like you're pleased with your share retention. So it sounds like you're over your 95% goal. I wanted confirmation on that. And do you think perhaps you are, because of the capability, as you were in the first quarter, perhaps gaining share from some of the other folks within the market? And then on the Foodservice side, you're not the only company that's been talking about, across all the packaging, better Foodservice trends. Do you think it's purely related to the new product offering? Or are you seeing some sort of secular trend either towards away from home, replacement of at-home food preparation? Or is it just the fact that we had a hot first 6 months and people are drinking more soft drinks and that sort of thing?

George, I'll take the first one. And Tom Kadien is here, and I'll hand the Foodservice question off to him. On share, we're pretty much tracking very close to the market, so I wouldn't say we're gaining share. We're working very hard to keep the customers that we have. And obviously, the box business, there's customers moving and business moving on a continuous basis. So my comments about keeping 95% were specifically about rationalizing plants and consolidating business and changing schedules of plants. But we're largely tracking the market. And at a macro level, not quarter-to-quarter, but over a longer period of time, that's sort of our strategy, to grow with the market. And the question is, what customers and segments do we pick that might give us an advantage in a market? And that's the approach we take. And with that, I guess I'll turn it over to Tom.

Yes, George, our Foodservice growth is really a result of the innovation and the new products that we're bringing to market and being aligned with the right customers. I think our volume was up 4% in the quarter. That's significantly better than, I'll say, the overall market is doing. And I think our customers are fighting food inflation and -- as it kind of rolls through their menu. And they're putting a lot of emphasis on beverages as a place to make money and to innovate, and that fits very well with our strategy around the new products.

Your next question comes from Al Kabili of Crédit Suisse. Albert T. Kabili - Crédit Suisse AG, Research Division: Most of my questions have been asked, but I guess maybe one for Tim on the uncoated free sheet. Volumes, North America, you continue to outperform the industry. And I was just wondering, how sustainable do you think that is? And what's driving that?

Al, well, I think what we're doing is sustainable. And the way we look at it, we have a North American customer base that we service, and we also have export markets that we service. So our feeling is that through the first quarter and second quarter, we see the market as being stable and our mix in the market being stable over the next couple of quarters. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. All right. And was exports -- I mean, can you help us with what exports -- how much that helped the volume number there?

Well, they were down in the quarter because we had a heavy outage quarter, and so we didn't ship as much and export in the second quarter as we did in the first. But we're doing a couple of things. We're anticipating the capacity that was asked about in Brazil earlier in the call, and we're working between our Brazilian business and our North American business to look at markets and baseload volumes. We're also backfilling some of the product that Brazil has been shipping into Europe as Brazil pulls back and grows in region. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. I appreciate that. And if I could just switch to the other, just a quick question on the containerboard, if we could switch to that. Can you just help us with -- give us some parameters on the negative mix impact sequentially, how we should be thinking about it, maybe some more color there, if there's any kind of quantification you could also give us in terms of dollars per ton or something headwind there?

Sure, Al. The mix comment and what shows on the outlook heat-map chart is really designed to focus on the change in our agricultural business from the second quarter to the third quarter. We're a lot bigger in that now post the Temple merger. So it's in the neighborhood of $1 a ton on boxes. So that's really what that comment is focused on. Albert T. Kabili - Crédit Suisse AG, Research Division: Okay. All right. I appreciate that. And then final question, while we're on the topic of agricultural, do you see -- well, how do you see the risk of the Midwest drought to your volumes on the ag side? Are you getting any early indications there?

I think most of the ag that I'm referring to tends to be on the coasts, the fresh produce. And if you look at what's going on in the Midwest drought, I think our biggest potential impact is really the knock-on effect of cost. Some of our customers are seeing their cost rise for feed, corn, feed for their animals. That means they may have to deal with that and could affect their demand. And then our own input materials like starch and others that are related to -- primarily corn is where we see a potential impact from the Midwest drought.

Your next question comes from Mark Connelly of CLSA. Kurt Schoen - Credit Agricole Securities (USA) Inc., Research Division: This is Kurt Schoen filling in for Mark. Can you give us some more color on how the Indian business has performed recently and relative to initial expectations?

Did you say it was a question about India? Kurt Schoen - Credit Agricole Securities (USA) Inc., Research Division: Yes, India. [indiscernible]

He just got back.

Yes. Kurt, I would say India is just like we thought it was going to be. The Q2 was all about, frankly, for them, a very large outage. It was our first experience doing a very large outage in India, and that really impacted April and May. But we saw a very good June come out of India and demand. While we're talking about it slowing in terms of uncoated free sheet, as John said, we can sell everything we can make, and we're looking at double digit year-over-year increases in uncoated free sheet there. So it's, as I think I said at Investor Day, it's everything we thought it would be. It's got a lot of upside potential, and it's hard. So I'd say we're right where we thought we would be in India.

Tom, do you want to comment about pulp mill running, coming out of the outage?

Yes. We had a significant pulp mill outage, and our hardwood pulp is up over 10%, which is a real advantage for us in that marketplace. And now that we've got, frankly, at this point, a little bit excess mark -- or excuse me, excess hardwood pulp, now we can put the pressure on getting the paper machine productivity up. So we think we're going to continue to grow, and we've got a nice integrated mill over there in Rajahmundry that's got a lot of upside.

If we look at it in terms of people, assets and markets, we're pretty pleased with what we see. Kurt Schoen - Credit Agricole Securities (USA) Inc., Research Division: And then has the weak monsoon affected demand there? Or do you expect it to?

Boy, I'm aware of the weak monsoon season. I think kind of like what Mark Sutton just said, it's probably going to impact food prices. That may have a knock-on impact, but I don't think it's going to hit our uncoated free sheet business. Kurt Schoen - Credit Agricole Securities (USA) Inc., Research Division: Okay. And then going to the Sun JV, can you give us some more color on how that's managed the downturn thus far? And given the downturn, do you think you guys can expect to see any more opportunities to expand your footprint in China?

Well, on the Sun JV, we're a largely nonintegrated producer, so we follow pulp pricing. It's been fairly volatile. If you look at the page in the deck, you can see pulp prices have come down on the input side for Sun, and pricing has come down accordingly. So it's all about managing margins over there. We're sold out. We're still solidly profitable and looking forward to having more capacity to sell, starting up late in September and putting product out into the market probably in October. So our Sun JV is running very well. It's all about execution in the kind of market they're in right now, and they run just a great operation over there. And I think it's a volatile market right now, but as long as we're managing our margins, we're going to be fine. I'm not going to speculate on further expansions into China. Our box business over there, we're starting to get traction, and we have a lot of capacity in our box business that's not full. So we have a lot of growth in China without putting in more expansion or acquisitions.

Kurt, and one of the things that we talked about in the outlook page, that heat map, or I didn't talk about it, but it's on there, is we are going to incur the startup costs for the Sun paper machine this quarter. We won't have a repeat of the Franklin costs, but we're going to have some startup expenses out of Sun.

Your next question comes from Anthony Pettinari of Citi.

To move back to Consumer Packaging, I was wondering if there was any noticeable trend, either positive or negative, on how demand moved through the 3 months of the quarter and into July. And then on your outlook slide, you reference packaging, volume and pricing to be basically stable in the third quarter. I was wondering, if you were to kind of split that out into industrial and consumer, would consumer be kind of a little bit weaker or in line or stronger than industrial? Any color you can give would be helpful.

I'll handle the consumer side. I would say, we saw some sequential growth second quarter better than first, but it was really the -- the slope of the line was better right up until Investor Day, and then it just kind of moved sideways. So the back half of May and June was really moving sideways. We'll see some sequential improvement in the third quarter again, but I wouldn't call it a recovery. I think we're kind of moving sideways, and seasonality is going to improve. Pricing, I would say, is stable at this point in consumer packaging.

Okay. And on the containerboard side, it seems like the biggest chunk of synergies that have yet to be realized involve the mills. And I was wondering, as we look out to the work at the mills, is there significant downtime or heavy engineering work that might bring some operational risk or some work that's maybe nonroutine? Or how should we think about that over the next year, 1.5 years?

Anthony, the mill synergies, as we discussed at Investor Day, some of the work we've identified does require mill outages, and based on when we closed the deal, we missed the window for some of that. So that's why some of those synergies are later in the time period. But we're not looking at anything unique or things that we haven't done before. There's a lot of projects, some capital, some just operational changes that have to do with energy reduction and consumption reduction, better choices on how we provide fiber to the mills, whether it's virgin fiber or recycled fiber. And in some cases, it's just operational changes that we're able to make while we're running to improve quality and cost. So there's nothing out there that we've discovered in our GAAP analysis that is unique or things that we haven't done before.

I think the really important point to understand is, those mill synergies aren't CapEx-driven. There are things we will do when we have a regularly planned outage, and we spend an incredible amount of time planning outages in International Paper because we spend over $400 million a year on them. And we usually execute flawlessly. That's the standard we expect.

Your next question is from Steve Chercover of D.A. Davidson. Steven Chercover - D.A. Davidson & Co., Research Division: Just a couple of quickies on freesheet and containerboard. First of all, Carol, I think you said that domestic containerboard prices were stable. Can you talk a little bit about how box prices have eroded over the last year or so?

Well, I think our chart shows that there's about a $7 erosion through the full year. And there's the -- also is a little bit of mix in there, so it's kind of hard to look at that. So that's why we would categorize boxes as relatively stable. Steven Chercover - D.A. Davidson & Co., Research Division: Got it. And you did indicate how they're going to change on September 1. How do you feel about your inventories presently and, I guess, going forward?

And I will let Mark answer those questions relative to the business.

Yes, we like our inventory levels right now based on learning how to operate our new system. They're at good absolute level and under control. And as I mentioned in an earlier answer, as we look at the third quarter and where our orders are materializing, given most of our big outages are behind us, we are prepared to run the capacity that we need to serve those orders and don't see any reason to build any inventory whatsoever. Steven Chercover - D.A. Davidson & Co., Research Division: Perfect. The only red square on I think what was referred to as the color chart or the heat chart is the mill divestiture impact. What did those 3 mills contribute in Q2? Was it maybe $20 million or so in EBITDA?

John mentioned, I think, or Carol did, closer to $30 million in Q2. So we're just calling that out as an -- those earnings go away for the third quarter. Steven Chercover - D.A. Davidson & Co., Research Division: And the final question is on uncoated freesheets, I guess, for Tim. The June statistics were fairly weak, down 7.1%, although I recognize you guys are outperforming. Is that an indication of escalating demand erosion? Or were customers giving the highs [ph] into the price hikes?

Well, I don't want to speculate on price. But what I would say about the demand is, and I think if you go back to a number of the months, at least 2 or 3 of them in -- so far in the first half of this year, some of the months can be a little bit deceptive. There were things that were going on last year. And what we're -- we look at each month, but we're continuing to pay attention to year-to-date numbers. And those numbers look right in line with what we had expected in terms of demand decline. So I saw the June numbers. Yes, it's a big decrease, but when you look at it overall, I think it's pretty much in line. We'll have to see how it plays out over the third quarter.

And our final question is coming from Paul Quinn of RBC Capital.

Just a question on the sale of the Temple building materials division. Is that -- the structure of that sale, is there going to be -- or are you thinking of it as 1 unit or a collection of assets?

Paul, it's 1 business. It's operating 1 business. We're going to put it out in the market as 1 business, and there are some bidders that may be -- some parties may be interested more in lumber or gypsum panels. And we'll just have to see how that plays out. We've got really good options to try to realize the highest value, but our preference is to sell it as 1 business. But obviously, we're going to be driven by where the value is. And the businesses are set up where they can be if we end up there, selling them as a gypsum business, a lumber business, a panel business.

And what do you expect on the timing of the sale? Is that by the end of the year?

It depends on how it gets sold, if we're going to be out. The -- we're already starting. We'll be out next week with the information to prospective buyers. And so we'll move as quickly as we can, but our objective will be to maximize the value.

I will now turn the call back over to Glenn Landau for any closing remarks.

Yes. So this just brings our second quarter earnings conference call to a close. We certainly appreciate everybody's participation this morning. Of course, I, along with our media contact, Tom Ryan, will be available today, and as always, for follow-up questions at the numbers listed in the Appendix. Have a good day.

Thank you. This does conclude today's conference call. You may now disconnect.