ip-20251231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


☒		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended
		12/31/2025
		or
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from - to -

Commission File No. 1-3157

INTERNATIONAL PAPER COMPANY

(Exact name of registrant as specified in its charter)


New York		13-0872805
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


6400 Poplar Avenue
Memphis,	Tennessee
(Address of principal executive offices)
38197
(Zip Code)
Registrant's telephone number, including area code:	901	419-9000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Shares	IP	New York Stock Exchange
Common Shares	IPC	London Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to

such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was

required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and

"emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its

internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting

firm that prepared or issued its audit report. ☒

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included

in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based

compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

The aggregate market value of the Company’s outstanding common stock held by non-affiliates of the registrant, computed by reference to the

closing price as reported on the New York Stock Exchange, as of the last business day of the registrant’s most recently completed second fiscal

quarter (June 30, 2025) was approximately $24,671,507,117.

The number of shares outstanding of the Company’s common stock as of February 20, 2026 was 529,469,427.

Documents incorporated by reference:

Portions of the registrant’s proxy statement filed within 120 days of the close of the registrant’s fiscal year in connection with registrant’s 2026

annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

DESCRIPTION OF BUSINESS

International Paper Company (the "Company," "International Paper" or "IP", which may also be referred to as "we"

or "us") is a global leader in sustainable packaging solutions. We produce renewable fiber-based packaging

products with manufacturing operations in North America, Latin America, Europe and North Africa. We are a New

York corporation, incorporated in 1941 as the successor to the New York corporation of the same name organized in

1898. In recent years, the Company has undergone significant transformation designed to simplify our operations,

strengthen performance and position the business for long-term value creation.

STRATEGY

At International Paper, we follow the IP 80/20 performance system. The 80/20 approach is a disciplined, data-driven

operating model focused on simplification, segmentation, resourcing and growth. In recent years the Company has

taken actions to drive meaningful operational improvement and increase strategic flexibility across our global

portfolio, including:


Simplify	Segment	Resource	Grow
Focusing on our core business: sustainable packaging solutions	Concentrating on the right geographies within each region	Tailoring investment and capital allocation strategies to meet distinct needs	Winning with customers and providing superior customer experiences
Exiting non-core businesses	Planning to separate into two independent, publicly traded companies in North America and EMEA (announced Jan 2026)	Investing in greenfield packaging facilities; plans for two new plants announced in 2025	Enhancing investor base in both North America and EMEA
Optimizing internal processes and organizational structures to reduce complexity	Prioritizing the right customer segments and product offerings	Investing in our talent and putting the right people in the right roles to create value	Focusing on achieving an advantaged cost position

We remain confident that the initiatives undertaken as part of our transformational journey will unlock substantial

value at IP and strengthen the Company for our employees, customers and shareholders.

2025 Highlights

•Financial: Net sales in 2025 totaled $23.63 billion and cash provided by operating activities totaled $1.7

billion.

•Strategic Acquisition: Completed the acquisition of DS Smith Ltd. (“DS Smith”), advanced regional

integration and implemented the 80/20 performance system within the new teams; enabled cross-business

sharing of best practices.

•Strategic Divestiture: Sold our Global Cellulose Fibers business for $1.5 billion to American Industrial

Partners (completed January 2026).

•Portfolio Rationalizations: Exited non-core businesses and markets, streamlined our footprint and

redeployed resources where needed.

•Organizational Improvements: Streamlined our organizational structure to eliminate redundancies created

by the acquisition, further decentralized our teams, outsourced some functional areas and better resourced

high value-creation areas.

•Shareholder Returns: Returned $977 million to shareholders in dividends.

•Packaging Focused Company: Took actions to position IP as a pure play company dedicated exclusively to

sustainable packaging.

2026 Focus

In 2026, we will continue to drive sustainable value creation and advance our company. Through the application of

our 80/20 performance system, we will execute our strategy with a sharp focus on achieving an advantaged cost

position, delivering superior customer experience and capturing a high relative supply position in the right

geographies, with the right customers and the right product offerings. A critical priority will be the execution of the

strategic separation to create two independent, publicly traded companies in North America and EMEA, which we

aim to complete near the end of 2026 or early 2027. In North America, the business will continue strengthening its

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position in the region, focusing on customers and leading on innovation with an advantaged cost position. In EMEA,

we will prepare the business to stand alone as an independent, publicly traded entity following the separation with

the goal of becoming the leading provider of innovative, sustainable packaging solutions in EMEA.

From 2021 through 2025, International Paper’s capital expenditures totaled approximately $5.4 billion, excluding

mergers and acquisitions. These expenditures reflect our continuing efforts to use our capital strategically to

improve product quality and environmental performance, as well as lower costs, maintain reliability of operations

and deploy strategic capital for capacity expansion. Capital expenditures in 2025 were approximately $1.9 billion

and are expected to be approximately $2.0 billion to $2.1 billion in 2026. You can find more information about capital

expenditures in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Discussions of acquisitions can be found in Note 7 Acquisitions of Item 8. Financial Statements and Supplementary

Data.

You can find discussions of restructuring charges and other special items in Item 7. Management’s Discussion and

Analysis of Financial Condition and Results of Operations. For further discussion on our business strategies, see

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CURRENT BUSINESS OVERVIEW

In the United States, as of the date of this filing, the Company operated 15 packaging mills, 159 converting and

packaging plants and 15 recycling plants. Additionally, production facilities in Europe, North Africa and Latin America

included 14 containerboard mills, 159 converting and packaging plants and 20 recycling plants. Substantially all our

businesses have experienced, and are likely to continue to experience, cycles relating to industry capacity and

general economic conditions.

VALUES

We are guided by our Company values:

•Safety – Above all else, we care about people. We look out for each other to ensure everyone is physically

and emotionally safe.

•Ethics – We act honestly and operate with integrity and respect. We promote a culture of transparency and

accountability.

•Excellence – We set high expectations and deliver outstanding results for each other, our customers and

our shareholders.

SEGMENTS

We operate under two divisions, which form the basis for the two segments we report, Packaging Solutions North

America and Packaging Solutions EMEA. A description of these business segments can be found in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

AVAILABLE INFORMATION

Throughout this Annual Report on Form 10-K, we “incorporate by reference” certain information in parts of other

documents filed with the U.S. Securities and Exchange Commission ("SEC"). The SEC permits us to disclose

important information by referring you to those documents. Our annual reports on Form 10-K, quarterly reports on

Form 10-Q, current reports on Form 8-K and proxy statements, along with all other reports and any amendments

thereto filed with or furnished to the SEC, are publicly available free of charge on the Investors section of our

website at www.internationalpaper.com as soon as reasonably practicable after we electronically file such material

with, or furnish it to, the SEC. We encourage you to refer to such information.

You can learn more about us by visiting our website at www.internationalpaper.com, which includes information

about the Company, our SEC filings, financial and other information for investors. Information on our website could

be deemed to be material information. We encourage investors, the media, and other interested parties to visit this

website regularly for updates. The information contained on or connected to our website is not incorporated by

reference into this Annual Report on Form 10-K and should not be considered part of this or any other report that we

file with or furnish to the SEC. Our internet address is included as an inactive textual reference only.

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HUMAN CAPITAL

EMPLOYEES

As of December 31, 2025, we have approximately 62,602 employees, nearly 30,421 of whom are in the United

States. Of our U.S. employees, 20,705 are hourly, with unions representing approximately 11,498 employees. Of

this number, 8,622 are represented by the United Steelworkers union ("USW").

International Paper, the USW, and several other unions have entered into five master agreements covering various

U.S. mills and converting facilities. Four of the master agreements are with the USW and include members from the

International Association of Machinists and Aerospace Workers, International Brotherhood of Electrical Workers,

United Food and Commercial Workers International Union and Workers Unite at certain U.S. mills and converting

facilities. The Company also has a master agreement with District Counsel 2, which is affiliated with the Printing

Packaging & Production Workers Union of North America that covers additional converting facilities. Individual

facilities continue to have local agreements for subjects not covered by the master agreements. If local facility

agreements are not successfully negotiated at the time of expiration, under the terms of the master agreements, the

local agreements will automatically renew with the same terms in effect.

In addition to our U.S. labor agreements, we operate manufacturing facilities across EMEA, where labor relations

are governed by local laws, works councils, national unions, and country specific collective bargaining frameworks.

Labor practices, employment protections, and negotiation processes in these regions can differ significantly from

those in the U.S. and may impose additional requirements related to consultation, employee representation, and

changes in operations. The Company works collaboratively with these local bodies and employee representatives,

but labor related regulations, negotiations, or disruptions in any of these jurisdictions could impact operations, costs,

or workforce flexibility.

SAFETY AND WELLBEING

At International Paper, we value safety above all else. The safety and well-being of our employees, visitors and

business partners is fundamental to how we operate. In 2025, we reinforced our commitment to safety performance

and further implemented our Safety Excellence strategy, which is designed to strengthen our safety culture across

all operations.

Our Board of Directors has oversight of our safety strategy, and in 2025 began receiving updates on our Safety

Excellence efforts at every Board meeting, elevating safety as a standing governance priority and reinforcing

accountability at the highest levels of the Company. In addition, in 2026 the Board participated in an intensive, in-

person safety training led by our third-party safety consultant alongside senior management, further strengthening

alignment on our Safety Excellence objectives and modeling the leadership behaviors we expect throughout the

organization.

Through our Safety Excellence efforts, we are building a culture guided by five key attributes:

1. We speak up and take action – every time, without fear.

2. We show up where the work happens and listen with intent.

3. We lead with humility and curiosity.

4. We proactively eliminate risk and invest in what matters.

5. We create a culture of care, trust, and accountability.

To ensure lasting impact, in 2025 we continued engagement of a leading safety consultant and initiated

comprehensive, top-down training and cascading through every level of leadership. Members of our executive

teams actively participated in safety leadership training, personal coaching and in-field demonstrations, reinforcing

accountability and modeling the behaviors we expect across the organization. These efforts are part of a broader

plan to embed safety into every aspect of our operations, with additional initiatives scheduled for 2026 and 2027 to

further advance our culture of safety excellence and engage every team member across IP.

We believe that safety performance and operational performance are inextricably linked. Plants and mills that

operate safely are less likely to experience unplanned process interruptions and downtime. The culture we are

building to improve safety performance also improves asset reliability, enhances production stability and supports

more consistent cost performance. Accordingly, the key drivers of strong safety performance contribute directly to

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operational excellence and, in turn, to our financial results. Our focus on Safety Excellence is therefore both a

cultural imperative and a key operational priority.

Our goal is to achieve zero serious injuries and fatalities at all sites and see that everyone goes home safely at the

end of each workday. This commitment means empowering every team member to stop unsafe work without

hesitation. To advance this goal, the following endeavors were undertaken in 2025:

•Trained 163 top leaders in 84 sessions that included classroom modules and coaching;

•Began training 3,400 site level leaders through classroom modules and in-field coaching;

•Established a Safety Governance Team in North America made up of executive leaders responsible for all

North American operations;

•Elevated safety updates as a standing agenda item at every meeting of the Board of Directors;

•Executed targeted investments to sustainably reduce exposure to harm in our facilities; and

•Celebrated team members who modeled our safety culture through personal recognition by our CEO and

sharing stories across the enterprise, reinforcing a culture where safety leadership is valued and visible.

We also believe workplace safety encompasses holistic well-being. We are committed to supporting the mental,

emotional, physical, professional and financial well-being of our employees and their families. Through our

Employee Assistance Program (“EAP”), offered at no cost to employees and family members, we provide resources

such as counseling, well-being coaching, financial guidance, identity theft resolution and support for emotional and

psychological safety. We believe these services help employees manage stress, build resilience, and achieve

personal and professional goals. Our holistic approach to wellness also includes tools and guidance for

incorporating wellness habits into daily life, ensuring our employees have the support they need to thrive.

TALENT MANAGEMENT

The attraction, retention and development of our employees is critical to our success. We strive to create a positive

employee experience that begins at onboarding. Our Human Resources Talent Management Team hosts online

Global New Employee Orientation for employees and each business conducts onsite new hire integration training

unique to its business and/or facility. This experience continues through our continuous learning, development and

performance management programs. We provide continuing education courses that are relevant to our industry and

job functions within the Company, including both instructor-led and online training through our Learning

Management System (“LMS”) MyLearning platform. Across the enterprise in 2025, employees completed nearly

830,000 learning activities through our platform.

In addition, we have created learning paths for specific positions that are designed to encourage an employee’s

advancement and growth within our organization, such as our REACH (Recruit, Engage, Align College Hires)

program and Global Manufacturing Training Initiative programs. Through REACH we recruit and develop early-

career engineers and safety professionals for our U.S. mills, preparing them to become future leaders. We invest in

the growth and development of our employees by providing a multi-dimensional approach to learning that

empowers, intellectually grows and professionally develops our employees. Our Global Manufacturing Training

Initiative provides training services to hourly operations and maintenance employees in our mills in a standardized

and structured manner. On the converting side of our business, nearly 100 front line and future leaders participated

in our multi-day in-person Leadership Application and Professional Development and Manufacturing Management

Associate Programs during 2025.

We develop leaders through a broad range of LMS virtual and in-person resources, courses and workshops for

individual contributors, people leaders and teams. In 2025, 44 senior leaders participated in the first offering of a

multi-part workshop series developed in partnership with The Aspen Institute. The program focused on cultivating

purpose-driven leadership, trust and collaboration, and equipping participants with the mindset and skills to navigate

complexity and drive meaningful impact.

We support employees in pursuing and preparing for future positions at the Company in several ways. We provide

tuition reimbursement and student loan assistance to help employees repay qualified student loans. We also offer

peer mentoring and leadership and career development training to support and develop our employees. These

resources provide employees with the skills and support they need to achieve their career goals, build management

skills and become leaders within our Company.

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The labor market for both hourly and salaried workers continues to be competitive. For additional information

regarding risks related to the current labor market, see Item 1A. Risk Factors – We operate in a challenging

market for talent and may fail to attract and retain qualified personnel, including key management

personnel.

COMPENSATION AND BENEFITS

We view compensation and benefits as part of how we attract, engage and retain our talented workforce. We do so

by rewarding performance while ensuring competitive compensation in our local markets around the world. We

continually evaluate our compensation and benefits so that we offer optimal compensation programs and remain a

leading employer of choice in the areas in which we operate.

TEAM-ORIENTED CULTURE

At International Paper, we strive to create a high-trust, high-performance culture. We focus on promoting a culture

that leverages the talents of all employees, and implementing practices that attract, recruit and retain a broad array

of talent, guided by our ongoing dedication to equal employment opportunity for all. We believe our efforts will lead

to improved business results, as teams with a broad range of perspectives drive innovation, enhance decision-

making, and better reflect the markets we serve.

We support enterprise-wide employee-led resource groups (“ERGs”) that are open to all employees and provide a

forum to communicate and exchange ideas and build a network of relationships across the Company. Our ERGs

are designed to help educate and motivate our global workforce, strengthening our business practices.

The make-up of our Board of Directors reflects our efforts to seek the most qualified board candidates with a broad

range of experiences and perspectives.

Our Executive Leadership Team ("ELT") is currently comprised of our chief executive officer, two executive vice

presidents and three senior vice presidents who oversee crucial functions and business units within the Company.

By virtue of our secondary listing on the London Stock Exchange, International Paper is now subject to certain

board composition disclosure requirements under the UK Listing Rules (the “UKLR”) established by the UK

Financial Conduct Authority (the "FCA"). The information below is required under UKLR 14.3.30R. The required

disclosure below is set out as of December 31, 2025 and the data provided in relation to the Board and executive

officers has been collected through the annual Directors and Officers’ questionnaire.


UKLR Reporting Standards (the "Standards")	Result	Further notes
At least 40% of the Board are women.	Not met	30% of the Board were women.
At least one member of the Board is from an ethnic minority.	Met	There were two ethnic minority men on the Board.
At least one of the senior Board positions (Chair, CEO, Senior Independent Director (SID) or CFO) is a woman.	Not met	The senior Board positions of Chairman, CEO, CFO and Lead Director are currently held by men. Until the individuals in those positions retire or otherwise leave, the Company will not meet the Standards.

In accordance with UKLR 14.3.31R, numerical data on the ethnic background and sex of the individuals on the

Company’s Board and in its executive management as of December 31, 2025 is set out below:

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	Number of Board Members	Percentage of the Board 1	Number of senior positions on the Board (CEO, CFO, SID and Chair) 2	Number in executive management 3	Percentage of executive management
Men	7	70%	2 4	5 5	100%
Women	3	30% 6	—	0 7	—%
Not specified/prefer not to say	—	—%	—	—	—%
White British or other White (including minority white groups)	8	80%	2	5	100%
Mixed multiple ethnic groups	—	—%	—	—	—%
Asian/Asian British	—	—%	—	—	—%
Black/African Caribbean/Black British	2	20%	—	—	—%
Other ethnic group including Arab	—	—%	—	—	—%
Not specified/prefer not to say	—	—%	—	—	—%

1 Information presented in this column reflects only our non-employee directors and does not include our CEO.

2 The Company is reporting on the positions of CEO, CFO, Chairman of the Board and Lead Director.

3 Executive management is defined, in accordance with the UKLR, as International Paper’s Executive Leadership Team, which includes our

Corporate Secretary.

4 Andrew K. Silvernail holds the position of CEO and Chair. Christopher M. Connor holds the position of Lead Director, which is the equivalent of

the SID. The position of CFO is not held by a member of the Board.

5 "Executive management" as used in this table includes our CEO.

6 As part of its succession planning, the Board actively considers highly qualified women candidates whose skills, experience and perspectives

align with the Company's long-term strategy while advancing progress toward the objectives outlined in UKLR 14.3.31R.

7 Melissa S. Flores joined the Company as senior vice president, chief human resources officer on January 5, 2026. Following Ms. Flores's

appointment, the number of women serving as members of executive management is 1 or 17%.

COMMUNITY ENGAGEMENT

Our community engagement efforts extend across the globe and support social and educational needs through

charitable giving, volunteerism and product donations. We also partner with agencies to help communities prepare

for and recover from natural disasters. In 2025, we invested approximately $16 million to address critical needs in

the communities around the world where we work and live.

INTELLECTUAL PROPERTY, PATENTS, AND TRADEMARKS

We rely on a combination of patent, copyright, trademark, design, trade secret, and internet domain laws to

establish and protect our intellectual property rights in the United States and in foreign jurisdictions. The Company’s

practice is to file applications and obtain patents for products and services we believe improve our value proposition

to customers. We maintain a portfolio of trademarks and service marks registered with the U.S. Patent and

Trademark Office and in certain foreign jurisdictions, unregistered trademarks, licenses, and internet domain names

that we consider important to the marketing of our products and business. These trademarks and service marks

include those entity and product names that appear in this Annual Report on Form 10-K and our logo, as well as

names of other products and marketing-related taglines. Our registered intellectual property has various expiration

dates. The Company also relies on trade secret and other confidential information protection for manufacturing

processes, product specifications, formulae, analyses, market information, forecasts, and other competitively

sensitive information.

COMPETITION AND COSTS

The packaging sector is large and fragmented, and the areas into which we sell our principal products are very

competitive. Our products compete with similar products produced by other forest products companies. We also

compete, in some instances, with companies in other industries and against substitutes for wood-fiber products.

Many factors influence the Company’s competitive position, including price, cost, product quality and services. You

can find more information about the impact of these factors on operating profits in Item 7. Management’s Discussion

and Analysis of Financial Condition and Results of Operations.

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MARKETING AND DISTRIBUTION

The Company sells products directly to end users and converters, as well as through agents, resellers and

distributors.

DESCRIPTION OF PRINCIPAL PRODUCTS

The Company’s principal products fall into several categories as described below and also in Item 7. Management’s

Discussion and Analysis of Financial Condition and Results of Operations. We produce renewable fiber-based

packaging solutions, primarily servicing industrial consumer goods and e-commerce markets. The Company

manufactures a broad range of containerboard and corrugated packaging products, which are used to protect, ship

and display goods across diverse end-use categories. Our containerboard portfolio includes linerboard, medium,

whitetop, and saturating kraft, which serve as the base materials for corrugated packaging. The Company converts

containerboard into corrugated boxes, bulk bins, shipping containers and specialty packaging through its network of

U.S. and international converting facilities. These products support customers in industries such as food and

beverage, agriculture, industrial manufacturing, personal care pharmaceuticals and consumer goods.

GOVERNMENTAL REGULATION

The Company’s policy is to operate its mills and plants in compliance with all applicable laws and regulations such

that it protects the environment and the health and safety of its employees. We operate our businesses and sell

products globally. In each of the jurisdictions in which we operate, we are subject to a variety of laws and

regulations governing various aspects of our business, including general business regulations as well as those

governing the manufacturing, production, content, handling, storage, transport, marketing and sale of our products.

Our operations are also subject to forestry reserve requirements, other environmental regulations and occupational

health and safety laws. Violations can result in substantial fines, administrative sanctions, criminal penalties,

revocations of operating permits and/or shutdowns of our facilities, litigation, other liabilities, as well as damage to

our reputation. We incur costs to comply with these requirements. For additional information regarding risks

associated with environmental matters, see Item 1A. Risk Factors – We are subject to a wide variety of laws,

regulations and other governmental requirements that may change in significant ways, and the cost of

compliance, or the failure to comply with such requirements, could impact our business and results of

operations.

ENVIRONMENTAL PROTECTION

Our 2030 goals establish the foundation for our efforts to support healthy and abundant forests, strengthen

communities, operate sustainably and advance renewable solutions. Through these efforts and more, the Company

tackles the toughest issues in the value chain to improve its environmental footprint and promote the long-term

sustainability of natural capital.

Our approach to sustainability considers our entire value chain, from sourcing raw materials responsibly and

working safely, to making renewable, recyclable products and providing a market for recovered products. To help

inform and prioritize the focus of our sustainability strategy, we have engaged with internal and external

stakeholders, assessed key issues, associated risks and opportunities, and incorporated sustainability

considerations into our processes.

The Company’s operations are subject to extensive and evolving federal, state, local, and international laws and

regulations governing the protection of the environment and became more so in 2025 in light of our increased scale

and global presence. Company manufacturing processes involve discharges to water, air emissions, water intake

and waste handling and disposal activities, all of which are subject to a variety of environmental laws and

regulations, along with requirements of environmental permits or analogous authorizations issued by various

governmental authorities. Our continuing objectives include: (i) controlling emissions and discharges from our

facilities to avoid adverse impacts on the environment, and (ii) maintaining compliance with applicable laws and

regulations.

The Company has been named as a potentially responsible party ("PRP") in environmental remediation actions

under various federal and state laws, including the Comprehensive Environmental Response, Compensation and

Liability Act of 1980, as amended ("CERCLA"). For additional information regarding certain remediation actions, see

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Note 14 Commitments and Contingent Liabilities of Item 8. Financial Statements and Supplementary Data. For

additional information regarding risks associated with environmental matters, see Item 1A. Risk Factors – We are

subject to a wide variety of laws, regulations and other governmental requirements that may change in

significant ways, and the cost of compliance with such requirements, or the failure to comply with such

requirements, could impact our business and results of operations.

CLIMATE CHANGE

The Company recognizes the impact of climate change on people and our planet. To manage climate-related risks,

we are taking actions throughout our value chain to help advance a low-carbon economy. We aligned our annual

sustainability reporting with the recommendations of the International Financial Reporting Standards S2 Climate-

related Disclosures in the 2024 reporting cycle. As part of our climate reports, we identify and report on climate-

related opportunities. We identify and evaluate physical and transition climate-related risks through our enterprise

risk management process.

The Company's 2024 Climate Report (which, prior to 2024, was referred to as the Company's Task Force on

Climate-related Financial Disclosures Report or "TCFD Report") provides climate related disclosures as of

December 31, 2024, consistent with the four core recommendations and 11 recommended disclosures set out in the

June 2017 Final Report published by the TCFD (the "Final 2017 TCFD Report)". Our 2025 Climate Report, which

will be available later in 2026, will provide climate related disclosures as of December 31, 2025, consistent with the

four core recommendations and 11 recommended disclosures set out in the Final 2017 TCFD Report. For ease of

review and given the detailed and technical content of these disclosures, the Climate Report is considered to be the

most appropriate location for the disclosures. This statement is provided in accordance with UKLR 14.3.24R. Our

corporate sustainability reports, including our 2024 and 2025 Climate Report, are or will be available at

www.internationalpaper.com/reports.

We transform renewable resources into recyclable products that people depend on every day. We aim to produce

low carbon products that have a positive impact on nature. To this end, we source renewable fiber from responsibly

managed forests and recycled raw materials. We then use a circular manufacturing process that makes the most of

resources and byproducts, while reducing the environmental impacts of our operations. At the end of use, the

majority of our low-carbon fiber-based products are recycled into new products at a higher rate than any other base

material. We work to advance the shift to a low-carbon, circular economy by designing products that are 100%

reusable, recyclable or compostable.

Through improvements in operations, equipment, energy efficiency and fuel diversity, we are working to achieve

company-wide reductions in Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions. As part of our 2030 goals,

we targeted incremental reductions of 35% in our Scope 1, 2, and 3 GHG emissions by 2030 in comparison to 2019

levels. We intend to continue to evaluate and implement projects as we pursue this 2030 GHG goal. This includes

ongoing energy efficiency efforts and capital projects to phase out our most carbon intensive fuel sources (Scope 1)

as well as developing GHG reduction strategies for our energy sourcing (Scope 2) and broader supply chain

footprint (Scope 3). In addition, we were an early adopter of the Taskforce on Nature-related Financial Disclosures

(“TNFD”). We published our first TNFD report in 2025 with 2024 data that aligns with TNFD recommendations,

which have been designed to (i) meet the corporate reporting requirements of organizations across jurisdictions; (ii)

be consistent with the global baseline for corporate sustainability reporting; and (iii) be aligned with the global policy

goals outlined in the Kunming-Montreal Global Biodiversity Framework, which was adopted to halt and reverse

nature loss by 2030.

We use carbon-neutral biomass and manufacturing residuals to generate a majority of the manufacturing energy at

our mills. We believe our efforts to advance sustainable forest management and restore forest landscapes are an

important lever for mitigating climate change through carbon storage in forests.

INTERNATIONAL EFFORTS

The 2015 Paris Agreement compels international efforts and voluntary commitments toward reducing the emissions

of GHGs. Although the United States has withdrawn from the 2015 Paris Agreement, IP recognizes the importance

of global policy action to achieve emission reductions consistent with an increase of “well below 2 ° Celsius above

pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 ° Celsius.” Consistent

with this objective, participating countries aim to balance GHG emissions generation and sequestration in the

second half of this century or, in effect, achieve net-zero global GHG emissions.

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To assist member countries in meeting GHG reduction obligations, the European Union operates an Emissions

Trading System ("EU ETS"). Our operations in the EU experience indirect impacts of the EU ETS through

purchased power pricing. To date, neither the direct nor indirect impacts of the EU ETS have been material to the

Company. We continue to evaluate potential future impacts in light of (i) our plans to separate our EMEA packaging

business into an independent public company and (ii) ongoing developments in the global climate-policy

frameworks, including the evolution of the 2015 Paris Agreement's non-binding national commitments and

transparency framework. or allocation of, and market prices for, GHG credits. In 2025, many countries failed to

submit updated climate targets, which has contributed to continued uncertainty in the allocation and market pricing

of GHG credits.

Additionally, the EU’s Corporate Sustainability Reporting Directive (“CSRD”), Corporate Sustainability Due Diligence

Directive ("CSDDD") and Deforestation Regulation (“EUDR”), each impose additional compliance responsibilities on

the Company. The CSRD requires additional reporting processes for greater accountability. The Company’s first

reporting year under the CSRD is expected to be 2028. The CSRD standards replace the existing Non-Financial

Reporting Directive and expand reporting requirements for companies operating in the EU. The implementation

timeline varies depending on the type of entity.

The CSDDD requires reporting and documentation about due diligence systems covering company and supply

chains. The CSDDD became effective in 2024 and EU member states have two years to implement through national

laws and decide on enforcement. The CSDDD implementation and compliance timeline may vary based on details

once finalized by each member state.

The EUDR requires companies trading in products derived from certain commodities to conduct extensive diligence

on the value chain to ensure goods do not result from recent deforestation, forest degradation or breaches of local

environmental and social laws. The Company is evaluating the implications of the EUDR to its business with

expected reporting to begin after December 30, 2026.

However, following the planned separation of our EMEA business into an independent public company, International

Paper will review its obligations to report under these requirements.

U.S. EFFORTS, INCLUDING STATE, REGIONAL AND LOCAL MEASURES

Responses to climate change may result in regulatory risks as new laws and regulations aimed at reducing GHG

emissions come into effect. The EPA manages regulations to: (i) control GHGs from mobile sources by adopting

transportation fuel efficiency standards; (ii) control GHG emissions from new Electric Generating Units; (iii) control

emissions from new oil and gas processing operations; and (iv) require reporting of GHGs from sources of GHGs

greater than 25,000 tons per year.

Several U.S. states have enacted or are considering legal measures requiring the reduction and reporting of GHG

emissions by companies and public utilities. While current regulations in these jurisdictions have not had, and are

not expected to have, a material impact on the Company, we continue to monitor developments closely.

In particular, the State of California has enacted two laws that introduce expanded climate-related disclosure

obligations:

•California Climate Corporate Data Accountability Act (SB 253) requires annual public reporting of Scope 1

and Scope 2 GHG emissions, beginning with fiscal-year 2025 data to be disclosed by August 2026.

•California Climate-Related Financial Risk Act (SB 261) mandates disclosure of climate-related reporting

obligations on companies doing business in California meeting specified thresholds, subject to the

resolution of ongoing legal challenges. In 2026, IP voluntarily self-reported under SB 261 using our 2024

Climate Report.

The Company is actively preparing to meet the upcoming requirements of SB 261 and will continue to monitor state-

level climate legislation, evaluate its implications on our operations and update disclosures as laws take effect and

regularity clarity evolves. It is unclear what impacts, if any, future state-level or local GHG rules will have on the

Company’s operations, as well as the outcome of any legal challenges to these rules.

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SUMMARY

Regulation related to GHGs and climate change continues to evolve in the areas of the world in which we do

business. Because it remains unclear what actions regulators may take or when such actions may occur, it is not

reasonably possible at this time to estimate the Company’s costs of compliance with rules that have not yet been

adopted or implemented, may never be adopted or implemented or may be subject to legal challenge. In addition to

possible direct impacts, future legislation and regulation could indirectly impact the Company. For example, higher

prices for transportation, energy and other inputs, as well as more protracted air permitting processes, could cause

delays and higher costs to implement capital projects. Other possible indirect impacts include influence on

competitive position due to customer and end-consumer preferences regarding low-carbon, circular products with a

high recycling rate along with tax credit and funding opportunities to expand green energy production and carbon

credit generation. The Company has controls and procedures in place designed to track GHG emissions from our

facilities and stay informed about developments concerning possible climate-related laws, regulations, accords, and

policies where we operate. We regularly assess whether such developments may have a material effect on the

Company, its operations or financial condition, and whether we have any related disclosure obligations under

applicable rules and regulations.

Moreover, compliance with legal requirements related to GHGs and/or climate change currently in effect or enacted

in the future are expected to require future expenditures to meet GHG emission reduction, disclosure or other

obligations. These obligations may include carbon taxes, the requirement to purchase GHG credits or the need to

acquire carbon offsets. We may also incur significant expenditures in relation to our efforts to meet our internal

targets or goals with respect to GHGs and climate change, including our 2030 goal on GHGs as discussed above.

Furthermore, in connection with complying with legal requirements and/or our efforts to meet our internal targets

and goals, we have made and expect to continue to make capital and other investments to displace traditional fossil

fuels, such as fuel oil and coal, with lower carbon alternatives, such as biomass and natural gas. Rather than rely on

carbon offsets, we focus on reducing energy consumption as well as relative GHG emissions across our mills and

manufacturing facilities. Currently, these efforts and obligations have not materially impacted the Company, but such

efforts and obligations may have a material impact on the Company in the future.

We believe sustainability is a key element of corporate governance with oversight of management's initiatives and

efforts provided by our Board of Directors and committees of the Board of Directors.

Our Board of Directors has primary oversight of the Company's enterprise risk management program, which

includes sustainability. The Board receives updates from our Chief Sustainability Officer ("CSO") and additional

members of management. Our Board also conducts periodic reviews of components of the sustainability strategy

and performance and reviews material key sustainability-related developments and issues. Our standing

committees share responsibility for sustainability as described below:

Audit and Finance Committee

•Reviews processes and controls for external reporting of sustainability and social impact data and metrics.

•Reviews related disclosures in Annual Report on Form 10-K and other sustainability reports.

Governance Committee

•Reviews and reassesses adequacy of, and oversees compliance with, our Corporate Governance

Guidelines.

•Seeks Board of Director candidates with a broad range of skills, experiences and perspectives.

Public Policy and Environment Committee ("PPE Committee")

•Reviews sustainability and social impact policies, plans and performance to ensure commitments to

stewardship.

•Stays current on emerging sustainability and social impact trends and issues impacting the Company.

At the management level, ownership and governance of sustainability matters is embedded in the organization from

the top down. Our CEO and ELT are responsible for corporate strategy and leadership including incorporation of our

sustainability goals and standards into our daily operations and long-term business strategy. Our ELT, which is

comprised of two executive vice presidents and three senior vice presidents who report directly to the CEO and

oversee critical functions and business units within the Company, evaluates sustainability issues based on input

from the businesses. The ELT receives several sustainability updates from our CSO.

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For additional information regarding risks associated with climate change and the evolving regulatory landscape,

see Item 1A. Risk Factors – We are subject to risks associated with climate change and other sustainability

matters and global, regional and local weather conditions as well as legal, regulatory and market responses

to climate change; We are subject to a wide variety of laws, regulations and other government requirements

that may change in significant ways, and the cost of compliance with such requirements, or the failure to

comply with such requirements, could impact our business and results of operations.

Additional information regarding climate change and the Company is available in our annual Sustainability Report

and Climate Report, both of which can, or will be, found on our website at www.internationalpaper.com. Our 2025

Sustainability Report and 2025 Climate Report will be available later in 2026. The information contained in such

reports is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of

this or any other report that we file with or furnish to the SEC. Any targets or goals with respect to sustainability

matters discussed herein or in our sustainability reports as noted above are forward-looking statements and may be

aspirational. These targets or goals are not guarantees of future results and involve assumptions and known and

unknown risks and uncertainties, some of which are beyond our control.

RAW MATERIALS

Raw materials essential to our businesses include wood fiber, mainly purchased in the form of pulpwood, wood

chips and old corrugated containers ("OCC"), and certain chemicals, including caustic soda, starch and adhesives.

For further information concerning fiber supply purchase agreements, see Liquidity and Capital Resources of Part II,

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The following are the executive officers of our Company as of the date of this filing.

Andrew K. Silvernail, 55, joined International Paper as chief executive officer on May 1, 2024 and became

chairman of the International Paper Board of Directors on October 1, 2024. Mr. Silvernail has two decades of

experience leading global companies in the manufacturing and technology sectors. He joined IP from KKR & Co.,

Inc., a global investment firm, where he served as an executive advisor, and 5 Nails, LLC, a private investment

advisory firm where he served as founder, chair and chief executive officer (2022-2024). Prior to this role, Mr.

Silvernail served as the chairman and chief executive officer of Madison Industries, one of the world’s largest

privately held companies (2021). Prior to that, Silvernail served as chairman and chief executive officer of IDEX

Corporation (NYSE: IEX) (2011-2020). Mr. Silvernail previously held executive positions at Rexnord Industries,

Newell Rubbermaid (NASDAQ: NWL) and Danaher Corporation (NYSE: DHR). He serves on the board of directors

of Stryker Corporation (NYSE: SYK) and Potter Global Technologies, a privately held company specializing in fire

and safety solutions.

Melissa S. Flores, 43, senior vice president, chief human resources officer since January 5, 2026. Ms. Flores leads

the human resources function. Ms. Flores previously served as chief human resources officer for IDEX Corporation

(NYSE: IEX) (2021-2025). Prior to that, she served in various other leadership roles at IDEX including Group Vice

President of Talent (2019-2021) and Group Vice President of Human Resources.

W. Thomas Hamic, 59, executive vice president and president - Packaging Solutions North America since

September 1, 2024. In this role, Mr. Hamic leads the Container and Containerboard businesses in North America.

Prior to this promotion, Mr. Hamic served as senior vice president - North American Container and chief commercial

officer (January 2023-2024). Mr. Hamic also served as senior vice president - Global Cellulose Fibers and

Enterprise Commercial Excellence (2020-2022) as well as various other leadership roles at the Company since

joining International Paper in 1991.

Lance T. Loeffler, 48, senior vice president, chief financial officer of the Company since April 1, 2025. In this role,

he has leadership responsibilities for the Company’s global financial strategy and finance functions. Before joining

IP, Mr. Loeffler worked for Halliburton (NYSE: HAL) where he most recently served as senior vice president, Middle

East and North Africa (2022-2024). Prior to this role, Mr. Loeffler held other positions at Halliburton including

executive vice president and chief financial officer (2018-2022).

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Timothy S. Nicholls, 64, executive vice president and president – Packaging Solutions EMEA effective April 1,

2025. Prior to this role, he served two separate terms as the Company’s chief financial officer – from 2007-2011,

and again from 2018-2025. At completion of the DS Smith business combination, Mr. Nicholls began serving in his

current position leading the EMEA business. Mr. Nicholls previously served in various leadership roles at the

Company since joining International Paper in 1999.

Joseph R. Saab, 57, senior vice president, general counsel and corporate secretary since July 2022. In addition to

leading all Legal functions for the Company, Mr. Saab also has responsibility for Corporate Security and served as

the interim senior vice president – Human Resources twice during leadership changes (August 2024-February

2025; June 2025-January 2026). Mr. Saab previously served as vice president, deputy general counsel and

assistant corporate secretary (2019-2022) and in other leadership roles with the Company since joining International

Paper in 2001.

There are no family relationships, as defined by the instructions to this item, among any of the Company’s executive

officers and any other executive officers or directors of the Company.

FORWARD-LOOKING STATEMENTS

Certain statements in this Annual Report on Form 10-K that are not historical in nature may be considered “forward-

looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.

Forward-looking statements can be identified by the use of forward-looking or conditional words such as “expects,”

“anticipates,” “believes,” “estimates,” “could,” “should,” “can,” “forecast,” “outlook,” “intend,” “look,” “may,” “will,”

“remain,” “confident,” “commit” and “plan” or similar expressions. These statements are not guarantees of future

performance and reflect management’s current views and speak only as to the dates the statements are made and

are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or

implied in these statements. All statements, other than statements of historical fact, are forward-looking statements,

including, but not limited to, statements regarding anticipated financial results, economic conditions, industry trends,

future prospects, and the anticipated benefits, execution and consummation of strategic corporate transactions.

Factors which could cause actual results to differ include but are not limited to: (i) our ability to consummate and

achieve the benefits expected from, and other risks associated with our plans to separate our North America and

Europe, Middle East and Africa (“EMEA”) operations into two independent public companies and other acquisitions,

joint ventures, divestitures, spinoffs, capital investments and other corporate transactions on a timely basis or at all

including the risk that an impairment charge may be recorded for goodwill or other intangible assets, which could

lead to decreased assets and reduced net earnings; (ii) our ability to complete regional integration and implement

our plans, forecasts, the internal control framework of DS Smith, including assessment of its internal control over

financial reporting; (iii) risks associated with our strategic business decisions including facility closures, business

exits, operational changes, restructuring initiatives and portfolio rationalizations intended to support the Company’s

80/20 approach for long-term growth; (iv) our failure to comply with the obligations associated with being a public

company listed on the New York Stock Exchange and the London Stock Exchange and the costs associated

therewith; (v) risks with respect to climate change and global, regional, and local weather conditions, as well as risks

related to our targets and goals with respect to climate change and the emission of greenhouse gases and other

sustainability matters, including our ability to meet such targets and goals; (vi) loss contingencies and pending,

threatened or future litigation, including with respect to environmental and antitrust related matters; (vii) the level of

our indebtedness, including our obligations related to becoming the guarantor of the DS Smith Euro Medium Term

Notes programme, risks associated with our variable rate debt, and changes in interest rates (including the impact

of currently elevated, but moderating, interest rate levels); (viii) the impact of global and domestic economic

conditions and industry conditions, including with respect to current challenging macroeconomic conditions,

inflationary pressures and changes in the cost or availability of raw materials, energy sources and transportation

sources, supply chain shortages and disruptions, competition we face, cyclicality and changes in consumer

preferences, demand and pricing for our products, and conditions impacting the credit, capital and financial markets;

(ix) risks arising from conducting business internationally, domestic and global geopolitical conditions, military

conflict (including the Russia/Ukraine conflict, the conflict in the Middle East, the further expansion of such conflicts,

and the geopolitical and economic consequences associated therewith as well as broader geopolitical tensions

involving major global actors, including those related to China and Venezuela), changes in currency exchange rates,

including in light of our increased proportion of assets, liabilities and earnings denominated in foreign currencies,

trade policies (including but not limited to protectionist measures and the imposition of new or increased tariffs; the

effects of the U.S. Supreme Court’s recent decision striking down certain previously imposed tariffs and creating

uncertainty regarding potential tariff refunds and the future scope of U.S. tariff authority; and the impact of new

executive orders that may restructure or reauthorize tariff measures through alternative legal mechanisms, as well

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as the potential impact of retaliatory tariffs and other penalties including retaliatory policies against the United

States) and global trade tensions, downgrades in our credit ratings, and/or the credit ratings of banks issuing certain

letters of credit, issued by recognized credit rating organizations; (x) the amount of our future pension funding

obligations, and pension and healthcare costs; (xi) the costs of compliance, or the failure to comply with, existing,

evolving or new environmental (including with respect to climate change and greenhouse gas emissions), tax, trade,

labor and employment, privacy, anti-bribery and anti-corruption, and other U.S. and non-U.S. governmental laws,

regulations and policies (including but not limited to those in the United Kingdom and European Union); (xii) any

material disruption at any of our manufacturing facilities or other adverse impact on our operations due to severe

weather, natural disasters, climate change or other causes; (xiii) cybersecurity and information technology risks,

including as a result of security breaches and cybersecurity incidents; (xiv) our exposure to claims under our

agreements with Sylvamo Corporation; (xv) our ability to attract and retain qualified personnel and maintain good

employee or labor relations; (xvi) our ability to maintain effective internal control over financial reporting; and (xvii)

our ability to adequately secure and protect our intellectual property rights. These and other factors that could cause

or contribute to actual results differing materially from such forward-looking statements can be found in our press

releases and reports filed with the U.S. Securities and Exchange Commission. In addition, other risks and

uncertainties not presently known to the Company or that we currently believe to be immaterial could affect the

accuracy of any forward-looking statements. The Company undertakes no obligation to publicly update any forward-

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

ITEM 1A. RISK FACTORS

The following is a summary of the material risks and uncertainties that could affect our business, financial condition

and results of operations. You should read this summary together with the more detailed description of each risk

factor contained below.

Risks Related to Industry Conditions

•Fluctuations in the prices of and the demand for our products due to factors such as economic cyclicality

and changes in customer or consumer preferences, and government regulations.

•Changes in the cost and availability of raw materials, energy and transportation have recently affected, and

could continue to affect, our profitability.

•Competition and downward pricing pressure in the global packaging industry could negatively impact our

financial results.

Risks Related to Market and Economic Factors

•Maintenance of two exchange listings may adversely affect liquidity in the market for our shares of common

stock and result in pricing differentials of shares of common stock between two exchanges.

•Developments in general business and economic conditions could have an adverse effect on the demand

for our products, our financial condition and the results of our operations.

•Changes in international conditions or other risks arising from conducting business internationally could

adversely affect our business and operations.

Risks Related to our Operations

•We are subject to a wide variety of laws, regulations and other government requirements that may change

in significant ways, and the cost of compliance with such requirements, or the failure to comply with such

requirements could impact our business and results of operations.

•Material disruptions at one of our manufacturing facilities could negatively impact financial results.

•We operate in a challenging market for talent and may fail to attract and retain qualified personnel, including

key management personnel.

•Our failure to maintain good employee or labor relations may affect our respective operations.

•We may be unable to realize the expected benefits and costs savings associated with restructuring

initiatives, including our 80/20 approach.

•We may not achieve the expected benefits from strategic acquisitions, joint ventures, divestitures, spin-offs,

capital investments, capital projects and other corporate transactions that are or will be pursued.

•We are subject to cybersecurity and information technology risks related to breaches of security pertaining

to sensitive company, customer, employee and vendor information as well as breaches in the technology

used to manage operations and other business processes.

•Our continued growth will depend on our ability to retain existing customers and attract new customers.

•Uninsured losses or losses in excess of our insurance coverage for various risks could have an adverse

financial effect on our business.

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•We may not be able to adequately secure and protect our intellectual property rights, which could harm our

competitive advantage.

•We may fail to identify or leverage digital transformation initiatives.

Risks Related to the Separation

•The proposed separation of our EMEA packaging business may not be completed, on the currently

contemplated timeline or at all.

Risks Related to our Indebtedness

•Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely

affect our cost of financing and have an adverse effect on the market price of our securities.

•The level of our indebtedness could adversely affect our financial condition and impair our ability to operate

our business.

•We are subject to risks associated with variable rate debt.

•Downgrades in the credit ratings of banks issuing certain letters of credit will increase our cost of

maintaining certain indebtedness and may result in the acceleration of deferred taxes.

Risks Related to Legal Proceedings and Compliance Costs

•Results of legal proceedings could have a material effect on our consolidated financial results.

•We could be exposed to liability for Brazilian taxes under our agreements with Sylvamo Corporation.

•Failure to remediate a material weakness in DS Smith’s internal control over financial reporting could

adversely affect our business and results of operations.

Risks Related to Climate and Weather and Social and Environmental Impact Reporting

•We are subject to risks associated with climate change and other sustainability matters and global, regional

and local weather conditions as well as by legal, regulatory, and market responses to climate change.

Risks Related to our Pension and Healthcare Costs

•Our pension and health care costs are subject to numerous factors which could cause these costs to

change.

•Our pension plans are currently fully funded on a projected benefit obligation basis; however, the possibility

exists that over time we may be required to make cash payments to the plan, reducing the cash available

for our business.

The Company faces a variety of risks, including risks in the normal course of business and through global, regional,

and local events that could have an adverse impact on its reputation, operations, and financial performance.

The following are material risk factors of which we are aware, including risk factors that could cause the Company’s

actual results to differ materially from those contemplated in any forward-looking statement. If any of the events or

circumstances described in any of the following risk factors occurs, our business, results of operations and/or

financial condition could be materially and adversely affected, and our actual results may differ materially from those

contemplated in any forward-looking statements we make in any public disclosures. Additional factors that could

affect our business, results of operations and/or financial condition are discussed elsewhere in this Annual Report

on Form 10-K (including in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of

Operations) and in the Company’s other filings with the U.S. Securities and Exchange Commission.

RISKS RELATED TO INDUSTRY CONDITIONS

Fluctuations in the prices of and the demand for our products due to factors such as economic cyclicality

and changes in customer or consumer preferences, and government regulation could materially affect our

financial condition, results of operations and cash flows.

Substantially all of our business has experienced, and is expected to continue to experience, cycles relating to

industry capacity, customer demand, and general economic conditions. The length and magnitude of these cycles

have varied over time and by product. Product prices and sales volumes have fallen in the past, and there can be

no assurance that this will not recur. New or existing producers of paper and sustainable packaging products may

add or adjust capacity affecting available supply. Further, changes in customer or consumer preferences may

increase or decrease the demand for fiber-based products and non-fiber substitutes. Customer and consumer

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preferences change based on, among other factors, cost, convenience, health concerns and perceptions and an

increased awareness of sustainability considerations. In some areas, customers have increasingly shown interest in

environmentally friendly products such as fiber-based packaging. Advances in non-fiber technologies such as

plastic packaging or other materials could result in decreased demand for our products. In addition, legal

developments, such as new governmental regulations on single-use packaging products could significantly alter the

market for our products. Any of the foregoing, including a failure to anticipate and respond to changing trends,

customer preferences and technological and regulatory developments, could have a material adverse effect on our

business, financial condition, results of operations and/or future prospects. A lack of investor confidence in the paper

and packaging industry could also have a negative impact on our business, financial condition, results of operations

and/or future prospects.

Changes in the cost and availability of raw materials, energy and transportation have recently affected, and

could continue to affect, our profitability.

We rely heavily on the use of certain raw materials (principally virgin wood fiber, recycled fiber, caustic soda, starch

and adhesives), energy sources (principally biomass, natural gas, electricity and fuel oil) and third-party transport

companies. The market price of virgin wood fiber varies based on availability, demand, quality, and source. The

global supply and demand for recycled fiber may be affected by factors such as trade policies between countries,

individual governments’ legislation and regulations, and general macroeconomic conditions. In addition, the

increase in demand of products manufactured, in whole or in part, from recycled fiber, on a global basis, may cause

significant fluctuations in recycled fiber prices. Taking into account ongoing inflationary conditions in domestic and

global markets, we have experienced, and may continue to experience, a significant increase in various costs,

including recycled fiber, energy, freight, chemical, and other supply chain costs, which has adversely affected, and

may continue to adversely affect, our operations. Moreover, the availability of labor and the market price for fuel

may affect third-party transportation costs.

In addition, because our business operates in highly competitive industry segments, we have not always been able

to, and may in the future be unable to, recoup past or future increases in the costs of any raw materials, energy

sources or transportation sources from customers, which significantly affect profitability. In addition, where we are

able to recoup our cost increases, there may be a delay between the onset of the cost increases and the

recoupment. Any inability to recover input cost increases could lead to a material adverse effect on our business,

financial condition, results of operations and/or future prospects.

We have significant exposure to energy costs, in particular gas, electricity and other fuel costs. Energy prices have

fluctuated dramatically in the past and may continue to increase and/or fluctuate in the future. Transportation costs

are also impacted by energy costs since a key component of transportation costs relates to the cost of oil. We have

employed and expect to continue to employ, strategies, including hedging a portion of our energy costs, and risk

mitigation tools to reduce the volatility of energy costs and ensure a degree of certainty over future energy costs.

However, there can be no certainty that those strategies and tools will continue to manage such impact in the future.

Volatile and increasing energy prices, including as a consequence of the conflict between Russia and Ukraine as

well as heightened geopolitical tensions in regions such as the Middle East, China, and recent events in Venezuela,

or a failure to effectively implement such strategies and tools could have a material adverse effect on our business,

financial condition, results of operations and/or future prospects.

Competition and downward pricing pressure in the global packaging industry could negatively impact our

financial results.

We operate in a competitive international environment. Our products compete with other forest products and

packaging companies in the markets where we operate.

Product innovations, manufacturing and operating efficiencies, additional manufacturing capacity, distribution and

commercial strategies pursued or achieved by competitors, and the entry of new competitors, could negatively

impact our financial results. In addition, our products compete with companies that produce substitutes for wood-

fiber products, such as plastics and various types of metal. Customer shifts away from wood-fiber products toward

such substitute products may adversely affect our business and financial results. Further, we depend on critical

suppliers and key customers. An inability to foster these relationships and to manage any material changes in

commercial terms and service levels could have a material adverse impact on our business, financial condition,

results of operations and/or future prospects.

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Pricing in the paper and packaging industries can be affected by, among other things, product commoditization,

changes in demand, entrance or withdrawal of new competitors or capacity, changes in product supply, and the

introduction of new products, technologies and equipment, including the use of artificial intelligence ("AI") and

machine learning solutions. We face significant pressure to reduce per unit costs to achieve commercially

acceptable returns. In circumstances where we are unable to adjust the relevant cost base sufficiently, pricing

pressure could have a material adverse effect on our business, financial condition, results of operations and/or

future prospects.

RISKS RELATED TO MARKET AND ECONOMIC FACTORS

Our maintenance of two exchange listings may adversely affect liquidity in the market for our shares of

common stock and result in pricing differentials of shares of common stock between the two exchanges.

Trading in shares of common stock on the London Stock Exchange ("LSE") and the NYSE takes place in different

currencies (pound sterling on the LSE and U.S. dollars on the NYSE) and at different times (resulting from different

time zones, different trading hours and different trading days for the LSE and the NYSE). The trading prices of

shares of common stock on these two exchanges may at times differ due to these and other factors. Any decrease

in the price of shares of common stock on the NYSE could cause a decrease in the trading price of shares of

common stock on the LSE and vice versa.

The benefits we expect of the dual listing on the NYSE and the LSE, which are increased liquidity, visibility among

investors and access to investors who may be able to hold listed shares in the United Kingdom, but not the United

States, and vice versa, may not be realized or, if realized, may not be sustained, and the costs and additional

regulatory burdens associated with a dual listing may ultimately outweigh the associated benefits.

We are affected by developments in general business and economic conditions, which could have an

adverse effect on the demand for our products, our financial condition and the results of our operations

including our ability to pay a cash dividend.

General economic conditions may adversely affect industrial non-durable goods production, consumer confidence

and spending, and employment levels, all which impact demand for our products, or otherwise adversely affect our

business. We may also be adversely affected by catastrophic or other unforeseen events, natural disasters,

geopolitical events, military conflicts, terrorism, port and canal blockages and similar disruptions, political, financial

or social instability, or civil or social unrest. Future health epidemics or pandemics could also adversely impact

portions of our business to varying degrees, including as the result of change in demand for certain products, supply

chain and labor disruptions, and higher costs. These effects could have a material impact on our business, results of

operations, cash flow, liquidity, or financial condition. Moreover, negative economic conditions or other adverse

developments with respect to our business have resulted in and may in the future result in impairment charges,

including impairments related to divested or acquired businesses whose carrying values may not be recoverable,

any of which could be material. Volatility or uncertainty in the financial, capital and credit markets, and negative

developments associated with interest rates, asset values, currency exchange rates and the availability of credit,

could also have a material adverse effect on our business, financial condition and results of operations and could

adversely affect our liquidity, access to capital markets and ability to pay a dividend.

Macroeconomic conditions in the U.S., Europe and globally remain challenging and volatile. Recent periods have

been characterized not only by persistent inflationary pressures, elevated interest rates, challenging labor market

conditions, tariff policies and heightened trade policy uncertainty but also by slowing global economic growth,

weakening global trade and investment flows, supply chain realignments, currency volatility, shifting fiscal and

monetary policies across major economies and adverse effects and uncertainty associated with current geopolitical

conditions. Our operations have been adversely affected and could continue to be adversely affected in the future,

by these challenging macroeconomic and geopolitical conditions, including as the result of lower demand for certain

products, and higher raw material and labor costs. Further, because the markets for packaging products in many

industrialized countries are generally mature, there is a significant degree of correlation between economic growth

and demand for packaging products. Therefore, any deterioration in macroeconomic conditions in the U.S., Europe

and/or globally resulting in a slowdown in economic growth may correlate with a corresponding decline in demand

for packaging products in those markets. Moreover, any significant deterioration in current negative macroeconomic

conditions, or any recovery therefrom that is significantly slower than anticipated, could have a material adverse

effect on our business, results of operations or financial condition. In addition, there can be no assurance that

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dividends will continue to be declared or paid at historical levels, and any reduction or suspension of dividends

could negatively impact our stock price. Further, if negative macroeconomic conditions result in significant

disruptions to capital and financial markets, the cost of borrowing, our ability to access capital on favorable terms,

and our overall liquidity could be adversely affected.

Changes in international conditions or other risks arising from conducting business internationally could

adversely affect our business and operations.

As a global producer of renewable fiber-based packaging products, we operate in many different countries. As a

result, we are vulnerable to risks related to our international operations. These risks, which can vary substantially by

country, may include economic or political instability, geopolitical events, corruption, anti-American sentiment,

expropriation measures, social and ethnic unrest, natural disasters, military conflicts and terrorism, the regulatory

environment (including the risks of operating in developing or emerging markets in which there are significant

uncertainties regarding the interpretation and enforceability of legal requirements and the enforceability of

contractual rights and intellectual property rights), adverse currency fluctuations, foreign exchange control regimes

(including restrictions on currency conversion), downturns or changes in economic conditions (including in relation

to commodity inflation), adverse tax consequences or rulings, import restrictions, controls or other trade protection

measures, economic sanctions, health guidelines and safety protocols, nationalization, changes in social, political or

labor conditions, and adverse developments regarding sustainability, environmental regulations and trade policies

and agreements, any of which risks could negatively affect our financial results. For example, a portion of our sales

could be adversely affected by changes in economic conditions and demographics, including as a result of tariffs.

Trade protection measures in favor of local producers of competing products, including governmental subsidies,

tariffs, tax benefits and other measures may give local producers a competitive advantage and adversely impact our

operating results and our business prospects in these countries. Likewise, disruption in existing trade agreements or

increased trade friction between countries (such as in relation to the trade tensions between the U.S. and China),

could have a negative effect on our business and results of operations by restricting the free flow of goods and

services across borders. Additionally, the U.S. government in 2025 increased certain rates and broadened the

scope of certain tariffs imposed on goods imported into the U.S., such as from China, which may strain international

trade relations and increase the risk that foreign governments implement retaliatory tariffs on goods imported from

the United States. Specifically, the U.S. federal government implemented tariffs on certain foreign goods and may

implement additional tariffs on foreign goods. If lasting, such tariffs and any further legislation or actions taken by the

U.S. federal government that restrict trade, such as additional tariffs, trade barriers, and other protectionist or

retaliatory measures taken by governments in Europe, Asia, and other countries, could adversely impact our ability

to sell products and services in our international markets. Tariffs have increased the cost of certain capital items,

including materials and equipment used in our capital investments. These increased costs could adversely impact

the profit margin that we earn on our products, which could make our products less competitive and reduce

consumer demand. Countries may also adopt other protectionist measures that could limit our ability to offer our

products and services. Conversely, these tariffs and retaliatory tariffs may be subject to further changes or

negotiations which could lower or remove them in the near or longer term with a return to more normalized trade

conditions in some instances. Due to this uncertainty, the ultimate impact of any tariffs and trade tension is unclear

and will depend on various factors, including if there are negotiated bilateral agreements to remove or lower tariffs,

and the timing, amount, scope and nature of the tariffs that remain implemented.

Recent legal and policy developments have further increased uncertainty. On February 20, 2026, the U.S. Supreme

Court struck down several of the sweeping tariffs imposed through a series of executive orders, holding that the

tariffs exceeded the authority granted under the International Emergency Economic Powers Act. The Court's ruling

eliminated key tariffs on imports from numerous major trading partners and created uncertainty regarding the status

of various trade agreements and tariff related obligations. The Court did not determine whether importers are owed

refunds for tariffs previously paid, although estimates suggest that potential refunds could be substantial, and

federal agencies must now determine how to administer the ruling. In response to the Supreme Court’s decision,

the government announced new Executive Orders on February 20, 2026, aimed at restructuring U.S. tariff policy

and exploring alternative statutory authorities to impose or maintain tariffs. The scope, timing, and implementation of

these Executive Orders remains uncertain, and may result in new or modified tariff regimes, additional regulatory

requirements, or further trade friction with U.S. trading partners. We may become entitled to refunds of certain tariffs

previously paid; however, whether any refund will be available, and the amount and timing of any such refund,

remain uncertain and subject to ongoing administrative processes and additional federal guidance. We are

continuing to evaluate the impact of both the Supreme Court’s ruling and the new Executive Orders on our supply

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chain, input costs, pricing, capital investments, and overall operating results, and the ultimate impact, if any, on our

business is not yet known.

We may continue to be adversely affected by ongoing geopolitical instability and the economic consequences and

disruptions arising therefrom, including as the result of the military conflict between Russia and Ukraine, the conflict

in the Middle East, and increasing tensions between China and Taiwan. These risks may be further heightened in

the event of the expansion in the scope or escalation of any such conflicts. In addition, changes to economic

sanctions programs, could put us at risk of violating sanctions because of an existing presence in a newly

sanctioned jurisdiction or relationship with a newly sanctioned entity if we fail or are unable to end such presence or

relationship in a timely manner.

In addition, our international operations are subject to laws related to operations in foreign jurisdictions, including

laws prohibiting bribery of government officials and other corrupt practices. Anti-bribery laws such as the U.K.

Bribery Act 2010, the Foreign Corrupt Practices Act of 1977, and similar worldwide anti-corruption laws generally

prohibit companies and their intermediaries from making improper payments to public officials for the purpose of

obtaining or retaining business. Further, the U.S. Department of the Treasury’s Office of Foreign Assets Control and

other non-U.S. government entities maintain economic sanctions targeting various countries, persons and entities.

We are also subject to the laws and regulations of governmental and regulatory agencies. Failure to comply with

domestic or foreign laws could result in various adverse consequences for us including the imposition of civil or

criminal sanctions, reputational damage and the prosecution of executives overseeing international operations.

We are exposed to the translation of the results of overseas subsidiaries into their respective reporting currencies,

as well as the impact of currency fluctuations on their commercial transactions denominated in foreign currencies.

Adverse movements in foreign exchange rates relating to foreign currency denominated commodities, assets and

liabilities, and transactions could have a material impact on our business, financial condition, results of operations

and/or future prospects.

RISKS RELATED TO OUR OPERATIONS

We are subject to a wide variety of laws, regulations and other government requirements that may change

in significant ways, and the cost of compliance with such requirements, or the failure to comply with such

requirements, could impact our business and results of operations.

As a publicly listed company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-

Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the listing requirements of the NYSE. By virtue of our secondary

listing on the LSE, we are also subject to the listing requirements of the LSE, the Market Abuse Regulation and

Disclosure Guidance and Transparency Rules. The Exchange Act requires that we file annual and other reports with

respect to our business, financial condition and results of operations. The Sarbanes-Oxley Act requires, among

other things, that we establish and maintain effective internal controls and procedures for financial reporting. Any

failure to maintain effective controls or any difficulties encountered implementing required new or improved controls

could cause us to fail to meet our reporting obligations, which could have a material adverse effect on our business

and the trading price of our common stock.

Our operations are subject to regulation under a wide variety of domestic and international laws, regulations and

other government requirements, including, among others, those relating to the environment, health and safety, labor

and employment, data privacy, tax, trade, competition and corruption and health care. There can be no assurance

that laws, regulations and government requirements will not be changed, applied or interpreted in ways that will

require us to modify our respective operations and objectives or affect our respective returns on investments by

restricting existing activities and products or increasing costs. In addition, any failure or alleged failure to comply

with applicable laws, regulations or other government requirements could have an adverse effect on our reputation

and financial results or may result in, among other things, litigation, revocation of required licenses, internal

investigations, governmental investigations or proceedings, administrative enforcement actions, fines and civil and

criminal liability.

We are subject to increasingly stringent federal, state, local and international laws governing the protection of the

environment that continue to evolve as new guidance is provided by regulatory and governing bodies and as

pending or future litigation is resolved. The changing laws, regulations and standards relating to corporate

governance, sustainability matters and public disclosures in various jurisdictions create uncertainty for public

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companies, increase legal and compliance costs and make activities more time consuming. We have incurred, and,

following completion of our planned separation of the EMEA packaging business, expect to continue to incur and

invest resources, significant capital, operating and other expenditures complying with applicable and forthcoming

environmental laws and regulations, including with respect to GHG emissions and other climate-related matters.

These investments may lead to higher operating expenses as the cost of compliance increases. Our environmental

expenditures include, among other areas, those related to air and water quality, waste disposal and the cleanup of

soil and groundwater, including situations where we have been identified as a potentially responsible party.

Following the separation of our EMEA packaging business, we will evaluate our exposure to international climate

regulations.

There can be no assurance that future remediation requirements and compliance with existing and new laws and

requirements will not require significant expenditures, or that existing reserves for specific matters will be adequate

to cover future costs. We could also incur substantial fines or sanctions, enforcement actions (including orders

limiting operations or requiring corrective measures), natural resource damages claims, cleanup and closure costs,

third-party claims for property damage and personal injury and reputational harm as a result of violations of, or

liabilities under, environmental laws, regulations, codes and common law. The amount and timing of environmental

expenditures is difficult to predict, and, in some cases, liability may be imposed without regard to contribution or to

whether we knew of, or caused, the release of hazardous substances. Additionally, if our compliance efforts with

new applicable laws, regulations, and standards do not align with the expectations of regulatory or governing bodies

due to ambiguities in their application and implementation, or if they differ from interpretations arising from related

litigation, we may face legal actions. This could negatively impact our business, financial condition, operational

results, and cash flow.

Our global operations are subject to complex and evolving domestic and international data privacy laws and

regulations, such as the European Union’s General Data Protection Regulation, the UK's General Data Protection

Regulation, any supplemental applicable European Union member state or UK national data protection laws,

China’s Personal Information Protection Law and comprehensive privacy laws in many U.S. states. These laws

impose a range of compliance obligations regarding the handling of personal data. There are significant penalties

for non-compliance, including monetary fines, disruption of operations and reputational harm. Moreover, other states

and governmental authorities around the world have introduced or passed, or are considering, similar legislation

which may impose varying standards and requirements on data collection, use and processing activities.

This increasingly restrictive and evolving global regulatory environment related to data privacy and data protection

may continue to require changes to our business practices, and give rise to significantly expanded compliance

burdens, costs and enforcement risks. Moreover, many of these laws and regulations are subject to uncertain

application, interpretation or enforcement standards that could result in claims, changes to business practices, data

processing and security systems, penalties, increased operating costs or other impacts on our business.

Additionally, regulatory bodies and others tasked with enforcing privacy and data protection laws have been actively

engaging in enforcement investigations and actions. These laws often provide for civil penalties for violations, as

well as private rights of action for data breaches that may increase data breach litigation. We use internal and

external resources to monitor compliance with relevant legislation and continually evaluate and, where necessary,

modify data processing practices and policies to comply with evolving privacy laws. Nevertheless, relevant

regulatory authorities could determine that our data handling practices fail to address all the requirements of certain

new laws, which could subject us to penalties and/or litigation. In addition, there is no assurance that our security

controls over personal data, the training of employees and vendors on data privacy and data security, and policies,

procedures and practices will prevent the improper handling of, disclosure of or access to personal data. Any such

unauthorized access, use or disclosure in violation of applicable privacy and data protection laws could cause

reputational harm and loss of consumer confidence and subject us to government enforcement actions (including

fines), or result in private litigation, which could result in loss of revenue, increased costs, liability for monetary

damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results.

We are also exposed to the risk of changes in tax law and tax rates in a number of jurisdictions. The costs

associated with these laws and regulations are substantial and possible future laws and regulations or changes to

existing laws and regulations (including the imposition of higher taxes) could require us to incur additional expenses

or capital expenditures or result in restrictions on or suspensions of operations. For example, the Organization for

Economic Cooperation and Development (the “OECD”) has issued a framework pursuant to which EU and non-EU

countries (including countries in which we operate) have enacted a 15% global minimum tax applied on a country-

by-country basis (the “Pillar Two rule”). In many of the countries implementing the Pillar Two rule, the first

component of the Pillar Two rule became effective in 2024 and the second component in 2025. In January 2026, the

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OECD/G20 issued administrative guidance modifying application of the Pillar Two rule through a Side-by-Side

system introducing two new Pillar Two safe harbors for US-parented multinational corporations, effective beginning

in 2026. The application of these safe harbors by each country that has implemented Pillar Two now depends on the

respective countries’ enacting the Side-by-Side system. It is possible that the Pillar Two rule could adversely impact

our effective tax rate in future periods. Additionally, administrative guidance with respect to tax law can be

incomplete or vary from legislative intent, and therefore the application of the tax law is uncertain. While we believe

our reported positions comply with relevant tax laws and regulations, taxing authorities could interpret the

application of certain laws and regulations differently. We have been and continue to be subject to tax audits in

various taxing jurisdictions around the world. In some cases, we have appealed, and may continue to appeal,

assessments by taxing authorities, including in the court system. As such, tax controversy matters may result in

previously unrecorded tax expenses, accelerated cash tax payments, higher future tax expenses, or the

assessment of interest and penalties.

AI continues to evolve rapidly, and, as with many technological innovations, it presents risks and challenges that

could affect its adoption and our business. Uncertainty in the global and legal regulatory regime relating to AI may

require significant resources to modify and maintain business practices to comply with international laws, the nature

of which cannot be determined at this time. Multiple jurisdictions, including Europe, the U.S. federal government,

and certain U.S. states, have already proposed or enacted laws, regulations, and other requirements governing AI.

In Europe, the EU AI Act, adopted in May 2024, entered its implementation phase in 2025 and imposes extensive

transparency, risk management and data governance obligations for AI systems, particularly those classified as high

risk, with significant fines for noncompliance. Additional implementing measures are expected. In the United States,

2025 marked a shift in federal AI policy with the government establishing a national AI policy framework aimed at

asserting federal preemption over divergent state AI laws. States continue to adopt AI statutes creating varied

compliance regimes addressing accountability, automated decision-making, transparency, worker protections and

privacy. Changes in regulatory regimes, or the adoption of new or more restrictive requirements, could make it more

difficult to use AI tools, require us to change our business practices, or limit AI usage which may lead to

inefficiencies or competitive disadvantages.

Material disruptions at one of our manufacturing facilities could negatively impact financial results.

We operate facilities in compliance with applicable rules and regulations and take measures to minimize the risks of

disruption. A material disruption at our corporate headquarters, a manufacturing facility or key mill could prevent us

from meeting customer demand, reduce sales and/or negatively impact our financial condition. Any of our

manufacturing facilities or any machines within an otherwise operational facility, could cease operations

unexpectedly due to a number of events, including:

•adverse weather events like fires, floods, earthquakes, hurricanes, winter storms and extreme

temperatures, or other catastrophes (including adverse weather conditions that may be intensified by

climate change);

•the effect of a drought or reduced rainfall on its water supply;

•disruption in the supply of raw materials or other manufacturing inputs;

•terrorism or threats of terrorism, security incidents or other threats to employee safety;

•information system disruptions or failures due to any number of causes, including cyber-attacks;

•domestic and international laws and regulations applicable to us and any of our respective business

partners, including joint venture partners, around the world;

•unscheduled maintenance outages;

•prolonged power failures;

•an equipment failure;

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•a chemical spill or release;

•explosion of a boiler or other equipment;

•damage or disruptions caused by third parties operating on or adjacent to a manufacturing facility;

•disruptions in the transportation infrastructure, including roads, bridges, railroad tracks and tunnels;

•a widespread outbreak of an illness or any other communicable disease, or any other public health crisis or

any impacts related to government regulation as a result thereof;

•failure of third-party service providers and business partners to satisfactorily fulfill their commitments and

responsibilities in a timely manner and in accordance with agreed upon terms;

•labor difficulties; and

•other operational problems.

Any such downtime or facility damage could prevent us from meeting production targets, customer demand and

satisfying customer requirements, which may necessitate unplanned expenditures, resulting in lower sales and have

a negative effect on our financial results.

We operate in a challenging market for talent and may fail to attract and retain qualified personnel,

including key management personnel.

Our ability to operate and grow our business depends on our ability to attract and retain employees with the skills

necessary to operate and maintain our facilities, produce our products and serve our customers. The market for

both hourly workers and salaried workers continues to be competitive, particularly for employees with specialized

technical and trade experience. This, along with the current competitive labor market and ongoing cost-pressured

conditions, has led to higher labor costs. In addition, we rely on our key executive and management personnel to

manage our business efficiently and effectively. The unanticipated departure of key executive and management

employees, particularly in a challenging market for attracting and retaining employees, could adversely affect our

business. Moreover, changing demographics and labor work-force trends, including evolving expectations around

remote and hybrid work, work-life balance expectations and increased return-to-office requirements, may make it

difficult for us to attract, retain or replace retiring or departing employees. The failure to retain and/or recruit

additional or substitute senior managers and/or other key employees and a failure to identify and resource for future

capability requirements such that there is a gap in skills and knowledge across key business areas, or if higher labor

costs and shortages persist, could have a material adverse effect on our business, financial condition, results of

operations and/or future prospects.

Our failure to maintain good employee or labor relations may affect our respective operations.

Future developments in relation to our business could adversely affect employee or labor relations. Good employee

and labor relations depend on the ability to drive innovation, manage change and engage the workforce, and failure

to do so could have a material adverse effect on our business, financial condition, results of operations and/or future

prospects. Further, labor disputes or other problems could lead to a substantial interruption to our business and

have a material adverse effect on our business, financial condition, results of operations and/or future prospects.

A significant number of our employees located outside of the U.S. are represented by unions, trade unions and

national works councils. We have collective bargaining agreements in place with U.S. and international trade

unions. In the U.S., we may not be able to successfully negotiate new collective bargaining agreements once our

current contracts with unions expire without work stoppages or labor difficulties, or we may be unable to renegotiate

such contracts on favorable terms. The mill master collective bargaining agreement and related mill joint pension

council master agreement with the United Steelworkers union (the "USW") will expire in August 2027 and

September 2027, respectively. The converting master collective bargaining agreements and related converting joint

pension council master agreement which will expire in April and September 2028, respectively. The USW represents

approximately 8,622 employees in our mills and converting facilities. In Europe, we have collective agreements in

place with trade unions, and also have agreements in place with the European Works Council, which brings

together employee representatives from the different European countries in which we operate and provides a forum

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for information sharing and consultation. We have experienced limited work stoppages in the past and may

experience work stoppages in the future. Further, labor organizations may attempt to organize groups of additional

employees from time to time, and recent and potential changes in labor laws could make it easier for them to do so.

If there is a substantial change to the terms of any collective bargaining agreements or an agreement acceptable to

us cannot be reached at all when the collective agreements are renewed, we could face increased labor costs or

disruptions as a result of labor union activity in the future. If we experience any extended interruption of operations

at any of the relevant facilities as a result of strikes or other work stoppages, or if unions, trade unions and national

works councils are able to organize additional groups of our employees, our operating costs could increase and our

operational flexibility could be reduced.

We may be unable to realize the expected benefits and cost savings associated with restructuring

initiatives, including our 80/20 approach.

We have restructured portions of our operations from time to time and have current restructuring initiatives taking

place and planned for North America and EMEA. In 2025, we agreed to sell our Global Cellulose Fibers business,

which we completed in January 2026, and exited the converting bag business. In North America, we actioned

closure of three mills, two recycling facilities, and six box plants, as well as one sheet plant, one sheet feeder, one

molded fiber facility and one box-to-sheet-feeder conversion. In EMEA, we actioned closures of 17 packaging

plants, one mill and one recycling center. Together these actions reduced the workforce by approximately 1,400. On

January 29, 2026, we announced plans to separate our EMEA packaging business into an independent public

company. Through the 80/20 approach, we intend to deliver profitable market share growth by striving to be the

lowest-cost producer, and the most reliable and innovative sustainable packaging solutions provider to our

customers across North America and EMEA. As part of our 80/20 approach, we intend to guide investments and

align resources to win with customers, while reducing complexity and cost across the Company. To that end, we

have been implementing restructuring initiatives. To that end, we have incurred, and expect to incur, charges in

connection with our restructuring initiatives.

We may be unable to realize the expected benefits from these and other restructuring initiatives that we may in the

future undertake. In particular, restructuring activities may divert the attention of management, disrupt operations

and fail to achieve the intended cost and operational benefits. If the Company is unable to realize the expected

benefits from its restructuring initiatives, the Company’s financial results could be adversely impacted. In addition,

because we are unable to predict or control market conditions, including changes in the supply and demand for our

products, product prices or manufacturing costs, we may not be able to predict the appropriate time to undertake

restructurings. Further, cash and non-cash charges may be incurred in connection with restructuring activities,

which may be material. Moreover, judgment is required to estimate restructuring charges, and these estimates, and

the assumptions underlying them, may change as additional information becomes available or facts or

circumstances related to restructuring initiatives change.

We may not achieve the expected benefits from strategic acquisitions, joint ventures, divestitures, spin-

offs, capital investments, capital projects and other corporate transactions that are or will be pursued.

Our strategy for long-term growth, productivity and profitability depends, in part, on our ability to accomplish prudent

acquisitions, joint ventures, divestitures, spin-offs, and other strategic corporate transactions and to realize the

benefits expected from such transactions, including the planned separation of our EMEA packaging business.

Ongoing capital investment is also required to expand, maintain and upgrade existing facilities, to develop new

facilities and to ensure compliance with new regulatory requirements. As part of our 80/20 approach, our capital

spending has increased. Capital projects may experience unanticipated disruptions or delays and the desired

benefits from those projects may not be realized. These risks include a deterioration in macroeconomic conditions,

shortages or higher costs of capital equipment or materials, delays in obtaining permits or other required approvals,

changes in laws and regulations or operational challenges. Our ability to advance capital investments depends on

the availability of cash flow. If our cash flow decreases due to market conditions, increased operating costs,

tightening credit markets, or other factors, we may be required to defer, scale back or cancel planned capital

projects. Such delays or reductions could limit our ability to pursue our strategic priorities, maintain or improve

operational efficiency or respond effectively to competitive or regulatory pressures. We are subject to the risk that

the expected benefits from such transactions and capital investments may not be achieved. This failure could

require an impairment charge to be recorded for goodwill or other intangible assets, which could lead to decreased

assets and reduced net earnings. Among the benefits expected from the strategic separation of our EMEA

packaging business, as well as completed acquisitions and joint ventures are synergies, cost savings, growth

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opportunities and access to new markets (or a combination thereof), and in the case of divestitures, the realization

of proceeds from the sale of businesses and assets to purchasers who place a higher strategic value on such

businesses and assets.

Corporate transactions of this nature that we may pursue involve a number of special risks, including with respect to

the inability to realize business goals with such transactions as noted above, including our assumptions, the focus of

management’s attention on these transactions, the assimilation or separation of businesses, the demands on

financial, operational and information technology systems, our ability to integrate and separate personnel, labor

models, financials, customer relationships, supply chain and logistics, IT and other systems successfully, business

culture compatibility, the possibility of becoming responsible for substantial contingent or unanticipated legal

liabilities as the result of corporate transactions, and changes in our geographic footprint and in the complexity of

our operations.

Moreover, effective internal controls are necessary to provide reliable and accurate financial reports, and the

planned separation of our North America and EMEA businesses may create complexity in our financial systems and

internal controls and make them more difficult to manage. Further regional integration of businesses into our internal

control system could cause us to fail to meet our financial reporting obligations. Moreover, any failure to integrate

the regional businesses, or delay in integrating the regional businesses, or IT systems of regional businesses could

create an increased risk of cybersecurity incidents. Following our regional integration, efforts may not produce the

expected margins or cash flows. Furthermore, we may finance these strategic transactions by incurring additional

debt or issuing equity, which could increase leverage or impact our ability to access capital in the future.

We are subject to cybersecurity and information technology risks related to breaches of security pertaining

to sensitive company, customer, employee and vendor information as well as breaches in the technology

used to manage operations and other business processes.

Our business operations rely on securely managed information technology systems, some of which are provided or

managed by third parties, for data capture, processing, storage and reporting. We have invested in information

technology security initiatives and risk management, as well as incident response, business continuity and disaster

recovery plans, but it is not possible to eliminate all systematic or external risk. Further, the development and

maintenance of information technology security measures is costly and requires ongoing monitoring, testing and

updating as technologies and processes change, and efforts to overcome security measures become increasingly

sophisticated. Additionally, the global regulatory environment surrounding information security, data privacy and data

protection is becoming increasingly restrictive and is evolving frequently.

The current cyber threat environment presents increased risk for all companies, including those in our industry. Like

other global companies, our systems are subject to recurring attempts by third parties to access information,

manipulate data or disrupt operations. In this regard, we have experienced cyber threats and events from time to

time, although none have materially affected us, including our results of operations or financial condition. Given the

current cyber threat environment, the volume and intensity of cybersecurity attacks and attempted intrusions are

expected to increase in the future. We work with a large and increasing number of third-party vendors, suppliers,

platforms, software, applications, and technologies, each of which may be subject to a cybersecurity incident or

information technology failure that impacts our business or operations. We may be required to spend significant

resources to verify the implementation of cybersecurity controls by our vendors and suppliers. In addition, despite

careful security and controls design, implementation, updating, monitoring and independent third-party verification,

our information technology systems, together with those of our third-party providers or joint venture partners, have

been and could again be compromised or disrupted due to factors such as employee error or malfeasance, cyber-

attacks, including ransomware, malware, phishing attacks, advanced persistent threats, social engineering,

credential stuffing or distributed denial-of-service attacks or data or security breaches by malicious actors such as

common hackers, criminal groups or nation-state organizations or social activist (“hacktivist”) organizations,

disruptions resulting from geopolitical events, natural disasters, failures or impairments of telecommunications

networks or other catastrophic events. Such attacks are increasing in complexity, and the rapid evolution and

increased adoption of AI technologies may intensify cybersecurity risks by making cyber-attacks more difficult to

detect, contain, and mitigate. Furthermore, remote working and personal device use increases the risks of cyber

incidents and the improper dissemination of personal or confidential information. Moreover, the hardware, software

or applications we use may have inherent vulnerabilities or defects of design, manufacture or operations or could be

inadvertently or intentionally implemented or used in a manner that could compromise information security. In

addition, cybersecurity-related threats may remain undetected for an extended period of time.

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Any cybersecurity attack, data or security breach, other security incident, compromise, damage, disruption, outage

or shutdown to our or the information technology systems or networks, or those of any businesses with which we

interact could result in lost sales, business delays, negative publicity or reputational impact, and a loss of customer

confidence, and have a material adverse effect on our business or financial results. Any such incident or breach

could also result in operational or supply chain disruptions, data loss, corruption or manipulation, or information

misappropriation including, but not limited to, interruption to systems availability, denial of access to and misuse of

applications required by customers to conduct business, the acquisition, use or disclosure of data or inability to

access data, the release of confidential information about our operations, and subject us to litigation and

government enforcement actions. Further, in such event, access to applications required to plan operations, source

materials, manufacture and ship finished goods and account for orders could be denied or misused. Theft of

intellectual property or trade secrets, and loss or inappropriate disclosure of confidential company, employee,

customer or vendor information, could also stem from such incidents. Moreover, any significant cybersecurity event

could require us to devote significant management time and resources in response to such event, interfere with the

pursuit of other important business strategies and initiatives, and cause us to incur additional expenditures, which

could be material, including to investigate and remediate such event, recover lost data, prevent future compromises

and adapt systems and practices in response to such events. There is no assurance that any remedial actions will

meaningfully limit the success of future attempts to breach our information systems, particularly because malicious

actors are increasingly sophisticated and utilize tools and techniques specifically designed to circumvent security

measures, avoid detection and obfuscate forensic evidence, which means we may be unable to identify, investigate

or remediate effectively or in a timely manner. Further, we are subject to an increasing number of cybersecurity

reporting obligations in different jurisdictions that vary in their scope and application, which may add complexities in

providing complete and reliable information about cybersecurity incidents to customers, counterparties, and

regulators, as well as the public. Corporate actions may impact our cybersecurity risk profile. As part of the strategic

separation of our EMEA packaging business, we intend to assess and address these cybersecurity risks to ensure

robust protection of our operations and data assets. Additionally, while insurance coverage designed to address

certain aspects of cyber risks may be in place, such insurance coverage may be insufficient to cover all losses or all

types of claims that may arise in connection with such incidents.

Our continued growth will depend on our ability to retain existing customers and attract new customers.

Our future growth will depend on our ability to retain existing customers, attract new customers as well as make

existing customers and new customers increase their volume commitments. There can be no assurance that

customers will continue to use our products or that they will be able to continue to attract new volumes at the same

rate as in the past.

A customer’s use of our products may decrease for a variety of reasons, including the customer’s level of

satisfaction with our products and services, the expansion of business to offer new products, the effectiveness of

our support services, the pricing of our products, the pricing, range and quality of competing products, the effects of

global economic conditions, regulatory limitations, trust, perception and interest in the paper and packaging industry

and in their products. Furthermore, customers can and do switch purchases between competing packaging

providers.

Any failure by us to retain existing customers, attract new customers, and increase revenue from both new and

existing customers could have a material adverse effect on our business, results of operations, financial condition

and/or future prospects. These efforts may require substantial financial expenditures, commitments of resources,

developments of processes, and other investments and innovations without a guarantee that existing customers will

be retained and/or new customers will be attracted.

Uninsured losses or losses in excess of our insurance coverage for various risks could have an adverse

financial effect on our business.

We maintain business insurance that we consider to be adequate and appropriate for our business and activities.

Certain types of risks such as losses due to natural disasters, riots, acts of war or terrorism are, however, either

uninsurable or not economically insurable. In addition, even if a loss is insured, we may be required to pay a

significant deductible on any claim for recovery of such loss prior to the insurer being obliged to reimburse the loss,

or the amount of the loss may exceed the coverage for the loss. Any uninsured losses could have a material

adverse effect on our business, financial condition, results of operations and/or future prospects.

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We may not be able to adequately secure and protect our intellectual property rights, which could harm our

competitive advantage.

We rely on intellectual property laws to protect our rights to certain aspects of our systems, products and processes

including product designs, proprietary technologies, research and concepts. For example, our packaging business

owns hundreds of patents covering our designs and products. Trademarks and licenses and their effective

management play an important role in protecting intellectual property rights. The actions taken by us to protect our

respective proprietary rights may be inadequate to prevent imitation or unauthorized use. The laws of various

countries offer different levels of protection for intellectual property rights and there can be no assurance that our

intellectual property rights will not be challenged, invalidated, misappropriated or circumvented by third parties. Any

of these possibilities could have a material adverse effect on our business, financial condition, results of operations

and/or future prospects.

We may fail to identify, prioritize or implement digital and/or AI transformation initiatives.

We may fail to identify, prioritize or implement digital and/or AI transformation initiatives across our operations,

including areas such as product design, materials sourcing, manufacturing, logistics, and customer delivery. Our

failure to adopt or scale these capabilities in a timely manner could impair our ability to meet evolving customer

expectations or may result in us falling behind our competitors with regards to innovation, speed to market,

manufacturing efficiency, and service performance. Any such shortfall could have a material adverse effect on our

business, financial condition, results of operations and/or future growth prospects.

RISKS RELATED TO THE SEPARATION

The proposed separation of our EMEA packaging business may not be completed, on the terms or the

timeline announced, if at all, and we may fail to realize some or all of the potential benefits of the proposed

separation.

On January 29, 2026, we announced our intention to create two independent, publicly traded companies:

International Paper will be comprised of its current business in North America including both legacy IP and DS

Smith assets, and the EMEA packaging business will be comprised of both legacy DS Smith and IP assets in

EMEA. The separation is expected to be structured as a spin-off of the combined EMEA Packaging business to

shareholders and is expected to be completed within 12-15 months, subject to the satisfaction of certain customary

conditions, including final approval by the IP Board of Directors as well as the filing and effectiveness of a

registration statement with the U.S. Securities and Exchange Commission and the publication of a prospectus

approved by the U.K. Financial Conduct Authority.

Executing the proposed separation will require significant amounts of time and effort, which could divert

management attention, disrupt the activities of our employees and have negative implications for our relationships

with our customers and other third parties. We also expect to incur additional costs and expenses in connection with

the separation.

The proposed separation is complex, and completion of the proposed separation and the timing of its completion

will be subject to a number of factors and conditions, including the readiness of the new company to operate as an

independent public company, the successful integration of both legacy DS Smith and International Paper

businesses in EMEA into one packaging business and finalization of the capital structure of the new company. The

complexity and magnitude of the restructuring and regional integration efforts associated with the separation are

significant and will continue to result in substantial costs. The restructuring and regional integration processes could

cause an interruption of, or loss of momentum in, the other activities of the Company, and our failure to meet the

challenges involved in successfully restructuring and regionally integrating legacy DS Smith and International Paper

businesses in North America and EMEA, respectively, could adversely affect the ability to separate and our

business financial condition, results of operations, and cash flows. Further, unanticipated developments could delay,

prevent or otherwise adversely affect the proposed separation, including disruptions in general or financial market

conditions, material adverse changes in business or industry conditions, unanticipated costs and potential problems

or delays in obtaining various regulatory and tax approvals or clearances. There can be no assurances regarding

the ultimate timing or structure of the proposed separation or that we will be able to complete the proposed

separation on the terms or on the timeline that was announced, if at all. In the event that the separation is not

completed, we will have incurred and may continue to incur, certain significant non-recurring costs related to the

separation without realizing the anticipated benefits.

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If the separation is completed, we may not be able to achieve the full strategic and financial benefits that are

expected to result from the separation. An inability to realize some or all of the anticipated benefits of the separation,

as well as any delays encountered in the process, could have an adverse effect on our business, financial condition,

results of operations and cash flows. There can be no assurance that the combined value of the common stock and

ordinary shares of the two companies will be equal or exceed the value that our common stock might have been

had the proposed separation not occurred.

RISKS RELATED TO OUR INDEBTEDNESS

Changes in credit ratings issued by nationally recognized statistical rating organizations could adversely

affect our cost of financing and have an adverse effect on the market price of our securities.

Maintaining an investment-grade credit rating is an important element of our financial strategy. A downgrade of

ratings below investment grade will likely eliminate our ability to access the commercial paper market, may limit

access to the capital markets, have an adverse effect on the market price of our securities, increase borrowing

costs and require us to post collateral for derivatives in a net liability position. The desire to maintain an investment

grade rating may cause us to take certain actions designed to improve our respective cash flow, including the sale

of assets, suspension or reduction of dividends and reductions in capital expenditures and working capital.

Certain of our debt agreements provide for an interest rate increase in case of a credit rating downgrade. This

applies to agreements governing approximately $4.0 billion of our debt as of December 31, 2025. As a result, a

downgrade in credit rating may lead to an increase in interest expenses. There can be no assurance that our credit

ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended or

withdrawn entirely by the rating agencies if, in each rating agency’s judgment, circumstances so warrant. Any such

downgrade, suspension or withdrawal of credit ratings could adversely affect our cost of borrowing, limit access to

the capital markets or result in more restrictive covenants in agreements governing the terms of any future

indebtedness that we may incur.

The level of our indebtedness could adversely affect our financial condition and impair our ability to

operate our business.

As of December 31, 2025, we had approximately $9.8 billion of outstanding indebtedness. The level of our

indebtedness could have important consequences to our financial condition, operating results and business,

including the following:

•it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures,

product development, dividends, share repurchases, debt service requirements, acquisitions and general

corporate or other purposes;

•a portion of our cash flows from operations will be dedicated to payments on indebtedness and will not be

available for other purposes, including operations, capital expenditures and future business opportunities;

•the debt service requirements of our indebtedness could make it more difficult for us to satisfy other

obligations;

•it may limit our ability to adjust to changing market conditions, including taking actions in connection with

changes in interest rates (such as in the current elevated interest rate environment), and place us at a

competitive disadvantage compared to our competitors that have less debt;

•it may increase our exposure to risks related to fluctuations in foreign currency as we earn profits in a

variety of currencies around the world and our debt is denominated in U.S. dollars, British pounds and

Euros;

•it may increase our exposure to the risk of increased interest rates insofar as we are compelled to refinance

indebtedness in an environment where rates, despite moderating in 2025, remain elevated and subject to

ongoing volatility; and

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•it may increase our vulnerability to a downturn in general economic conditions or in our business and may

make us unable to carry out capital spending that is important to our growth.

In addition, we are subject to agreements governing our indebtedness that require us to meet and maintain certain

financial ratios and covenants. A significant or prolonged downturn in general business and economic conditions, or

other significant adverse developments with respect to our results of operations or financial condition, may affect

our ability to comply with these covenants or meet those financial ratios and tests and could require us to take

action to reduce our debt or to act in a manner contrary to our current business objectives. Moreover, the

restrictions associated with these financial ratios and covenants may prevent us from taking actions that we believe

would be in the best interest of our business and may make it difficult for us to execute our business strategy

successfully or effectively compete with companies that are not similarly restricted. Additionally, despite these

restrictions, we may be able to incur substantial additional indebtedness in the future, which might subject us to

additional restrictive covenants that could affect our financial and operational flexibility and otherwise increase the

risks associated with our indebtedness as noted above.

We are subject to risks associated with variable rate debt.

We are subject to interest rate risk associated with short-term cash investments, variable rate debts, supply chain

financing and short-term debt. We are also exposed to interest rate risk in relation to our installment notes and loans

in the Temple Inland timber monetization special purpose entities. We have variable rate debt in the aggregate

amount of approximately $2.1 billion as of December 31, 2025. Interest rates rose significantly during 2022-2024

but declined in 2025 following adjustments made by the Federal Reserve in response to economic conditions.

Interest rates could remain volatile in 2026. Changes in interest rates impact the earnings on our short-term cash

investments, the interest rate payable on our variable rate debt and credit agreements, the cost of supply chain

financing and the refinance rate on our short-term debt.

Downgrades in the credit ratings of banks issuing certain letters of credit will increase our cost of

maintaining certain indebtedness and may result in the acceleration of deferred taxes.

We are subject to the risk that a bank with currently issued irrevocable letters of credit supporting installment notes

in connection with Temple Inland’s 2007 sales of forestlands, may be downgraded below the required rating. Prior to

2013, certain banks had fallen below the required ratings threshold and were successfully replaced, or waivers were

obtained regarding their replacement. As a result of continuing uncertainty in the banking environment, the three

letter-of-credit banks currently in place remain subject to risk of downgrade and the number of qualified replacement

banks remains limited. The downgrade of one or more of these banks may subject us to additional costs of securing

a replacement letter-of-credit bank or could result in an acceleration of deferred income taxes of $487 million if

replacement banks cannot be obtained.

RISKS RELATED TO LEGAL PROCEEDINGS AND COMPLIANCE COSTS

Results of legal proceedings could have a material effect on our consolidated financial results.

We are a party to various legal, regulatory and governmental proceedings and other related matters, including with

respect to antitrust and environmental matters. In addition, we are and may become subject to other loss

contingencies, both known and unknown, which may relate to past, present and future facts, events, circumstances

and occurrences. Should an unfavorable outcome occur in connection with the legal, regulatory or governmental

proceedings or our other loss contingencies or we become subject to any such loss contingencies in the future,

there could be a material adverse impact on our financial results. See Note 14 - Commitments and Contingent

Liabilities of Item 8. Financial Statements and Supplementary Data for further information.

For example, we (through both International Paper and our DS Smith legacy subsidiaries operating in Italy) are

among several of companies operating in the paper packaging industry subject to a decision by the Italian

Competition Authority concerning anti-competitive behavior in Italy. We are further subject to a number of actual and

threatened claims for compensation arising out of or relating to the decision by the Italian Competition Authority. In

addition, International Paper has been named as a defendant in a purported class action complaint that alleges civil

violation of Sections 1 and 3 of the Sherman Act. The complaint alleges that the defendants, beginning on

November 1, 2020 through the present, conspired to fix, raise, maintain, and/or stabilize prices of containerboard

products and seeks to recover treble damages, injunctive relief, attorneys’ fees and actual damages.

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The Company is defending and intends to continue to defend robustly against such claims. It is too early to predict

or reasonably estimate the overall outcome or ultimate potential liability (if any) that might be incurred in connection

therewith, and there can be no guarantee that the aggregate of possible damages could not have a material impact

on our financial condition.

We could be exposed to liability for Brazilian taxes under our agreements with Sylvamo Corporation.

In connection with the spin-off of Sylvamo Corporation (“Sylvamo”), we previously entered into agreements with

Sylvamo and its subsidiaries, including among others a tax matters agreement. Under the tax matters agreement,

we could have significant payment obligations in connection with certain Brazilian tax matters. Under this

agreement, we have agreed to pay 60% of the first $300 million of any liability resulting from the resolution of these

Brazilian tax matters (with Sylvamo paying the remaining 40% of the first $300 million of any such liability) and

100% of any liability resulting from the Brazilian tax matters over $300 million. These Brazilian tax matters relate to

assessments for the tax years 2007-2015 of approximately $106 million in tax (adjusted for variation in currency

exchange rates) and approximately $288 million in interest, penalties, and fees (adjusted for variation in currency

exchange rates). Accordingly, the assessments total approximately $394 million (adjusted for variation in currency

exchange rates), although interest, penalties and fees continue to accrue. Under the tax matters agreement, our

potential liability for such assessments would currently be approximately $274 million (adjusted for variation in

currency exchange rates). If we were found liable to pay such amounts, this could have an adverse effect on our

business, financial condition, results of operations and/or cash flow. See Note 14 - Commitments and Contingent

Liabilities of Item 8. Financial Statements and Supplementary Data for further information.

DS Smith previously identified material weaknesses in its internal controls over financial reporting,

including its Information Technology General Control environment, that, if not properly remediated, could

increase the costs, expenses and management time required to meet the standards required by Section 404

of the Sarbanes-Oxley Act, and therefore adversely affect the business of the Company and its share price.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,

such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated

financial statements will not be prevented or detected on a timely basis.

Prior to January 31, 2025, DS Smith was not required to comply with Section 404 of the Sarbanes-Oxley Act or to

formally assess the effectiveness of its internal controls over financial reporting for that purpose. As described under

Item 8 “Report of Management on Financial Statements” and Item 9A. "Controls and Procedures," in connection

with the preparation of the acquisition proxy statement, the independent auditors identified material weaknesses in

DS Smith's internal control environment including Information Technology General Controls ("ITGCs") in fiscal years

ended April 30, 2022, April 30, 2023, and April 30, 2024, which would have constituted material weaknesses under

Section 404 of the Sarbanes-Oxley Act. DS Smith’s ITGCs were not consistently operating effectively due to

inappropriate user and administrative access, ineffective change-management, inadequate third-party management,

and insufficient authentication and security protocols.

In accordance with SEC guidance, our management’s assessment of the effectiveness of the Company’s internal

control over financial reporting as of December 31, 2025, excluded DS Smith. During 2025, International Paper

worked to incorporate the internal controls and procedures for DS Smith into the Company’s internal control

environment and will continue to incorporate the internal controls and procedures for the legacy DS Smith assets in

North America post separation. Management is focused on remediating the DS Smith ITGC deficiencies, and has

initiated a redesign of ITGCs across DS Smith systems, including enhancing governance over user access and

system changes, by delivering training across DS Smith to further educate and upskill control and process owners.

Management intends to implement the redesigned control framework in 2026.

These remediation measures may be time consuming and costly and there is no assurance that these initiatives will

ultimately have the intended effects. The deficiencies in DS Smith’s internal control over financial reporting will not

be considered remediated until the controls operate for a sufficient period and management has concluded, through

testing that these controls operate effectively. If we do not successfully remediate the deficiencies, or if other

deficiencies are identified or arise in the future, we may incur additional costs and expenses and will be required to

dedicate management's time to meeting the standards required by Section 404 of the Sarbanes-Oxley Act. In such

case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic

reports, in addition to applicable stock exchange listing requirements and requirements under certain of our

agreements, which could adversely affect investor confidence in us, our business, and the trading price of our

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common stock. In addition, these DS Smith ITGC deficiencies may also have the effect of heightening other risks

described in this “Risk Factors” section.

RISKS RELATED TO CLIMATE AND WEATHER AND SOCIAL AND ENVIRONMENTAL IMPACT REPORTING

We are subject to risks associated with climate change and other sustainability matters and global, regional

and local weather conditions as well as by legal, regulatory, and market responses to climate change.

Climate change impacts, including rising temperatures, extreme temperature events (such as prolonged heat or

freezing conditions) and the increasing severity and/or frequency of adverse weather conditions, may result in

operational impacts on our facilities, as well as supply chain disruptions and increased raw material and other costs.

These adverse weather conditions and other physical impacts which may be exacerbated as the result of climate

change include floods, hurricanes, tornadoes, earthquakes, hailstorms, wildfires, snow, ice storms and drought.

Climate change may also contribute to the decreased productivity of forests, a key source in the production of paper

products, and adverse impacts on the distribution and abundance of species, and the spread of disease and insect

epidemics, any of which developments could adversely affect forestland management and the availability of energy

and water resources. The effects of climate change and global, regional and local weather conditions, including the

resulting financial costs of compliance with legal or regulatory initiatives, could have a material adverse effect on our

results of operations and business.

In recent years, there has been a heightened focus, including from investors, customers, the general public,

domestic and foreign governmental (including but not limited to the United Kingdom and the European Union) and

nongovernmental authorities, regarding sustainability matters, including with respect to climate change, greenhouse

gas (“GHG”) emissions, packaging and waste, sustainable supply chain practices, biodiversity, deforestation, land,

energy and water use, and human capital matters. This heightened focus on sustainability matters, including climate

change, has resulted in more prescriptive reporting requirements with respect to sustainability metrics and other

new requirements, an increased expectation that such metrics will be voluntarily disclosed by companies such as

ours, and increased pressure with respect to making commitments, setting targets, or establishing goals, and taking

action to meet them, which has caused and is expected to continue to cause the Company to incur increased

compliance costs. As the result of this increased focus and commitment to sustainability matters, we (either

voluntarily and/or as required by applicable law and regulation) have provided disclosure and established targets

and goals with respect to various sustainability matters, including climate change. For example, we have publicly

committed to reducing our Scope 1, 2 and 3 GHG emissions by 35% from 2019 to 2030. Meeting these and other

sustainability targets and goals have increased our capital and operational costs. Further, we may continue to

establish, increase and/or revise such disclosure, targets and goals in the future. For example, as we prepare to

separate our EMEA operations, we intend to assess International Paper’s 2030 goals and adapt our existing targets

and timelines. Efforts to achieve our initiatives and goals, including collecting, measuring, and reporting

sustainability information, involve operational, reputational, financial, legal, and other challenges and may result in

additional costs or delays related to achieving our 2030 goals. Such efforts may have a negative impact on us,

including our brand name, reputation, and the market price of our common stock.

There also continues to be a lack of consistency in implementation expectations of legal and regulatory initiatives

regarding climate change across jurisdictions and various governmental entities. Additional expenses are expected

to be incurred because of domestic and international regulators requiring additional disclosures regarding GHG

emissions. Further, there can be no assurance regarding the extent to which our climate and other sustainability

targets can be achieved, and the achievement of these targets is subject to various risks and uncertainties, some of

which are outside our control. Moreover, there is no assurance that investments made in furtherance of achieving

such targets and goals will meet investor expectations or any binding or non-binding legal standards regarding

sustainability performance. If we are unable to meet climate and other sustainability targets and goals, on projected

timelines or at all, or if such goals and targets are perceived negatively, including the perception that they are not

sufficiently robust or, conversely, are too costly or not otherwise in our best interests, investor, customer and other

stakeholder relationships could be damaged, which could adversely impact our reputation, business and results of

operations. Moreover, not all our competitors establish climate or other sustainability targets and goals at

comparable levels, which could result in competitors having lower supply chain or operating costs as well as

reduced reputational risks associated with not meeting such goals.

We may be unable to manage energy demand needs within our sustainability targets and certain of our respective

acquisitions may bring new sustainability challenges. Such inability to manage sustainability demands and

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challenges could have a significant impact on our business, financial condition, results of operations and/or future

prospects. Other climate-related business risks that we face, include risks related to the transition to a lower-carbon

economy, such as increased prices for fossil fuels; the introduction of a carbon tax; increased regulation of

operations and products, and the resulting potential for increased litigation; and more stringent and/or complex

environmental and other permitting requirements. To the extent that climate-related business risks materialize,

particularly if we are unprepared for them, we may incur unexpected costs, and our business may be materially and

adversely affected.

Additionally, sustainability reporting is becoming more broadly expected by regulators, investors, shareholders, and

other third parties. If we do not adapt to or comply with such investor, customer, or other stakeholder expectations,

or if we are perceived to have not responded appropriately or quickly enough to growing sustainability related

concerns for sustainability issues, regardless of whether there is a regulatory or legal requirement to do so, we may

suffer reputational damage or be precluded from doing business with certain customers. Our business, financial

condition, and/or the market price of our common stock could be materially and adversely affected. Further, our

sustainability and goals may not be favored by certain stakeholders, whose priorities and expectations may not align

or may be opposed to one another, which could result in public scrutiny or reputational damage, and could impact

the attraction and retention of investors, customers, and employees.

RISKS RELATED TO OUR PENSION AND HEALTHCARE COSTS

Our pension and health care costs are subject to numerous factors which could cause these costs to

change.

We have defined benefit pension plans covering substantially all U.S. salaried employees hired prior to July 1, 2004,

and substantially all hourly union and non-union employees regardless of hire date. We froze participation for U.S.

salaried employees under these plans, including credited service and compensation on or after January 1, 2019;

however, the pension freeze does not affect benefits accrued through December 31, 2018.

We continue to provide retiree health care benefits to certain former U.S. employees, as well as financial assistance

toward the cost of individual retiree medical coverage for certain former U.S. salaried employees. Prior to the

acquisition, DS Smith and its predecessor entities maintained a number of separate defined benefit pension

arrangements for different employee groups. These plans were closed or frozen at different times and, in some

cases, were subsequently terminated or transitioned to multiemployer plans. For certain union represented groups,

we continue to make required contributions or other payments tied to historical withdrawal liabilities or plan funding

obligations. We also assumed a small legacy retiree life insurance benefit for a limited group of former employees,

which will continue only for the remaining covered participants through 2027. DS Smith did not provide retiree health

care benefits to its U.S. employees, and no new retiree health care obligations were created as part of the

acquisition.

Pension costs are dependent upon numerous factors resulting from actual plan experience and assumptions of

future experience. Pension plan assets are primarily made up of equity and fixed income investments. Fluctuations

in actual market returns on plan assets, changes in general interest rates and in the number of retirees may impact

pension costs in future periods. Likewise, changes in assumptions regarding current discount rates and expected

rates of return on plan assets could increase pension costs. However, the impact of market fluctuations has been

reduced as a result of investments in our pension plan asset portfolio which hedge the impact of changes in interest

rates on the plan’s funded status. Drivers for fluctuating health costs include unit cost changes, health care

utilization by participants, and potential changes in legal requirements and government oversight. If any of these

factors cause pension costs or health care benefits to increase in future periods, this could have an adverse effect

on our business, financial condition, results of operations and/or cash flow.

Our U.S. and UK funded pension plans are currently fully funded on a projected benefit obligation basis;

however, the possibility exists that over time we may be required to make cash payments to the plans,

reducing the cash available for our business.

We record an asset or a liability associated with our pension plans equal to the surplus of the fair value of plan

assets above the benefit obligation or the excess of the benefit obligation over the fair value of plan assets. As of

December 31, 2025, we had an overfunded U.S. qualified pension with a surplus of $366 million and an overfunded

UK qualified pension with a surplus of $112 million. When aggregated with U.S. nonqualified pension obligations,

the benefit surplus recorded under the provisions of Accounting Standards Codification 715, “Compensation –

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Retirement Benefits,” as of December 31, 2025 was $148 million. The amount and timing of future contributions,

which could be material, will depend upon a number of factors, including the actual earnings, changes in values of

plan assets and changes in interest rates. If benefit obligations under the qualified pensions exceed the value of

plan assets by more than permitted under applicable statutory minimum funding requirements, then we may be

required to make additional contributions. Such contributions may have an adverse effect on our operational results

and cash flow.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

RISK MANAGEMENT AND STRATEGY

The Company’s cybersecurity risk management processes are integrated into our overall risk management system.

The Company has a formalized enterprise risk management program overseen by the Board of Directors and

committees of the Board of Directors that addresses strategic, operational, financial, compliance, legal and

information technologies and cybersecurity risks. Each year, the Chief Audit Executive provides the Board of

Directors and members of the ELT with a comprehensive update on the Company’s risk management activities. This

update includes a structured, collaborative review through which key risks are examined and prioritized. In 2025, the

Board of Directors identified seven priority risks for the Company, including cybersecurity.

The Company has an Information Technology (“IT”) Risk Governance Program that aligns with our enterprise risk

management framework and assists with fulfilling oversight responsibilities for major IT risks, including cybersecurity

risks. An enterprise Cyber Governance, Risk, and Compliance function manages overall Company cyber risk,

coordinating risk management functions with each business. Business and IT leaders conduct cyber risk reviews

monthly within each business. These monthly reviews include the evaluation of new and evolving risks,

management of risk mitigation plans, and a review of all cybersecurity incidents meeting certain criteria.

Our Cybersecurity Risk Assessment Program

The Company has a risk assessment program in place to assess, identify and manage material risks from

cybersecurity threats. Cybersecurity risks the Company faces include targeted attacks, ransomware, malware,

phishing attacks, data theft, other data or security breaches, virus and intrusion software, as well as attacks to our

website, financial applications, operational technology, telecommunications and human resources data. Key aspects

of the Company’s cybersecurity program include the following:

•layered technical protective capabilities and detective surveillance controls;

•using independent third parties to assess the Company’s practices related to, and provide expertise and

assistance with, various aspects of information security, as further described below;

•courses and awareness training on information security for employees with Company email or access to

Company devices, including phishing, social engineering and other cybersecurity training as well as

targeted training for specific roles based on responsibilities and risk level;

•global security and privacy policies; and

•business continuity, incident response and disaster recovery procedures, including table top exercises

involving senior leaders.

The Company does not believe that risks from cybersecurity threats, including as a result of any previous

cybersecurity incidents, have materially affected the Company, including its business strategy, results of operations

or financial condition. For a full discussion of cybersecurity risks facing the Company, please see Part I, Item 1A.

Risk Factors - We are subject to cybersecurity and information technology risks related to breaches of

security pertaining to sensitive company, customer, employee and vendor information as well as breaches

in technology used to manage operations and other business processes.

The Company carries cyber insurance which provides coverage in connection with cybersecurity breaches.

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Engagement of Third Parties

The Company engages third parties in connection with assessing, identifying and managing its cybersecurity risks.

All of the following activities were conducted in both regions in 2025, except for the annual security program

assessment which was completed in North America and is planned for EMEA in 2026:

•Engagement of an independent third party with incident response expertise to provide intelligence-based

cybersecurity solutions and services to assist the Company with preparing for, preventing, investigating,

responding to and remediating cybersecurity incidents, including attacks that target on-premise, cloud, and

critical infrastructure environments.

•Engagement of an independent third party to conduct an annual security program assessment of the

controls, maturity and performance of the Company’s information security program and the information

security risk associated with the Company’s business systems. The assessment uses the National Institute

of Standards and Technology Cybersecurity Framework as its benchmark.

•Engagement of a leading third-party service provider to periodically perform an external and an internal

penetration assessment using industry standard tools and techniques.

In 2025, the Company began transitioning to a strategic outsourcing model for certain North America IT functions to

enhance efficiency and resilience.

The Company has employed the following processes to oversee and identify material risks from cybersecurity

threats associated with the Company’s use of third-party service providers in North America and EMEA including the

following:

•The Company’s cybersecurity risk management program takes into account third-party systems whereby

the Company could be impacted by the compromise of the security of vendors or other business relations of

the Company, and the Company has a comprehensive third-party access management system.

•The Company conducts risk-based due diligence on the profiles of third-party service providers with respect

to cybersecurity risks prior to engagement.

•Providers of critical and outsourced services are continuously monitored with respect to security risks,

including periodic audits and compliance reviews.

•The Company also requires service providers to adhere to the Company’s cybersecurity standards,

maintain robust security controls, and provide prompt notification of any actual or suspected breach

impacting Company data or operations.

These measures are designed to mitigate risks associated with use of third parties including outsourcing of non-

core IT functions overseas while maintaining compliance with applicable regulatory requirements and protecting the

integrity of the Company’s systems and data. We expect the transition to be finalized in the second quarter of 2026.

Additionally, our Internal Audit team conducts annual assessments of our cyber programs and controls.

Oversight of Third Parties

The Company has processes to oversee and identify material risks from cybersecurity threats associated with the

Company’s use of third-party service providers. In this regard, the Company’s cybersecurity risk management

program takes into account third-party systems whereby the Company could be impacted by the compromise of the

security of vendors or other business relations of the Company, and the Company has a comprehensive third-party

access management system. In addition, the Company conducts risk-based due diligence on the profiles of third-

party service providers with respect to cybersecurity risks prior to engagement, and providers of critical and

outsourced services are continuously monitored with respect to security risks, including periodic audits and

compliance reviews. The Company also requires service providers to adhere to the Company’s cybersecurity

standards, maintain robust security controls, and provide prompt notification of any actual or suspected breach

impacting Company data or operations.

These measures are designed to mitigate risks associated with use of third parties including outsourcing of non-

core IT functions overseas while maintaining compliance with applicable regulatory requirements and protecting the

integrity of the Company’s systems and data.

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CYBERSECURITY GOVERNANCE

Role of the Board of Directors and its Committees

International Paper has an integrated board and executive-level governance structure that oversees risks from

cybersecurity threats. The Company’s Board of Directors has primary oversight of our enterprise risk management

program, which includes cybersecurity risk. Moreover, the Board of Directors is supported in its oversight by the

Audit and Finance Committee and Public Policy and Environment Committee ("PPE Committee"), which share

oversight responsibilities related to the Company’s information security programs. The Audit and Finance

Committee reviews management’s cybersecurity and information security risk management programs and controls,

including processes for management’s identification and reporting of material cybersecurity incidents. The PPE

Committee reviews technology issues pertinent to the Company including those associated with information and

operational technology, cybersecurity and data security and assesses related Company strategies.

Our Board of Directors, Audit and Finance Committee and PPE Committee each receive periodic updates on

cybersecurity issues from management (including our Chief Information Security Officer (“CISO”)). For example, the

CISO provides reports to the Audit and Finance Committee and PPE Committee annually regarding cybersecurity

risks, as well as plans and strategies to mitigate those risks.

Role of Management

At a management level, our cybersecurity risk management program is led by our CISO. Our current CISO has

been with the Company for over 30 years, worked in Information Technology for over 25 years, and has led the

Company’s security efforts since 2011. Appointed as the Company’s first CISO in 2019, our CISO stays current on

cybersecurity issues and trends through continuing education activities such as participation at conferences and in

webinars. Our CISO reports to our Chief Financial Officer. Additionally, our CISO and members of the cybersecurity

team hold several industry recognized certifications, such as Certified Information Systems Security Professional,

Certified Information Security Manager, and Certified Ethical Hacker, among others.

The Company has adopted a global cyber-incident response plan which provides for controls and procedures in

connection with cybersecurity events, including escalation procedures summarized below. The cyber-incident

response plan captures our North America and EMEA operations and is designed to address non-operational and

operational cybersecurity events. Evaluation and response to cybersecurity events is led by our Cybersecurity

Incident Response Teams (“CIRTs”), under the direction of our CISO. The CIRTs are made up of subject matter

experts representing information security, information technology, operational technology and legal. The CIRTs

perform an impact assessment with respect to cybersecurity incidents, gathers facts and provides a chronology of

events in connection therewith, and lead remediation and recovery activities. Our General Counsel, Senior Vice

President, Chief Human Resources Officer, Chief Ethics and Compliance Officer (or their respective designees),

Global Chief Privacy Officer and CISO review and assess significant non-operational data breaches. Cybersecurity

events that meet specified criteria for operational impact are escalated for further review to our Business Continuity

Incident Command Teams (“Incident Command Teams”). The Incident Command Teams perform an initial

assessment that includes evaluation of the cybersecurity event’s severity, response required, and estimated

business cost, and leads the execution of business continuity plans to maintain Company operations. Cybersecurity

events meeting certain criteria are escalated to our Disclosure Committee, General Counsel and Chief Financial

Officer for further review, and, if appropriate, may be further elevated for the review of the Board of Directors. The

Disclosure Committee, General Counsel and Chief Financial Officer assess and determine materiality using the

facts gathered and chronology of events provided by the Incident Command Team. If deemed material, the event

will be timely reported on a Current Report on Form 8-K in accordance with applicable SEC rules.

ITEM 2. PROPERTIES

MILLS AND PLANTS

A listing of our production facilities by segment, the vast majority of which we own, can be found in Appendix I

hereto, which is incorporated herein by reference.

The Company’s facilities are in good operating condition and are suited for the purposes for which they are

presently being used. We continue to study the economics of modernization or adopting other alternatives for higher

cost facilities.

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CAPITAL INVESTMENTS AND DISPOSITIONS

Given the size, scope and complexity of our business interests, we continually examine and evaluate a wide variety

of business opportunities and planning alternatives, including possible acquisitions and sales or other dispositions of

properties. You can find a discussion about the level of planned capital investments for 2026 and dispositions and

restructuring activities as of December 31, 2025 in Item 7. Management’s Discussion and Analysis of Financial

Condition and Results of Operations and in Note 7 Acquisitions of Item 8. Financial Statements and Supplementary

Data.

ITEM 3. LEGAL PROCEEDINGS

Information concerning certain legal proceedings of the Company is set forth in Note 14 Commitments and

Contingent Liabilities of Item 8. Financial Statements and Supplementary Data which is incorporated herein by

reference.

The Company is not subject to any administrative or judicial proceeding arising under any federal, state or local

provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily

for the purpose of protecting the environment that is likely to result in monetary sanctions of $1 million or more.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

ISSUER PURCHASES OF EQUITY SECURITIES

As of the filing of this Annual Report on Form 10-K, the Company’s common stock is traded on the New York Stock

Exchange (NYSE: IP) and the London Stock Exchange (LSE: IPC). As of February 20, 2026, there were

approximately 9,994 record holders of common stock of the Company.

We pay regular quarterly cash dividends and currently expect to continue to pay regular quarterly cash dividends in

the foreseeable future, though each quarterly dividend payment is subject to review and approval by our Board of

Directors.

The table below presents information regarding the Company’s purchases of its equity securities for the time

periods presented.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in billions)
October 1, 2025 - October 31, 2025	7,562	$46.97	—	$2.96
November 1, 2025 - November 30, 2025	12,146	45.27	—	2.96
December 1, 2025 - December 31, 2025	2,718	41.93	—	2.96
Total	22,426

(a)22,426 shares were acquired from employees or members of our Board of Directors as a result of share withholdings to pay income taxes

under the Company's stock program. On October 11, 2022, our Board of Directors increased the authorization up to a total of $3.35 billion

shares. This repurchase program does not have an expiration date. As of December 31, 2025, approximately $2.96 billion aggregate

shares of our common stock remained authorized for repurchase.

PERFORMANCE GRAPH

The performance graph shall not be deemed "soliciting material" or to be "filed" with the Commission or subject to

Regulation 14A or 14C under, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended,

(the "Exchange Act") and will not be deemed to be incorporated by reference into any filing of the Company under

the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically

incorporates it by reference into such a filing.

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The following line graph compares a $100 investment in Company stock on December 31, 2020 with a $100

investment in our peer group and the S&P Composite-500 Stock Index (S&P 500 Index) also made at market close

on December 31, 2020. The graph portrays total return, 2020-2025, assuming reinvestment of all dividends.

1)The companies included in the Peer Group are Klabin S.A., Mondi Group, Packaging Corporation of America and Stora Enso Group.

2)Returns are calculated in $USD.

ITEM 6. RESERVED

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in

conjunction with our consolidated financial statements and related notes included in “Item 8. Financial Statements

and Supplementary Data” of this Annual Report on Form 10-K. In addition to historical consolidated financial

information, the following discussion contains forward-looking statements that reflect our plans, estimates, and

beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed

in the forward-looking statements. Factors that could cause or contribute to those differences include those

discussed below and elsewhere in this Annual Report on Form 10-K, particularly in Item 1A “Risk Factors” and

“Forward-Looking Statements.”

The following generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.

Discussion of historical items in 2023, and year-to-year comparisons between 2024 and 2023, can be found in our

Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 21,

2025, under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of

Operations.

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EXECUTIVE SUMMARY

2025 Financial Summary

•Net sales of $23.63 billion

•Loss from continuing operations of $(2.84) billion includes the following:

◦$2.47 billion pre-tax non-cash goodwill impairment charge

◦$958 million non-cash accelerated depreciation associated with asset rationalization decisions

◦$626 million of restructuring charges

•Adjusted EBITDA (non-GAAP) from continuing operations of $2.98 billion (1)

•Cash provided by operating activities of $1.70 billion

•Free cash flow (non-GAAP) of $(159) million (1)

(1) See "Non-GAAP Financial Measures" for a list of our non-GAAP financial measures and reconciliations to the

most directly comparable GAAP measures.

Overview

Throughout 2025, we continued to execute a multi‑year transformation designed to simplify our portfolio, sharpen

our regional focus and improve underlying earnings power. The Company undertook significant strategic and

operational changes driven largely by our 80/20 performance system, the integration of DS Smith and the

divestiture of our Global Cellulose Fibers ("GCF") business.

The Company acquired DS Smith in early 2025 for an enterprise value of approximately $9.9 billion. The acquisition

expanded our geographic reach across both the North America and EMEA regions, enabling advantaged cost

positions, superior customer experiences and improved supply positions. Integration progressed rapidly during

2025, with teams applying the 80/20 performance system across both regions to streamline combined operations,

optimize production footprints, and realize supply chain and commercial synergies. By year‑end, we had executed

approximately $710 million of full run‑rate cost‑out actions, including synergy benefits attributable to the DS Smith

combination.

In North America, we continued to leverage 80/20 to simplify our business operations and focus our resources to

accelerate growth. In our packaging business, we exited non-strategic export and specialty markets and rationalized

higher cost capacity to better align with profitable customer demand. We achieved approximately $510 million of

run-rate cost savings in 2025 with the closures of several mills and plants, allowing us to increase investment in our

remaining assets. We also entered into a definitive agreement to divest our GCF business, positioning the company

as a pure play leading sustainable packaging solutions company.

Parallel with our efforts in North America, the Company advanced its integration and transformation strategy in

EMEA, where it launched the 80/20 performance system with approximately $200 million of run-rate cost-out

actions and synergy benefits actioned in 2025. Early adoption from teams across the regions has supported a

smooth rollout as the Company positions the EMEA business for its next phase of operational focus and regional

alignment.

In the first quarter of 2026, we completed the sale of our GCF business to American Industrial Partners for $1.5

billion. We intend to use proceeds from the transaction to support strategic reinvestment in our packaging business,

reduce debt to improve our credit profile and preserve financial flexibility and maintenance of a strong investment-

grade credit rating.

On January 29, 2026, the Company announced plans to separate into two independent, publicly traded companies:

International Paper will be comprised of its current business in North America including both legacy IP and DS

Smith assets, and the EMEA packaging business will be comprised of both legacy DS Smith and IP assets in

EMEA. The separation is expected to be structured as a spinoff of the EMEA business to shareholders, with

International Paper retaining a meaningful ownership stake. The transaction is expected to be completed within 12

to 15 months, subject to customary approvals, including final approval by IP’s Board of Directors, filing and

effectiveness of registration statement with the U.S. SEC and publication of prospectus approved by the U.K.

Financial Conduct Authority. No assurance can be provided regarding the ultimate timing or structure of the

proposed separation or its eventual completion.

The Company expects that creating two regionally focused businesses will allow each to tailor strategies to their

distinct markets, enhance management focus, and support long-term value creation. In 2026, the Company expects

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to continue advancing its transformation strategy through the planned strategic separation, targeted investment

agendas, and continued operational improvements across its regional platforms. This strategic action represents the

next phase of our transformation and is designed to advance long‑term value creation for customers and

shareholders. Following the separation, International Paper plans to intensify its focus on its North American

operations, with an emphasis on targeted capital allocation, investments in productivity and innovation, and

disciplined strategic acquisitions.

As previously disclosed, IP intends to retain a meaningful ownership stake in the EMEA packaging business, which

is expected to be listed on both London Stock Exchange and the New York Stock Exchange. For additional

information about the separation, including process steps and anticipated impacts, please see Note 22 Subsequent

Events of Item 8. Financial Statements and Supplementary Data and Part I, Item 1A. Risk Factors - Risks Related

to the Separation.

Market Conditions

Throughout 2025, the Company operated in challenging demand environments across both North America and

EMEA. In North America, market demand was weaker than expected throughout most of the year as economic

uncertainty from tariffs, slower housing starts, weaker consumer sentiment and lower industrial production

negatively impacted box demand. Although industry growth was subdued throughout 2025, we grew above market

in the second half of the year as we gained commercial momentum through our focused customer service and

reliability efforts. In EMEA, overall demand remained relatively soft throughout 2025 as macroeconomic uncertainty

and volatility persisted, influenced by trade uncertainty, geopolitical tensions in the Middle East and the Russia-

Ukraine conflict.

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Non-GAAP Financial Measures

The non-GAAP financial measures presented in this Form 10-K as referenced below have limitations as analytical

tools and should not be considered in isolation or as a substitute for an analysis of our results calculated in

accordance with GAAP. In addition, because not all companies utilize identical calculations, the Company's

presentation of non-GAAP measures in this Form 10-K may not be comparable to similarly titled measures

disclosed by other companies, including companies in the same industry as the Company. Users are cautioned not

to place undue reliance on any non-GAAP financial measures presented in this Form 10-K.

Below are the Company’s key non‑GAAP financial measures and their definitions:

Adjusted operating earnings (loss) and adjusted operating earnings (loss) per share are defined as earnings

(loss) from continuing operations (a GAAP measure) excluding net special items and non-operating pension

expense (income). Earnings (loss) from continuing operations and diluted earnings (loss) from continuing operations

per share are the most directly comparable GAAP measures. The Company calculates adjusted operating earnings

(loss) by excluding the after-tax effect of non-operating pension expense (income) and net special items, as

described in greater detail below, from earnings (loss) from continuing operations reported under GAAP. Adjusted

operating earnings (loss) per share is calculated by dividing adjusted operating earnings (loss) by diluted average

shares of common stock outstanding. Management uses these non-GAAP financial measures to focus on ongoing

operations and believes that such non-GAAP financial measures are useful to investors in assessing the operational

performance of the Company and enabling investors to perform meaningful comparisons of past and present

consolidated operating results from continuing operations. The Company believes that using these non-GAAP

financial measures, along with the most directly comparable GAAP measures, provides for a more complete

analysis of the Company's results of operations.

Adjusted EBITDA from continuing operations is defined as earnings (loss) from continuing operations before

income taxes and equity earnings (loss), interest expense, net, net special items, non-operating pension expense

(income) and depreciation and amortization. Earnings (loss) from continuing operations before income taxes and

equity earnings (loss) is the most directly comparable GAAP measure. Beginning in 2025, management is also

using this measure to focus on on-going operations and believes this measure is useful to investors. This change

reflects investor feedback and management's view that Adjusted EBITDA from continuing operations provides a

meaningful measure of the operating performance of the Company and helps enable investors to perform

meaningful comparisons of past and present consolidated operating results from continuing operations.

Free cash flow is defined as cash provided by (used for) operations less capital expenditures, and the most directly

comparable GAAP measure is cash provided by (used for) operations. Management utilizes this measure in

connection with managing our business and believes that free cash flow is useful to investors as a liquidity measure

because it measures the amount of cash generated that is available, after reinvesting in the business, to maintain a

strong balance sheet, pay dividends, repurchase stock, service debt and make investments for future growth. It

should not be inferred that the entire free cash flow amount is available for discretionary expenditures.

Operational income tax provision and operational effective income tax rate are calculated by adjusting the

earnings (loss) from continuing operations before income taxes and equity earnings (loss), income tax provision

(benefit) and rate to exclude net special items and non-operating pension expense (income). The most directly

comparable GAAP measures are the reported income tax provision and effective income tax rate, respectively.

Management believes that this presentation provides useful information to investors by providing a meaningful

comparison of the income tax rate between past and present periods.

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Below are reconciliations of the non‑GAAP financial measures noted above to their most directly

comparable GAAP measures:

Non-operating pension expense (income) represents amortization of prior service cost, amortization of actuarial

gains/losses, expected return on assets and interest cost. The Company excludes these amounts from our adjusted

operating earnings (loss) as the Company does not believe these items reflect ongoing operations. These particular

pension cost elements are not directly attributable to current employee service. The Company includes service cost

in our non-GAAP measure as it is directly attributable to employee service, and the corresponding employees’ other

compensation elements, in connection with ongoing operations.

See Effects of Special Items Expense (Income) for additional detail regarding the net special items expense

(income) referenced in the tables below.

Reconciliation of Earnings (loss) from continuing operations to Adjusted operating earnings (loss)


In millions	2025	2024
Earnings (Loss) from Continuing Operations	$(2,838)	$725
Add back - Non-operating pension expense (income)	(12)	(42)
Add back - Net special items expense (income)	3,237	235
Income tax effect - Non-operating pension and special items (a)	(487)	(447)
Adjusted Operating Earnings (Loss)	$(100)	$471

(a) For the year ended December 31, 2025, this amount includes tax benefits of $271 million related to the EMEA goodwill impairment and $62

million related to capital losses associated with the announced agreement to sell our GCF business. This amount also includes tax expense of $3

million on the non-operating pension income and a tax benefit of $157 million associated with other special items. For the year ended December

31, 2024, this amount includes a tax benefit of $416 million related to internal legal entity restructuring. This amount also includes tax expense of

$10 million on the non-operating pension income and a tax benefit of $41 million associated with other special items.

Reconciliation of Earnings (loss) from continuing operations to Adjusted operating earnings (loss) on a per

share basis


	2025	2024
Diluted Earnings (Loss) Per Share from Continuing Operations	$(5.61)	$2.05
Add back - Non-operating pension expense (income) per share	(0.02)	(0.12)
Add back - Net special items expense (income) per share	6.40	0.66
Income tax effect per share - Non-operating pension and special items	(0.97)	(1.26)
Adjusted Operating Earnings (Loss) Per Share	$(0.20)	$1.33

Reconciliation of Earnings (loss) from continuing operations to Adjusted EBITDA from continuing

operations


In millions	2025	2024
Earnings (Loss) from Continuing Operations	$(2,838)	$725
Add back: Income tax provision (benefit)	(533)	(361)
Less: Equity earnings (loss), net of taxes	(3)	(5)
Earnings (Loss) from Continuing Operations Before Income Taxes and Equity Earnings (Loss)	(3,368)	369
Interest expense, net	372	214
Special items	3,237	245
Non-operating pension expense (income)	(12)	(42)
Depreciation and amortization	2,747	850
Adjusted EBITDA from Continuing Operations	$2,976	$1,636

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Reconciliation of Cash provided by operations to Free cash flow


In millions	2025	2024
Cash provided by operations	$1,698	$1,678
Adjustments:
Capital expenditures	(1,857)	(921)
Free Cash Flow	$(159)	$757

Reconciliation of Income tax provision (benefit) to Operational tax provision (benefit) and the reported

effective income tax rate to the operational effective tax rate


In millions	2025		2024
	Provision (Benefit)	Rate	Provision (Benefit)	Rate
Income tax provision (benefit) and reported effective income tax rate	$(533)	16%	$(361)	(98)%
Income tax effect - non-operating pension (income) expense and special items	487		447
Operational Tax Provision (Benefit) and Operational Effective Tax Rate	$(46)	32%	$86	15%

Effects of Net Special Items Expense (Income)

Pre-tax special items included in continuing operations totaling $3.24 billion and $235 million were recorded in 2025

and 2024, respectively. Details of these charges were as follows:


Special Items
In millions	2025		2024
PS EMEA goodwill impairment	$2,467	(a)	$—
Severance and other costs	626	(b)	104	(b)
DS Smith combination costs	237	(c)	86	(c)
Net (gains) losses on sales and impairments of businesses	(25)	(d)	—
Net (gains) losses on sales and impairments of assets	(70)	(e)	(59)	(e)
Environmental remediation adjustments	2	(f)	60	(f)
Strategic advisory fees	—		37	(c)
Third-party warehouse fire	—		13	(g)
Italy antitrust	—		(6)	(h)
Legal reserve adjustments	—		10	(i)
Interest related to settlement of tax audits	—		(10)	(j)
Total Pre-Tax Special Items	$3,237		$235

(a) Non-cash goodwill impairment related to the Company's PS EMEA business segment recorded in impairment of goodwill.

(b) Severance and other costs associated with the Company's 80/20 approach which includes the realignment of resources and mill strategic

actions recorded primarily in restructuring and other charges, net.

(c) Transaction related costs that the Company believes are not reflective of the Company's underlying operations. 2025 includes $29 million

recorded in cost of products sold, $158 million recorded in selling and administrative expenses and $50 million recorded in taxes other than

payroll and income taxes. 2024 includes $123 million recorded in selling and administrative expenses.

(d) Includes a charge related to the sale of the Company's kraft paper bag business and a net gain related to the sale of five European box plants

in Mortagne, Saint-Amand and Cabourg (France), Ovar (Portugal) and Bilbao (Spain) to satisfy regulatory commitments in connection with the

DS Smith combination.

(e) Includes gains on assets sales related to our permanently closed Courtland, Alabama paper mill and Orange, Texas containerboard mill and

charges associated with the sale of the Company's aircraft and other assets.

(f) Environmental remediation adjustments associated with remediation work at sites that have been closed/divested that the Company believes

are not reflective of the Company's underlying operations recorded in cost of products sold.

(g) The Company's cost for third-party damages associated with a warehouse fire in Morocco recorded in cost of products sold.

(h) Settlement associated with an Italian antitrust matter initially recorded as a special item in 2019 recorded in cost of products sold.

(i) Legal reserve adjustment associated with a previously discontinued business recorded in cost of products sold.

(j) Interest income on tax overpayments in prior years associated with the settlement of certain tax audits recorded in interest expense, net.

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RESULTS OF OPERATIONS

The following summarizes our results from operations for the year ended December 31, 2025 compared with the

year ended December 31, 2024:


In millions	2025	2024	Change
Net sales	$23,634	$15,835	$7,799
Cost of products sold	16,637	11,397	5,240
Selling and administrative expenses	2,050	1,703	347
Depreciation and amortization	2,747	851	1,896
Distribution expenses	2,000	1,180	820
Taxes other than payroll and income taxes	210	119	91
Restructuring charges, net (a)	626	103
Impairment of goodwill (a)	2,467	—
Net (gains) losses on sales and impairments of businesses (a)	(25)	—
Net (gains) losses on sales and impairments of assets (a)	(70)	(59)
Interest expense, net	372	214	158
Non-operating pension (income) expense	(12)	(42)
Earnings from continuing operations before income taxes and equity earnings (loss)	(3,368)	369
Income tax provision (benefit)	(533)	(361)
Equity earnings (loss), net of taxes	(3)	(5)
Earnings (loss) from continuing operations	(2,838)	725
Discontinued operations, net of taxes	(678)	(168)
Net earnings (loss)	$(3,516)	$557

(a) Refer to special items discussion on page 41.

TWELVE MONTHS ENDED DECEMBER 31, 2025 COMPARED TO THE TWELVE MONTHS ENDED DECEMBER 31, 2024

The following is a discussion of International Paper’s consolidated results of operations for the year ended

December 31, 2025, and the major factors affecting these results compared to 2024.

Refer to the Effects of Net Special Items Expense (Income) section for details of net special items expense (income)

discussed below.

Net sales

Compared to the year ended December 31, 2024, net sales for the year ended December 31, 2025 increased by

$7.8 billion. DS Smith accounted for $7.8 billion of net sales in 2025. For IP legacy, the increase of $46 million was

driven by higher sales prices partially offset by lower sales volumes. Additional details on net sales are provided in

the Business Segment Results section below.

Cost of products sold

Compared to the year ended December 31, 2024, cost of products sold for the year ended December 31, 2025

increased by $5.2 billion. DS Smith accounted for $5.8 billion of total cost of products sold in 2025 and net special

items charges of $31 million were included in 2025 compared to $77 million in 2024. For IP legacy, cost of products

sold was impacted by lower raw materials and operating materials of $542 million, partially offset by increases in

fuel and utility expenses of $111 million.

Selling and administrative expenses

Compared to the year ended December 31, 2024, selling and administrative expenses for the year ended

December 31, 2025 increased by $347 million. DS Smith accounted for $442 million of total selling and

administrative expenses in 2025 and net special items charges of $158 million were included in 2025 compared to

$123 million in 2024. For IP legacy, selling and administrative expenses were impacted by decreases in incentive

compensation of $148 million and increases in other costs of $21 million.

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Depreciation and amortization

Compared to the year ended December 31, 2024, depreciation and amortization for the year ended December 31,

2025 increased by $1.9 billion. DS Smith accounted for $1.3 billion of depreciation and amortization in 2025,

including $403 million of accelerated depreciation associated with mill and other strategic actions. For IP legacy, the

increase compared to 2024 was due to an increase of $553 million in accelerated depreciation related to mill and

other strategic actions in 2025.

Distribution expenses

Compared to the year ended December 31, 2024, distribution expenses for the year ended December 31, 2025

increased by $820 million. DS Smith accounted for $858 million of distribution expenses in 2025. For IP legacy,

distribution expenses were impacted by lower freight costs and lower sales volumes compared to 2024.

Taxes other than payroll and income taxes

Compared to the year ended December 31, 2024, taxes other than payroll and income taxes for the year ended

December 31, 2025 increased by $91 million. DS Smith accounted for $33 million of taxes other than payroll and

income taxes in 2025. Net special items charges of $50 million were included in taxes other than payroll and income

taxes in 2025. For IP legacy, taxes other than payroll and income taxes were impacted by higher real estate taxes

compared to 2024.

Interest expense, net

Compared to the year ended December 31, 2024, interest expense, net for the year ended December 31, 2025

increased by $158 million. DS Smith accounted for $160 million of interest expense, net in 2025 and net special

items income of $10 million was included in interest expense, net in 2024. For IP legacy, interest expense, net was

impacted by higher interest income.

Income tax provision (benefit)

A net income tax benefit from continuing operations of $533 million was recorded for 2025 and the reported effective

income tax rate was 16%. This includes a tax benefit of $271 million related to the EMEA goodwill impairment and a

tax benefit of $62 million related to capital losses associated with the announced agreement to sell our GCF

business, which closed in January 2026. Excluding these items, a $157 million net tax benefit for other special items

and $3 million tax expense related to non-operating pension income, the operational tax provision (benefit) (non-

GAAP) for 2025 was $46 million, or 32% of pre-tax earnings before equity earnings.

A net income tax benefit from continuing operations of $361 million was recorded for 2024 and the reported effective

income tax rate was (98)%. This includes a tax benefit of $416 million related to internal legal entity restructuring.

Excluding these items, a $41 million net tax benefit for other special items and $10 million tax expense related to

non-operating pension income, the operational tax provision (non-GAAP) for 2024 was $86 million, or 15% of pre-

tax earnings before equity earnings.

Compared to the year ended December 31, 2024, the operational effective tax rate increased by 17% in 2025. DS

Smith accounted for a significant increase in the foreign taxes driving up the operational effective tax rate in the

year.

Refer to "Non-GAAP Financial Measures" for a reconciliation of the net income tax provision (benefit) (GAAP) to the

operational income tax provision (benefit) (non-GAAP) and the reported effective income tax rate (GAAP) to the

operational effective income tax rate (non-GAAP).

Discontinued operations, net of taxes

On August 21, 2025, the Company announced that it had reached a definitive agreement with American Industrial

Partners ("AIP") to sell its GCF business. All current and historical operating results of the GCF business are

presented as Discontinued Operations, net of taxes, in the consolidated statements of operations. All current and

historical assets and liabilities of the GCF business are classified as Assets held for sale and Long-Term Assets

Held For Sale and Liabilities held for sale and Long-Term Liabilities Held For Sale in the accompanying consolidated

balance sheets. See Note 8 - Divestiture of Item 8. Financial Statements and Supplementary Data for further

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details.

Discontinued operations, net of taxes for 2025 and 2024 includes the operating earnings of the GCF business.

Discontinued operations, net of taxes also includes the following charges (benefits):


In millions	2025	2024
Net loss on impairment of the GCF business	$1,070	$—
Global Cellulose Fibers transaction costs	52	5
Severance and other costs (benefits)	(8)	123
Total	$1,114	$128

DESCRIPTION OF BUSINESS SEGMENTS

The Company currently operates in two segments: Packaging Solutions North America ("PS NA") and Packaging

Solutions EMEA ("PS EMEA"). These segments are organized by geography and align with the Company's internal

management structure. All segments are differentiated on a common product, common customer basis consistent

with the business segmentation generally used in the forest products industry. See Note 21 - Financial Information

by Business Segment of Item 8. Financial Statements and Supplementary Data for further details regarding the

Company's business segments.

The majority of our business is focused on creating fiber-based packaging that protects and promotes goods,

enables worldwide commerce and helps keep consumers safe. We meet our customers’ most challenging sales,

shipping, storage and display requirements with sustainable solutions. Our U.S. production capacity was

approximately 11 million tons annually as of December 31, 2025.

Containerboard includes linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft.

Approximately 75% of our production is converted into corrugated packaging and other packaging by our 170 North

American corrugated packaging plants. Additionally, we recycle approximately one million tons of OCC and mixed

and white paper through our 15 U.S. recycling plants. Our corrugated packaging plants are supported by regional

design centers, which offer total packaging solutions and supply chain initiatives. In EMEA, our operations include

14 containerboard mills, 148 corrugated packaging plants and 20 recycling plants.

BUSINESS SEGMENT RESULTS

The following tables present net sales and business segment operating profit (loss), which is the Company's

measure of segment profitability and is defined as earnings (loss) before income taxes and equity earnings (losses),

including the impact of less than wholly owned subsidiaries and excluding interest expense, net, corporate

expenses, net, net special items and non-operating pension expense. Business segment operating profit (loss) is a

measure reported to our management for purposes of making decisions about allocating resources to our business

segments and assessing the performance of our business segments and is presented in our financial statement

footnotes in accordance with ASC 280 - "Segment Reporting." For additional information regarding business

segment operating profit (loss), including a description of the manner in which business segment operating profit

(loss) is calculated, see Note 21 - Financial Information by Business Segment of Item 8. Financial Statements and

Supplementary Data.

Demand for our products is closely correlated with non-durable industrial goods production, as well as with demand

for e-commerce, processed foods, poultry, meat and agricultural products. In addition to prices and volumes, major

factors affecting profitability are raw material and energy costs, freight costs, mill outage costs, manufacturing

efficiency and product mix.

PS NA


In millions	2025	2024
Sales	$15,175	$14,293
Business Segment Operating Profit (Loss)	$572	$891

PS NA 2025 results include sales of $611 million and business segment operating profit (loss) of $(346) million for

the DS Smith business. For legacy IP PS NA, sales increased in 2025 compared with 2024, driven by higher sales

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prices, partially offset by lower volumes reflecting the impact of our box go-to-market strategy and mill strategic

actions. Cost of products sold decreased by $241 million and was impacted by lower volumes, lower planned

maintenance downtime costs and lower input costs, partially offset by higher operating costs. Operating costs were

higher primarily due to increased costs on materials and services and increased spending on maintenance and

reliability, partially offset by lower economic downtime. Input costs were lower, driven by lower recovered fiber and

wood costs, partially offset by higher energy and chemical costs. Selling and administrative expenses were $52

million lower due to lower incentive compensation expense. Distribution costs were $37 million lower driven by

lower sales volumes. Depreciation and amortization expense was $564 million higher, driven by accelerated

depreciation associated with our mill and other strategic actions.

Looking ahead to the first quarter of 2026, compared with the fourth quarter of 2025, sales volumes for corrugated

boxes are expected to be lower due to seasonality and the exit of non-strategic markets. Operating costs are

expected to be flat. Planned maintenance outage costs are expected to be higher due to the timing of planned

outages. Operating and input costs are expected to be relatively flat.

PS EMEA


In millions	2025	2024
Sales	$8,451	$1,355
Business Segment Operating Profit (Loss)	$(236)	$60

PS EMEA 2025 results include sales of $7.2 billion and business segment operating profit (loss) of $(321) million for

the DS Smith business. For legacy IP PS EMEA, sales were lower in 2025 compared with 2024, reflecting lower

volumes in a soft demand environment and an unfavorable product mix. Cost of products sold decreased $54

million and was impacted by lower volumes, lower operating costs and lower input costs, primarily for energy costs.

Selling and administrative expenses were $12 million lower driven by incentive compensation expense. Distribution

expense was $25 million lower driven by lower sales volumes.

Entering the first quarter of 2026, compared with the fourth quarter of 2025, sales volumes are expected to be

higher due to known customer wins. Average sales margins are expected to be higher, reflecting a favorable

product mix. Operating costs are expected to be higher primarily driven by the timing of energy subsidies and

increased volumes. Planned maintenance outage costs are expected to be lower due to the timing of planned

outages. Input costs are expected to be higher primarily driven by elevated energy costs.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

A major factor in International Paper’s liquidity and capital resource planning is generation of operating cash flow,

which is highly sensitive to changes in the pricing and demand for our major products. While changes in key

operating cash costs, such as raw material, energy, mill outage and distribution, have an effect on operating cash

generation, we believe our focus on commercial and operational excellence, as well as our ability to tightly manage

costs and working capital has improved our cash flow generation over an operating cycle.

Use of cash during 2025 was primarily focused on working capital requirements, capital spending into the business

for growth including mill and plant improvements, equipment and new greenfield investments and returning cash to

shareholders through dividends.

CASH PROVIDED BY OPERATING ACTIVITIES

Cash provided by operations, including discontinued operations, totaled $1.7 billion in both 2025 and 2024. Cash

used by working capital components (accounts receivable, contract assets and inventory less accounts payable and

accrued liabilities, interest payable and other) totaled $834 million in 2025, compared with cash used by working

capital components of $10 million in 2024. The change in cash provided by operations in 2025 compared to the

2024 period was primarily due to significant payments made in 2025 that impacted operating cash flow, including

DS Smith transaction costs and severance payments, as well as incentive compensation and other benefit

payments.

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INVESTMENT ACTIVITIES

Cash used for investment activities, including discontinued operations, totaled $1.0 billion in 2025 compared with

$808 million in 2024. The increase in cash used for investment activities in 2025 compared to 2024 is mainly due to

higher capital expenditures of $936 million, offset by an increase in proceeds from sale of fixed assets of $127

million, proceeds from divestitures, net of transaction costs of $141 million and net cash acquired from acquisitions

of $414 million.

Including discontinued operations, capital expenditures were $1.9 billion in 2025, or 64% of depreciation and

amortization, compared with $921 million in 2024, or 71% of depreciation and amortization. Capital spending as a

percentage of depreciation and amortization, including discontinued operations, was impacted by accelerated

depreciation of $958 million and $233 million for the years ended December 31, 2025 and December 31, 2024,

respectively, related to mill strategic actions and other 80/20 actions.

The following table shows capital expenditures by business segment for the years ended December 31, 2025 and

2024:


In millions	2025	2024
Packaging Solutions North America	$1,115	$710
Packaging Solutions EMEA	573	53
Subtotal	1,688	763
Corporate and other (a)	169	158
Capital Expenditures	$1,857	$921

(a) Includes capital expenditures related to Corporate and GCF.

Acquisitions

See Note 7 Acquisitions of Item 8. Financial Statements and Supplementary Data for a discussion of the Company's

acquisitions.

FINANCING ACTIVITIES

Financing activities during 2025 included debt issuances of $409 million and reductions of $255 million for a net

increase of $154 million. Financing activities during 2024 included debt issuances of $102 million and reductions of

$141 million.

There were no early debt extinguishments during the years ended December 31, 2025 and December 31, 2024.

Other financing activities during 2025 included the net issuance of approximately 3.7 million shares of treasury

stock, while repurchases of common stock and payments of restricted stock withholding taxes totaled $65 million.

During 2025, no shares of common stock were repurchased under the Company's share repurchase program.

Through December 31, 2025, the Company had repurchased 119.8 million shares at an average price of $46.23, for

a total of approximately $5.5 billion, since the repurchase program began in September 2013. The Company paid

cash dividends totaling $977 million during 2025.

Other financing activities during 2024 included the net issuance of approximately 2.0 million shares of treasury

stock. Repurchases of common stock and payments of restricted stock withholding taxes totaled $23 million. During

2024, no shares of common stock were repurchased under the Company's share repurchase program. Through

December 31, 2024, the Company has repurchased 119.8 million shares at an average price of $46.23, for a total of

approximately $5.5 billion, since the repurchase program began in September 2013. The Company paid cash

dividends totaling $643 million during 2024.

Interest Rate Swaps

Our policy is to manage interest cost using a mixture of fixed-rate and variable-rate debt. To manage this risk,

International Paper utilizes interest rate swaps to change the mix of fixed and variable rate debt. During 2020,

International Paper terminated its interest rate swaps with a notional amount of $700 million and maturities ranging

from 2024 to 2026 with an approximate fair value of $85 million. Subsequent to the termination of the interest rate

swaps, the fair value basis adjustment is amortized to earnings as interest income over the same period as a debt

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premium on the previously hedged debt. The Company had no outstanding interest rate swaps for the years ended

December 31, 2025 and 2024.

Variable Interest Entities

Information concerning variable interest entities is set forth in Note 15 Variable Interest Entities of Item 8. Financial

Statements and Supplementary Data.

LIQUIDITY AND CAPITAL RESOURCES OUTLOOK FOR 2026

We intend to continue making choices for the use of cash that are consistent with our capital allocation framework to

drive long-term value creation. These include maintaining a strong balance sheet and investment grade credit

rating, and creating value with a continued focus on cost reduction and making organic investments to maintain our

world-class system and strengthen our businesses.

On January 23, 2026, the Company completed the previously announced sale of its GCF business to AIP for $1.5

billion, including the issuance of preferred stock with an aggregate initial liquidation preference of $190 million. The

Company plans to use a portion of the proceeds from the sale of the GCF business to pay down existing debt.

As of December 31, 2025, approximately $2.96 billion remain authorized for repurchase under our share

repurchase program, which has no expiration date. We may repurchase shares under such authorization in open

market transactions (including block trades), privately negotiated transactions or otherwise, subject to prevailing

market conditions, our liquidity requirements, applicable securities laws requirements and other factors. In addition,

we have paid regular quarterly cash dividends and expect to continue to pay regular quarterly cash dividends in the

foreseeable future. Each quarterly dividend is subject to review and approval by our Board of Directors.

Long-Term Debt

The following summarizes certain material provisions of our long-term debt facilities and current obligations. The

following description is only a summary, does not purport to be complete and is qualified in its entirety by reference

to the documents governing such indebtedness. For additional information regarding the Company’s credit

agreements, outstanding and assumed indebtedness, see Note 16 Debt and Lines of Credit of Item 8. Financial

Statements and Supplementary Data.

At December 31, 2025, International Paper’s U.S. dollar denominated credit facilities totaled $1.9 billion, comprised

of a $1.4 billion contractually committed bank credit agreement and up to $500 million available under its

receivables securitization program. Management believes these credit agreements provide sufficient liquidity to

manage operating cash flow variability during the current economic cycle. The credit agreements generally provide

for interest rates at a floating rate index plus a pre-determined margin tied to International Paper’s credit rating. At

December 31, 2025, the Company had no borrowings outstanding under the $1.4 billion credit agreement or the

$500 million receivables securitization program. The Company’s credit agreements contain no restrictive covenants

other than the financial covenants as described in Note 16 - Debt and Lines of Credit of Item 8. Financial

Statements and Supplementary Data, and the borrowings under the receivables securitization program being limited

by eligible receivables. The Company was in compliance with all its debt covenants at December 31, 2025 and

within the thresholds stipulated. The financial covenants do not restrict any borrowings under the credit agreements.

Commercial Paper

In addition to the $1.9 billion capacity under the Company's credit agreements, International Paper has a

commercial paper program with a borrowing capacity of $1.0 billion supported by its $1.4 billion credit agreement.

Under the terms of the Company's commercial paper program, individual maturities on borrowings may vary, but not

exceed one year from the date of issue. Interest bearing notes may be issued either as fixed or floating rate notes.

The Company had no borrowings outstanding as of December 31, 2025 and December 31, 2024 under this

program.

Assumed Debt

In 2025, International Paper assumed foreign denominated debt of DS Smith in various currencies.

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Euro Medium Term Notes

Our subsidiary DS Smith initiated consent solicitations with the holders of several series of its outstanding euro- and

sterling denominated notes to approve certain amendments to the notes’ terms and related trust deeds (the “Euro

Medium Term Notes”). The amendments were designed to align DS Smith’s reporting and covenant framework with

that of International Paper following the acquisition, and to provide greater flexibility for the reorganization of DS

Smith’s subsidiaries. As part of the solicitation process, International Paper agreed to provide guarantees of DS

Smith’s obligations under each series of the Euro Medium Term Notes. These amendments and guarantees were

implemented in March 2025 through supplemental trust deeds. All principal amounts of the affected Euro Medium

Term Notes remain outstanding.

Credit and Bank Facilities

The Company amended and restated its £1.25 billion multi-currency credit facility agreement, its €200 million credit

facility and €60 million committed bank facility. The amendments (i) replaced the Company's standalone financial

reporting requirements with International Paper’s financial information; (ii) aligned the facility's financial covenant

with those in International Paper’s existing credit facilities; and (iii) updated certain events of default and

undertakings to reflect International Paper's financing framework and to provide additional flexibility for potential

subsidiary reorganization within the International Paper group.

The £1.25 billion multi-currency credit facility allows for British pound sterling, euro and U.S. dollar-denominated

borrowings at floating rates plus a pre-determined margin, with borrowings generally denominated to match the

Company's cashflows. At December 31, 2025, the Company had €975 million and £10 million (approximately $1.2

billion) borrowings outstanding under the credit facility. The Company’s credit facility agreement is not subject to any

restrictive covenants other than that International Paper must comply with the same negative covenants as per its

existing credit facilities. IP was in compliance with all its debt covenants at December 31, 2025, and was well below

the thresholds stipulated under the covenants as defined in the credit facility agreement. Further the financial

covenants do not restrict any borrowings under the £1.25 billion credit facility agreement.

The €200 million credit facility agreement provides for interest rates at a fixed rate for each facility. At December 31,

2025, the Company had €163 million (approximately $191 million) borrowings outstanding under the credit facility

agreement.

The credit facility agreements do not impose restrictive covenants other than requiring International Paper to comply

with the same negative covenants applicable to its existing credit facilities. IP was in compliance with all applicable

covenants as of December 31, 2025, and remained well within the thresholds. The financial covenants do not

restrict the Company’s ability to borrow under the credit facility agreement.

The €60 million committed bank facility, maturing in 2026, allows for British pound sterling, euro and US dollar-

denominated borrowings. At December 31, 2025, there were no borrowings outstanding under this agreement. The

Company has a £50 million uncommitted bank facility. At December 31, 2025, the Company had €55 million

(approximately $65 million) borrowings outstanding under this agreement.

During the year ended December 31, 2025, the Company had debt reductions of $255 million in 2025, related

primarily to $26 million of capital leases, $27 million of environmental development bonds ("EDB"), $95 million of

industrial development bonds ("IDB") and $61 million of bonds. In addition, during the year ended December 31,

2025, the Company also had debt issuances of $165 million of industrial development bonds. The Company also

borrowed $244 million under its foreign denominated credit facilities during 2025.

Capital Expenditures

We increased capital spending in 2025 as the Company accelerated several multi-year investments to support our

80/20 approach, enhance mill productivity, expand capacity in key growth markets, and modernize equipment to

improve safety, reliability and energy efficiency. In North America, these 2025 authorizations include investment of

$250 million to convert a machine at the Riverdale mill in Selma, Alabama to produce containerboard and

construction of a new state-of-the-art sustainable packaging box plant in Waterloo, Iowa.

Capital expenditures for 2026 are planned at approximately $1.95 billion to $2.05 billion, or about 98% to 103% of

depreciation and amortization, reflecting continued execution of these strategic projects. The timing and scope of

planned investments will depend on operational needs and the availability of operating cash flows, and certain

projects may be deferred if cash generation or market conditions weaken.

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International Paper expects to be able to meet projected capital expenditures, service existing debt, meet working

capital and dividend requirements and make common stock and/or debt repurchases for the next 12 months and for

the foreseeable future thereafter with current cash balances and cash from operations, supplemented as required

by its existing credit facilities. The Company will continue to rely on debt and capital markets for the majority of any

necessary long-term funding not provided by operating cash flows. Funding decisions will be guided by our capital

structure planning objectives. The primary goals of the Company’s capital structure planning are to maximize

financial flexibility and maintain appropriate levels of liquidity to meet our needs while managing balance sheet debt

and interest expense. We have repurchased, and may continue to repurchase, our common stock (under our

existing share repurchase program) and debt (including through open market purchases, privately negotiated

transactions or otherwise) to the extent consistent with this capital structure planning, and subject to prevailing

market conditions, our liquidity requirements, applicable securities laws requirements and other factors. The

majority of International Paper’s debt is accessed through global public capital markets where we have a wide base

of investors.

Maintaining an investment grade credit rating is an important element of International Paper’s financing strategy. At

December 31, 2025, the Company held long-term credit ratings of BBB (stable outlook) and Baa2 (stable outlook)

by S&P and Moody’s, respectively.

Contractual obligations for future payments under existing debt and lease commitments and purchase obligations at

December 31, 2025, were as follows:


In millions	2026	2027	2028	2029	2030	Thereafter
Debt maturities (a)	$992	$2,584	$739	$381	$807	$4,328
Operating lease obligations	245	190	124	72	46	100
Purchase obligations (b)	3,018	661	432	311	263	1,150
Total (c)	$4,255	$3,435	$1,295	$764	$1,116	$5,578

(a)Includes financing lease obligations.

(b)Includes fiber supply and other service and supply agreements.

(c)The table above does not reflect: (i) approximately $344 million of unrecognized tax benefits due to the uncertainty regarding the timing

and amount of payment; (ii) $37 million of Deemed Repatriation Transition Tax under the 2017 Tax Cuts and Jobs Act, which will be

settled in 2026; and (iii) $487 million deferred tax liability related to the Temple-Inland timber monetization, which will be settled with the

maturity of the notes in 2027.

We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2025, to be permanently

reinvested and, accordingly, no U.S. income taxes have been provided thereon (see Note 13 Income Taxes of Item

8. Financial Statements and Supplementary Data). We do not anticipate the need to repatriate funds to the United

States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs

associated with our domestic debt service requirements.

Pension Obligations and Funding

At December 31, 2025, the projected benefit obligation for the Company’s defined benefit plans determined under

U.S. GAAP was approximately $144 million lower than the fair value of plan assets. Plans that are subject to

minimum funding requirements had plan assets of $486 million higher than the projected benefit obligation. Under

current IRS funding rules, the calculation of minimum funding requirements differs from the calculation of the

present value of plan benefits (the "projected benefit obligation") for accounting purposes. Funding contributions

depend on the funding methods selected by the Company. The selected methods allow for the smoothing of asset

values and interest rates used to measure the funding obligations. The Company continually reassesses the

amount and timing of any discretionary contributions and elected not to make any voluntary contributions in 2023,

2024 or 2025. At this time, we do not expect to have any required contributions to our plans in 2026, although the

Company may elect to make future voluntary contributions. The timing and amount of future contributions, which

could be material, will depend on a number of factors, including the actual earnings and changes in values of plan

assets and changes in interest rates.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires International Paper to establish

accounting policies and to make estimates that affect both the amounts and timing of the recording of assets,

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liabilities, revenues and expenses. Some of these estimates require subjective judgments about matters that are

inherently uncertain.

Accounting policies whose application has had or is reasonably likely to have a material impact on the reported

results of operations and financial position of International Paper, and that can require a significant level of

estimation or uncertainty by management that affect their application, include the accounting for impairment of long-

lived assets and goodwill, pensions, income taxes and business combinations. Management has discussed the

selection of critical accounting policies and the effect of significant estimates with the Audit and Finance Committee

of the Company’s Board of Directors and with its independent registered public accounting firm.

IMPAIRMENT OF LONG-LIVED ASSETS AND GOODWILL

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that

indicate that the carrying value of the assets may not be recoverable. A recoverability test is performed by

comparing the undiscounted cash flows to the carrying value of the assets. If the carrying amount is less than the

undiscounted cash flows, the fair value of the assets is compared to the carrying value to determine if they are

impaired. An impairment of a long-lived asset exists when the asset’s carrying amount exceeds its fair value.

In conjunction with the previous announcement and subsequent sale of the Global Cellulose Fibers business to AIP

for $1.5 billion, the Company evaluated the long-lived assets for impairment. As a result, the Company recorded a

net pre-tax charge of $1.07 billion ($805 million after taxes) for the year ended December 31, 2025 due to the

difference between the sales price less estimated selling costs and the carrying value. This non-cash charge is

included in Discontinued Operations, net of taxes in the accompanying consolidated statements of operations.

We perform an annual goodwill impairment as of October 1. Additionally, interim assessments of possible

impairments of goodwill are also made when events or changes in circumstances indicate that the carrying value of

the asset may not be recoverable through future operations. A goodwill impairment exists when the carrying amount

of goodwill exceeds its fair value.

ASU 2011-08, "Intangibles - Goodwill and Other," allows entities testing goodwill for impairment the option of

performing a qualitative assessment before performing the quantitative goodwill impairment test. If a qualitative

assessment is performed, an entity is not required to perform the quantitative goodwill impairment test unless the

entity determines that, based on that qualitative assessment, it is more likely than not that its fair value is less than

its carrying value.

The January 31, 2025 acquisition of DS Smith added approximately $4.3 billion of goodwill, of which $3.4 billion was

allocated to the PS EMEA reporting unit and $0.9 billion was related to the PS NA reporting unit.

The Company completed its annual goodwill impairment testing for the PS NA and PS EMEA reporting units as of

October 1, 2025. Based on this assessment, no impairment was identified for either reporting unit.

Later in the fourth quarter of 2025, the Company, as part of its annual strategic review, identified a triggering event

driven by its updated strategic plan impacted by macroeconomic and industry outlooks, as well as the Company’s

evaluation of a potential separation into two independent, publicly traded companies. In response, the Company

performed a quantitative goodwill impairment test for the PS NA and PS EMEA reporting units, comparing each

reporting unit’s carrying value to its estimated fair value.

Estimated fair values were determined using discounted future cash flows and market multiples, which use inputs

that are classified within Level 2 and Level 3 of the fair value hierarchy. The discounted cash flow approach requires

significant management judgments, including assumptions related to forecasts of future revenues, operating

margins, and discount rates. The market‑multiple approach under the guideline public company method similarly

requires significant assumptions regarding adjusted EBITDA multiples.

As of December 31, 2025, the quantitative impairment test concluded that the carrying amount of the PS EMEA

reporting unit exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of

approximately $2.47 billion, which is reflected in Impairment of goodwill in the accompanying consolidated

statement of operations. After the impairment charge the carrying value of the PS EMEA reporting unit approximates

fair value. The estimated fair value of the PS EMEA reporting unit is sensitive to the underlying assumptions and a

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material change in any one, or combination of assumptions, could result in material future goodwill impairment. The

carrying amount of the PS NA reporting unit did not exceed its estimated fair value, and no impairment was

recorded for that reporting unit.

PENSION BENEFIT OBLIGATIONS

The calculation of the pension benefit obligation and corresponding expense amounts are determined annually, with

involvement of International Paper’s consulting actuary, and are dependent upon various assumptions including the

expected long-term rate of return on plan assets, discount rates, projected future compensation increases and

mortality rates.

The calculations of pension benefit obligations and expense require decisions about a number of key assumptions

that can significantly affect liability and expense amounts, including the expected long-term rate of return on plan

assets and the discount rate used to calculate plan liabilities.

Benefit obligations and fair values of plan assets as of December 31, 2025, for International Paper’s pension plan

were as follows:


In millions	Benefit Obligation	Fair Value of Plan Assets
U.S. qualified pension	$8,116	$8,482
U.S. nonqualified pension	218	—
Non-U.S. pension	1,116	1,112

The table below shows the discount rate used by International Paper to calculate U.S. pension obligations for the

years shown:


	2025	2024	2023
U.S. Discount rate	5.53%	5.68%	5.10%
Non-U.S. Discount rate	5.11%-5.16%	4.99%	5.88%

International Paper determines the actuarial assumptions to calculate liability information as of December 31 each

year or more frequently if required and pension expense for the following year. International Paper consults with our

third-party actuary in determining these actuarial assumptions. The expected long-term rate of return on plan assets

is based on projected rates of return for current asset classes in the plan’s investment portfolio. The discount rate

assumption was determined based on a hypothetical settlement portfolio selected from a universe of high-quality

corporate bonds.

The expected long-term rate of return on U.S. pension plan assets used to determine net periodic cost for the year

ended December 31, 2025 was 7.00%.

Decreasing the expected long-term rate of return on U.S. plan assets by an additional 0.25% would increase 2026

pension expense by approximately $21 million, while a decrease of 0.25% in the discount rate would increase

pension expense by approximately $13 million.

Actual rates of return earned on U.S. pension plan assets for each of the last 10 years were:


Year	Return	Year	Return
2025	11.8%	2020	24.7%
2024	(0.1)%	2019	23.9%
2023	7.3%	2018	(3.0)%
2022	(22.0)%	2017	19.3%
2021	7.7%	2016	7.1%

ASC 715, “Compensation – Retirement Benefits,” provides for delayed recognition of actuarial gains and losses,

including amounts arising from changes in the estimated projected plan benefit obligation due to changes in the

assumed discount rate, differences between the actual and expected return on plan assets, and other assumption

changes. These net gains and losses are recognized in pension expense prospectively over a period that

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approximates the average remaining service period of active employees expected to receive benefits under the

plans to the extent that they are not offset by gains and losses in subsequent years.

The increase in 2025 pension expense primarily reflects lower asset returns, higher interest cost due to a higher

discount rate, and the impact of curtailment and settlement losses.

Assuming that discount rates, expected long-term returns on plan assets and rates of future compensation

increases remain the same as of December 31, 2025, projected future net periodic pension plan expense (income)

would be as follows:


In millions	2027	2026
Pension expense (income)
U.S. plans	$(27)	$(14)
Non-U.S. plans	(6)	(6)
Net (income) expense	$(33)	$(20)

The Company estimates that it will record net pension income of approximately $14 million for its U.S. defined

benefit plans in 2026, compared to expense of $42 million in 2025.

The market value of plan assets for International Paper’s U.S. qualified pension plan at December 31, 2025 totaled

approximately $8.5 billion, consisting of approximately 64% hedging assets and 36% return seeking assets. The

Company’s funding policy for its qualified pension plan is to contribute amounts sufficient to meet legal funding

requirements, plus any additional amounts that the Company may determine to be appropriate considering the

funded status of the plan, tax deductibility, the cash flows generated by the Company, and other factors. The

Company continually reassesses the amount and timing of any discretionary contributions and could elect to make

voluntary contributions in the future. There were no required contributions to the U.S. qualified plan in 2025. The

nonqualified defined benefit plans are funded to the extent of benefit payments, which totaled $49 million for the

year ended December 31, 2025.

INCOME TAXES

International Paper records its global tax provision based on the respective tax rules and regulations for the

jurisdictions in which it operates. Where the Company believes that a tax position is supportable for income tax

purposes, the item is included in its income tax returns. Where treatment of a position is uncertain, liabilities are

recorded based upon the Company’s evaluation of the “more likely than not” outcome considering technical merits

of the position based on specific tax regulations and facts of each matter. Changes to recorded liabilities are only

made when an identifiable event occurs that changes the likely outcome, such as settlement with the relevant tax

authority, the expiration of statutes of limitation for the subject tax year, change in tax laws, or recent court cases

that are relevant to the matter. Accrued interest related to these uncertain tax positions is recorded in our

consolidated statement of operations in Interest expense, net. The Company's uncertain tax positions were $384

million and $204 million at December 31, 2025 and 2024, respectively.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will

not be realized. Significant judgment is required in assessing the need for and magnitude of appropriate valuation

allowances against deferred tax assets. This assessment is completed by tax jurisdiction and relies on both positive

and negative evidence available, with significant weight placed on recent financial results. Cumulative reported pre-

tax income is considered objectively verifiable positive evidence of our ability to generate positive pre-tax income in

the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little or no weight

placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. When necessary, we

use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable

income and when deferred tax assets will reverse and generate tax deductions. Assumptions, judgment, and the

use of estimates are required when scheduling the reversal of deferred tax assets and liabilities, and the exercise is

inherently complex and subjective. The realization of these assets is dependent on generating future taxable

income, as well as successful implementation of various tax planning strategies. The Company's valuation

allowance was $1.5 billion and $1.2 billion at December 31, 2025 and 2024, respectively.

While International Paper believes that these judgments and estimates are appropriate and reasonable under the

circumstances, actual resolution of these matters may differ from recorded estimated amounts.

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BUSINESS COMBINATIONS

We account for acquisitions under ASC 805, Business Combinations, which requires allocating the purchase price

to the fair values of assets acquired and liabilities assumed as of the acquisition date. This process involves

significant estimates and assumptions, particularly for property, plant and equipment and identifiable intangible

assets such as customer relationships and lists, trade names, and technology. Key inputs include forecasted cash

flows, discount rates, market data, and other valuation factors. These estimates are inherently judgmental and

subject to change as additional information becomes available during the measurement period (up to 12 months

after closing).

On January 31, 2025, we completed the combination with DS Smith for $9.9 billion. The purchase price allocation

resulted in goodwill for the excess of purchase price over the fair value of net assets acquired. The fair value

assigned to the assets and liabilities acquired above were measured using Level 2 and Level 3 inputs. The

estimated fair value of inventory was determined using the Comparative Sales and Replacement Cost methods.

Fair value estimates related to the trade name and patents identified intangible assets were determined using the

Relief from Royalty method. The fair value estimates related to customer relationships and lists identified intangible

assets were determined using the Multi-Period Excess Earnings method. The plants, properties and equipment,

specifically the machinery and equipment and buildings and improvements, were valued using either the indirect or

direct methods of the Cost Approach, while the land was valued using the Sales Comparison Approach. We have

finalized the fair values of property, plant and equipment, intangible assets, and certain tax-related items, with

assistance from third-party valuation specialists. See Note 1 and Note 7 of Item 8. Financial Statements and

Supplementary Data for additional details.

LEGAL PROCEEDINGS

Information concerning certain legal proceedings involving the Company is set forth in Item 8. Financial Statements

and Supplementary Data, which is incorporated by reference herein. Except as set forth in Note 14 Commitments

and Contingent Liabilities, the Company is not subject to any administrative or judicial proceeding arising under any

federal, state or local provisions that have been enacted or adopted regulating the discharge of materials into the

environment or primarily for the purpose of protecting the environment that is likely to result in monetary sanctions

of $1 million or more.

RECENT ACCOUNTING DEVELOPMENTS

See Note 2 Recent Accounting Developments of Item 8. Financial Statements and Supplementary Data for a

discussion of new accounting pronouncements.

EFFECT OF INFLATION

Inflationary increases in certain input costs, such as energy, wood fiber and chemical costs, can impact the

Company’s operating results as can general inflationary conditions, including labor market conditions, economic

activity, consumer behavior, and supply shortages and disruptions. During 2025, inflationary pressures stabilized

and moderated over the year and did not have a significant impact on our operating results. The Company's

operating results are more strongly influenced by economic supply and demand factors in specific markets due to

the impact on sales prices and volumes and exchange rate fluctuations when compared to inflationary factors.

FOREIGN CURRENCY EFFECTS

International Paper has operations in a number of countries. Its operations in those countries also export to, and

compete with imports from other regions. As such, currency movements can have a number of direct and indirect

impacts on the Company’s financial statements. Direct impacts include the translation of international operations’

local currency financial statements into U.S. dollars and the remeasurement impact associated with non-functional

currency financial assets and liabilities. Indirect impacts include the change in competitiveness of imports into, and

exports out of, the United States (and the impact on local currency pricing of products that are traded

internationally). In general, a weaker U.S. dollar and stronger local currency is beneficial to International Paper. The

currencies that have the most impact are the euro and pound sterling.

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MARKET RISK

We use financial instruments, including fixed and variable rate debt, to finance operations, for capital spending

programs and for general corporate purposes. Additionally, financial instruments, including various derivative

contracts, are used to hedge exposures to interest rate, commodity and foreign currency risks. We do not use

financial instruments for trading purposes. Information related to International Paper’s debt obligations is included in

Note 16 Debt and Lines of Credit of Item 8. Financial Statements and Supplementary Data.

The fair value of our debt and financial instruments varies due to changes in market interest and foreign currency

rates and commodity prices since the inception of the related instruments. We assess this market risk utilizing a

sensitivity analysis. The sensitivity analysis measures the potential loss in earnings, fair values and cash flows

based on a hypothetical 10% change (increase and decrease) in interest and currency rates and commodity prices.

INTEREST RATE RISK

Our exposure to market risk for changes in interest rates relates primarily to short- and long-term debt obligations

and investments in marketable securities. We invest in investment‑grade securities issued by financial institutions

and in AAA‑rated money market mutual funds, while limiting our exposure to any one issuer or fund. Our

investments in marketable securities at December 31, 2025 and 2024 are stated at cost, which approximates

market due to their short-term nature. At December 31, 2025, our interest rate risk exposure related to these

investments was not material.

We issue fixed and floating rate debt in a proportion that management deems appropriate based on current and

projected market conditions. Derivative instruments, such as interest rate swaps, may be used to execute this

strategy. At December 31, 2025 and 2024, the fair value of the net liability of financial instruments with exposure to

interest rate risk was approximately $7.1 billion and $4.0 billion, respectively. The potential increase in fair value

resulting from a 10% adverse shift in quoted interest rates would have been approximately $895 million and $206

million at December 31, 2025 and 2024, respectively.

COMMODITY PRICE RISK

The objective of our commodity exposure management is to minimize volatility in earnings due to large fluctuations

in the price of commodities. Commodity swap or forward purchase contracts may be used to manage risks

associated with market fluctuations in energy prices. At December 31, 2025 and 2024, the net fair value of these

contracts was $21 million liability and $3 million asset. The potential loss in fair value from a 10% adverse change in

quoted commodity prices for these contracts would have been approximately $40 million and $2 million at

December 31, 2025 and 2024, respectively.

FOREIGN CURRENCY RISK

International Paper transacts business in many currencies and is also subject to currency exchange rate risk

through investments and businesses owned and operated in foreign countries. The currencies that have the most

impact are the euro and pound sterling. Our objective in managing the associated foreign currency risks is to

minimize the effect of adverse exchange rate fluctuations on our after-tax cash flows as well as financial statement

impact. We address these risks on as needed basis by entering into cross-currency interest rate swaps, foreign

exchange contracts, or foreign currency denominated debt designated as net investment hedges.

At December 31, 2025 and 2024, the net fair value of foreign currency derivative instruments was immaterial. The

potential loss in fair value for such financial instruments from a 10% adverse change in quoted foreign currency

exchange rates was also immaterial.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the preceding discussion regarding market risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF MANAGEMENT ON:

Financial Statements

The management of International Paper Company is responsible for the preparation of the consolidated financial

statements in this Annual Report on Form 10-K. The consolidated financial statements have been prepared using

accounting principles generally accepted in the United States of America considered appropriate in the

circumstances to present fairly the Company’s consolidated financial position, results of operations and cash flows

on a consistent basis. Management has also prepared the other information in this Annual Report on Form 10-K and

is responsible for its accuracy and consistency with the consolidated financial statements.

As can be expected in a complex and dynamic business environment, some financial statement amounts are based

on estimates and judgments. Even though estimates and judgments are used, measures have been taken to

provide reasonable assurance of the integrity and reliability of the financial information contained in this Annual

Report on Form 10-K. We have formed a Disclosure Committee to oversee this process.

The accompanying consolidated financial statements have been audited by the independent registered public

accounting firm Deloitte & Touche LLP (PCAOB ID No. 34). During its audits, Deloitte & Touche LLP was given

unrestricted access to all financial records and related data, including minutes of all meetings of shareholders and

the Board of Directors and all committees of the Board of Directors. Management believes that all representations

made to the independent auditors during their audits were valid and appropriate.

Internal Control Over Financial Reporting

The management of International Paper Company is also responsible for establishing and maintaining adequate

internal control over financial reporting (as defined in Rules (13a-15(e) and 15d-15(e) under the Exchange Act).

ICFR is the process designed by, or under the supervision of, our principal executive officer and principal financial

officer, and effected by our Board of Directors, management and other personnel to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes. All

internal control systems have inherent limitations, including the possibility of circumvention and overriding of

controls, and therefore can provide only reasonable assurance of achieving the designed control objectives. The

Company’s internal control system is supported by written policies and procedures, contains self-monitoring

mechanisms, and is audited by our internal audit function. Appropriate actions are taken by management to correct

deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior

management, our Audit and Finance Committee and our staff of highly qualified financial and legal professionals.

The Company has assessed the effectiveness of its internal control over financial reporting as of December 31,

2025. In making this assessment, it used the criteria described in “Internal Control – Integrated Framework (2013)”

issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this

assessment, management believes that, as of December 31, 2025, the Company’s internal control over financial

reporting was effective.

In accordance with SEC guidance, management's assessment of the effectiveness of the Company’s internal

control over financial reporting as of December 31, 2025 excluded DS Smith, which was acquired by the Company

during the last fiscal year on January 31, 2025. DS Smith constituted approximately 43% of the Company’s total

assets as of December 31, 2025 and approximately 33% of the Company’s total net sales for the year ended

December 31, 2025, respectively.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued its report on the

effectiveness of the Company’s internal control over financial reporting.

Internal Control Environment And Board Of Directors Oversight

Our internal control environment includes an enterprise-wide attitude of integrity and control consciousness that

establishes a positive “tone at the top.” This is exemplified by our ethics program that includes long-standing

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principles and policies on ethical business conduct that require employees to maintain the highest ethical and legal

standards in the conduct of International Paper business, which have been distributed to all employees. The

Company provides a toll-free telephone helpline whereby any employee may anonymously report suspected

violations of law or International Paper’s policy; and maintains an office of ethics and business practice. The internal

control system further includes careful selection and training of supervisory and management personnel,

appropriate delegation of authority and division of responsibility, dissemination of accounting and business policies

throughout International Paper, and an extensive program of internal audits with management follow-up.

The Board of Directors, assisted by the Audit and Finance Committee, monitors the integrity of the Company’s

financial statements and financial reporting procedures, the performance of the Company’s internal audit function

and independent auditors, and other matters set forth in its charter. The Audit and Finance Committee, which

consists of independent directors, meets regularly with representatives of management, and with the independent

auditors and the Internal Auditor, with and without management representatives in attendance, to review their

activities. The Audit and Finance Committee Charter takes into account the New York Stock Exchange rules relating

to audit committees and the SEC rules and regulations promulgated as a result of the Sarbanes-Oxley Act of 2002.

The Audit and Finance Committee has reviewed and discussed the consolidated financial statements for the year

ended December 31, 2025, including critical accounting policies and significant management judgments, with

management and the independent auditors. The Audit and Finance Committee’s report recommending the inclusion

of such financial statements in this Annual Report on Form 10-K will be set forth in our Proxy Statement.

ANDREW K. SILVERNAIL

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

LANCE T. LOEFFLER

SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of International Paper Company:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of International Paper Company and subsidiaries

(the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations,

comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended

December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the

financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended

December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on

criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission and our report dated February 27, 2026, expressed an unqualified

opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an

opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with

the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of

material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the financial statements. Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the financial

statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial

statements that were communicated or required to be communicated to the Audit and Finance Committee and that

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially

challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way

our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which

they relate.

Retirement Plans — Fair value of other investments — Refer to Note 19 to the financial statements

Critical Audit Matter Description

As of December 31, 2025, the Company’s US Pension Plan held approximately $2.2 billion in investments whose

reported value is determined based on net asset value (“NAV”). The strategic asset allocation policy prescribed by

the Company’s US Pension Plan includes permissible investments in certain hedge funds, private equity funds, and

real estate funds whose reported values are determined based on the estimated NAV of each investment.

These NAVs are generally determined by the US Pension Plan’s third-party administrators or fund managers and

are subject to review and oversight by management of the Company and its third-party investment advisors.

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Given a lack of a readily determinable value of these investments and the subjective nature of the valuation

methodologies and unobservable inputs used in these methodologies, auditing the NAV associated with these

investments requires a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination of NAV associated with the Company’s US Pension Plan’s

investments in hedge funds, private equity funds, and real estate funds included the following, among others:

•We tested the effectiveness of controls over the Company’s determination and evaluation of NAV, including

those related to the reliability of NAVs reported by third-party administrators and fund managers.

•We inquired of management and the investment advisors regarding changes to the investment portfolio and

investment strategies.

•We obtained a confirmation from the third-party custodian as of December 31, 2025 of all individual

investments held in trust for the US Pension Plan to confirm the existence of each individual asset held in

trust.

•For selected investment funds with a fiscal year end of December 31, we performed a retrospective review

in which we compared the estimated fair value recorded by the Company in the December 31, 2024

financial statements, to the actual fair value of the fund (using the per-share NAV disclosed in the fund’s

subsequently issued audited financial statements), to evaluate the appropriateness of management’s

estimation process.

•We rolled forward the valuation from selected funds’ most recently audited financial statements to

December 31, 2025. This roll forward procedure included consideration of the Company’s transactions in

the fund during the period, as well as an estimate of the funds’ returns based on an appropriate,

independently obtained benchmark or index. We then compared our independent fund valuation estimate to

the December 31, 2025, balance recorded by the Company. For certain selected funds, our roll forward

procedures included alternative procedures, such as inspecting trust statements for observable transactions

near year-end to compare to the estimated fair value.

•For certain investments, we inquired of management to understand year-over-year changes in the fund

manager’s estimate of NAV and compared the fund’s return on investment to other available qualitative and

quantitative information.

Goodwill – Packaging Solutions EMEA – Refer to Notes 1 and 12 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit

to its carrying value annually or whenever events or changes in circumstances indicate that an evaluation should be

completed. The Company estimates the fair value of its reporting units using income and market approaches. The

estimate of the fair value using the income approach requires management to make significant estimates and

assumptions related to forecasts of future revenues and operating margins, and discount rates. The determination

of the fair value using the market approach requires management to make significant assumptions related to

earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples for guideline public companies.

Changes to the assumptions and estimates may result in a significantly different estimate of the fair value of the

reporting units, which could result in a different assessment of the recoverability of goodwill or the impairment

amount of goodwill.

During the fourth quarter of 2025, the Company identified a triggering event as part of its annual strategic review,

driven by updated macroeconomic and industry outlooks, as well as the Company's evaluation of a potential

separation into two independent, publicly traded companies. We identified the assessment of goodwill for

impairment for Packaging Solutions EMEA (“PS EMEA”) during the fourth quarter as a critical audit matter because

of the significant estimates and assumptions management made to estimate the fair value of the reporting unit, and

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the sensitivity of the estimate to changes in the assumptions, specifically the forecasts of future revenues and

operating margins, and the discount rate used in the income approach; and the selection of EBITDA multiples of

guideline public companies in the market approach. This required a high degree of auditor judgment and an

increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures

to evaluate the reasonableness of management’s estimates and assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of future revenues and operating margins, and the selection of the

discount rate, and EBITDA multiples of guideline public companies for the PS EMEA reporting unit, included the

following, among others:

•We tested the effectiveness of controls over management's goodwill impairment evaluation, including those

over the determination of the fair value of the PS EMEA reporting unit, such as controls related to

management's forecasts of future revenues and operating margins and selection of the discount rate and

EBITDA multiples of guideline public companies.

•We evaluated the reasonableness of management’s forecasts of future revenues and operating margins of

PS EMEA by comparing the forecasts to (1) forecasted information in industry reports, market data, and

guideline public company information, (2) internal communications to management and the board of

directors, and (3) external communications made by management to analysts and investors.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the selection of the

discount rate and EBITDA multiples of guideline public companies, by:

▪Testing the source information underlying the determination of the discount rate, testing the

mathematical accuracy of the calculation, and developing a range of independent estimates and

comparing those to the discount rate selected by management.

▪Comparing the reporting unit's growth and profitability to the guideline public companies selected,

testing the source information underlying the determination of the EBITDA multiples, developing a

range of independent estimates and comparing those to the EBITDA multiples selected by

management, and testing the mathematical accuracy of the calculation.

Business Combinations – Acquisition of DS Smith – Valuation of Customer Relationships and Lists – Refer

to Note 1 and Note 7 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of DS Smith for $9.9 billion on January 31, 2025. The Company allocates

the total consideration of the assets acquired and liabilities assumed based on their estimated fair value as of the

business combination date. The identifiable intangible assets acquired in connection with the acquisition of DS

Smith included customer relationships and lists of $3.4 billion. Management estimated the fair value of the customer

relationships and lists intangible asset using the multi-period excess earnings method, which is a specific

discounted cash flow method. The fair value determination of the customer relationships and lists required

management to make significant estimates and assumptions related to forecasts of future revenues and operating

margins, and selection of the customer attrition rate and discount rate.

We identified the customer relationships and lists intangible asset as a critical audit matter because there was a

high degree of auditor judgment and extent of effort involved in applying audit procedures and evaluating the

significant assumptions related to forecasts of future revenues and operating margins, and the selection of customer

attrition rate and discount rate, including the need to involve our fair value specialists.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and operating margins, and the selection of the

customer attrition rate and discount rate for the customer relationships and lists intangible asset included the

following, among others:

•We tested the effectiveness of controls over the fair value of the customer relationships and lists intangible

asset, including management's controls over the forecasts of future revenues and operating margins, and

selection of the customer attrition rate and discount rate.

•We evaluated the reasonableness of management’s forecasts of future revenues and operating margins by

comparing the projections to forecasted information in industry reports and companies in its peer group.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) mathematical

accuracy of the valuation for customer relationships and lists intangible asset, and (2) the following

significant valuation assumptions:

▪Customer attrition rate by testing the source information underlying the determination of the rate

and testing the mathematical accuracy of the calculations.

▪Discount rate by developing a range of independent estimates and comparing those to the discount

rate selected by management.

/s/ Deloitte & Touche LLP

Memphis, Tennessee

February 27, 2026

We have served as the Company's auditor since 2002.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of International Paper Company:

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of International Paper Company and subsidiaries (the

“Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion,

the Company maintained, in all material respects, effective internal control over financial reporting as of

December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by

COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United

States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the

Company and our report dated February 27, 2026, expressed an unqualified opinion on those financial statements.

As described in the Report of Management on Internal Control over Financial Reporting, management excluded

from its assessment the internal control over financial reporting at DS Smith, which was acquired on January 31,

2025, and whose financial statements constitute 43% of total assets and 33% of total net sales of the consolidated

financial statement amounts as of and for the year ended December 31, 2025. Accordingly, our audit did not include

the internal control over financial reporting at DS Smith.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for

its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report

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of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the

Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered

with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting

was maintained in all material respects. Our audit included obtaining an understanding of internal control over

financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and

operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we

considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for external purposes in

accordance with generally accepted accounting principles. A company’s internal control over financial reporting

includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and expenditures of the company are being made

only in accordance with authorizations of management and directors of the company; and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s

assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

/s/ Deloitte & Touche LLP

Memphis, Tennessee

February 27, 2026

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CONSOLIDATED STATEMENT OF OPERATIONS


In millions, except per share amounts, for the years ended December 31	2025	2024	2023
NET SALES	$23,634	$15,835	$16,033
COSTS AND EXPENSES
Cost of products sold	16,637	11,397	11,512
Selling and administrative expenses	2,050	1,703	1,257
Depreciation and amortization	2,747	851	1,146
Distribution expenses	2,000	1,180	1,240
Taxes other than payroll and income taxes	210	119	127
Restructuring charges, net	626	103	65
Impairment of goodwill	2,467	—	—
Net (gains) losses on sales and impairments of businesses	(25)	—	—
Net (gains) losses on sales and impairments of assets	(70)	(59)	—
Interest expense, net	372	214	230
Non-operating pension (income) expense	(12)	(42)	54
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY EARNINGS (LOSSES)	(3,368)	369	402
Income tax provision (benefit)	(533)	(361)	68
Equity earnings (loss), net of taxes	(3)	(5)	(21)
EARNINGS (LOSS) FROM CONTINUING OPERATIONS	(2,838)	725	313
Discontinued operations, net of taxes	(678)	(168)	(25)
NET EARNINGS (LOSS)	(3,516)	557	288
BASIC EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations	$(5.61)	$2.09	$0.90
Discontinued operations	(1.34)	(0.49)	(0.07)
Net earnings (loss)	$(6.95)	$1.60	$0.83
DILUTED EARNINGS (LOSS) PER SHARE
Earnings (loss) from continuing operations	$(5.61)	$2.05	$0.89
Discontinued operations	(1.34)	(0.48)	(0.07)
Net earnings (loss)	$(6.95)	$1.57	$0.82

The accompanying notes are an integral part of these financial statements.

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CONSOLIDATED BALANCE SHEET


In millions, except per share amounts, at December 31	2025	2024
ASSETS
Current Assets
Cash and temporary investments	$1,145	$1,062
Accounts and notes receivable (less allowances of $70 in 2025 and $30 in 2024)	3,791	2,402
Contract assets	635	362
Assets held for sale	1,800	1,016
Inventories	2,012	1,486
Other current assets	723	96
Total Current Assets	10,106	6,424
Plants, Properties and Equipment, net	14,443	7,916
Goodwill	5,326	3,038
Intangibles, net	4,043	72
Long-Term Financial Assets of Variable Interest Entities (Note 15)	2,349	2,331
Right of Use Assets	697	402
Overfunded Pension Plan Assets	486	93
Long-Term Assets Held For Sale	—	1,876
Deferred Charges and Other Assets	514	648
TOTAL ASSETS	$37,964	$22,800
LIABILITIES AND EQUITY
Current Liabilities
Notes payable and current maturities of long-term debt	$992	$191
Accounts payable	3,902	2,110
Accrued payroll and benefits	834	680
Liabilities held for sale	502	344
Other current liabilities	1,669	933
Total Current Liabilities	7,899	4,258
Long-Term Debt	8,839	5,362
Deferred Income Taxes	1,898	1,028
Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 15)	2,127	2,120
Long-Term Lease Obligations	486	269
Underfunded Pension Benefit Obligations	316	232
Postretirement and Postemployment Benefit Obligation	133	133
Long-Term Liabilities Held For Sale	—	125
Other Liabilities	1,439	1,100
Commitments and Contingent Liabilities (Note 14)
Equity
Common stock $1 par value, 2025 - 627.0 shares and 2024 - 448.9 shares	627	449
Paid-in capital	14,414	4,732
Retained earnings	4,885	9,393
Accumulated other comprehensive loss	(528)	(1,722)
	19,398	12,852
Less: Common stock held in treasury, at cost, 2025 – 99.0 shares and 2024 – 101.5 shares	4,571	4,679
Total Equity	14,827	8,173
TOTAL LIABILITIES AND EQUITY	$37,964	$22,800

The accompanying notes are an integral part of these financial statements.

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CONSOLIDATED STATEMENT OF CASH FLOWS


In millions for the years ended December 31	2025	2024	2023
OPERATING ACTIVITIES
Net earnings (loss)	$(3,516)	$557	$288
Depreciation and amortization	2,882	1,305	1,432
Deferred income tax provision (benefit), net	(855)	(473)	(156)
Restructuring charges, net	618	221	99
Impairment of goodwill	2,467	—	—
Net (gains) losses on sales and impairments of businesses	1,045	—	—
Net (gains) losses on sales and impairments of assets	(70)	(58)	—
Net (gains) losses on sales and impairments of equity method investments	—	—	153
Periodic pension (income) expense, net	39	1	94
Equity method dividends received	—	—	13
Other, net	(78)	135	(88)
Changes in operating assets and liabilities
Accounts and notes receivable	91	59	255
Contract assets	(21)	36	48
Inventories	158	12	73
Accounts payable and other liabilities	(1,027)	(140)	(402)
Interest payable	22	16	(19)
Other	(57)	7	43
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	1,698	1,678	1,833
INVESTMENT ACTIVITIES
Capital expenditures	(1,857)	(921)	(1,141)
Acquisitions, net of cash acquired	414	—	—
Proceeds from divestitures, net of transaction costs	141	—	—
Proceeds from sales of equity method investments, net of transaction costs	—	—	472
Proceeds from sale of fixed assets	218	91	4
Proceeds from insurance recoveries	28	25	—
Other	32	(3)	(3)
CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES	(1,024)	(808)	(668)
FINANCING ACTIVITIES
Issuance of debt	409	102	783
Reduction of debt	(255)	(141)	(780)
Change in book overdrafts	181	(69)	(8)
Repurchases of common stock and payments of restricted stock tax withholding	(65)	(23)	(218)
Dividends paid	(977)	(643)	(642)
Other	(1)	(1)	(1)
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES	(708)	(775)	(866)
Effect of Exchange Rate Changes on Cash	25	(38)	10
Change in Cash and Temporary Investments	(9)	57	309
Cash and Temporary Investments
Beginning of the period	1,170	1,113	804
End of the period	$1,161	$1,170	$1,113

The accompanying notes are an integral part of these financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


In millions	Common Stock Issued	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Common Stock Held In Treasury, At Cost	Total Equity
BALANCE, JANUARY 1, 2023	$449	$4,725	$9,855	$(1,925)	$4,607	$8,497
Issuance of stock for various plans, net	—	5	—	—	(77)	82
Repurchase of stock	—	—	—	—	220	(220)
Dividends ($1.850 per share)	—	—	(652)	—	—	(652)
Comprehensive income (loss)	—	—	288	360	—	648
BALANCE, DECEMBER 31, 2023	449	4,730	9,491	(1,565)	4,750	8,355
Issuance of stock for various plans, net	—	2	—	—	(94)	96
Repurchase of stock	—	—	—	—	23	(23)
Dividends ($1.850 per share)	—	—	(655)	—	—	(655)
Comprehensive income (loss)	—	—	557	(157)	—	400
BALANCE, DECEMBER 31, 2024	449	4,732	9,393	(1,722)	4,679	8,173
Issuance of stock for various plans, net	—	(49)	—	—	(173)	124
Issuance of stock for DS Smith acquisition	178	9,731	—	—	—	9,909
Repurchase of stock	—	—	—	—	65	(65)
Dividends ($1.850 per share)	—	—	(992)	—	—	(992)
Comprehensive income (loss)	—	—	(3,516)	1,194	—	(2,322)
BALANCE, DECEMBER 31, 2025	$627	$14,414	$4,885	$(528)	$4,571	$14,827

The accompanying notes are an integral part of these financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

International Paper (the "Company") is a global producer of renewable fiber-based packaging products with primary

markets and manufacturing operations in North America and Europe and additional markets and manufacturing

operations in Latin America and North Africa. Substantially all of our businesses have experienced, and are likely to

continue to experience, cycles relating to available industry capacity and general economic conditions.

FINANCIAL STATEMENTS

These consolidated financial statements have been prepared in conformity with accounting principles generally

accepted in the United States that require the use of management’s estimates. Actual results could differ from

management’s estimates. Certain amounts from prior year have been reclassified to conform with the current year

financial statement presentation.

DS Smith

As a result of the acquisition of DS Smith, the Chief Operating Decision Maker (CODM) began reviewing and

managing the Company’s financial results and operations under a revised structure that reflects the scope of the

Company’s continuing operations: Packaging Solutions North America (PS NA) and Packaging Solutions EMEA (PS

EMEA). The PS EMEA segment includes the Company's legacy EMEA Industrial Packaging business and the

EMEA DS Smith business. As such, amounts related to the Company's legacy EMEA Industrial Packaging business

have been recast out of the Industrial Packaging segment into the new PS EMEA segment for all prior periods. The

North America DS Smith business has been included in the PS NA segment. Amounts related to the Company's

legacy North America Industrial Packaging business have been reported in the PS NA segment for all prior periods.

See Note 7 for further details regarding the DS Smith acquisition and Note 21 for further details regarding business

segments.

Global Cellulose Fibers Discontinued Operations

Following the announcement on August 21, 2025 of a definitive agreement to sell the Global Cellulose Fibers (GCF)

business, the GCF business is no longer a reportable segment and all current and historical operating results of the

GCF business are presented as Discontinued Operations, net of taxes, in the consolidated statements of

operations. All current and historical assets and liabilities of the Global Cellulose Fibers business are classified as

Assets held for sale and Long-Term Assets Held For Sale and Liabilities held for sale and Long-Term Liabilities Held

For Sale in the accompanying consolidated balance sheets. See Note 8 for further details regarding the Global

Cellulose Fibers business and discontinued operations.

DISCONTINUED OPERATIONS

A discontinued operation may include a component or a group of components of the Company's operations. A

disposal of a component or a group of components is reported in discontinued operations if the disposal represents

a strategic shift that has or will have a major effect on the Company's operations and financial results when the

following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2)

the component or group of components is disposed of by sale; or (3) the component or group of components is

disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off). For any

component classified as held for sale or disposed of by sale or other than by sale, qualifying for presentation as a

discontinued operation, the Company reports the results of operations of the discontinued operations (including any

gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued

operation), less applicable income taxes (benefit), as a separate component in the consolidated statements of

operations for current and all prior periods presented. The Company also reports assets and liabilities associated

with discontinued operations as separate line items on the consolidated balance sheets. The Company recorded

discontinued operations for the years ended December 31, 2025, 2024 and 2023 in connection with the sale of its

Global Cellulose Fibers business and for the year ended December 31, 2023 in connection with the sale of its equity

method investment in Ilim. See Note 8 and Note 11 for further details.

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CONSOLIDATION

The consolidated financial statements include the accounts of International Paper and subsidiaries for which we

have a controlling financial interest, including variable interest entities for which we are the primary beneficiary. All

significant intercompany balances and transactions are eliminated.

EQUITY METHOD INVESTMENTS

The equity method of accounting is applied for investments when the Company has significant influence over the

investee’s operations, or when the investee is structured with separate capital accounts. Our material equity method

investments are described in Note 11.

OTHER-THAN-TEMPORARY IMPAIRMENT

The Company evaluates our equity method investments for other-than-temporary impairment ("OTTI") when

circumstances indicate the investment may be impaired. When a decline in fair value is deemed to be an OTTI, an

impairment is recognized to the extent that the fair value is less than the carrying value of the investment. We

consider various factors in determining whether a loss in value of an investment is other than temporary including:

the length of time and the extent to which the fair value has been below cost, the financial condition of the investee,

and our intent and ability to retain the investment for a period of time sufficient to allow for recovery of value.

Management makes certain judgments and estimates in its assessment including but not limited to: identifying if

circumstances indicate a decline in value is other than temporary, expectations about operations, as well as

industry, financial, regulatory and market factors.

BUSINESS COMBINATIONS

The Company allocates the total consideration of the assets acquired and liabilities assumed based on their

estimated fair value as of the business combination date. In developing estimates of fair values for long-lived

assets, including identifiable intangible assets, the Company utilizes a variety of inputs including forecasted cash

flows, anticipated growth rates, discount rates, customer attrition rates, estimated replacement costs and

depreciation and obsolescence factors. Determining the fair value for specifically identified intangible assets such as

customer relationships and lists and developed technology involves judgment. We may refine our estimates and

make adjustments to the assets acquired and liabilities assumed over a measurement period, not to exceed one

year. Upon the conclusion of the measurement period or the final determination of the values of assets acquired and

liabilities assumed, whichever comes first, any subsequent adjustments are charged to the consolidated statements

of operations. Subsequent actual results of the underlying business activity supporting the specifically identified

intangible assets could change, requiring us to record impairment charges or adjust their economic lives in future

periods. See Note 7 for further details.

RESTRUCTURING LIABILITIES AND COSTS

For operations to be closed or restructured, a liability and related expense is recorded when a present obligation

exists and the amount of the obligation can be reasonably estimated. For termination costs associated with

employees covered by a written or substantive plan, a liability is recorded when it is probable that employees will be

entitled to benefits and the amount can be reasonably estimated. For termination costs associated with employees

not covered by a written and broadly communicated policy covering involuntary termination benefits (severance

plan), a liability is recorded for costs to terminate employees (one-time termination benefits) when the termination

plan has been approved and committed to by management, the employees to be terminated have been identified,

the termination plan benefit terms are communicated, the employees identified in the plan have been notified and

actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or

that the plan will be withdrawn. The timing and amount of an accrual is dependent upon the type of benefits granted,

the timing of communication and other provisions that may be provided in the benefit plan. The accounting for each

termination is evaluated individually. See Note 6 for further details.

REVENUE RECOGNITION

Generally, the Company recognizes revenue on a point-in-time basis when the Company transfers control of the

goods to the customer. For customized goods where the Company has a legally enforceable right to payment for

the goods, the Company recognizes revenue over time, which generally is, as the goods are produced.

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The Company’s revenue is primarily derived from fixed consideration; however, we do have contract terms that give

rise to variable consideration, primarily volume rebates, early payment discounts and other customer refunds. The

Company estimates its volume rebates at the individual customer level based on the most likely amount method

outlined in ASC 606 "Revenue from Contracts with Customers". The Company estimates early payment discounts

and other customer refunds based on the historical experience across the Company's portfolio of customers to

record reductions in revenue that is consistent with the expected value method outlined in ASC 606. Management

has concluded that these methods result in the best estimate of the consideration the Company will be entitled to

from its customers.

The Company has elected to present all sales taxes on a net basis, account for shipping and handling activities as

fulfillment activities, recognize the incremental costs of obtaining a contract as expense when incurred if the

amortization period of the asset the Company would recognize is one year or less, and not record interest income or

interest expense when the difference in timing of control or transfer and customer payment is one year or less. See

Note 3 for further details.

TEMPORARY INVESTMENTS

Temporary investments with an original maturity of three months or less and money market funds with greater than

three-month maturities but with the right to redeem without notice are treated as cash equivalents and are stated at

cost, which approximates market value. See Note 9 for further details.

INVENTORIES

Inventories include all costs directly associated with manufacturing products: materials, labor, and manufacturing

overhead. In the United States, costs of raw materials and finished paper products are generally determined using

the last-in, first-out method. These inventories are measured at the lower of cost or market. Other inventories are

valued using the first-in, first-out or average cost methods. These inventories are measured at the lower of cost or

net realizable value. See Note 9 for further details.

LEASED ASSETS

Operating lease right of use ("ROU") assets and liabilities are recognized at the commencement date of the lease

based on the present value of lease payments over the lease term. The Company's leases may include options to

extend or terminate the lease. These options to extend are included in the lease term when it is reasonably certain

that we will exercise that option. Some leases have variable payments, however, because they are not based on an

index or rate, they are not included in the ROU assets and liabilities. Variable payments for real estate leases

primarily relate to common area maintenance, insurance, taxes and utilities. Variable payments for equipment,

vehicles, and leases within supply agreements primarily relate to usage, repairs and maintenance. As the implicit

rate is not readily determinable for most of the Company's leases, the Company applies a portfolio approach using

an estimated incremental borrowing rate to determine the initial present value of lease payments over the lease

terms on a collateralized basis over a similar term, which is based on market and company specific information. We

use the unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate, and apply the rate

based on the currency of the lease, which is updated on a quarterly basis for measurement of new lease liabilities.

Leases having a lease term of twelve months or less are not recorded on the balance sheet and the related lease

expense is recognized on a straight-line basis over the term of the lease. In addition, the Company has applied the

practical expedient to account for the lease and non-lease components as a single lease component for all of the

Company's leases. See Note 10 for further details.

PLANTS, PROPERTIES AND EQUIPMENT

Plants, properties and equipment, net are stated at cost, less accumulated depreciation. Expenditures for

betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred. Depreciation for

the majority of paper mills, as well as other plants and equipment, is calculated using the straight‑line method and

depreciation for certain paper mills is based on the units‑of‑production method. If a decision is made to abandon

plants, properties or equipment before the end of its useful life, depreciation expense is revised to reflect the

shortened useful life. See Note 9 for further details.

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GOODWILL

Annual evaluation for possible goodwill impairment is performed as of the beginning of the fourth quarter of each

year, with additional interim evaluation performed when management believes that it is more likely than not, that

events or circumstances have occurred that would result in the impairment of a reporting unit’s goodwill.

The Company has the option to evaluate goodwill for impairment by first performing a qualitative assessment of

events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less

than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines that it

is not more likely than not that the fair value of a reporting unit is less than its carrying amounts, then the

quantitative goodwill impairment test is not required to be performed. If the Company determines that it is more

likely than not that the fair value of a reporting unit is less than its carrying amount, or if the Company does not elect

the option to perform an initial qualitative assessment, the Company is required to perform the quantitative goodwill

impairment test. In performing this evaluation, the Company estimates the fair value of its reporting unit using a

weighted approach based on discounted future cash flows and market multiples. The determination of fair value

using the discounted cash flow approach requires management to make significant estimates and assumptions

related to forecasts of future revenues, operating margins and discount rates. The determination of fair value using

market multiples requires management to make significant assumptions related to adjusted earnings before interest,

taxes, depreciation, and amortization ("EBITDA") multiples. For reporting units whose carrying amount is in excess

of their estimated fair value, the reporting unit will record an impairment charge by the amount that the carrying

amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting

unit.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that

indicate that the carrying value of the assets may not be recoverable. A recoverability test is performed by

comparing the undiscounted cash flows to carrying value of the assets. The inputs related to the undiscounted cash

flows requires judgments as to whether assets are held and used or held for sale, the weighting of operational

alternatives being considered by management and estimates of the amount and timing of expected future cash

flows from the use of the long-lived assets generated by their use. If the carrying amount is less than the

undiscounted cash flows, the fair value of the assets is compared to the carrying value to determine if they are

impaired. We estimate fair value using discounted cash flows and other valuation techniques as needed. Impaired

assets are recorded at their estimated fair value.

INCOME TAXES

International Paper uses the asset and liability method of accounting for income taxes whereby deferred income

taxes are recorded for the future tax consequences attributable to differences between the financial statement and

tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected

to apply to taxable income in the years in which those temporary differences are expected to be recovered or

settled. Deferred tax assets and liabilities are remeasured to reflect new tax rates in the periods rate changes are

enacted.