International Paper Company
Annual Report 2023

Plain-text annual report

World Headquarters International Paper 6400 Poplar Avenue Memphis, TN 38197 United States of America EMEA Headquarters ©2024 International Paper Company. All rights reserved. The International Chaussée de la Hulpe, 166 Paper logo is a trademark of International Paper Company or its affiliates. 1170 Brussels, Belgium From Fortune © 2023. Fortune Media IP Limited All rights reserved. FORTUNE is a registered trademark of Fortune Media IP Limited and is used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, International Paper Company. “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC. FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that International Paper has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products. All product names, logos and brands are property of their respective owners. I n t e r n a t i o n a l P a p e r 2 0 2 3 A n n u a l R e p o r t 2023 Annual Report internationalpaper.com 429195_IP_AR23_CoverOnly-v2a_R2.indd 1-3 429195_IP_AR23_CoverOnly-v2a_R2.indd 1-3 3/19/24 2:24 PM 3/19/24 2:24 PM 429195_IP_AR23_CoverOnly-v2a_R2.indd 4-6 429195_IP_AR23_CoverOnly-v2a_R2.indd 4-6 3/19/24 2:24 PM 3/19/24 2:24 PM International Paper at a Glance Every day the world moves forward with new ideas, new technologies and new challenges. And every day International Paper forges ahead, becoming more dependable, more innovative and more sustainable than ever. Meeting today’s needs for renewable, fiber-based packaging and pulp while sharpening our focus on the future, we're here for what’s now and we’re creating what’s next. 21,000+ customers worldwide 39,000+ employees globally 250+ locations in more than 10 countries and 35 U.S. states $18.9B net sales in 2023 100M boxes made per day 429195_S_IP_AR23_v7a_TextOnly_R4.indd 1 429195_S_IP_AR23_v7a_TextOnly_R4.indd 1 3/19/24 2:33 PM 3/19/24 2:33 PM 01 International Paper 2023 Annual Report What we achieved in 2023: $840M returned to shareowners $2.16 in adjusted operating earnings per share (Non-GAAP)* $6.4B five-year total return to shareowners through dividends and share repurchases What we expect in 2024: Opened a $100M state- of-the-art corrugated • Positive market momentum and demand recovery packaging facility in Atglen, across portfolio Pennsylvania, providing more • Maintain financial strength than 100 manufacturing jobs to Atglen and the surrounding communities and flexibility to accelerate value creation for our stakeholders *Adjusted operating earnings, adjusted operating earnings per share, adjusted EBIT and adjusted EBITDA are non-GAAP financial measures. For a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure, see the disclosures in Financial Highlights included in this Annual Report. Dear Shareowners, On January 31, 1898, International Paper was born when 17 pioneering pulp and paper mills joined forces. Fast forward 125 years, we provide solutions to customers around the world as a global producer of sustainable packaging, pulp and other fiber-based products, and one of the world's largest recyclers. Our 39,000 team members are dedicated to creating products that enhance the quality of life and ensure essential goods are protected and transported from producers to retailers, and ultimately to our neighbors around the world. As I reflect on 2023, I appreciate the contributions and resilience of our employees and our strong customer relationships as we managed through a challenging market environment. Lower consumer spending on goods, customer inventory de-stocking, supply chain disruptions and historically high cost inflation impacted demand for our products and significantly constrained our earnings. Our teams navigated these challenges and executed well, both commercially and operationally. We leveraged our broad capabilities and market expertise to innovate, and create value for our customers. Driving out costs across our operations was a primary focus throughout the year and by leveraging advanced technologies and big data, we continued to improve productivity and drive profitability. Through our Building a Better IP initiatives, we delivered $260 million of earnings benefits in 2023, exceeding our target and demonstrating the mindset embedded in our culture for maximizing value through commercial and operational excellence. 02 429195_S_IP_AR23_v7a_TextOnly_R4.indd 2 429195_S_IP_AR23_v7a_TextOnly_R4.indd 2 3/19/24 2:33 PM 3/19/24 2:33 PM We took strategic actions in 2023 to structurally reduce important improvements within IP and across our supplier fixed costs and optimize our operations while maintaining and customer base. I’m incredibly proud of the awards we flexibility to grow with our customers. We also completed have earned in recognition of our efforts and the progress we the sale of our ownership interest in the Ilim joint venture continue to make. in Russia. With the completion of this transaction, International Paper no longer has any investment in Russia. We continued to optimize our Global Cellulose Fibers business, aligning with customers and segments that value our differentiated product and service offerings. We believe absorbent pulp is a value-added product that will grow over time due to the essential role it plays in addressing the personal care needs of consumers around the world. We are not satisfied with our absolute results in 2023. However, we made progress in improving mix, reducing our exposure to "International Paper is well- positioned for the future. Our financial foundation is strong, as are the principles and core values that guide our actions." commodity pulp grades and reducing costs. Looking ahead to 2024, International Paper is well- In our Industrial Packaging business, we invested in our extensive box system to improve our ability to serve customers. We added new converting lines to existing facilities, upgraded equipment with modern technology and opened a state-of-the-art facility in eastern Pennsylvania. These investments are helping address regional capacity constraints and productivity challenges. Across our packaging business, we are leveraging capabilities, strong positioned for the future. Our financial foundation is strong, as are the principles and core values that guide our actions. I’m confident in our commercial strategies and our ability to drive significant improvements across our entire system. Given our strategic customer relationships, talented teams, world-class assets and market expertise, we are committed to maximizing long-term value for all our stakeholders, and we intend to deliver. segment-based value propositions and focused cost- On behalf of International Paper’s board of directors and our reduction efforts. We are making meaningful progress 39,000 employees, thank you for your continued support improving margins and mix by creating value for our and ownership. customers while maximizing profitability. IP’s solid financial foundation and disciplined capital allocation framework continue to be fundamental to the way we operate. In addition to investing in our business in 2023, we preserved our solid balance sheet, remained committed to our dividend policy and returned approximately $840 million to our shareholders. This brings our five-year total to $6.4 billion in terms of cash returned to shareholders through dividends and stock repurchases. We strive to create a better future for people and our planet throughout every step of our value chain. Our commitments to safe operations, community giving and advancing our Vision 2030 goals are helping drive Mark S. Sutton, Chairman of the Board and Chief Executive Officer 03 429195_S_IP_AR23_v7a_TextOnly_R4.indd 3 429195_S_IP_AR23_v7a_TextOnly_R4.indd 3 3/19/24 2:33 PM 3/19/24 2:33 PM International Paper 2023 Annual Report Shareholder Value We have advantaged positions serving attractive market segments with safe, efficient manufacturing operations near sustainable fiber sources. 2.5x Debt / EBITDA (Non-GAAP)* $3B in liquidity and cash Fully funded qualified pension plan (U.S. only) *Adjusted operating earnings, adjusted operating earnings per share, adjusted EBIT and adjusted EBITDA are non-GAAP financial measures. For a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP measure, see the disclosures in Financial Highlights included in this Annual Report. $260M of cumulative earnings improvement generated through our Building a Better IP $1.1B in capital investments Continued focus on cost reduction and future growth in packaging business Recognition FORTUNE Magazine World’s Most Admired Companies® 2023 for 20 years American Opportunity Index Best Employers 2023 FTSE4Good Index Series An equity index series that is designed to facilitate investment in companies that meet globally recognized corporate responsibility standards Ethisphere Institute World’s Most Ethical Companies® for 17 consecutive years 04 429195_S_IP_AR23_v7a_TextOnly_R4.indd 4 429195_S_IP_AR23_v7a_TextOnly_R4.indd 4 3/19/24 2:33 PM 3/19/24 2:33 PM Our Leadership As of March 1, 2024 A diverse and agile leadership team with a winning mindset is critical to guiding the company’s improvement efforts and driving our success. Leadership Transitions Our CEO Succession Plan: Mark Sutton Chairman and CEO In 2023, our Chairman and CEO Mark Sutton requested that the Board of Directors move forward with the next phase of the company's CEO succession plan. This phase includes a comprehensive evaluation of internal and external candidates for Sutton's successor. Sutton will continue in his role as chairman and CEO until his successor is in place. In 2023, we added one senior leader: Ksenia Sosnina Senior Vice President, EMEA Ksenia Sosnina was elected senior vice president and president, International Paper, Europe, Middle East & Africa in July 2023. Sosnina first joined International Paper in 2013 as an officer and vice president leading IP Russia. She became a member of the Ilim Group Board of Directors in 2015 and was subsequently nominated as Chief Executive Officer of the Ilim Group in 2016. Mark S. Sutton Chairman of the Board and Chief Executive Officer Clay R. Ellis Senior Vice President Global Cellulose Fibers and IP Asia Aimee Gregg Senior Vice President Supply Chain and Information Technology W. Thomas Hamic Senior Vice President North American Container and Chief Commercial Officer Allison B. Magness Senior Vice President Manufacturing and Environment, Health and Safety Timothy S. Nicholls Senior Vice President and Chief Financial Officer Thomas J. Plath Senior Vice President Human Resources and Corporate Affairs James P. Royalty, Jr. Senior Vice President Containerboard and Recycling Joseph R. Saab Senior Vice President, General Counsel and Corporate Secretary Ksenia Sosnina Senior Vice President and President, IP EMEA 05 429195_S_IP_AR23_v7a_TextOnly_R4.indd 5 429195_S_IP_AR23_v7a_TextOnly_R4.indd 5 3/19/24 2:33 PM 3/19/24 2:33 PM International Paper 2023 Annual Report Our Businesses Building on more than 125 years of dependability and innovation, we continue to use sustainable fiber to serve customers and create profitable growth and long-term value for our shareholders. Total Revenue† † The remaining 2% of revenue is attributed mostly to fiber supply agreements. Industrial Packaging 83% 15% Industrial Packaging 83% of our total revenue† Global Cellulose Fibers 15% of our total revenue† We create 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 recycling business collects, consumes and markets more than 7 million tons of paper recovered annually in the United States, Mexico, Spain and Morocco. We are one of the world’s largest recyclers of recovered office paper and corrugated boxes. In Europe, Middle East & Africa, we serve customers from our network of two recycled containerboard mills and 23 box plants in France, Italy, Morocco, Portugal and Spain. Packaging Segments: • Food and Beverage • E-Commerce, Shipping and Distribution • Durables & Non-Durables Revenue by region: • 90% North America • 10% EMEA and Other Global Cellulose Fibers Cellulose fibers are a sustainable, renewable raw material used in a variety of products people depend on every day. We create safe, quality pulp for a wide range of applications like diapers, towel and tissue products, feminine care, incontinence and other personal care products that promote health and wellness. In addition, our innovative specialty pulps serve as a sustainable raw material used in textiles, construction materials, paints, coatings and more. Pulp Segments: • Absorbent hygiene • Specialty • Tissue and paper Revenue by region: • 89% North America* • 11% EMEA and Other * Although the majority of Global Cellulose Fibers revenue is generated in North America, we export approximately 90% of this volume, primarily to Asia and EMEA, with a smaller portion going to Latin America. 06 429195_S_IP_AR23_v7a_TextOnly_R4.indd 6 429195_S_IP_AR23_v7a_TextOnly_R4.indd 6 3/19/24 2:33 PM 3/19/24 2:33 PM Vision 2030 Vision 2030 defines our pathway to become among the most successful, sustainable and responsible companies in the world. Comprising four enterprise-wide goals and eight targets, Vision 2030 shows how we will accelerate our progress while remaining the supplier of choice for customers, the company of choice for employees and the investment of choice for shareholders. Healthy and Abundant Forests Sustainable Operations Goal: Target: Target: Lead forest stewardship efforts globally Goal: Target: Target: Source 100% of our fiber from sustainably managed forests or recovered fiber while safeguarding forests, watersheds and biodiversity Conserve and restore 1 million acres (400,000 hectares) of ecologically significant forestland Improve our climate impact and advance water stewardship Reduce our Scope 1, 2 and 3 greenhouse gas (GHG) emissions by 35% Reduce our water use by 25% and implement context-based water management plans at all mills Thriving People and Communities Renewable Solutions Goal: Goal: Target: Accelerate the transition to a low-carbon economy through innovative fiber-based products Advance circular solutions throughout our value chain and create innovative products that are 100% reusable, recyclable or compostable Target: Target: Target: Promote employee well-being by providing safe, caring and inclusive workplaces and strengthen the resilience of our communities Achieve 30% overall representation of women and 50% women in salaried positions. Implement regional diversity plans, including 30% minority representation in U.S. salaried positions Achieve zero injuries for employees and contractors Improve the lives of 100 million people in our communities 07 429195_S_IP_AR23_v7a_TextOnly_R4.indd 7 429195_S_IP_AR23_v7a_TextOnly_R4.indd 7 3/19/24 2:33 PM 3/19/24 2:33 PM International Paper 2023 Annual Report Delivering Our Customer Promise Doing the right things for our customers — at every moment, in every experience — is our customer promise. We live up to this commitment by listening to our customers, understanding their needs and creating value-added solutions. We know that each of our roles is ultimately linked to the customer experience. At IP, we understand opportunities, identify solutions and develop creative methods to deliver what our customers value better than anyone else. We focus on practical innovation and bringing new improvements to areas from design and graphics to lab testing and mechanical packaging systems. For example, IP worked with a national customer in our packaging business to optimize freight by eliminating incoming wooden pallets and increasing freight efficiency. Since more deliveries could fit into each container, fewer trips were needed to get products where they needed to go — meaning lower freight costs and reduced greenhouse gas emissions. 08 429195_S_IP_AR23_v7a_TextOnly_R4.indd 8 429195_S_IP_AR23_v7a_TextOnly_R4.indd 8 3/19/24 2:33 PM 3/19/24 2:33 PM The IP Way Our Mission Our Core Values Our mission is to improve people’s lives, the planet and our company’s performance by transforming renewable resources into products people depend on every day. We do the right things, in the right ways, for the right reasons, all of the time. Our Vision Our vision is to be among the most successful, sustainable and responsible companies in the world. Safety Above all, we care about people. We look out for each other to ensure everyone returns home safely. Ethics We act honestly and operate with integrity and respect. We promote a culture of openness and accountability. Stewardship We are responsible stewards of people and communities, natural resources and capital. We strive to leave everything in better shape for future generations. Think the Customer We will deliver on our customer promise to do the right things for our customers, at every moment, in every experience. Include and Engage We strive to intentionally build a culture in which each employee feels a sense of belonging and experiences an environment in which to do their best work every day. 429195_S_IP_AR23_v7a_TextOnly_R4.indd 9 429195_S_IP_AR23_v7a_TextOnly_R4.indd 9 3/19/24 2:33 PM 3/19/24 2:33 PM 09 International Paper 2023 Annual Report Our Board of Directors As of March 1, 2024 Mark S. Sutton Chairman of the Board and Chief Executive Officer International Paper Christopher M. Connor Lead Director, Retired Chairman, President and Chief Executive Officer The Sherwin-Williams Company Ahmet C. Dorduncu Retired Chief Executive Officer Akkök Group Ilene S. Gordon Retired Chairman, President and Chief Executive Officer Ingredion Incorporated Anders Gustafsson Executive Chair Zebra Technologies Corporation Jacqueline C. Hinman Chief Executive Officer Atlas Technical Consultants Clinton A. Lewis, Jr. Chief Executive Officer AgroFresh Solutions, Inc. Kathryn D. Sullivan Senior Fellow Potomac Institute for Policy Studies Ambassador- at-Large Smithsonian National Air and Space Museum Anton V. Vincent President Mars Wrigley North America Ray G. Young Retired Vice Chairman and Chief Financial Officer Archer Daniels Midland Company Director Transitions Ray G. Young Ray Young will not stand for re-election when his current term of service ends in May 2024. 10 429195_S_IP_AR23_v7a_TextOnly_R4.indd 10 429195_S_IP_AR23_v7a_TextOnly_R4.indd 10 3/19/24 2:33 PM 3/19/24 2:33 PM 10-K International Paper 2023 Annual Report 11 429195_S_IP_AR23_v7a_TextOnly_R4.indd 11 429195_S_IP_AR23_v7a_TextOnly_R4.indd 11 3/19/24 2:33 PM 3/19/24 2:33 PM [THIS PAGE INTENTIONALLY LEFT BLANK] 429195_S_IP_AR23_v6b_ILB_p12_ACH_01.pdf 1 3/12/24 1:48 PM FINANCIAL HIGHLIGHTS In millions, except per share amounts, at December 31 FINANCIAL SUMMARY Net Sales Business Segment Operating Profit Earnings from Continuing Operations Before Income Taxes and Equity Earnings Net Earnings Total Assets Total Shareholders’ Equity Attributable to International Paper Company PER SHARE OF COMMON STOCK Basic Earnings Per Share Attributable to International Paper Company Common Shareholders Diluted Earnings Per Share Attributable to International Paper Company Common Shareholders Cash Dividends SHAREHOLDER PROFILE Shareholders of Record at December 31 Shares Outstanding at December 31 Average Common Shares Outstanding Average Common Shares Outstanding – Assuming Dilution 2023 2022 $ 18,816 $ 21,161 1,249 (a) (b) (b-c) 382 288 23,261 8,355 1,848 (a) (d) 1,511 1,504 (d-e) 23,940 8,497 $ 0.83 $ 0.82 1.8500 8,236 346.0 346.9 349.1 $ 4.14 $ 4.10 1.8500 8,638 350.3 363.5 367.0 (a) (b) (c) (d) See the comparison of net earnings (loss) from continuing operations attributable to International Paper Company to its total business segment operating profit on page 31 and the operating profit table on page 91 for details of operating profit by business segment. Includes net pre-tax restructuring charges of $118 million for costs associated with the permanent closure of our containerboard mill in Orange, Texas and the permanent shutdown of pulp machines at our Riegelwood, North Carolina and Pensacola, Florida mills and pre-tax income of $19 million for the revision of severance estimates related to our Build a Better IP initiative. Also included is a charge of $422 million for accelerated depreciation associated with the permanent closure of our containerboard mill in Orange, Texas and the permanent shutdown of pulp machines at our Riegelwood, North Carolina and Pensacola, Florida mills, charges of $36 million for environmental remediation reserve adjustments and income of $3 million for interest associated with the previously announced settlement of the timber monetization restructuring tax matter. Includes a charge of $135 million for impairment and transaction costs related to our former equity method investment in the Ilim joint venture, a charge of $18 million for the other-than-temporary impairment of an equity method investment, a tax benefit of $23 million related to the settlement of tax audits and tax expense of $4 million related to internal legal entity restructuring. Includes net pre-tax restructuring charges of $89 million including a charge of $93 million for debt extinguishment costs and other income of $4 million. Also included is a charge of $76 million related to the impairment of goodwill in our EMEA Packaging business, a net gain of $65 million related to the monetization of our investment in Sylvamo Corporation, a charge of $63 million for environmental remediation reserve adjustments, a charge of $58 million for interest related to the previously announced settlement of the timber monetization restructuring tax matter, a charge of $11 million for a litigation reserve, income of $15 million for a legal settlement, a loss of $10 million for the foreign currency cumulative translation adjustment related to the sale of an equity method investment and a charge of $6 million for other costs. (e) Includes a charge of $533 million for the impairment of our equity method investment in connection with our announced plan to sell our interest in the Ilim joint venture, a tax benefit of $604 million related to the previously announced settlement of the timber monetization restructuring tax matter, a tax benefit of $66 million related to the tax-free exchange of our shares of Sylvamo Corporation and tax expense of $45 million related to a foreign deferred tax valuation allowance. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The non-GAAP financial measures presented 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 use identical calculations, the Company’s presentation of non-GAAP measures may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as International Paper. Management believes certain non-GAAP financial measures, when used in conjunction with information presented in accordance with GAAP, can facilitate a better understanding of the impact of various factors and trends on the Company’s financial condition and results of operations. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. For reconciliations of Adjusted Operating Earnings (Loss) per share attributable to International Paper Company common shareholders to diluted earnings (loss) per share attributable to International Paper Company common shareholders, see pages 29-30. In millions, at December 31 Calculation of Adjusted EBITDA Earnings from Continuing Operations Before Income Taxes and Equity Earnings Interest Expense, Net Special items Non-operating pension expense (income) EBIT before Special Items Depreciation, amortization and cost of timber harvested Adjusted EBITDA 2023 2022 $382 231 557 54 1,224 1,010 $2,234 $1,511 325 175 (192) 1,819 1,040 $2,859 Adjusted EBIT and Adjusted EBITDA are “non-GAAP financial measures” presented as supplemental measures of our performance and the most directly comparable GAAP measure for Adjusted EBIT and Adjusted EBITDA are operating income and net income, respectively. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company’s performance over time, and that other companies use these and/or similar measures for similar purposes. However, Adjusted EBIT and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating Adjusted EBIT and Adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Moody’s methodology is used to calculate Adjusted Debt to EBITDA ratio. Moody’s adjusts debt to include balance sheet debt, operating leases/deferred tax liability and debt issuance expense, and pension gap. EBITDA is adjusted to include lease and pension adjustments (non-GAAP). 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 12/31/2023 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 (State or other jurisdiction of incorporation or organization) 13-0872805 (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 Common Shares Trading symbol(s) Name of each exchange on which registered IP New York Stock Exchange Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Securities Registered Pursuant to Section 12(g) of the Act: None Yes ý 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 ý 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 ý 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 ý 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. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý 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, 2023) was approximately $10,960,397,116. The number of shares outstanding of the Company’s common stock as of February 9, 2024 was 346,353,824. 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 2024 annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K. INTERNATIONAL PAPER COMPANY INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023 PART I. ITEM 1. BUSINESS. General Human Capital Competition and Costs Marketing and Distribution Description of Principal Products Sales Volumes by Product Government Regulation Environmental Protection Climate Change Raw Materials Information About Our Executive Officers Forward-looking Statements ITEM 1A. ITEM 1B. ITEM 1C. ITEM 2. RISK FACTORS. UNRESOLVED STAFF COMMENTS. CYBERSECURITY. PROPERTIES. ITEM 3. ITEM 4. PART II. ITEM 5. ITEM 6. ITEM 7. Mills and Plants Capital Investments and Dispositions LEGAL PROCEEDINGS. MINE SAFETY DISCLOSURES. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. RESERVED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Executive Summary Results of Operations Description of Business Segments Business Segment Results Liquidity and Capital Resources Critical Accounting Policies and Significant Accounting Estimates Legal Proceedings Recent Accounting Developments Effect of Inflation Foreign Currency Effects Market Risk 1 1 1 2 4 5 5 5 5 5 6 9 9 10 11 22 22 24 24 24 25 25 26 26 27 28 32 35 36 37 41 43 44 44 44 44 INTERNATIONAL PAPER COMPANY INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023 ITEM 7A. ITEM 8. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Report of Management on Financial Statements, Internal Control over Financial Reporting and Internal Control Environment and Board of Directors Oversight Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm Consolidated Statement of Operations Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Statement of Cash Flows Consolidated Statement of Changes in Equity Notes to Consolidated Financial Statements CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. CONTROLS AND PROCEDURES. OTHER INFORMATION. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. EXECUTIVE COMPENSATION. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. PRINCIPAL ACCOUNTANT FEES AND SERVICES. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Additional Financial Data FORM 10-K SUMMARY. SIGNATURES. ITEM 9. ITEM 9A. ITEM 9B. ITEM 9C. PART III. ITEM 10. ITEM 11. ITEM 12. ITEM 13. ITEM 14. PART IV. ITEM 15. ITEM 16. APPENDIX I 2023 LISTING OF FACILITIES. APPENDIX II 2023 CAPACITY INFORMATION. 45 46 46 48 51 52 53 54 55 56 93 93 93 93 94 94 94 94 94 94 95 95 95 99 100 A-1 A-3 PART I. ITEM 1. BUSINESS GENERAL (the International Paper Company "Company," "International Paper" or "IP", which may also be referred to as "we" or "us") is a global producer of renewable fiber-based packaging and pulp products with manufacturing operations in North America, Latin America, Europe and North Africa. We are a New York corporation, the incorporated successor to the New York corporation of the same name organized in 1898. You can learn more about at us www.internationalpaper.com. in 1941 as website visiting our by three bag facilities. Production In the United States, at December 31, 2023, the Company operated 23 pulp and packaging mills, 162 converting and packaging plants, 16 recycling plants and facilities at December 31, 2023 in Canada, Europe, North Africa and Latin America included four pulp and packaging mills, 37 converting and packaging plants, and two recycling plants. We operate a packaging products distribution business principally through six branches in Asia. Substantially all of our businesses have experienced, and are likely to continue to experience, cycles relating to industry capacity and general economic conditions. We are guided by our core values. We do the right things, in the right ways, for the right reasons, all of the time – this is The IP Way. Our overarching values are safety, ethics, and stewardship. • • • • • Safety – Above all, we care about people. We look out for each other to ensure everyone returns home safely each day. Ethics – We act honestly and operate with integrity and respect. We promote a culture of openness and accountability. Stewardship – We are responsible stewards of people and communities, natural resources and capital. We strive to leave everything in better shape for future generations. Think the Customer – We will deliver on Our Customer Promise to do the right things for our customers, at every moment, in every experience. Include and Engage – We strive to build a culture in which each employee feels a sense of belonging and experiences an environment in which to do their best work every day. For management and financial reporting purposes, our businesses are separated into two segments: Industrial Packaging and Global Cellulose Fibers. A 1 description of these business segments can be found on pages 35 and 36 of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. On September 18, 2023, we completed the previously announced sale of our 50% equity interest in Ilim S.A. ("Ilim"), which was a joint venture that operated a pulp and paper business in Russia and has subsidiaries including Ilim Group. We also completed the sale of all of our Ilim Group shares (constituting a 2.39% stake) and divested other non-material residual interests associated with the completed sales, we no longer have an interest in Ilim or any of its subsidiaries, and no longer have any investments in Russia. As a result, all current and historical results of the Ilim investment reportable segment are presented as Discontinued Operations, net of taxes. See discussion in Note 11 - Equity Method Investments on pages 69 and 70 of Item 8. Financial Statements and Supplementary Data. Ilim. Following the Company permanently closed Following our public announcement on October 18, 2023, its containerboard mill in Orange, Texas on December 4, 2023 and permanently ceased production on two of its pulp machines at its Riegelwood, North Carolina and Pensacola, Florida mills on December 11, 2023. The mill closure resulted in pre-tax non-cash asset write-off and accelerated depreciation charges of approximately $347 million and pre-tax cash severance and other charges of approximately $81 million. The machine shutdowns resulted in pre-tax non-cash asset write-off and accelerated depreciation charges of approximately $75 million and pre-tax cash severance and other shutdown charges of approximately $37 million. The Company recorded these charges in the fourth quarter of 2023. shutdown through 2023, International Paper’s From 2019 capital spending approximated $4.6 billion, excluding mergers and acquisitions. These expenditures reflect our continuing efforts to use our capital strategically improve product quality and environmental to performance, as well as lower costs, maintain reliability of operations and deploy strategic capital for capacity expansion. Capital spending in 2023 was approximately $1.1 billion and is expected to be approximately $800 million to $1.0 billion in 2024. You can find more information about capital spending on page 39 of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Discussions of acquisitions can be found in Note 7 Acquisitions on page 65 of Item 8. Financial Statements and Supplementary Data. You can find discussions of restructuring charges and other special Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. items on page 35 of Throughout this Annual Report on Form 10-K, we “incorporate by reference” certain information in parts of other documents filed with the 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. information financial and other Our website contains a significant amount of information about the Company, including our SEC filings and for investors. The information that we post on our website could be deemed to be material information. We encourage investors, the media, and others interested in the Company to visit this website from time to time, as information is updated and new information is posted. The information contained on or connected 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. to our website, however, HUMAN CAPITAL EMPLOYEES As of December 31, 2023, we have approximately 39,000 employees, nearly 33,000 of whom are located in the United States. Of our U.S. employees, 22,900 are hourly, with unions representing approximately 14,200 employees. Of this number, 10,600 are represented by the United Steelworkers union ("USW"). International Paper, the USW, and several other unions have entered into four master agreements covering various U.S. mills and converting facilities. These master agreements cover several specific items, including wages, select benefit programs, successorship, employment security, and health and safety. Individual facilities continue to have local agreements for other 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 contracts will automatically renew with the same terms in effect. The master agreements cover the majority of our union represented mills and converting facilities. In addition, International Paper is party to a master 2, International Brotherhood of Teamsters, covering additional converting facilities. agreement with District Council SAFETY AND WELLBEING At International Paper, safety is core to who we are and how we operate. To achieve this, we are cultivating a resilient safety culture where every team member is empowered to stop work they believe is unsafe. We work tirelessly to anticipate and address layers of unexpected events by protection, continuously enhancing our systems and engaging all team members in learning events to prevent injuries before they take place. Our Vision 2030 goal to create a 100% injury-free workplace for fuels our our commitment to Memphis and everywhere in between. team members and contractors from Madrid incorporating We also care deeply about the mental, emotional, physical and professional wellbeing of our employees by providing an Employee Assistance Program (“EAP”) at no cost to employees and family members. Our EAP offers coaching and counseling sessions aimed at problem solving, achieving goals, and dealing with stress and anxiety management through resiliency. We embrace a holistic wellness approach providing employees with resources on incorporating wellness habits into their daily lives. HUMAN CAPITAL MANAGEMENT The attraction, retention and development of our employees is critical to our success. We create a that begins at positive employee experience Talent onboarding. Our Human Resources 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 learning, our continues development 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 2023, employees completed 4.6 million learning activities through our platform. through and continuous 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, 2 program Align College Hires) 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, more than 350 front line and future leaders participated in our multi-day in- person Leadership Application and Professional Development and Manufacturing Management Associate Programs during 2023. resources, courses and workshops We develop leaders through our IP Leadership Institute offering a broad range of LMS virtual and in person for individual contributors, people leaders and teams. We also offer peer mentoring and leadership and career development training to support and develop our employees. to employees reimbursement We help our employees better themselves by offering to pursue tuition additional education to prepare for other positions at the Company. We also provide student loan assistance to help employees repay qualified student loans. 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. to be The labor market for both hourly and salaried workers continues increasingly 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 local markets around the world. We continually evaluate our compensation and benefits so that we offer optimal compensation programs and leading employer of choice in the areas in which we operate. remain a in our DIVERSITY AND INCLUSION In 2023, we added Include and Engage as a new core value because we believe in an inclusive workforce, where employees of diverse backgrounds and perspectives are represented, engaged and empowered to contribute innovative ideas, influence decisions, and bring their authentic selves to work. While this core value is new, our efforts around diversity and inclusion have been in place for more than 20 years. Looking forward to projected workforce demographic changes over the next decade, and guided by our commitment to equal employment opportunity for all, our stated Vision 2030 goal is to achieve 30% overall representation of women and 50% women in salaried positions, 30% racial and ethnic minority in U.S. salaried positions, and to implement regional diversity plans in non-U.S. locations. To foster a more diverse and focused on the Company inclusive culture, promoting a culture of diversity and inclusion that leverages talents of all employees, and implementing practices that attract, recruit and retain a broad diversity of talent. representation the is Our Global Diversity and Inclusion Council, comprised of senior leaders in the Company, is committed to creating and promoting a culture of inclusion, collaboration, engagement, equity and diversity. The Company supports enterprise-wide employee-led networking circles (“ENCs”) that are open to all employees and provide a forum to communicate and exchange ideas, build a network of relationships across the Company, and pursue personal and professional development, such as the Women in International Paper ("WIP") ENC, Black Employee Networking Circle ("BEN"), LGBTQ+ & Allies ENC ("IPride") and a Veterans ENC ("iVets"). Each ENC is sponsored by Company leaders and aligned with our core values and business objectives. Through annual initiatives, ENCs offer development opportunities, encourage cross-collaboration and connection with individuals throughout the Company, and engage allies. Some facilities and functions also have their own ENCs. In 2023 our ENCs executed on 30 initiatives aimed at strengthening our diversity and inclusion culture. As examples of our efforts, in 2023, IPride hosted a workshop, “Pride 101,” where speakers educated attendees on topics such as history of the LGBTQ+ movement, and offered guidance to allies on how to support LGBTQ+ colleagues. Similarly, BEN sponsored a Juneteenth event, iVets partnered with our Community Engagement to sponsor Wreaths Across America, and WIP worked with our team 3 communications team to recognize women working in our facilities. We also recognize Diversity & Inclusion awareness months, conduct training and host D&I workshops and team-level courses which further our diversity and inclusion goals. We have also developed a Diversity Acquisition Framework for U.S. colleges and universities to guide our enterprise diversity and inclusion efforts as we strive to hire the best talent by accessing all the available talent using broad recruiting parameters through inclusive and legally compliant employment practices. The make-up of our Board of Directors and Senior Leadership Team ("SLT") reflects our efforts to seek qualified board candidates with diverse backgrounds and perspectives including, but not limited to, such factors as race, ethnicity and gender. At December 31, 2023, the composition of our Board of Directors, as noted below, reflects those efforts and the importance of diversity: • • 27% women, 27% ethnically diverse, 18% African-American and 75% of the Board of Director’s standing committees are chaired by women. Our Senior Leadership Team is currently comprised of senior vice presidents who oversee crucial functions and business units within the Company and is 30 percent women as of December 31, 2023. COMMUNITY ENGAGEMENT to support the We encourage our employees communities in which they live and in which the Company operates. Our community engagement efforts extend across the globe and support social and educational needs. To that end, in 2023 we invested approximately $20 million to address critical needs in the communities in which we work and live. Our Vision 2030 goal is to strengthen the resilience of our communities, in numerous ways, and improve the lives of 100 million people in our communities in numerous ways, including the support of education, reducing hunger, promoting health and wellness and supporting disaster relief. One way we lead in promoting health and wellness is through our award-winning Fighting Period Poverty in Our Communities program. Period poverty is lack of access to period products and education and affects at least 500 million women and girls globally. Period poverty leads to school truancy, reproductive issues, health risks and unnecessary shame. Through this program, we collaborate with partners to create awareness of period poverty globally and provide period care kits to people who need them most. the Company was honored with the In 2022, American Forest & Paper Association's (“AF&PA”) “Diversity, Equity and in Sustainability Award” for our “Ending Period Poverty” program. In 2023, we hosted 62 menstrual product kit packing events in nine countries donating more than 32,000 menstrual product kits to people across the world. Inclusion in 2023, the Company was awarded a Also Leadership in Sustainability Award for Resilient U.S. Forests by the AF&PA for its innovative approach to promote forest bird awareness and conservation within the forest product supply chain in partnership with the American Bird Conservancy. In 2024, we received the Grassroots Innovation Award from the Public Affairs Council. Additionally, we are proud to have been named among the world’s most ethical companies by Ethisphere for 17 consecutive years. INTELLECTUAL PROPERTY, PATENTS, AND TRADEMARKS foreign in certain 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 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 pulp and packaging sectors are 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. 4 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 on pages 27 through 37 of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You can find information about the Company’s manufacturing capacities on page A-3 of Appendix II. 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 are described on pages 35 and 36 of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. SALES VOLUMES BY PRODUCT Sales volumes of major products for 2023, 2022 and 2021 were as follows: SALES VOLUMES BY PRODUCT (a) In thousands of short tons (except as noted) Industrial Packaging Corrugated Packaging (b) Containerboard Recycling Saturated Kraft Gypsum/Release Kraft Europe, Middle East & Africa ("EMEA") Packaging (b) Industrial Packaging Global Cellulose Fibers (in thousands of metric tons) (c) 2023 2022 2021 9,428 2,604 2,152 160 237 1,282 15,863 2,681 10,202 2,642 2,190 188 251 1,376 16,849 2,893 10,787 2,893 2,223 186 234 1,546 17,869 2,970 Includes third-party and intersegment sales and excludes sales of equity investees. (a) (b) Volumes for corrugated box sales reflect consumed tons sold ("CTS"). Board sales for these businesses reflect invoiced tons. (c) Includes North American volumes and internal sales to mills. GOVERNMENTAL REGULATION production, those governing The Company’s policy is to operate its mills and factories 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 the regulations as well as manufacturing, handling, storage, transport, marketing and sale of our products. Our operations are also subject to forestry environmental reserve regulations and occupational health and safety laws. Violations fines, administrative 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 risks associated with environmental regarding matters, see Item 1A. Risk Factors – WE ARE result sanctions, requirements, substantial content, criminal other can in SUBJECT TO A WIDE VARIETY OF LAWS, REGULATIONS AND OTHER GOVERNMENTAL IN REQUIREMENTS THAT MAY CHANGE 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 As responsible stewards of people and communities, natural resources and capital, stewardship is one of the Company's core values. Our Vision 2030 goals provide a framework to build a better future for people, the planet and the Company in the areas of healthy and abundant forests, thriving people and communities, sustainable operations and renewable solutions. Through the Company tackles the toughest issues in the value chain to improve its environmental footprint and promote the long-term sustainability of natural capital. these efforts and more, Our approach to sustainability considers our entire value chain, from sourcing raw materials responsibly 5 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 using a variety of methods, issues and associated risks and assessed key opportunities, sustainability and considerations into our processes. Additionally, in 2020, we established our Vision 2030 goals with the purpose of promoting healthy and abundant forests, thriving people and communities, sustainable operations and renewable solutions. incorporated In addition, laws and authorities. international As part of its business, the Company is subject to extensive and increasingly stringent federal, state regulations local, and governing the protection of the environment. For example, 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 new environmental laws or regulations impacting our facilities around the world are often passed or proposed. Our continuing objectives include: (1) controlling emissions and discharges from our the to avoid adverse facilities environment, and (2) maintaining compliance with applicable laws and regulations. The Company spent approximately $40 million in 2023 for capital projects to control environmental releases into the air and water, and to assure environmentally sound management and disposal of waste. We expect to spend approximately $35 million for environmental capital projects. Capital expenditures on environmental projects for 2025 and 2026, respectively, are anticipated to be approximately $40 million and $35 million. It is possible that our capital expenditure assumptions, estimates and project completion dates may change, and our projections are subject to change due to items such as the finalization of ongoing engineering projects, varying laws and costs or changes regulations. in environmental impacts on in 2024 The Company has completed capital projects to meet the U.S. Environmental Protection Agency's ("EPA") maximum achievable control technology ("MACT") and risk and technology review ("RTR") regulations that require owners of specified pulp and paper process equipment and boilers to meet new air for certain substances. As emissions standards portions of these MACT and RTR regulations have been remanded to EPA for further consideration it is not clear at this time what, if any, additional capital project expenditures might result from resolution of the open issues. 6 in party The Company has been named as a potentially responsible environmental ("PRP") remediation actions under various federal and state laws, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"). Many of these proceedings involve the cleanup of hazardous substances at large commercial landfills that received waste from many different sources. While joint and several liability is authorized under CERCLA and equivalent state laws, as a practical matter, liability for CERCLA cleanups is typically allocated among the many PRPs and/or potentially liable parties, and costs are commonly allocated according to relative amounts of waste factors. There are other deposited and other remediation costs the cleanup of hazardous substances at the Company’s current, closed or facilities, and recorded as liabilities on the balance sheet. For additional information regarding certain remediation actions, see Note 14 Commitments and Contingent Liabilities of Item 8. Financial Statements and Supplementary Data on pages 74 through 78. For additional information regarding risks associated with environmental matters, see Item 1A. Risk Factors – WE ARE SUBJECT TO A WIDE VARIETY OF LAWS, 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, OUR COULD BUSINESS AND RESULTS OF OPERATIONS. typically associated with REGULATIONS formerly-owned IMPACT AND CLIMATE CHANGE aligned economy. We The Company recognizes the impacts of climate change on people and our planet. To manage taking actions risks, we are climate-related throughout our value chain to help advance a low- carbon annual sustainability reporting with the recommendations of the Task Force on Climate-Related Financial Disclosure (“TCFD”) in the 2023 reporting cycle (based upon data from 2022). As part of our TCFD 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. our 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 Vision 2030 goals, we have targeted incremental reductions of 35% in our Scope 1, 2, and 3 GHG emissions by 2030 in comparison to 2019 levels. The Science Based Targets initiative (“SBTi”) approved these targets as consistent with levels required to meet the goals of the 2015 Paris Agreement, an agreement signed among over 170 countries, which became effective in November 2016. We intend to continue to evaluate and implement projects as we pursue this Vision 2030 GHG goal. This includes ongoing energy efficiency efforts and to phase out our most carbon capital projects intensive (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 have recently committed to be an early adopter of the Taskforce on Nature- (“TNFD”). TNFD related Financial Disclosures adopters reporting TNFD disclosures recommendations, which have been designed to (i) meet 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 the Kunming-Montreal Global Biodiversity Framework, which was adopted to halt and reverse nature loss by 2030. to make corporate the corporate aligned with fuel sources reporting intend that are in We use carbon-neutral biomass and manufacturing residuals (rather than fossil fuels) 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. IP supports the 2015 Paris Agreement and recognizes the importance of global policy action 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 to achieve emission 7 and sequestration in the second half of this century or, in effect, achieve net-zero global GHG emissions. in meeting GHG To assist member countries reduction obligations, the European Union operates an Emissions Trading System ("EU ETS"). Our operations in the EU experience indirect impacts of through purchased power pricing. the EU ETS Neither the direct nor indirect impacts of the EU ETS have been material to the Company, but they could be material to the Company in the future depending on how the 2015 Paris Agreement's non-binding commitments or allocation of, and market prices for, GHG credits under existing rules evolve over the coming years. compliance responsibilities on Additionally, the EU’s newly mandated Corporate Sustainability Reporting Directive (“CSRD”) and Deforestation Regulation (“EUDR”), each impose the additional Company. The CSRD requires additional reporting processes for greater accountability. The Company’s first reporting year under the CSRD is expected to be 2025. The CSRD standards replace the existing Non- Financial Reporting Directive and expands reporting requirements for companies operating in the EU. The implementation timeline varies depending on the type of entity. from certain commodities The EUDR requires companies trading in products derived 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. Currently, the Company is evaluating the implications of the EUDR to its business with the expected earliest reporting date being in 2025. 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 (“EGUs”); (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, including states in which we operate facilities, have enacted or are considering legal measures to require the reduction and reporting of emissions of GHGs by companies and public utilities. California, New York and Virginia have already enacted such programs, although these regulations have not had, and are not expected to impact on have a material the Company. For example, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act, which will impose climate-related reporting obligations on companies in California meeting specified doing business thresholds, the Company. We monitor proposed programs in other states as well; however, it is unclear what impacts, if any, future state-level or local GHG rules will have on the Company’s operations. including SUMMARY impacts, to possible direct Regulation related to GHGs and climate change continues to evolve in the areas of the world in which we do business. However, while it is likely that there will be increased governmental action regarding GHGs and climate change in the future, it is unclear what actions will be taken and when such actions will occur and at this time it is not reasonably possible to estimate the Company’s costs of compliance with rules that have not yet been adopted or implemented and may not be adopted or implemented in the future. future In addition legislation and regulation could have indirect impacts on for the Company, such as higher prices transportation, energy and other inputs, as well as more protracted air permitting processes, causing delays and higher costs to implement capital projects. Other possible indirect impacts may 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 to track GHG emissions from our facilities, as well as to stay informed about developments concerning possible climate-related laws, regulations, accords, and policies in the U.S. and in other jurisdictions 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 which are currently in effect or which may be effective 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 Vision 2030 goal on GHGs as set forth 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 promoted by our Board of Directors, committees of the Board of Directors, and senior management. 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 of Directors 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 on 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 diverse backgrounds. Management Development and Compensation Committee ("MDCC Committee") objectives Approves Chief Executive Officer ("CEO") sustainability-focused and evaluates performance. in SLT Considers sustainability compensation and in overall compensation plan design. Reviews sustainability disclosures related to executive compensation. factors • • • 8 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. in is embedded At the management level, ownership and governance of sustainability matters the organization from the top down. Our CEO and SLT 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 SLT, which is comprised of senior vice presidents who oversee critical functions and business units within the Company, evaluates sustainability issues based on input from function- specific councils that report to the SLT. The SLT receives several sustainability updates throughout the year from our CSO. The Company also has an Enterprise Lead Team (“ELT”), comprised of the SLT and additional subject matter experts, including our CSO, that meets quarterly and receives regular climate-related updates. Moreover, at the operational level, our Stewardship Council, a cross-functional leadership team with representatives from businesses the and Company’s sustainability strategy and tactics. teams, guides and supports functional For additional information regarding risks associated with climate change, 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. on our found website Additional information regarding climate change and the Company is available in our annual Sustainability Report and TCFD Report, both of which can, or will be, at www.internationalpaper.com. Our 2023 Sustainability Report and 2023 TCFD Report will be available later in 2024. 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, 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 page 40. INFORMATION ABOUT OUR EXECUTIVE OFFICERS The following are the executive officers of our Company as of the date of this filing. Mark S. Sutton, 62, chair (since January 2015 and member of the Board of Directors since June 2014) and chief executive officer (since November 2014). In his 40 years with the Company, Mr. Sutton has served in various roles of increasing responsibilities including president and chief operating officer (June 2014-October 2014), senior vice president - Industrial Packaging (2011-2014), senior vice president - Printing and Communications Papers the Americas (2010-2011), senior vice president - Supply Chain (2008-2009), vice president - Supply Chain (2007-2008), and vice president - Strategic Planning (2005-2007). Mr. Sutton is also a member of the board of directors of The Kroger Company (NYSE: KR). He is a member of The Business Council and the Business Roundtable and serves on the American Forest & Paper Association board of directors. He also serves on the board of directors for Memphis Tomorrow, an association of CEOs of Memphis’ largest businesses working to promote opportunity and quality of life for all Memphians. Mr. Sutton joined International Paper in 1984. Clay R. Ellis, 53, senior vice president - Global Cellulose Fibers and IP Asia since January 2023. Mr. Ellis previously served as senior vice president - Enterprise Operational Excellence (2019-2022) and vice president - Manufacturing, Global Cellulose Fibers (2016-2019). Prior to that, he served as vice president of Pulp (2014-2016), and vice president Manufacturing, North American Papers (2012-2014). Mr. Ellis joined International Paper in 1992. Aimee Gregg, 45, senior vice president, Supply Chain and Information Technology, since January 2023. Prior to this role, Ms. Gregg served as vice president and general manager, Containerboard and Recycling (2020-2023); vice president, Recycling and Recovered Fiber (2018-2020), and general manager, Recycling, joined International Paper in 2002. (2016-2018). Ms. Gregg 9 W. Thomas Hamic, 57, senior vice president - North American Container and chief commercial officer since January 2023. Prior to this role, Mr. Hamic served as senior vice president - Global Cellulose Fibers and Enterprise Commercial Excellence (2020-2022). Mr. Hamic previously served as senior vice president - Containerboard and Enterprise Commercial Excellence (2019-2020). Mr. Hamic has also previously served as vice president and general manager - Containerboard and Recycling, North American Container (2015-2019). Mr. Hamic became vice president and general manager of the South Area Container the Americas in 2009, and was appointed to the role of vice president, Industrial Packaging Group’s Finance and Strategy in 2010. Mr. Hamic joined International Paper in 1991. Allison B. Magness, 46, senior vice president Manufacturing and Environmental Health and Safety (”EHS”) since January 2023. Prior to this role, she served as vice president, South Area, North American Container (2019-2022). Previously she served in a president, number roles Manufacturing and Containerboard (2015-2019); manager, Technical Services, North American Papers and Pulp (2013-2015); and mill manager of the Franklin Mill joined International Paper in 2000. (2011-2013). Ms. Magness including vice of Timothy S. Nicholls, 62, senior vice president and chief financial officer since June 2018. Mr. Nicholls previously served as senior vice president - Industrial Packaging the Americas (2017-2018), senior vice president - Industrial Packaging (2014-2016), senior vice president - Printing and Communications Papers of the Americas (2011-2014), senior vice president and chief financial officer (2007-2011), vice president and executive project leader of IP Europe (2007), and vice president and chief financial officer - IP Europe (2005-2006). Mr. Nicholls joined International Paper in 1999 following our acquisition of Union Camp Corporation where he had worked since 1991. Thomas J. Plath, 60, senior vice president - Human Resources and Corporate Affairs since January 2023. Prior to this role, he served as senior vice president - Human Resources and Global Citizenship (2017-2022). Mr. Plath previously served as vice president - Human Resources, global businesses (2014-2017), and vice president – Human Resources Manufacturing, Technology, EHS and Global Supply Chain (2013-2014). Mr. Plath joined International Paper in 1991. James P. Royalty, Jr., 54, senior vice president - Containerboard and Recycling since January 2023. Previously, he served as senior vice president and president, Europe, Middle East, Africa & Russia (2019-2022); vice president, Corporate Development 10 and Disruptive Technologies president, Strategic Projects president, Investor Relations president and general manager, Container Americas International Paper in 1991. (2018-2019); vice (2017-2018); vice (2013-2017); vice the joined (2008-2013). Mr. Royalty Joseph R. Saab, 55, senior vice president, general counsel and corporate secretary since July 2022. Mr. Saab previously served as vice president, deputy general counsel and assistant corporate secretary - (2019-2022) and associate general counsel Industrial Packaging North America, Europe, Middle East & Africa joined International Paper in 2001. (2014-2019). Mr. Saab Ksenia N. Sosnina, 55, senior vice president, Europe, Middle East & Africa since July 2023. Earlier in her career, Ms. Sosnina served as an officer and vice president of IP Russia (2015-2016) and served as chief executive officer of Ilim Group (2016-2023). Ms. Sosnina joined International Paper in 2013. the 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 “believes,” “anticipates,” 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. Forward-looking statements can be identified by the use of forward-looking or conditional words such as “expects,” “estimates,” “could,” “should,” “can,” “forecast,” “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. Factors which could cause actual results to differ include but are not limited to: (i) risks with respect to climate change and global, regional, and local weather conditions, as well as risks related to our ability to meet targets and goals with respect to climate change and the emission of greenhouse gases and other sustainability matters; (ii) the level of our indebtedness, risks associated with our variable rate debt, and changes in interest rates (including the impact of current elevated interest rate levels); (iii) the impact of global and domestic economic conditions and industry conditions, including with respect to conditions, current negative macroeconomic to (iv) rates, risks arising financial markets; conditions, military 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 customer or consumer preferences, government regulation, demand and pricing for our products, and conditions impacting the credit, capital from and conducting business internationally, domestic and global geopolitical conflict (including the Russia/Ukraine conflict, the conflict in Israel and surrounding areas, the possible expansion of such conflicts, and the potential geopolitical and therewith), economic consequences associated changes trade in currency exchange in our credit protectionist policies, downgrades ratings, and/or the credit ratings of banks issuing certain letters of credit, issued by recognized credit rating organizations; (v) the amount of our future funding obligations, and pension and pension healthcare costs; (vi) the costs of compliance, or the comply with, existing and new failure to climate environmental (including with respect change and GHG emissions), labor and tax, employment, privacy, anti-bribery and anti-corruption, and other U.S. and non-U.S. governmental laws and regulations; (vii) any material disruption at any of our manufacturing facilities or other adverse impact on to severe weather, natural our operations due disasters, climate change or other causes; (viii) our ability to realize expected benefits and cost savings associated with restructuring initiatives; (ix) our ability to achieve the benefits expected from, and other risks associated with, ventures, acquisitions, divestitures, spin-offs, capital investments and other corporate cybersecurity and information technology risks, including as a result of security breaches and cybersecurity incidents; (xi) loss contingencies and pending, threatened or future litigation, including with respect to environmental related matters; (xii) our exposure to claims under our agreements with Sylvamo Corporation; (xiii) our failure to realize the anticipated benefits of the spin- off of Sylvamo Corporation and the qualification of such spin-off as a tax-free transaction for U.S. federal income tax purposes; and (xiv) our ability to attract and retain qualified personnel, particularly in light of current labor market conditions. These and other factors that could cause or contribute to actual results forward-looking differing materially 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. transactions, from such joint (x) ITEM 1A. RISK FACTORS 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 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations) and in the Company’s other filings with the Securities and Exchange Commission. Moreover, or uncertainties not presently known to us, or that we currently deem immaterial, may adversely affect our business, results of operations, or financial condition. (including risks in RISKS RELATING TO MARKET AND ECONOMIC FACTORS ADVERSE DEVELOPMENTS IN GENERAL BUSINESS AND ECONOMIC CONDITIONS COULD HAVE AN ADVERSE EFFECT ON THE DEMAND FOR OUR PRODUCTS AND OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS. General economic conditions may adversely affect industrial non-durable goods production, consumer confidence and spending, commercial printing and advertising activity, and white-collar employment levels, all of which impact demand for our products, or otherwise adversely affect our business. We may also be adversely affected by catastrophic or other unforeseen events, including health epidemics or pandemics, such as COVID-19, 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 pandemics could adversely impact portions of our business to varying degrees, including as the result of lower 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 11 and respect to our business have resulted in, and may in the future result in impairment charges which could be material. Volatility or uncertainty in the financial, negative credit markets, capital 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 our results of operations. and to be challenging Macroeconomic conditions in the U.S. and globally in various respects, continue including as the result of significant inflationary pressures, elevated interest rates, challenging labor market conditions, and adverse effects associated with current geopolitical conditions. Our operations have been adversely affected by, and are expected to continue to be adversely affected by, these negative macroeconomic conditions, including as the result of for certain products, higher raw lower demand material and labor costs. Moreover, any significant in current negative macroeconomic deterioration conditions, or any is recovery significantly slower than anticipated, could have a material adverse effect on our business, results of operations or financial condition. Further if current negative macroeconomic in significant disruptions to capital and financial markets, our cost of borrowing, our ability to access capital on favorable terms, and our overall liquidity could be adversely affected. conditions therefrom result that impacted The COVID-19 pandemic adversely portions of our business to varying degrees, including as the result of lower demand for certain of our products, supply chain and labor disruptions, and higher costs. If public health conditions related to COVID-19 or a similar health epidemic or pandemic were to significantly worsen in the U.S. or in other markets in which we operate, our business and financial results could be adversely impacted, and we may be unable to effectively respond to or predict any such developments. renewable INTERNATIONALLY CHANGES IN INTERNATIONAL CONDITIONS OR OTHER RISKS ARISING FROM CONDUCTING BUSINESS COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS. As a global producer fiber-based packaging and pulp of products, we could be substantially affected by risks related to the countries outside the U.S. in which we have manufacturing facilities or sell our products. These risks, which can vary substantially by country, instability, may geopolitical anti-American sentiment, social and ethnic unrest, natural disasters, regulatory military conflicts and environment (including the risks of operating in include economic or political corruption, terrorism, events, the in safety relation (including guidelines developing or emerging markets in which there are significant uncertainties regarding the interpretation and enforceability of legal requirements and the intellectual enforceability of contracts rights and property rights) fluctuations in the value of local currency versus the U.S. dollar, foreign exchange control regimes (including restrictions on currency conversion) repatriating cash from foreign countries to the U.S., downturns or changes in economic conditions to commodity inflation), adverse tax consequences or rulings, import restrictions or controls, economic sanctions, health protocols, and 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 significant portion of sales from our Global Cellulose Fibers business are concentrated in China and could be adversely affected by changes in economic conditions and demographics in China. Trade protection measures in favor of local producers of competing governmental subsidies, tax benefits and other measures giving local producers a competitive advantage over us, may also adversely impact our operating results and 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), which may result in tariffs, could have a negative effect on our business and results of operations by restricting the free flow of goods and services across borders. products, including During the third quarter of 2023, we completed the sale of our ownership stake in Ilim and Ilim Group, and we no longer have investments in Russia following the completion of this sale. Prior to the completion of this sale, the military conflict between Russia and Ukraine adversely affected our Ilim joint venture and our financial results, including as the result of economic sanctions, actions by the Russian government, and associated domestic and global economic and geopolitical conditions. Additionally, while we no longer have any investments in Russia, we may continue to be adversely affected by ongoing geopolitical economic instability therefrom, consequences and disruptions arising including as the result of the military conflict between Russia and Ukraine, the military conflict between Israel and Hamas, 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 military conflicts. and the In addition, our international operations are subject to regulation under U.S. law and other laws related to 12 operations in foreign jurisdictions, including laws prohibiting bribery of government officials and other corrupt practices. For example, the Foreign Corrupt Practices Act of 1977, as amended, prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining the U.S. Department of business abroad, and Treasury’s Office of Foreign Assets Control and other non-U.S. government entities maintain economic sanctions targeting various countries, persons and entities. Failure to comply with domestic or foreign laws could result in various adverse consequences, including the imposition of civil or criminal sanctions, damage to our reputation and the prosecution of executives overseeing our international operations. RISKS RELATED TO CLIMATE AND WEATHER 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 impacts, CLIMATE CHANGE. Climate change including rising temperatures and the increasing severity and/or frequency of adverse weather conditions, may result in operational impacts on our facilities, 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 earthquakes, floods, hailstorms, wildfires, snow, ice storms and drought. Climate change may also contribute to the decreased productivity of forests and adverse impacts on the distribution and abundance of species, and the spread of disease and insect epidemics, any of which developments timber harvesting. 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. hurricanes, tornadoes, adversely affect could and governmental There has been an increased focus, including from investors, customers, the general public, U.S. and foreign nongovernmental authorities, regarding sustainability matters, including with respect to climate change, GHG emissions, packaging and waste, sustainable supply chain practices, biodiversity, deforestation, land, energy and water use, diversity and inclusion and other human capital matters. This increased focus on sustainability matters, including climate change, may result in more prescriptive reporting requirements with respect to sustainability metrics, an increased expectation that such metrics will be voluntarily disclosed by companies such as ours, and increased pressure to intended requiring to be a regulatory regulators legal and make commitments, set targets, or establish goals, and take action to meet them. As the result of this increased focus and our commitment to sustainability matters, we have voluntarily provided disclosure and established targets and goals with respect to various sustainability matters, including climate change. For example, we have made public commitments reduction of carbon regarding our emissions, including our Vision 2030 goal of reducing Scope 1, 2 and 3 GHG emissions by 35% from 2019-2030, which have been approved by SBTi as consistent with levels required to meet the goals of the 2015 Paris Agreement. Meeting these and other sustainability targets and goals have increased, and may continue to increase, our capital and operational lack of costs. There also continues consistency initiatives in regarding climate change across jurisdictions and various governmental entities. We also expect to incur additional expenses as a result of U.S. and international additional disclosures regarding GHG emissions. Further, there can be no assurance regarding the extent to which our climate and other sustainability targets will 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 our 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, any such developments could adversely impact our reputation as well as investor, customer and other stakeholder relationships, which could adversely impact our business and results of operations. Moreover, not all of our competitors establish climate or other sustainability targets and goals at comparable levels to ours, which could result in competitors having lower supply chain or operating costs as well as reduced reputational risks associated with not meeting such goals. 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 our operations and our 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. 13 RISKS RELATED TO OUR INDEBTEDNESS OUR AFFECT THE LEVEL OF OUR INDEBTEDNESS COULD FINANCIAL ADVERSELY CONDITION AND IMPAIR OUR ABILITY TO OPERATE OUR BUSINESS. As of December 31, 2023, we had approximately $5.6 billion of level of our outstanding indebtedness could have important consequences to our results and business, including the following: financial condition, operating indebtedness. The • • • • • • • it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, development, product dividends, share repurchases, debt service requirements, acquisitions and general corporate or other purposes; be dedicated a portion of our cash flows from operations will on indebtedness and will not be available for other purposes, including operations, capital expenditures business opportunities; payments future and to 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 to take actions in connection with elevated interest rates (such as interest rate environment), and place us at a competitive disadvantage compared to our competitors that have less debt; the current elevated in 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; it may increase our exposure to the risk of increased interest rates insofar as we are compelled indebtedness at higher interest rates, which risk is heightened by the current high interest rate environment; and refinance to it may to a increase our vulnerability 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 to meet and our that require us indebtedness to our maintain certain financial ratios and covenants. A significant or prolonged downturn in general business and economic conditions, or other significant adverse results of respect developments with 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 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. to WE ARE SUBJECT TO RISKS ASSOCIATED WITH OUR VARIABLE RATE DEBT We have interest rate risk, primarily related to variable rate debt in the aggregate amount of approximately $908 million as of December 31, 2023, associated with our short-term cash investments, variable rate debts, supply chain financing, short-term debt and the installment notes and loans in the Temple-Inland timber monetization special purpose entities. rose significantly during 2022 and 2023 and could remain high and volatile in 2024 and beyond. Changes in interest rates impact how much we earn on our short- term cash investments, the interest rate we pay on our variable rate debt and credit agreements, the cost of supply chain financing and the refinance rate of our information, see short-term debt. For additional “Market Risk – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 44. Interest Rate Risk” Interest rates in ISSUED BY IN CREDIT RATINGS CHANGES STATISTICAL RECOGNIZED NATIONALLY 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 the Company’s ratings below investment grade will likely eliminate our ability to access the commercial paper market, may limit our access to the capital markets, have an adverse effect on the market price of our securities, increase our cost of borrowing and require us to post collateral for derivatives in a net liability position. Our desire to maintain the Company's investment grade rating may cause us to take certain actions designed 14 to improve our cash flow, including sale of assets, reduction of our dividend and suspension or reductions in capital expenditures and working capital. the terms of Under the agreements governing approximately $1.1 billion of our debt as of December 31, 2023, the applicable interest rate on such debt may increase upon each downgrade in our credit rating. As a result, a downgrade in our credit rating may lead to an increase in our interest expense. There can be no assurance that such credit ratings will remain in effect for any given period of time or that such ratings will not be lowered, the rating suspended or withdrawn entirely by judgment, in each rating agency’s agencies circumstances so warrant. Any such downgrade, suspension or withdrawal of our credit ratings could adversely affect our cost of borrowing, limit our access to the capital markets or result in more restrictive covenants in agreements governing the terms of any future indebtedness that we may incur. if, irrevocable 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 letters of credit supporting installment notes in connection with Temple-Inland's 2007 sales of forestlands, may be downgraded below a 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, some of the 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 payments of up to $485 million in deferred income taxes if replacement banks cannot be obtained. The deferred in our consolidated financial statements. See Note 15, Variable Interest Entities, on pages 78 through 80, and Note 13. Income Taxes, on pages 72 through 74, in Item 8. Financial Statements and Supplementary Data for further information. taxes are currently recorded RISKS RELATING 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 15 substantially all U.S. salaried employees hired prior to July 1, 2004 (or later for certain acquired populations, as described in Note 18. Retirement Plans, on pages 82 through 87, in Item 8. Financial Statements and Supplementary Data) and substantially all hourly union and non-union employees regardless of hire date. We froze participation under these plans for U.S. salaried employees, 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 provide retiree health care benefits to certain former U.S. employees, as well as financial assistance towards the cost of individual retiree medical coverage for certain former U.S. salaried employees. Our 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 legal requirements and government oversight. in the excess of OUR U.S. FUNDED PENSION PLAN IS 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. 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 benefit obligation over the fair value of plan assets. At December 31, 2023, we had an overfunded U.S. qualified pension asset balance of $118 million. When aggregated with U.S. pension obligations, the benefit deficit recorded under the provisions of Accounting Standards Codification ("ASC") 715, “Compensation – Retirement Benefits,” at December 31, 2023 was $146 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. nonqualified RISKS RELATING TO INDUSTRY CONDITIONS HAVE ENERGY MATERIALS, CHANGES IN THE COST OR AVAILABILITY OF AND RAW TRANSPORTATION 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 companies that transport our goods. The market price of virgin wood fiber varies based upon availability 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 the U.S. and globally, we have experienced, and may continue to experience, a significant including recycled fiber, energy, freight, chemical, and other supply chain costs, which has adversely affected and is expected to continue to adversely affect our results of operations. Energy prices, in particular prices for oil and natural gas, have fluctuated dramatically in the past and may continue to increase and/or fluctuate in the future. Moreover, the availability of labor and the market price for fuel may affect our costs for third- In addition, because our party businesses operate in highly competitive industry segments, we may have not always been able, and may in the future be unable to recoup past or future increases in the costs of any raw materials, energy sources or through price increases to our customers. Our profitability has been, and will continue to be, affected by changes in the costs and availability of such raw materials, energy sources and transportation sources. transportation sources in various costs, transportation. increase consumer preferences may increase or decrease the demand for our fiber-based products and non-fiber substitutes. Moreover, customer and consumer preferences are constantly changing based on, factors, cost, convenience, health among other concerns and perceptions and an increased awareness of sustainability considerations. These preferences may affect the prices of our products. In addition, regulatory developments, such as new or developing regulation or single-use packaging products could significantly alter the market for our products. Consequently, our financial results are sensitive to changes in the pricing, and supply and demand for our products. In addition, our reputation and financial results may be adversely affected if we fail to anticipate trends that would enable us to offer to changing customer products preferences and regulatory developments. technological and respond that IN forest products companies. THE COULD U.S. AND COMPETITION INTERNATIONALLY NEGATIVELY IMPACT OUR FINANCIAL RESULTS. We operate in a competitive environment, both in the U.S. and internationally, in all of our operating segments. Our products compete with similar products produced by other Product innovations, manufacturing and operating efficiencies, capacity, marketing, additional manufacturing distribution and pricing strategies pursued or achieved by competitors, increased use of artificial intelligence and machine learning solutions in our industry, and the entry of new competitors into the markets we serve could negatively impact our financial results. In addition, our products also compete, in some instances, with companies in other industries 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. the 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, GOVERNMENT AND REGULATION COULD MATERIALLY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS. Substantially all of our businesses have experienced, and are likely to continue to experience, cycles relating to industry capacity and general economic conditions. The length and magnitude of these cycles have varied over time and by product. In addition, changes in customer or 16 RISKS RELATING TO OUR OPERATIONS OUR IMPACT FACILITIES MATERIAL DISRUPTIONS AT ONE OF OUR COULD MANUFACTURING NEGATIVELY FINANCIAL RESULTS. We operate our facilities in compliance with applicable rules and regulations and take measures to minimize the risks of disruption at our facilities. A material disruption at our corporate headquarters or one of our manufacturing facilities could prevent us from meeting customer demand, impact our reduce our sales and/or negatively financial condition. Any of our manufacturing facilities, or any of our machines within an otherwise operational unexpectedly due to a number of events, including: facility, cease could operations • • • • • • • • • • • • • • • • • 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; information system disruptions or failures due to any number of causes, including cyber- attacks; international domestic and laws and regulations applicable to us and our business partners, including joint venture partners, around the world; unscheduled maintenance outages; prolonged power failures; an equipment failure; a chemical spill or release; explosion of a boiler or other equipment; damage or disruptions caused by third parties operating on or adjacent to one of our manufacturing facilities; the in disruptions infrastructure, including railroad tracks and tunnels; transportation roads, bridges, 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 our 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 customer demand for our products and/or require us to make unplanned expenditures. If one of our machines or facilities were to incur significant downtime, our ability to meet our production targets and satisfy customer requirements could be impaired, resulting in lower sales and having a negative effect on our business and financial results. in part, on our ability WE MAY NOT ACHIEVE THE EXPECTED BENEFITS FROM STRATEGIC ACQUISITIONS, JOINT VENTURES, DIVESTITURES, SPIN-OFFS, CAPITAL INVESTMENTS, CAPITAL PROJECTS AND OTHER CORPORATE TRANSACTIONS THAT WE HAVE PURSUED OR MAY PURSUE. Our long-term growth, productivity and strategy for profitability depends, to accomplish prudent acquisitions, joint ventures, divestitures, spin-offs, capital investments, capital projects, and other corporate transactions that we may pursue and to realize the benefits we expect from such transactions. Our expenditures for capital projects could be higher than we anticipate, we may experience unanticipated disruptions or delays in completing the projects and we may not achieve the desired benefits from those projects, including as a result of a deterioration in macroeconomic conditions in our business, unavailability of capital equipment or related materials, delays in obtaining permits or other requisite approvals or changes laws and regulations. We are subject to the risk that we may from such the expected benefits not achieve transactions. This failure could require us to record an impairment charge for goodwill or other intangible assets, which could lead to decreased assets and reduced net earnings. Among the benefits we expect from potential as well as completed acquisitions and joint ventures are synergies, cost savings, growth opportunities and access to new markets (or a combination thereof), and in the case of divestitures, the the sale of businesses and assets to purchasers who place a higher strategic value on such businesses and assets than we do. realization of proceeds from in Corporate transactions of this nature that we may pursue involve a number of special risks, including with respect to our inability to realize our business goals with such transactions as noted above, the focus of our management’s attention on these transactions and the assimilation of acquired businesses into our operations, the demands on our technology financial, operational and systems resulting from acquired businesses, and the possibility that we may become responsible for substantial contingent or unanticipated legal liabilities as the result of acquisitions or other corporate transactions. information 17 Any of these circumstances could adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock. the 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 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. The assessments for the tax years 2007-2015 total approximately $119 million (adjusted for variation in currency exchange rates) in tax, plus interest, penalties, and fees. The interest, penalties, and fees currently total approximately $274 million (adjusted for variation in currency exchange rates), which reflects a recent law change pursuant to which the Brazil tax authority on January 16, 2024 agreed to cancel a portion of the interest, penalties, and fees. total Accordingly, approximately $393 million (adjusted for variation in currency exchange rates). See Note 14 Commitments and Contingent Liabilities on pages 74 through 78 of Item 8. Financial Statements and Supplementary Data for further information. the assessments currently to be competitive, particularly 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 the skills to attract and retain employees with necessary to operate and maintain our facilities, produce our products and serve our customers. The market for both hourly workers and salaried workers for continues employees with specialized trade experience. This, along with the current competitive labor market and ongoing inflationary conditions, has led to higher labor costs, particularly at our converting facilities. Although our focused efforts to attract and retain employees, including by offering higher levels of compensation in certain instances, resulted in a decreased attrition rate in 2023 compared to the prior two years’ historically high attrition rates, recruiting and retaining talent (particularly those early in their careers) continues to be a challenge. In addition, we rely on key executive and management personnel to manage our business efficiently and effectively. The technical and loss 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 remote work and changing work-life balance expectations, may make it difficult for us to replace retiring or departing employees. If we fail to attract and retain qualified personnel, or if we continue to experience excessive turnover, we may continue to experience higher labor costs and labor shortages, and our business may be adversely impacted. In addition, a significant number of our employees are represented by unions. We may not be able to successfully negotiate new union contracts 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. Negotiations between the company and USW regarding the mill master collective bargaining agreement (which expired August 2023) and related mill joint pension council master agreement (which expired September 2023) resulted in new agreements which will expire August 2027 and September 2027, respectively. Negotiations between the Company and USW regarding the converting master collective bargaining agreement (which expires April 2024) and related converting joint pension council master (which expires September 2024) are scheduled to begin on February 19, 2024. USW represents approximately 10,600 employees in our converting facilities. We have also experienced work stoppages in the past and may experience them in the future. Moreover, labor organizations may attempt to organize groups of additional employees from time to time, recent and potential changes in labor laws could make it easier for them to do so. If we experience any extended interruption of operations at any of our facilities as a result of strikes or other work stoppages or if unions are able to organize additional groups of our employees, our operating costs increase and our operational flexibility could be reduced. 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 upon 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 18 incident response, business continuity and disaster recovery plans but we cannot eliminate all systematic or external risk. The development and maintenance of these measures is costly and requires ongoing monitoring, testing and updating as technologies and processes change, and efforts to overcome security measures sophisticated. Additionally, the regulatory environment surrounding information security data privacy and data protection is becoming increasingly restrictive and is evolving frequently. increasingly become social activist updating, monitoring joint venture partners, could 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 our operations. In this regard, we have experienced cyber threats and incidents, although none have materially affected us, including our results of operations or financial condition. Given the current cyber threat environment, we expect the volume and intensity of cybersecurity attacks and attempted intrusions to increase in the future. In addition, despite careful security and controls design, implementation, and independent third-party verification, our information technology systems, and those of our third-party be providers or compromised or disrupted due to employee error or malfeasance, cyber-attacks, including ransomware, malware, phishing attacks, or data or security breaches by malicious actors such as common hackers, criminal groups or nation-state organizations or organizations, disruptions resulting from geopolitical events, natural of disasters, telecommunications networks or other catastrophic events. Such attacks are increasing in complexity, and the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks by making cyberattacks more difficult to detect, contain, and mitigate. Furthermore, the significant in remote working and personal device use increases the risks of cyber incidents and the improper dissemination of personal or confidential information. Moreover, 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 that could compromise information security. In addition, the cybersecurity-related threats that we face may remain undetected for an extended period of time. In the event that our information systems are disrupted or compromised, or the information systems of any businesses with which we interact, are disrupted or compromised, in a manner which impacts us or our information systems, as a result of any cybersecurity in a manner ("hacktivist") impairments increase failures or 19 impact, and a to conduct business with us, attack, data or security breach, or other security incident, any such developments could result in lost sales, business delays, negative publicity or loss of customer reputational 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 our the customers 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 our 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 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.   Additionally, while we have insurance coverage designed to address certain aspects of cyber risks 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. to WITH WE MAY BE UNABLE TO REALIZE THE EXPECTED BENEFITS AND COSTS SAVINGS ASSOCIATED RESTRUCTURING INCLUDING OUR STRATEGIC INITIATIVES, ACTIONS ANNOUNCED IN OCTOBER 2023. We have restructured portions of our operations from time to time, have current restructuring initiatives taking in place, and restructuring activities in the future. In particular, as previously disclosed in October 2023, the Company committed to certain strategic actions impacting its Containerboard and Global Cellulose Fibers businesses as further described below. Consistent that we will engage likely is it with this initiative, in December 2023, the Company permanently closed its containerboard mill in Orange, Texas and permanently ceased production on two of its pulp machines at its Riegelwood, North Carolina and Pensacola, Florida mills. The Company recorded charges associated with these actions during the three months ended December 31, 2023. See Note 6 - Restructuring and Other Charges, Net in Item 8. Financial Statements and Supplementary Data for additional information. take. initiatives which we may We may be unable to realize the expected benefits from the strategic actions described above and other In restructuring particular, restructuring activities may divert the attention of management, disrupt our operations and fail to achieve the intended cost and operational benefits. In addition, because we are not able to predict or control market conditions, including changes in the supply and demand for our products, the prices for our products or our manufacturing costs, we may not be able to predict the appropriate time to undertake restructurings. Further, we may incur cash and non-cash charges in connection with restructuring activities, which may be material. Moreover, to estimate is restructuring charges, and these estimates, and the assumptions underlying them, may change as additional information becomes available or facts or circumstances initiatives to change. restructuring judgment required related RISKS RELATING TO LEGAL PROCEEDINGS AND COMPLIANCE COSTS AND IMPACT REGULATIONS WE ARE SUBJECT TO A WIDE VARIETY OF OTHER LAWS, GOVERNMENT REQUIREMENTS THAT MAY CHANGE IN SIGNIFICANT WAYS, AND THE COST OF COMPLIANCE WITH SUCH REQUIREMENTS, OR THE FAILURE TO COMPLY WITH SUCH REQUIREMENTS, OUR COULD BUSINESS AND RESULTS OF OPERATIONS. Our operations are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and other government requirements - including, among others, the to environment, health and labor and employment, data privacy, tax, trade 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 operations and objectives or affect our returns on investments by restricting existing activities and products, or subjecting us to increased costs. In addition, any failure or alleged failure to comply with applicable laws, regulations or other government requirements could adversely affect our reputation, and financial results or result in, among other things, those relating safety, litigation, revocation of required licenses, internal investigations, or proceedings, administrative enforcement actions, fines and civil and criminal liability. governmental investigations to and matters. Additionally, incurred, and expect For example, as part of our business, we are subject to increasingly stringent federal, state, local and international laws governing the protection of the environment. We have to continue to incur, significant capital, operating and other expenditures complying with applicable and laws and regulations, forthcoming environmental including with respect to GHG emissions and other climate-related new environmental laws, regulations or other requirements to address GHG emissions or climate change may cause us incur additional compliance costs, including costs that we are unable to predict at the current time. Moreover, there has historically been, and may continue to be, a lack of consistency between jurisdictions regarding legal requirements with respect to climate and GHG emission matters, which has created and may continue to create economic uncertainty. Our regulatory 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. Moreover, we may be directly impacted by, and are working to manage, the risks and costs to us, our customers and our vendors of the effects of climate change, GHGs, and the availability of energy and water resources. These impact on risks forestlands, which are a key resource the in production of our products, increased product costs and changes in the types of products that customers purchase. There can be no assurance that future remediation requirements and compliance with existing and new laws and requirements will not that existing require significant expenditures, or reserves for specific matters will be adequate to cover future costs. We could also incur substantial fines or sanctions, enforcement actions (including orders requiring corrective limiting our operations or 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. the potentially adverse include Our global operations subject us to complex and evolving U.S and international data privacy laws and regulations, such as European’s Union General Data 20 Protection Regulation, China’s Personal Information Protection Law and comprehensive privacy laws in many states, including California, Connecticut, Colorado, Utah, and Virginia. These laws impose a range of compliance obligations the handling of personal data. There are significant penalties 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 our data collection, use and processing activities. for non-compliance regarding This increasingly restrictive and evolving regulatory environment at the international, federal and state level 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 our business practices, data processing and security systems, penalties, increased operating costs or other impacts on our businesses. 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 proactively use internal and external resources to monitor compliance with relevant legislation and continually evaluate and, where necessary, modify our 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 the policies, procedures and practices we implemented or may implement in the future will prevent the improper handling of, disclosure of or access to personal data. Improper handling and disclosure of or access to personal data in violation of other data privacy and protection laws could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, 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. 21 We are subject to taxes in the U.S. and various foreign jurisdictions, and changes in laws, regulation or interpretation of existing laws and regulations in the U.S. and other jurisdictions where we are subject to taxation, could increase our taxes and have an adverse effect on our financial results. For example, the Organization for Economic Cooperation and Development ("OECD") has proposed a 15% global minimum tax applied on a country-by-country basis (the "Pillar Two rule"), and many countries (including countries in which we operate) have enacted or begun the process of enacting laws adopting the Pillar Two rule. The first component of the Pillar Two rule is expected to begin applying in 2024, with the second component expected to go into effect in 2025. While we do not currently expect the Pillar Two rule to have a material impact on our effective tax rate, our analysis is ongoing as the OECD continues to release guidance and as countries begin implementing legislation. Future developments could change our current assessment, and it is possible that the Pillar Two rule could adversely impact our effective tax rate in future periods. can from relevant guidance legislative administrative In addition, the application of tax law is subject to interpretation and to audit by taxing authorities. Additionally, be incomplete or vary intent, and therefore the application of the tax law is uncertain. While we believe the positions reported by the Company comply with laws and regulations, taxing authorities could interpret our application of certain laws and regulations differently. We are currently subject to tax audits in the U.S. and other taxing jurisdictions around the world. In some cases, we have appealed, and may continue to appeal, assessments by taxing authorities 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. tax As with many technological innovations, artificial intelligence (“AI”) presents risks and challenges that could affect its adoption, and therefore our business. Uncertainty in the legal regulatory regime relating to artificial intelligence may require significant resources to modify and maintain business practices to comply with U.S. and non-U.S. laws, the nature of which time. Several cannot be determined at jurisdictions, federal government, and certain U.S. states, have already proposed or enacted laws, regulations, and other requirements governing AI. For example, on October 30, 2023, issued an the Biden administration Executive Order to, among other things, establish extensive new standards for AI safety and security. Other jurisdictions may decide to adopt similar or more restrictive requirements that may render the use including Europe, the U.S. this of AI challenging. These requirements may make it harder for us to conduct our business using AI, lead to regulatory fines or penalties, require us to change our business practices, or limit our use of AI. If our use of AI is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of these factors could adversely affect our results of financial condition, and business, operations. shareholders for U.S. federal income tax purposes, and the Company could incur significant U.S. federal income tax liabilities. These income tax liabilities may be indemnifiable by Sylvamo pursuant to a tax matters agreement between the Company and Sylvamo. However, there can be no assurance that Sylvamo would have adequate resources or liquidity if it were required to indemnify the Company for any such tax liability. 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 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 regulatory or in connection with our governmental loss contingencies, or if 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 on pages 74 through 78 of Item 8. Financial Statements and Supplementary Data for further information. legal, or proceedings other to Sylvamo, the Company and IF THE SPIN-OFF OF SYLVAMO CORPORATION WERE TO FAIL TO QUALIFY FOR NON- RECOGNITION TREATMENT FOR U.S. FEDERAL INCOME TAX PURPOSES, THEN INTERNATIONAL PAPER AND OUR SHAREHOLDERS MAY BE SUBJECT TO SIGNIFICANT U.S. FEDERAL INCOME TAXES. The Company received an opinion of tax counsel and a private letter ruling from the U.S. Internal Revenue Service (the “IRS”) regarding the qualification of the spin-off of Sylvamo and certain related transactions as a transaction that is generally the tax-free shareholders of the Company for U.S. federal income tax purposes. A tax opinion is not binding on the IRS or the courts, and there can be no assurance that the IRS or a court will not take a contrary position. In addition, the Company’s tax counsel and the IRS relied on certain representations and covenants delivered by the Company and Sylvamo in rendering such opinion and private letter ruling. If any of the representations or covenants relied upon for the tax opinion or private letter ruling become inaccurate, incomplete or not complied with by the Company, Sylvamo or any of their respective subsidiaries, the tax opinion may be invalid and the conclusions reached therein could be jeopardized. If the IRS ultimately determines that the spin-off is taxable, then the spin-off could be treated as a taxable dividend or capital gain to the Company’s Even if the spin-off otherwise qualifies for non- recognition of gain or loss under Section 355 of the U.S. Tax Code, the spin-off may be taxable to the Company (but not the shareholders of the Company) pursuant to Section 355(e) of the Code if there is a 50% or more (by vote or value) change in ownership of either the Company or Sylvamo, directly or indirectly, as part of a plan or series of related transactions this that the Company’s or purpose, any acquisitions of Sylvamo's common stock within two years before or after the spin-off are presumed to be part of such a plan, although the Company or Sylvamo may be able to rebut that presumption based on either applicable facts and circumstances or a “safe harbor” described in the U.S. tax regulations. the spin-off. For include ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY RISK MANAGEMENT AND STRATEGY legal financial, compliance, The Company’s cybersecurity risk management processes are integrated into the Company’s 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, and information technologies and cybersecurity risks. In addition, the Enterprise Risk Management Council team (“ERM Council”) comprised of senior vice presidents and other business leaders responsible for managing enterprise risks and planning and organizing the activities of our organization to minimize the effects of risk on the Company's business and financial results. The ERM Council regularly reports to the Board of Directors on areas of risk and risk management. The Chief Financial Officer serves as the ERM Council Lead. The Chief Audit Executive serves as the ERM Council Process Owner. is a management-level The Company has an Information Technology (“IT”) the Risk Governance Program that aligns with 22 level. The enterprise risk management framework and assists with fulfilling oversight responsibilities for major IT risks, including cybersecurity risks. The IT Risk Governance Program identifies, defines, manages, measures and governs cybersecurity risks across the Company at an enterprise IT Risk Governance Program is carried out by an IT Risk Identification and Mitigation Team (“IT RIM”), which is comprised of business information security, information technology, human resources, internal audit, legal, and risk. The IT RIM meets monthly, reviews all cybersecurity incidents meeting certain criteria, provides oversight with respect to cybersecurity matters at a management level, and reports to the ERM Council. leaders from Our Risk Assessment Program faces targeted to our website, The Company has a risk assessment program in place to assess, identify and manage material risks from cybersecurity threats. Cybersecurity risks the Company attacks, include ransomware, data theft, virus and intrusion software, as well as attacks financial technology, operational applications, telecommunications and human resources data. 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 INFORMATION AS WELL AS AND VENDOR BREACHES IN TECHNOLOGY USED TO MANAGE BUSINESS OPERATIONS PROCESSES. Key aspects of the Company’s cybersecurity program include the following: OTHER AND • • • • • and awareness layered technical protective capabilities and detective surveillance controls; utilizing 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; on courses for employees with information security to Company Company email or access devices, 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. phishing, including training Engagement of Third Parties The Company engages third parties in connection with assessing, cybersecurity risks, including the following: identifying and managing its • • • for, preventing, Engagement of an independent third party with incident response expertise to provide intelligence-based cybersecurity solutions and services to assist the Company with preparing 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 security program conduct an annual 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 annually perform an external and an internal penetration assessment using industry standard tools and techniques. Additionally, our Internal Audit team conducts annual assessments of our cyber programs and controls. Oversight of Third Parties In the Company’s use of regard, this The Company has processes to oversee and identify material risks from cybersecurity threats associated third-party service with the Company’s providers. cybersecurity risk management program takes into account third-party systems whereby the Company could be impacted by the compromise of the security the of vendors or other business relations of 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 services are continuously monitored with risks. The Company also requires service providers to provide prompt notification of any actual or suspected breach impacting Company data or operations. to security respect 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. The Company carries cyber insurance which provides connection with coverage breaches. in cybersecurity 23 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 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, for management’s identification and reporting of material cybersecurity incidents. The PPE Committee reviews technology issues pertinent to the Company including those associated with operational information technology, cybersecurity and data security and assesses related Company strategies. including processes and Our Board of Directors, Audit and Finance Committee and PPE Committee each receives 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 regarding cybersecurity risks, as well as plans and strategies to mitigate those risks, at least annually. Furthermore, our ERM Council annually reports its activities either directly to the Board of Directors or through the Audit and Finance Committee. 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. He was appointed as the Company’s first CISO in 2019. Our CISO stays current on cybersecurity issues and through continuing education activities such as participation at conferences and in webinars. Our CISO reports to the Chief Information Officer who oversees the Company’s information technology department. trends The Company has also adopted a 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 is designed to address operational cybersecurity events. Evaluation and response to cybersecurity events is led by our Cybersecurity non-operational and remediation and Incident Response Team (“CIRT”), under the direction of our CISO. The CIRT is comprised of subject matter experts representing Information Security, Information Technology, Operational Technology, and Legal. The CIRT performs an impact assessment with respect to cybersecurity incidents, gathers facts and provides a chronology of events in connection therewith, and recovery activities. Our leads General Counsel, Senior Vice President of Human Resources, Chief Ethics and Compliance Officer (or their respective designees), 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 Team (“Incident Command Team”). The Incident Command Team performs 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. The Disclosure Committee, General Counsel and Chief Financial Officer assess and determine materiality using the facts and chronology of events provided by the Incident Command Team. 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. 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 level of planned capital investments for 2024 on page 39, and dispositions and restructuring activities as of December 31, 2023, on page 35 of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Note 7 Acquisitions on page 65 of Item 8. Financial Statements and Supplementary Data. the 24 ITEM 3. LEGAL PROCEEDINGS Information concerning certain legal proceedings of the Company is set forth in Note 14 Commitments and Contingent Liabilities on pages 74 through 78 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 the discharge of materials environment or primarily for the purpose of protecting the environment that is likely to result in monetary sanctions of $1 million or more. into ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 PART II. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND EQUITY SECURITIES PURCHASES OF ISSUER We pay regular quarterly cash dividends and expect to continue to pay regular quarterly cash dividends in though each quarterly the dividend payment is subject to review and approval by our Board of Directors. foreseeable future, As of the filing of this Annual Report on Form 10-K, the Company’s common shares are traded on the New York Stock Exchange (NYSE: IP). As of February 9, 2024, there were approximately 8,188 record holders of common stock of the Company. 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 October 1, 2023 - October 31, 2023 November 1, 2023 - November 30, 2023 December 1, 2023 - December 31, 2023 Total 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) 5,373 $ 3,992 1,241 10,606 35.19 33.71 38.82 — $ — — 2.96 2.96 2.96 (a) 10,606 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 restricted 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, 2023, approximately $2.96 billion aggregate shares of our common stock remained authorized for repurchase. 26 PERFORMANCE GRAPH to be "filed" with The performance graph shall not be deemed the "soliciting material" or 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. The following line graph compares a $100 investment in Company stock on December 31, 2018 with a $100 investment the S&P in our peer group and Composite-500 Stock Index (S&P 500 Index) also made at market close on December 31, 2018. The graph portrays total return, 2018-2023, assuming reinvestment of all dividends. 1) The companies included in the peer group are DS Smith PLC, Klabin S.A., Mondi Group, Packaging Corporation of America, Smurfit Kappa Group, Stora Enso Group, and WestRock Company. 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 “Financial Statements information, and Supplementary Data” of this Annual Report on Form 10-K. In addition to historical consolidated financial following discussion the 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, 27 particularly in “Risk Factors” and “Forward-Looking Statements.” The following generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussion of historical items in 2021, and year-to-year comparisons between 2022 and 2021, can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 17, 2023, under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. EXECUTIVE SUMMARY Full-year 2023 net earnings attributable to shareholders were $288 million ($0.82 per diluted share) compared with $1.5 billion ($4.10 per diluted share) for full-year 2022. During 2023, International Paper executed well, both commercially and operationally, as we navigated an uncertain and challenging demand environment. During much of the year, underlying demand for our lower as consumers prioritized products was spending on services and essential goods. This trend was influenced by the pull forward of goods during the pandemic, as well as by inflationary pressures and rising interest rates that impacted the consumer. Demand for our products was further constrained by inventory destocking as our customers, and the broader supply chain, worked through elevated inventories of their products. The lower demand combined with declining sales prices and continued cost inflation resulted in lower sales and earnings in 2023 as compared to 2022. During 2023, we remained focused on mitigating the impact of these challenges through commercial and cost reduction initiatives. We advanced our strategies to improve profitability across our portfolio by in capabilities in our Industrial Packaging business to enhance our value proposition to align with customer needs and optimizing our Global Cellulose Fibers business by reducing our exposure to commodity pulp. We took strategic actions to structurally reduce fixed costs in our mill system in both our Industrial Packaging and Global Cellulose Fibers businesses. We also made significant progress in Building a IP, driven by commercial and process Better benefits improvement exceeding our 2023 target. Regarding capital allocation in 2023, we returned approximately $840 million to shareowners including approximately $640 million of dividends and $200 million of share repurchases. Finally, during 2023, we completed the sale of our ownership stake in Ilim for $508 million. International Paper no longer has investments in Russia following completion of this sale. initiatives, investing resulting in 28 to prior the year Comparing 2023 performance to 2022, price and mix was lower in our North American Industrial Packaging business due to prior index movements, lower export prices and higher export mix, as demand improved. Price in our Global Cellulose Fibers business was lower due index movements and an unfavorable mix driven by lower absorbent pulp shipments. Volume in both business segments was impacted by ongoing inventory destocking across the supply chain. While there was demand recovery in the second half of in both business segments, volume was lower in our North American Industrial Packaging business as consumers shifted priorities toward non-discretionary goods and services while dealing with inflation. Volume in our Global Cellulose Fibers business was also impacted by lower demand as a result of the slowdown in the global economy. Operations and costs in both the North American Industrial Packaging and Global Cellulose Fibers businesses were higher reflecting the impact of inflation on materials and services along with the impact of higher unabsorbed costs resulting from increased economic downtime in the current year. Planned maintenance outage costs were lower in our North American Industrial Packaging business while higher in our Global Cellulose Fibers business. Input costs were lower in both business segments, primarily driven by lower energy, wood and distribution costs along with lower recovered fiber costs in our North American Industrial Packaging business. in in our from contract restructuring Looking ahead to the first quarter 2024, as compared to the fourth quarter 2023, we expect this quarter to be an earnings trough on seasonally lower volumes, higher costs and from the impact of the January winter freeze. We also expect the majority of prior index movements to flow through in the first quarter 2024. Specifically Industrial Packaging business, we expect price to be relatively flat as prior price index movements are offset by the commercial benefits the box business. Volume is expected to be lower in the first quarter 2024 due to normal seasonal declines in North America, partially offset by two more shipping days. Operations and costs are expected to decrease earnings energy higher consumption and cost inflation on wages and employee benefits. These increases are expected to be partially offset by lower fixed costs resulting from the closure of our Orange, Texas mill. Maintenance outage expense is expected to be higher coming off of a seasonally lower fourth quarter 2023. Input costs to decrease earnings on higher are expected recovered fiber and energy costs. In our Global Cellulose Fibers business, we expect price and mix to modestly improve as a result of our strategy to reduce seasonally due to exposure to commodity pulp. We expect volume to be relatively flat as seasonally lower shipments due to the Chinese New Year are offset by improved demand in other areas. Operations and costs are expected to decrease earnings due to seasonality and cost inflation, partially offset by the non-repeat of a turbine maintenance outage and lower fixed costs resulting from the idling of our pulp machine in our Riegelwood, North Carolina mill. Maintenance outage expense is expected to increase earnings while higher input costs associated with energy and chemicals are expected to decrease earnings. Looking at full-year 2024, we see a transitional year where markets continue to recover as we focus on in both business improving mix and margins segments through execution of our commercial strategies. We expect demand trends to continue to improve across our portfolio with year-over-year industry growth of approximately three percent for packaging and fluff pulp. Additionally, we expect more than $400 million of net benefits from our commercial and operational initiatives. This includes the fixed cost reductions tied to the closure of our Orange, Texas containerboard mill and the permanent shutdown of two pulp machines in our Global Cellulose Fibers business, with the benefits of both strategic actions expected to be at a full run rate by the fourth quarter 2024. These cost saving initiatives will be important in offsetting expected higher costs for recovered fiber, transportation and general inflation on wages, employee benefits, materials and services. With respect to our capital allocation framework, we are targeting capital expenditures of $800 million - $1.0 billion for general maintenance, cost improvement and to enhance capabilities in our box business. As previously mentioned, we returned approximately $840 million of cash to shareowners in 2023 including approximately $640 million of dividends. Given our strategic customer relationships, teams, world class assets and market talented expertise, we are committed to maximizing long-term value for all our stakeholders. in 2024 As previously disclosed, the Company permanently closed its containerboard mill in Orange, Texas in December 2023 and permanently ceased production of two of its pulp machines at its Riegelwood, North Carolina and Pensacola, Florida mills on December 11, 2023. The mill closure resulted in pre-tax non- cash asset write-off and accelerated depreciation charges of approximately $347 million and pre-tax cash severance and other shutdown charges of approximately $81 million during the year ended December 31, 2023. The machine shutdowns resulted in pre-tax non-cash asset write-off and accelerated depreciation charges of approximately $75 million and pre-tax cash severance and other shutdown charges of approximately $37 million during the year ended December 31, 2023. (loss) attributable Adjusted Operating Earnings and Adjusted Operating Earnings Per Share are non-GAAP measures and are defined as net earnings to International Paper (a GAAP measure) excluding discontinued operations, net special items and non- operating pension expense (income). Net earnings (loss) and Diluted earnings (loss) per share attributable to common shareholders are the most directly comparable GAAP measures. The Company calculates Adjusted Operating Earnings by excluding the after-tax effect of discontinued operations, non- operating pension expense (income) and items considered by management to be unusual (net special items) from net earnings (loss) attributable to reported under GAAP. Adjusted shareholders Operating Earnings Per Share is calculated by dividing Adjusted Operating Earnings by diluted average shares of common stock outstanding. Management uses this measure to focus on on-going operations, and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present consolidated operating results from continuing operations. The Company believes that using this information, along with the most directly comparable GAAP measure, provides for a more complete analysis of the results of operations. The following are reconciliations of Earnings (loss) attributable to common shareholders to Adjusted operating earnings (loss) attributable to common total and per share basis. shareholders on a Additional detail is provided later in this Annual Report on Form 10-K regarding the net special items referenced in the charts below: In millions Net Earnings (Loss) Attributable to Shareholders Less - Discontinued operations, net of taxes (gain) loss 2023 2022 $ 288 $ 1,504 14 237 Earnings (Loss) from Continuing Operations 302 1,741 Add back - Non-operating pension expense (income) 54 (192) Add back - Net special items expense (income) 572 233 Income tax effect - Non-operating pension and special items (173) (614) Adjusted Operating Earnings (Loss) Attributable to Shareholders $ 755 $ 1,168 29 Diluted Earnings (Loss) Per Share Attributable to Shareholders Less - Discontinued operations, net of taxes (gain) loss per share Diluted Earnings (Loss) Per Share from Continuing Operations Add back - Non-operating pension expense (income) per share 2023 2022 $ 0.82 $ 4.10 0.04 0.64 0.86 4.74 0.15 (0.52) Add back - Net special items expense (income) per share 1.64 0.63 Income tax effect per share - Non-operating pension and special items (0.49) (1.67) Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders $ 2.16 $ 3.18 In millions Net Earnings (Loss) Attributable to Shareholders Less - Discontinued operations, net of taxes (gain) loss Earnings (Loss) from Continuing Operations Add back - Non- operating pension expense (income) Add back - Net special items expense (income) Income tax effect - Non-operating pension and special items Adjusted Operating Earnings (Loss) Attributable to Shareholders Diluted Earnings (Loss) Per Share Attributable to Shareholders Less - Discontinued operations, net of taxes (gain) loss per share Diluted Earnings (Loss) Per Share from Continuing Operations Add back - Non- operating pension expense (income) per share Add back - Net special items expense (income) per share Income tax effect per share - Non- operating pension and special items Adjusted Operating Earnings (Loss) Per Share Attributable to Shareholders Three Months Ended December 31, 2023 Three Months Ended September 30, 2023 Three Months Ended December 31, 2022 $ (284) $ 165 $ (318) — (284) 14 546 27 192 13 29 489 171 (48) 144 (134) (10) 42 $ 142 $ 224 $ 309 Three Months Ended December 31, 2023 Three Months Ended September 30, 2023 Three Months Ended December 31, 2022 $ (0.82) $ 0.47 $ (0.90) — 0.08 1.38 (0.82) 0.55 0.48 0.04 0.04 (0.13) 1.58 0.08 0.41 (0.39) (0.03) 0.11 $ 0.41 $ 0.64 $ 0.87 30 Cash provided by operations, including discontinued operations, totaled approximately $1.8 billion and $2.2 billion for 2023 and 2022, respectively. The Company generated free cash flow of approximately $692 million in 2023 and $1.2 billion in 2022. Free cash flow is a non-GAAP measure and the most directly comparable GAAP measure is cash provided by 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. By adjusting for certain items that are not indicative of the Company's operational performance, we believe that free cash flow also enables investors to perform meaningful comparisons between past and present periods. underlying ongoing The following are reconciliations of free cash flow to cash provided by operations: In millions 2023 2022 Cash provided by operations $ 1,833 $ 2,174 Adjustments: Cash invested in capital projects, net of insurance recoveries Free Cash Flow (1,141) (931) $ 692 $ 1,243 Three Months Ended December 31, 2023 Three Months Ended September 30, 2023 Three Months Ended December 31, 2022 $ 492 $ 468 $ 761 In millions Cash provided by operations Adjustments: Cash invested in capital projects, net of insurance recoveries Free Cash Flow $ (305) 187 $ (228) 240 $ (322) 439 The non-GAAP financial measures presented in this Annual Report on Form 10-K as referenced above 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 Annual Report on Form 10-K may not be comparable to similarly titled measures disclosed by other companies, including companies in the same industry as the Company. The following table presents a comparison of Net earnings (loss) from continuing operations attributable to International Paper Company to its total Business Segment Operating Profit (Loss): In millions 2023 2022 Net Earnings (Loss) from Continuing Operations Attributable to International Paper Company $ 302 $ 1,741 Add back (deduct) Income tax provision (benefit) Equity (earnings) loss, net of taxes Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings Interest expense, net Adjustment for less than wholly owned subsidiaries Corporate expenses, net Corporate net special items Business net special items 59 (236) 21 6 382 1,511 231 325 (2) 27 28 529 (5) 34 99 76 Non-operating pension expense (income) 54 (192) Business Segment Operating Profit (Loss): Industrial Packaging Global Cellulose Fibers Total Business Segment Operating Profit (Loss) $ 1,249 $ 1,848 $ 1,266 $ 1,742 (17) 106 $ 1,249 $ 1,848 Business Segment Operating Profit (Loss) in 2023 was $599 million lower than in 2022 as the benefits from lower input costs ($982 million) and lower maintenance outage costs ($8 million) were more than offset by lower average sales price realizations and an unfavorable mix ($435 million), lower sales volumes ($228 million) and higher operating costs ($926 million). RESULTS OF OPERATIONS International Paper’s management Business Segment Operating Profits (Losses) are to used by measure the earnings performance of its businesses. Management uses this measure to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons of past and present operating results. International Paper believes this information, along with net earnings, provides a more complete analysis of the results of operations by year. that using income Business Segment Operating Profits (Losses) are defined as earnings (loss) from continuing operations before taxes and equity earnings, but including the impact of less than wholly owned subsidiaries, and excluding interest expense, net, corporate expenses, net, corporate net special items, business net special items and non-operating pension expense. Business Segment Operating Profits (Losses) 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". in two segments: International Paper operates Industrial Packaging and Global Cellulose Fibers. On September 18, 2023, the Company completed the sale of its Ilim equity investment and, as a result, all current and historical results of the Ilim investment are presented as Discontinued Operations, net of taxes and our equity investment in Ilim is no longer a separate reportable industry segment. For additional information, see discussion in Note 11 – Equity method Investments on pages 69 and 70 of Item 8. Financial Statements and Supplementary Data. 31 The principal changes in operating profit by business segment were as follows: supported by approximately $1.9 billion of credit facilities. • Industrial Packaging’s operating profit of $1.3 billion was $476 million lower than in 2022 as the benefits of input costs and lower maintenance outage costs were more than offset by lower average sales price and an unfavorable mix, lower sales volumes and higher operating costs. • Global Cellulose Fibers' operating profit (loss) of $(17) million was $123 million lower than in 2022 as the benefits of lower input costs were more than offset by lower average sales price and an unfavorable mix, lower sales volumes, higher operating costs and maintenance outage costs. LIQUIDITY AND CAPITAL RESOURCES Including discontinued operations, International Paper generated $1.8 billion of cash flow from operations for the year ended December 31, 2023, compared with $2.2 billion in 2022. Capital spending for 2023 totaled $1.1 billion, or 80% of depreciation and amortization remains strong, liquidity position expense. Our 32 RESULTS OF OPERATIONS While the operating results for International Paper’s various business segments are driven by a number of business-specific factors, changes in International Paper’s operating results are closely tied to changes in general economic conditions in North America, Europe, Latin America, North Africa and the Middle East. Factors that impact the demand for our products include industrial non-durable goods production, consumer preferences, consumer spending and movements in currency exchange rates. Product prices are affected by a variety of factors including general economic trends, inventory levels, currency exchange rate movements and worldwide capacity utilization. In addition to these revenue- related factors, net earnings are impacted by various cost drivers, the more significant of which include changes in raw material costs, principally wood, recovered fiber and chemical costs; energy costs; freight costs; mill outage costs; salary and benefits costs, including pensions; and manufacturing conversion costs. The following is a discussion of International Paper’s consolidated results of operations for the year ended December 31, 2023, and the major factors affecting these results compared to 2022. For the year ended December 31, 2023, International Paper reported net sales of $18.9 billion, compared with $21.2 billion in 2022. International net sales (based on the location of the seller and including U.S. exports) totaled $5.3 billion or 28% of total sales in 2023. This compares with international net sales of $5.9 billion in 2022. Full year 2023 net earnings attributable to International Paper Company totaled $288 million ($0.82 per diluted share), compared with net earnings of $1.5 billion ($4.10 per diluted share) in 2022. Amounts in 2023 and 2022 include the results of discontinued operations. Earnings from continuing operations attributable to International Paper Company after taxes in 2023 and 2022 were as follows: In millions 2023 2022 Earnings from continuing operations attributable to International Paper Company $ 302 (a) $ 1,741 (b) (a) (b) Includes $412 million of net special items charges and $41 million of non-operating pension expense. Includes $429 million of net special items income and $144 million of non-operating pension income. Compared with 2022, the benefits from lower input costs ($743 million), lower maintenance outage costs ($6 million), lower corporate and other costs ($3 million), lower net interest expense ($25 million) and lower tax expense ($8 million) were more than offset by lower average sales price and an unfavorable mix ($329 million), lower sales volumes ($172 million) and higher operating costs ($700 million). In addition, excluding special items, 2023 results included higher equity earnings, net of taxes. Our Building a Better IP initiatives delivered $260 million of earnings in 2023 primarily though our strategy acceleration initiative to deliver profitable growth through commercial and investment excellence. 33 The operational tax provision and operational effective tax rate are non-GAAP financial measures and are calculated by adjusting the income tax provision from continuing operations and rate to exclude the tax effect of net special items and non- operating pension expense (income). Management believes this presentation provides useful information to investors by providing a meaningful comparison of the income tax rate between past and present periods. that The following is a reconciliation of the net income tax provision (benefit) to the operational tax provision and rate: In millions 2023 2022 Earnings (Loss) From Continuing Operations Before Income Taxes and Equity Earnings Pre-tax special items Non-operating pension (income) expense Adjusted Operating Earnings (Loss) from Continuing Operations Before Income Taxes and Equity Earnings $ 382 $ 1,511 554 54 233 (192) $ 990 $ 1,552 Income tax provision (benefit) $ 59 $ (236) Income tax effect - non-operating pension (income) expense and pre-tax special items 173 614 Operational Tax Provision $ 232 $ 378 Operational Tax Rate 23 % 24 % INTEREST EXPENSE AND EQUITY EARNINGS, NET OF TAXES related Net corporate interest expense totaled $231 million in 2023 and $325 million in 2022. Net interest expense includes $3 million and $58 million of interest timber monetization to expense restructuring in 2023 and 2022, tax matter respectively. Net interest expense in 2023 also includes $6 million of interest income associated with the settlement of tax audits. The decrease in net interest expense in 2023 compared with 2022 was due to higher interest income. the Equity earnings, net of taxes were a loss of $21 million and a loss of $6 million in 2023 and 2022, respectively. Equity earnings in 2023 includes an $18 million other-than-temporary impairment of an equity method investment. See Business Segment Results on pages 36 and 37 of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of the impact of these factors by segment. DISCONTINUED OPERATIONS On September 18, 2023, the Company completed the sale of its Ilim equity investment and, as a result, all current and historical results of the Ilim investment are presented as Discontinued Operations, net of taxes and our equity investment is no longer a segment. This separate transaction is discussed further in Note 11 - Equity Method Investments on pages 69 and 70 of Item 8. Financial Statements and Supplementary Data for further discussion. reportable industry Discontinued operations include the equity earnings of the prior Ilim joint venture. Discontinued operations also includes after-tax losses of $126 million and $533 million in 2023 and 2022, respectively for impairment and transaction costs related to our former equity method investment in the Ilim joint venture. INCOME TAXES A net income tax provision from continuing operations of $59 million was recorded for 2023 and the reported effective income tax rate was 15%. This includes a tax benefit of $23 million related to the settlement of tax audits and tax expense of $4 million related to internal legal entity restructuring. Excluding these items, a $141 million net tax benefit for other special items and a $13 million tax benefit related to non- operating pension expense, tax provision (non-GAAP) for 2023 was $232 million, or 23% of pre-tax earnings before equity earnings. the operational A net income tax benefit from continuing operations of $236 million was recorded for 2022 and the reported effective income tax rate was (16%). This includes a tax benefit of $604 million related to the settlement of the timber monetization restructuring tax matter, a tax benefit of $66 million related to the tax-free exchange of our shares of Sylvamo and tax expense of $45 million related to a foreign deferred tax valuation allowance. Excluding these items, a $37 million net tax benefit for other special items and $48 million tax expense related to non-operating pension income, the operational tax provision (non-GAAP) for 2022 was $378 million, or 24% of pre-tax earnings before equity earnings. 34 2023 2022 Orange mill closure costs $ 81 (a) $ — SPECIAL ITEMS Pre-tax special items (excluding interest expense and equity earnings) included in continuing operations totaling $557 million and $175 million were recorded in 2023 and 2022, respectively. Details of these charges were as follows: Special Items In millions Business Segments Restructuring and other, net $ 107 $ — Orange mill accelerated depreciation 347 (a) — Pensacola mill and Riegelwood mill accelerated depreciation Net (gains) losses on sales and impairments of businesses 75 (b) — Corporate — 529 76 (c) 76 Corporate Restructuring and other, net $ (8) $ 89 Environmental remediation reserve adjustments Legal reserve adjustments Foreign currency cumulative translation loss related to sale of equity method investment Sylvamo investment fair value adjustment Other Total 36 — — — — 28 63 (4) 10 (65) 6 99 $ 557 $ 175 (a) Recorded in the Industrial Packaging business segment. (b) Recorded in the Global Cellulose Fibers business segment. (c) Recorded in the Industrial Packaging business segment for the impairment of goodwill in our EMEA Packaging business. evaluates continually revenue capability, International Paper its operations for improvement opportunities targeted to (a) focus our portfolio on our core businesses, (b) realign capacity to operate fewer facilities with the (c) close high cost, same reduce costs. unprofitable Additionally, the Company is committed to its capital allocation framework to maintain a strong balance sheet including reducing debt to maximize value creation and maintain our current investment grade credit rating. facilities, and (d) During 2023 and 2022, pre-tax restructuring and other charges, net, totaling $99 million and $89 million, respectively, were recorded. Details of these charges were as follows: Restructuring and Other, Net In millions Business Segments 2023 2022 Pensacola mill and Riegelwood mill pulp machine shutdowns Building a Better IP 37 (b) — (11) (c) — 107 — Building a Better IP $ (8) $ — Early debt extinguishment costs (see Note 16) Other Total — — (8) 93 (4) 89 $ 99 $ 89 (a) Recorded in the Industrial Packaging business segment. (b) Recorded in the Global Cellulose Fibers segment. the (c) Industrial Includes $8 million Packaging business segment and $3 million income recorded in the Global Cellulose Fibers business segment. income recorded in DESCRIPTION OF BUSINESS SEGMENTS International Paper’s business segments discussed below are consistent with the internal structure used to manage these businesses. All segments are differentiated on a common product, common customer basis consistent with the business segmentation generally used in the forest products industry. INDUSTRIAL PACKAGING 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 is over 13 million tons annually. 35 Our products include linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft. About 80% of our production is converted into corrugated packaging and other packaging by our 173 North American corrugated packaging plants. Additionally, we recycle approximately one million tons of OCC and mixed and white paper through our 16 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 a recycled fiber containerboard mill in Morocco and one in Spain and 23 corrugated packaging plants in France, Italy, Spain, Morocco and Portugal. GLOBAL CELLULOSE FIBERS feminine care, Cellulose fibers are a sustainable, renewable raw material used in a variety of products people depend on every day. We create safe, quality pulp for a wide range of applications like diapers, towel and tissue products, incontinence and other personal care products that promote health and wellness. In addition, our innovative specialty pulps serve as a sustainable raw material used in textiles, construction materials, paints, coatings and more. Our products are made in the United States and Canada and sold around the world. International Paper facilities have annual dried pulp capacity of about 3 million metric tons. BUSINESS SEGMENT RESULTS The following tables present net sales and operating profit (loss) which is the Company's measure of segment profitability. INDUSTRIAL PACKAGING industrial Demand for Industrial Packaging products is closely correlated with goods non-durable production, as well as with demand for e-commerce, foods, poultry, meat and agricultural processed products. In addition to prices and volumes, major factors affecting Industrial Packaging are raw material and energy costs, freight costs, mill outage costs, manufacturing efficiency and product mix. the profitability of Industrial Packaging In millions Net Sales Operating Profit (Loss) 2023 2022 $ 15,596 $ 17,451 $ 1,266 $ 1,742 Industrial Packaging net sales for 2023 decreased 11% to $15.6 billion compared with $17.5 billion in 2022. Operating profits in 2023 were 27% lower than in 2022. Comparing 2023 with 2022, benefits from lower input costs ($856 million) and maintenance 36 outage costs ($21 million) were more than offset by lower average sales price and an unfavorable mix ($363 million), lower sales volumes ($177 million) and higher operating costs ($813 million). North American Industrial Packaging In millions Net Sales (a) Operating Profit (Loss) 2023 2022 $ 14,293 $ 16,011 $ 1,186 $ 1,753 (a) Includes intra-segment sales of $95 million for 2023 and $132 million for 2022. geographic mix. Sales in 2023 compared with 2022 North American Industrial Packaging's average sales margins were lower, reflecting lower prices for both containerboard and corrugated boxes and an volumes unfavorable decreased for corrugated boxes across our segments, reflecting a soft demand environment as consumer spending focused on non-discretionary goods and services and retailers and manufacturers pulled down inventory levels. Containerboard also decreased. Total maintenance and economic downtime was about 725,000 short tons higher in 2023 compared with 2022, primarily due to economic downtime. Operating and distribution costs increased, primarily due to inflation on materials and services and increased economic downtime. Planned maintenance downtime costs were lower in 2023 than in 2022. Input costs were significantly lower, driven by lower recovered fiber, energy and wood costs. volumes sales Looking ahead to the first quarter of 2024, compared with the fourth quarter of 2023, sales volumes for corrugated boxes and containerboard are expected to be seasonally lower. Average sales margins are expected to be stable. Operating costs are expected to increase. Planned maintenance downtime costs are expected to be higher. Input costs are expected to be higher, primarily for recovered fiber. EMEA Industrial Packaging In millions Net Sales Operating Profit (Loss) 2023 2022 $ $ 1,398 $ 1,572 80 $ (11) EMEA Industrial Packaging's average sales margins were lower reflecting lower average sales prices for containerboard and an unfavorable product mix partially offset by higher average sales prices for corrugated boxes. Sales volumes in 2023 were lower than in 2022 driven by soft demand. Operating costs in 2023 were higher driven by inflation on materials and services. Planned maintenance outage costs were lower in 2023 compared with 2022. Input costs were significantly lower in 2023, driven by energy and recovered fiber costs. Entering the first quarter of 2024, compared with the fourth quarter of 2023, sales volumes are expected to be higher driven by seasonality. Average sales margins are expected to be higher, reflecting lower containerboard costs. Operating costs are expected to be lower. Planned maintenance outage costs are expected to be lower. Other input costs are expected to be stable. Earnings will be impacted by the non- repeat of an energy subsidy and other favorable one- time items in the fourth quarter 2023. Entering the first quarter of 2024, compared with the fourth quarter of 2023, sales volumes are expected to be stable. Average sales margins are expected to be stable. Operating costs are expected to be higher. Planned maintenance outage costs are expected to be lower than in the fourth quarter of 2023. Input costs are expected to be higher, primarily for energy and chemicals. LIQUIDITY AND CAPITAL RESOURCES GLOBAL CELLULOSE FIBERS 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 2023 was primarily focused on working capital requirements, capital spending and returning cash to shareholders through dividends and share repurchases under the Company's share repurchase program. CASH PROVIDED BY OPERATING ACTIVITIES Cash provided by operations, including discontinued operations, totaled $1.8 billion in 2023, compared with $2.2 billion for 2022. Cash used by working capital components (accounts receivable, contract assets and inventory less accounts payable and accrued liabilities, interest payable and other) totaled $2 million in 2023, compared with cash used by working capital components of $145 million in 2022. Cash dividends received from equity investments were $13 million in 2023, compared with $204 million in 2022. INVESTMENT ACTIVITIES Investment activities in 2023 increased from 2022. Capital spending was $1.1 billion in 2023, or 80% of depreciation and amortization, compared with $931 million in 2022, or 90% of depreciation and amortization. Included in 2023 depreciation expense is $347 million of accelerated depreciation related to Demand for Cellulose Fibers products is closely correlated with changes in demand for absorbent primarily hygiene the products, in various income growth demographics and geographic regions. It is further affected by changes in currency rates that can benefit or hurt producers in different geographic regions. Principal cost drivers include manufacturing efficiency, raw material and energy costs, mill outage costs, and freight costs. driven by Global Cellulose Fibers In millions Net Sales Operating Profit (Loss) 2023 2022 $ 2,890 $ 3,227 $ (17) $ 106 for 2023 Global Cellulose Fibers net sales decreased 10% to $2.9 billion, compared with $3.2 billion in 2022. Operating profits in 2023 decreased compared to 2022. Comparing 2023 with 2022, benefits from lower input costs ($126 million) were more than offset by lower average sales price and an unfavorable mix ($72 million), lower sales volumes ($51 million), higher operating costs ($113 million) and higher maintenance outage costs ($13 million). Sales volumes in 2023 compared with 2022 were lower, driven by customer inventory destocking. Total maintenance and economic downtime was about 507,000 short tons higher in 2023 compared with 2022, primarily due to economic downtime. Average sales margins were lower, reflecting lower average market pulp prices and an unfavorable product mix partially offset by higher average fluff pulp prices. Operating costs increased, driven by inflation on materials and services and downtime. Distribution costs were the global supply chain environment improved. Planned maintenance outage costs were higher in 2023. Input costs were lower, driven by energy, freight, wood and chemicals. lower as 37 the closure of our containerboard mill in Orange, Texas and $75 million of accelerated depreciation related to the permanent shutdown of pulp machines at our Riegelwood, North Carolina and Pensacola, Florida mills. Capital spending as a percentage of depreciation and amortization was 62% for Global Cellulose Fibers and 81% for Industrial Packaging in 2023. following The table shows capital spending by business segment for the years ended December 31, 2023 and 2022: In millions Industrial Packaging Global Cellulose Fibers Subtotal Corporate and other Capital Spending 2023 2022 $ 928 $ 177 1,105 36 762 143 905 26 $ 1,141 $ 931 Capital spending to be approximately $800 million to $1.0 billion, or 78% to 97% of expected depreciation and amortization. is expected in 2024 Acquisitions See Note 7 Acquisitions on page 65 of Item 8. Financial Statements and Supplementary Data for a discussion of the Company's acquisitions. FINANCING ACTIVITIES Financing activities during 2023 included debt issuances of $783 million and reductions of $780 million for a net increase of $3 million. Financing activities during 2022 included debt issuances of $1.0 billion and reductions of $1.0 billion. There were no early debt extinguishment amounts during the year ended December 31, 2023. Amounts related to early debt extinguishment during the year ended December 31, 2022 are below: In millions Early debt reductions (a) Pre-tax early debt extinguishment costs (b) 2022 $ 503 93 (a) Reductions related to notes with interest rates ranging from 3.00% to 8.70% with original maturities from 2021 to 2048 for the year ended December 31, 2022. (b) Amounts are included in Restructuring and other charges in the accompanying consolidated statements of operations. Other financing activities during 2023 included the net issuance of approximately 1.6 million shares of treasury stock. Repurchases of common stock and payments of restricted stock withholding taxes totaled $218 million, including $197 million related to shares repurchased under the Company's share repurchase program. Through December 31, 2023, the Company 38 has repurchased 119.8 million shares at an average price of $46.23, for a total of approximately $5.5 billion, since in September 2013. The Company paid cash dividends totaling $642 million during 2023. the repurchase program began Other financing activities during 2022 included the net issuance of approximately 1.6 million shares of treasury stock. In 2022, repurchases of common stock and payments of restricted stock withholding taxes totaled $1.3 billion, including $1.3 billion related to shares repurchased under the Company's share repurchase program. The Company paid cash dividends totaling $673 million during 2022. 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 to 2026 with an from 2024 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 the previously hedged debt. The premium on Company had no outstanding interest rate swaps for the years ended December 31, 2023 and 2022. Variable Interest Entities Information concerning variable interest entities is set forth in Note 15 Variable Interest Entities on pages 78 through 80 of Item 8. Financial Statements and Supplementary Data. In connection with the 2006 International Paper installment sale of forestlands, we received $4.8 billion of installment notes. These installment notes were used by variable interest entities as collateral for borrowings from third-party lenders. These variable interest entities were restructured in 2015 (the "2015 Financing Entities") when the installment notes and third-party loans were extended. The 2015 Financing Entities held installment notes of $4.8 billion and third-party loans of $4.2 billion which both matured in August 2021. We settled the third-party loans at their maturity with the proceeds from the installment notes. This resulted in cash proceeds of approximately $630 million the 2015 Financing representing our equity Entities. Maturity of installment notes and the termination of the monetization structure also resulted in a $72 million tax liability that was paid in the fourth quarter of 2021. On September 2, 2022, the Company and the Internal Revenue Service agreed timber to settle monetization restructuring tax matter. Under this the 2015 Financing Entities in the audit. The amount of agreement, the Company agreed to fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing interest expense of recognized in 2022 was $58 million. As of December 31, 2023, $252 million in U.S. federal income taxes and $58 million in interest expense the settlement have been paid as a result of agreement. The Company has now fully satisfied the payment terms of the settlement agreement regarding timber monetization the 2015 Financing Entities the restructuring Company’s remaining deferred tax liability associated with the 2015 Financing Entities of $604 million was recognized as a one-time tax benefit in the third quarter of 2022. tax matter. The reversal of LIQUIDITY AND CAPITAL RESOURCES OUTLOOK FOR 2024 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, returning meaningful cash to shareholders through dividends and share repurchases and making organic investments to maintain our world-class system and strengthen our businesses. as for purchase authorized On October 11, 2022, our Board of Directors approved an additional $1.5 billion under our share repurchase program. This program does not have an expiration date and has approximately $2.96 billion aggregate amount of shares of common stock remaining of December 31, 2023. We may continue to repurchase shares under such authorization in open market trades), privately transactions to negotiated prevailing market liquidity requirements, applicable securities laws requirements and other factors. In addition, we have paid regular quarterly cash dividends and expect to continue to pay the foreseeable future. Each quarterly dividend is subject to review and approval by our Board of Directors. regular quarterly cash dividends transactions or otherwise, subject (including block conditions, our in Capital Expenditures and Long-Term Debt Capital spending for 2024 is planned at approximately $800 million to $1.0 billion, or about 78% to 97% of depreciation and amortization. At December 31, 2023, International Paper’s credit agreements totaled $1.9 billion, which is comprised of the $1.4 billion contractually committed bank credit agreement and up the receivables securitization program. In June 2023, the Company amended and restated its credit agreement to $500 million under 39 to, among other things (i) reduce the size of the contractually committed bank facility from $1.5 billion to $1.4 billion, (ii) extend the maturity date from June 2026 to June 2028, and (iii) replace the LIBOR-based rate with a SOFR-based rate. Management believes these credit agreements are adequate to cover expected 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 dependent upon International Paper’s credit rating. At December 31, 2023, 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 are not subject to any financial restrictive covenants other covenants as disclosed on pages 80 and 81 in Note 16 - Debt and Lines of Credit of Item 8. Financial Statements and Supplementary Data, and the receivables securitization borrowings under program being limited by eligible receivables. The Company was its debt covenants at December 31, 2023 and was well below the thresholds stipulated under the covenants as defined in the credit agreements. Further the financial covenants do not restrict any borrowings under the credit agreements. in compliance with all than the the 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, 2023, and $410 million outstanding as of December 31, 2022, under this program. During the first quarter of 2023, the Company entered into a variable term loan agreement providing for a $600 million term loan which was fully drawn on the date of such loan agreement and matures in 2028. The $600 million debt was issued following the repayment of $410 million of commercial paper earlier in 2023. Additionally, during the first quarter of 2023, the Company issued an approximately $72 million environmental development bond ("EDB") with an interest rate of 4.00% and a maturity date of April 1, 2026. The proceeds from this issuance were used to repay an approximately $72 million outstanding EDB that matured on April 1, 2023. During the second quarter of 2023, the Company issued approximately $24 million of debt with a rate and a maturity date of variable December 1, 2027. The Company had debt interest reductions of approximately $49 million of variable interest EDBs with current maturities. Additionally, during the second quarter of 2023, the Company issued an approximately $54 million EDB with a variable rate and a maturity date of May 1, 2028. The proceeds of this were used to repay an approximately $54 million EDB that matured on May 1, 2023. The Company issued an approximately $25 million EDB with a variable rate and a maturity date of June 1, 2030. The proceeds of this were used to repay an approximately $25 million EDB that matured on June 1, 2023. During the third quarter of 2023, the Company repaid an approximately $70 million EDB with an interest rate of 2.90% that matured on September 1, 2023. During the fourth quarter of 2023, the Company repaid an approximately $87 million note with an interest rate of 6.875% that matured on November 1, 2023. issued the approximately $11 million of debt with a variable interest rate and a maturity date of December 1, 2027. Additionally, Company For additional information regarding the Company’s credit agreements and outstanding indebtedness, see Note 16 Debt and Lines of Credit on pages 80 and 81 of Item 8. Financial Statements and Supplementary Data. long-term 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 funding not provided by necessary 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 International factors. The majority of Paper’s debt is accessed through global public capital markets where we have a wide base of investors. 40 Maintaining an investment grade credit rating is an important element of International Paper’s financing strategy. At December 31, 2023, 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, 2023, were as follows: In millions 2024 2025 2026 2027 2028 Thereafter Debt maturities (a) $ 138 $ 189 $ 143 $ 333 $ 670 $ 4,120 Operating lease obligations 171 Purchase obligations (b) 2,222 127 847 89 698 60 507 33 363 31 1,863 Total (c) $ 2,531 $ 1,163 $ 930 $ 900 $ 1,066 $ 6,014 Includes financing lease obligations. (a) (b) Includes $3.8 billion relating to fiber supply agreements. (c) Not included in the above table due to the uncertainty of the amount and timing of the payment are unrecognized tax benefits of approximately $168 million. Also not included in the above table is $84 million of Deemed Repatriation Transition Tax associated with the 2017 Tax Cuts and Jobs Act which will be settled from 2024 - 2026. Additionally, the deferred tax liability of $485 million related to the Temple- Inland timber monetization is not included in the table above. It will be settled with the maturity of the notes in 2027. We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2023, to be permanently reinvested and, accordingly, no U.S. income taxes have been provided thereon (see Note 13 Income Taxes on pages 72 through 74 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 determined At December 31, 2023, the projected benefit obligation for the Company’s U.S. defined benefit plans under U.S. GAAP was approximately $146 million higher than the fair value of plan assets, excluding non-U.S. plans. Plans that are subject to minimum funding requirements had plan assets of $118 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 timing of any reassesses the amount and discretionary contributions and elected not to make any voluntary contributions in 2021, 2022 or 2023. At this time, we do not expect to have any required contributions to our plans in 2024, although the future voluntary Company may elect contributions. The 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. timing and amount of to make 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 revenues and recording of assets, expenses. Some of require that are subjective inherently uncertain. liabilities, these estimates judgments about matters 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 contingencies, impairment or disposal of long-lived assets and goodwill, pensions and income taxes. 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. CONTINGENT LIABILITIES Accruals for contingent liabilities, including personal injury, product liability, environmental, asbestos and other legal matters, are recorded when it is probable that a liability has been incurred or an asset impaired and the amount of the loss can be reasonably estimated. Liabilities accrued for legal matters require judgments regarding projected outcomes and range of loss based on historical litigation and settlement experience and recommendations of legal counsel and, for if applicable, other experts. Liabilities environmental matters require evaluations of relevant environmental regulations and estimates of future remediation alternatives and costs. The Company estimated liability associated with environmental matters to be approximately $251 million and $243 million in the aggregate as of December 31, 2023 and 2022, respectively. Liabilities for asbestos-related matters require reviews of recent and historical claims data. The Company's total recorded liability with respect to pending and future the probable asbestos-related claims was $97 million and $105 million, net of estimated insurance recoveries, as of December 31, 2023 and 2022, respectively. The Company utilizes its in-house legal counsel and environmental experts to develop estimates of its legal, environmental and asbestos obligations, supplemented as needed by third-party specialists to analyze its most complex contingent liabilities. IMPAIRMENT OF LONG-LIVED ASSETS AND GOODWILL changes Long-lived assets are reviewed for impairment upon in the occurrence of events or 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. 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. We perform an annual goodwill impairment as of interim assessments of October 1. Additionally, 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. impairment charges based on The amount and timing of goodwill and long-lived asset these assessments requires the estimation of future cash flows or the fair market value of the related assets based on management’s best estimates of certain future selling prices and key volumes, operating, raw material, energy and freight costs, various other projected operating economic factors and other intended uses of the assets. including factors, 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 North America Industrial Packaging reporting unit is the Company’s only reporting unit with goodwill. As of October 1, 2023, we performed our annual goodwill impairment test for this reporting unit through a quantitative goodwill impairment test. For the 2023 quantitative assessment, the estimated fair value of 41 requires management the reporting unit was calculated using a weighted approach based on discounted future cash flows, market multiples and transaction multiples. The determination of fair value using the discounted cash flow approach to make significant estimates and assumptions related to forecasts of future revenues, operating profit margins, and discount rates. The determination of fair value using market multiples and transaction multiples to make requires management significant assumptions revenue multiples and to adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples. The results of our quantitative goodwill impairment test indicated that the carrying amount did not exceed the estimated fair value of the North America Industrial Packaging reporting unit. related 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, 2023, for International Paper’s pension plan were as follows: In millions U.S. qualified pension U.S. nonqualified pension Non-U.S. pension Benefit Obligation Fair Value of Plan Assets $ 8,718 $ 8,836 264 58 — 20 The table below shows the discount rate used by International Paper to calculate U.S. pension obligations for the years shown: Discount rate 2023 2022 2021 5.10 % 5.40 % 2.90 % International Paper determines these actuarial assumptions, after consultation with our actuaries, on December 31 each year or more if required, to calculate liability information as of that date and pension expense for the following year. The expected long-term rate of return on plan assets is frequently 42 in the plan’s based on projected rates of return for current asset classes 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, 2023 was 6.50%. Increasing the expected long-term rate of return on U.S. plan assets by an additional 0.25% would decrease 2024 pension expense by approximately $21 million, while a (decrease) increase of 0.25% in the discount rate would (increase) decrease pension expense by approximately $12 million. Actual rates of return earned on U.S. pension plan assets for each of the last 10 years were: Year 2023 2022 2021 2020 2019 Return 7.3 % (22.0) % 7.7 % 24.7 % 23.9 % Year 2018 2017 2016 2015 2014 Return (3.0) % 19.3 % 7.1 % 1.3 % 6.4 % 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 approximates the average 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. remaining Net periodic pension plan expenses, calculated for all of International Paper’s plans, were as follows: In millions 2023 2022 2021 2020 2019 Pension (income) expense U.S. plans Non-U.S. plans $ 94 $ (116) $ (112) $ 32 $ 93 5 5 4 5 6 Net (income) expense $ 99 $ (111) $ (108) $ 37 $ 99 The increase in 2023 pension expense primarily reflects higher interest cost and lower expected return on assets, offset by lower service cost. Assuming that discount rates, expected long-term returns on plan assets and future compensation increases remain the same as of rates of is completed by 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 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 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 income, as well as generating successful implementation of various tax planning strategies. The Company's valuation allowance was $848 million and $677 million at December 31, 2023 and 2022, respectively. to estimate when deferred taxable future International Paper believes While these judgments and estimates are appropriate and actual reasonable resolution of these matters may differ from recorded estimated amounts. circumstances, under that the LEGAL PROCEEDINGS Information concerning the Company’s environmental and other legal proceedings is set forth in Note 14 Commitments and Contingent Liabilities on pages 74 through 78 of Item 8. Financial Statements and Supplementary Data. 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. December 31, 2023, projected future net periodic pension plan expense (income) would be as follows: In millions Pension expense (income) U.S. plans Non-U.S. plans Net (income) expense 2025 2024 $ $ (43) $ 5 (38) $ (7) 5 (2) The Company estimates that it will record net pension income of approximately $7 million for its U.S. defined benefit plans in 2024, compared to expense of $94 million in 2023. The market value of plan assets for International Paper’s U.S. qualified pension plan at December 31, 2023 totaled approximately $8.8 billion, consisting of approximately 66% hedging assets and 34% 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 2023. The nonqualified defined benefit plans are funded to the extent of benefit payments, which totaled $22 million for the year ended December 31, 2023. 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. 43 RECENT ACCOUNTING DEVELOPMENTS See Note 2 Recent Accounting Developments on Item 8. Financial Statements and page 60 of Supplementary Data for a discussion of new accounting pronouncements. EFFECT OF INFLATION Inflationary increases in certain input costs, such as energy, wood, recycled fiber, freight and chemical costs, had an adverse impact on the Company’s operating results in 2023 and 2022. The effects of inflation have been more significant in recent years due to general inflationary conditions, including labor market conditions, economic activity, consumer behavior, supply shortages and disruptions. Sales prices and volumes are primarily influenced by economic supply and demand factors in specific markets and by exchange rate fluctuations but are the current also currently being inflationary environment. impacted by FOREIGN CURRENCY EFFECTS indirect impacts on financial statements. Direct 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 the number of direct and Company’s 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 in include 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 currency that has the most impact is the Euro. impacts change the 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 to related International Paper’s debt obligations is included in trading purposes. Information 44 Note 16 Debt and Lines of Credit on pages 80 and 81 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 of financial institutions and money market mutual funds with a minimum rating of AAA and limit exposure to any one issuer or in marketable securities at December 31, 2023 and 2022 are stated at cost, which approximates market due to their short- term nature. Our interest rate risk exposure related to these investments was not material. investments fund. Our 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, 2023 and 2022, the fair value of the net liability of financial instruments with exposure to interest rate risk was approximately $4.5 billion and $4.3 billion, respectively. The potential increase in fair value resulting from a 10% adverse shift in quoted interest rates would have been approximately $273 million and $328 million at December 31, 2023 and 2022, respectively. COMMODITY PRICE RISK of our objective commodity The 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, 2023 and 2022, the net fair value of these contracts was $27 million asset and $20 million asset. The potential loss in fair value from a 10% adverse change in quoted commodity prices for these contracts would have been approximately $4 million and $3 million at December 31, 2023 and 2022, respectively. FOREIGN CURRENCY RISK transacts business International Paper in many currencies and is also subject to currency exchange rate risk through investments and businesses owned and operated in foreign countries. The currency that has the most impact is the Euro. 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. We address these risks on a limited basis by entering into cross- currency interest rate swaps, or foreign exchange contracts. instruments with exposure At December 31, 2023 and 2022, the net fair value of financial foreign currency risk 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. to ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See the preceding discussion regarding market risk. 45 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 is this Annual Report on Form 10-K and 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 formed a Disclosure on Form 10-K. We have 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 the Board of Directors and all committees of Directors. Management all that representations made to the independent auditors during their audits were valid and appropriate. believes Internal Control Over Financial Reporting Internal control over 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 financial Exchange Act). reporting is the process designed by, or under the supervision of, our principal executive officer and principal financial officer, and effected by our Board of to Directors, management and other personnel provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes. All internal control the systems have possibility of circumvention and overriding of controls, limitations, including inherent 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. financial The Company has assessed the effectiveness of its internal control over reporting as of December 31, 2023. In making this assessment, it used the criteria described in “Internal Control – the Integrated Framework issued by Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this that, as of assessment, management believes December 31, 2023, the Company’s internal control over financial reporting was effective. (2013)” The Company’s registered public independent accounting firm, Deloitte & Touche LLP, has issued its report on the effectiveness of the Company’s internal control over financial reporting. The report appears on pages 48 through 50. Internal Control Environment And Board Of Directors Oversight internal control environment includes an Our 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 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 management personnel, appropriate delegation of authority and division of responsibility, dissemination throughout of accounting and business policies International Paper, and an extensive program of internal audits with management follow-up. supervisory training and of The Board of Directors, assisted by the Audit and Finance Committee, monitors the integrity of the financial Company’s reporting procedures, the Company’s internal audit function and independent auditors, and other matters set forth in its charter. The financial statements and the performance of 46 representatives Audit and Finance Committee, which consists of regularly with independent directors, meets representatives of management, and with the independent auditors and the Internal Auditor, with and without management 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, 2023, 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. MARK S. SUTTON CHAIRMAN AND CHIEF EXECUTIVE OFFICER TIMOTHY S. NICHOLLS SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 47 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of International Paper Company: Opinion on the Financial Statements 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 federal Company securities rules and regulations of the Securities and Exchange Commission and the PCAOB. in accordance with laws and the applicable the U.S. We have audited the accompanying consolidated balance sheets of International Paper Company and subsidiaries (the "Company") as of December 31, 2023 and 2022, 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, 2023, and the related the "financial notes (collectively referred statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period in conformity with ended December 31, 2023, accounting principles generally accepted the United States of America. to as in We did not audit the financial statements of Ilim S.A. as of and for the year ended December 31, 2022. The Company’s investment in Ilim S.A. is accounted for by use of the equity method and is presented as held-for-sale and within discontinued operations, as disclosed in Note 11. The accompanying financial the Company statements of its equity Ilim S.A. of $133 million as of in investment December 31, 2022, and its equity earnings in Ilim S.A. of $296 million for the year ended December 31, 2022. The financial statements of Ilim S.A. were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Ilim S.A. as of and for the year ended December 31, 2022, is based solely on the report of the other auditors. include We have also audited, in accordance with the the Public Company Accounting standards of the Oversight Board (United States) (PCAOB), Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued of Sponsoring Organizations of the Treadway Commission and our report dated February 16, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. the Committee by 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 48 the audit We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform 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 Matter that is material The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit and Finance Committee and that (1) relates to an account or disclosure financial statements and involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter financial statements, taken as a whole, and we are not, by the critical audit matter below, communicating providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. in any way our opinion on the the (2) to Retirement Plans — Plan Assets — Refer to Note 18 to the financial statements Critical Audit Matter Description As of December 31, 2023, the Company’s Qualified Pension Plan held approximately $2.7 billion in investments whose reported value is determined based on net asset value (“NAV”). The strategic asset the Company’s allocation policy prescribed by Qualified Pension Plan permissible investments in certain hedge funds, private equity funds, and real estate funds whose reported values includes are determined based on the estimated NAV of each investment. the These NAVs are generally determined by Qualified 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. 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, including the need to involve professionals in our firm having expertise in alternative investments. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the determination of NAV associated with the Company’s Qualified 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, the reliability of NAVs reported by third-party administrators and fund managers. those related including to • We the inquired of management and investment advisors regarding changes to the investment investment strategies. portfolio and • We obtained a confirmation from the third- party custodian as of December 31, 2023 of all individual investments held in trust for the Qualified Pension Plan the existence of each individual asset held in trust. to confirm • 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, 2022 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. • With the assistance of professionals in our alternative expertise firm investments, we rolled forward the valuation having in roll independently from selected funds’ most recently audited financial statements to December 31, 2023. This included forward procedure 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, obtained benchmark or index. We then compared our independent fund valuation estimate to the December 31, 2023, balance recorded by the Company. For certain selected funds, our roll included alternative forward procedures procedures, trust statements for observable transactions near year-end to compare to the estimated fair value. such as inspecting • For certain inquired of investments, we 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. /s/ Deloitte & Touche LLP Memphis, Tennessee February 16, 2024 We have served as the Company's auditor since 2002. REPORT OF PUBLIC ACCOUNTING FIRM INDEPENDENT REGISTERED To the shareholders and the Board of Directors of International Paper Company: Opinion on Reporting Internal Control over Financial Integrated Framework (2013) We have audited the internal control over financial reporting of International Paper Company and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control the — issued by Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the respects, Company maintained, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. in all material We have also audited, in accordance with the the Public Company Accounting standards of Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the 49 year ended December 31, 2023, of the Company and our report dated February 16, 2024, expressed an unqualified opinion on those financial statements. company’s assets that could have a material effect on the financial statements. Basis for Opinion is responsible The Company’s management 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 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. financial the audit We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform to obtain reasonable assurance about whether effective internal control over 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 regarding to provide reliability of A company’s internal control over financial reporting reasonable is a process designed assurance financial the 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 recorded as that transactions are assurance necessary financial to permit preparation of statements in accordance with generally accepted receipts and accounting principles, 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 that 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 the degree of compliance with the policies or procedures may deteriorate. in conditions, or that /s/ Deloitte & Touche LLP Memphis, Tennessee February 16, 2024 50 CONSOLIDATED STATEMENT OF OPERATIONS In millions, except per share amounts, for the years ended December 31 NET SALES COSTS AND EXPENSES Cost of products sold Selling and administrative expenses Depreciation, amortization and cost of timber harvested Distribution expenses Taxes other than payroll and income taxes Restructuring and other charges, net Net (gains) losses on sales and impairments of businesses Net (gains) losses on sales of equity method investments Net (gains) losses on mark to market investments Interest expense, net Non-operating pension (income) expense EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY EARNINGS (LOSSES) Income tax provision (benefit) Equity earnings (loss), net of taxes EARNINGS (LOSS) FROM CONTINUING OPERATIONS Discontinued operations, net of taxes NET EARNINGS (LOSS) Less: Net earnings (loss) attributable to noncontrolling interests NET EARNINGS (LOSS) ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY BASIC EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS Earnings (loss) from continuing operations Discontinued operations, net of taxes Net earnings (loss) DILUTED EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS Earnings (loss) from continuing operations Discontinued operations, net of taxes Net earnings (loss) The accompanying notes are an integral part of these financial statements. 2023 2022 2021 $ 18,916 $ 21,161 $ 19,363 13,629 15,143 13,832 1,360 1,293 1,385 1,432 1,040 1,097 1,575 1,783 1,444 154 148 99 — — — 231 89 76 10 (65) 325 139 509 (7) (204) 32 337 54 (192) (200) 382 1,511 59 (21) (236) (6) 302 1,741 (14) (237) 999 188 2 813 941 288 1,504 1,754 — — 2 $ 288 $ 1,504 $ 1,752 $ 0.87 $ 4.79 $ (0.04) (0.65) $ 0.83 $ 4.14 $ $ 0.86 $ 4.74 $ (0.04) (0.64) $ 0.82 $ 4.10 $ 2.08 2.42 4.50 2.07 2.40 4.47 51 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) In millions for the years ended December 31 NET EARNINGS (LOSS) OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Amortization of pension and postretirement prior service costs and net loss: U.S. plans (less tax of $29, $28 and $41) Non-U.S. plans (less tax of $0, $0 and $0) Pension and postretirement liability adjustments: U.S. plans (less tax of $(56), $(109) and $235) Non-U.S. plans (less tax of $0, $1 and $1) Change in cumulative foreign currency translation adjustment (less tax of $0, $0 and $0) Net gains/losses on cash flow hedging derivatives (less tax of $0, $1 and $(1)) TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX Comprehensive Income (Loss) Net (Earnings) Loss Attributable to Noncontrolling Interests Other Comprehensive (Income) Loss Attributable to Noncontrolling Interests 2023 2022 2021 $ 288 $ 1,504 $ 1,754 87 (1) 85 1 124 1 (170) (327) 706 3 441 — 360 648 — — 8 (28) 2 7 69 (6) (259) 901 1,245 2,655 — — (2) 2 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY $ 648 $ 1,245 $ 2,655 The accompanying notes are an integral part of these financial statements. 52 CONSOLIDATED BALANCE SHEET In millions, except per share amounts, at December 31 ASSETS Current Assets Cash and temporary investments Accounts and notes receivable (less allowances of $34 in 2023 and $31 in 2022) Contract assets Inventories Assets held for sale Other current assets Total Current Assets Plants, Properties and Equipment, net Investments Long-Term Financial Assets of Variable Interest Entities (Note 15) Goodwill Overfunded Pension Plan Assets Right of Use Assets Deferred Charges and Other Assets TOTAL ASSETS LIABILITIES AND EQUITY Current Liabilities Notes payable and current maturities of long-term debt Accounts payable Accrued payroll and benefits Other current liabilities Total Current Liabilities Long-Term Debt Long-Term Nonrecourse Financial Liabilities of Variable Interest Entities (Note 15) Deferred Income Taxes Underfunded Pension Benefit Obligation Postretirement and Postemployment Benefit Obligation Long-Term Lease Obligations Other Liabilities Commitments and Contingent Liabilities (Note 14) Equity Common stock $1 par value, 2023 - 448.9 shares and 2022 - 448.9 shares Paid-in capital Retained earnings Accumulated other comprehensive loss Less: Common stock held in treasury, at cost, 2023 – 102.9 shares and 2022 – 98.6 shares Total Equity TOTAL LIABILITIES AND EQUITY The accompanying notes are an integral part of these financial statements. 53 2023 2022 $ 1,113 $ 804 3,059 3,284 433 481 1,889 1,942 — 114 133 126 6,608 6,770 10,150 10,431 163 186 2,312 2,294 3,041 3,041 118 448 421 297 424 497 $ 23,261 $ 23,940 $ 138 $ 763 2,442 2,708 397 355 982 1,174 3,959 5,000 5,455 4,816 2,113 2,106 1,552 1,732 280 140 312 281 150 283 1,095 1,075 449 449 4,730 4,725 9,491 9,855 (1,565) (1,925) 13,105 13,104 4,750 4,607 8,355 8,497 $ 23,261 $ 23,940 CONSOLIDATED STATEMENT OF CASH FLOWS In millions for the years ended December 31 OPERATING ACTIVITIES Net earnings (loss) Depreciation, amortization, and cost of timber harvested Deferred income tax provision (benefit), net Restructuring and other charges, net Periodic pension (income) expense, net Net (gains) losses on mark to market investments Net (gains) losses on sales and impairments of businesses Net (gains) losses on sales and impairments of equity method investments Net (gains) losses on sales of fixed assets Equity method dividends received Equity (earnings) losses, net Other, net Changes in current assets and liabilities Accounts and notes receivable Contract assets Inventories Accounts payable and accrued liabilities Interest payable Other CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES INVESTMENT ACTIVITIES Invested in capital projects, net of insurance recoveries Acquisitions, net of cash acquired Proceeds from sales of equity method investments, net of transaction costs Proceeds from sales of businesses, net of cash divested Proceeds from exchange of equity securities Proceeds from settlement of Variable Interest Entities Proceeds from sale of fixed assets Other CASH PROVIDED BY (USED FOR) INVESTMENT ACTIVITIES FINANCING ACTIVITIES Repurchases of common stock and payments of restricted stock tax withholding Issuance of debt Reduction of debt Change in book overdrafts Dividends paid Reduction of Variable Interest Entity loans Distribution to Sylvamo Corporation Net debt tender premiums paid Other CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES Effect of Exchange Rate Changes on Cash Change in Cash and Temporary Investments Cash and Temporary Investments Beginning of the period End of the period The accompanying notes are an integral part of these financial statements. 54 2023 2022 2021 $ 288 $ 1,504 $ 1,754 1,432 1,040 1,210 (156) (773) (291) 99 94 — — 153 — 13 89 509 (116) (112) (65) 76 543 — 204 32 (358) (205) (86) 159 (108) (291) (313) 20 108 157 255 (59) (596) 48 73 (402) (19) 43 (103) (162) 110 41 28 (49) (263) 519 (32) (5) 1,833 2,174 2,030 (1,141) (931) (549) — 472 — — — 4 (3) — — — 311 — 13 (1) (80) 908 827 — 4,850 101 (3) (668) (608) 6,054 (218) (1,284) (839) 783 1,011 1,512 (780) (1,017) (2,509) (8) 1 65 (642) (673) (780) — — — (1) — (4,220) — (89) (3) (130) (456) (18) (866) (2,054) (7,375) 10 (3) (9) 309 (491) 700 804 1,295 595 $ 1,113 $ 804 $ 1,295 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Sylvamo Corporation spin-off — (1,729) In millions BALANCE, JANUARY 1, 2021 Issuance of stock for various plans, net Repurchase of stock Dividends ($2.000 per share) Transactions of equity method investees Divestiture of noncontrolling interests Comprehensive income (loss) BALANCE, DECEMBER 31, 2021 Issuance of stock for various plans, net Repurchase of stock Dividends ($1.850 per share) Comprehensive income (loss) BALANCE, DECEMBER 31, 2022 Issuance of stock for various plans, net Repurchase of stock Dividends ($1.850 per share) Comprehensive income (loss) BALANCE, DECEMBER 31, 2023 Common Stock Issued Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Common Stock Held In Treasury, At Cost Total International Paper Shareholders’ Equity Noncontrolling Interests Total Equity $ 449 $ 6,325 $ 8,070 $ (4,342) $ 2,648 $ 7,854 $ — — — 54 — — — 18 — — — — — — — (793) — — 1,752 1,773 — 44 — — — (89) 839 — — — — 903 — — 143 (839) (793) 18 — 2,655 14 $ 7,868 (1) 43 — — 143 (839) — (793) — 18 (13) (13) — 2,655 449 4,668 9,029 (1,666) 3,398 9,082 — 9,082 — — — — 57 — — — — — (678) 1,504 — — — (259) (75) 1,284 — — 132 (1,284) (678) 1,245 — 132 — (1,284) — — (678) 1,245 449 4,725 9,855 (1,925) 4,607 8,497 — 8,497 — — 5 — — — — — (77) 220 82 (220) — 82 — (220) — — (652) — — (652) — (652) — — 288 360 — 648 — 648 $ 449 $ 4,730 $ 9,491 $ (1,565) $ 4,750 $ 8,355 $ — $ 8,355 The accompanying notes are an integral part of these financial statements. 55 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS products with primary markets International Paper (the "Company") is a global producer of renewable fiber-based packaging and pulp and manufacturing operations in North America and Europe and additional markets and manufacturing operations in Latin America, North Africa and Asia. 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. Printing Papers Spin-off On October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers segment along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded company, Sylvamo Corporation ("Sylvamo"). The transaction was implemented through the distribution of shares of the standalone company to International Paper's shareholders (the "Distribution"). As a result of the Distribution, Sylvamo is an independent public the New York Stock company Exchange under the symbol "SLVM". trades on that In addition to the spin-off of Sylvamo, the Company completed the sale of its Kwidzyn, Poland mill on August 6, 2021. All historical operating results of the Sylvamo businesses and Kwidzyn mill have been presented as Discontinued Operations, net of tax, in the consolidated statement of operations. See Note 8 for further details regarding the Sylvamo spin-off 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 56 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 statement 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 sheet. CONSOLIDATION The consolidated financial statements include the accounts of International Paper and subsidiaries for interest, which we have a controlling including variable interest entities for which we are the primary beneficiary. All significant intercompany balances and transactions are eliminated. financial 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 impairment for other-than-temporary investments ("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 in value a decline temporary, expectations about operations, as well as industry, financial, regulatory and market factors. is other than BUSINESS COMBINATIONS The Company allocates the total consideration of the assets acquired and liabilities assumed based on the business fair value as of their estimated 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, estimated replacement costs and depreciation and obsolescence factors. Determining the fair value for specifically identified lists and intangible assets such as customer 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 first, any liabilities assumed, whichever comes the subsequent adjustments are charged consolidated statement 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. to RESTRUCTURING LIABILITIES AND COSTS policy broadly communicated For operations to be closed or restructured, a liability and related expense is recorded in the period when operations cease. 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 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 the Company recognizes revenue over time, which generally is, as the goods are produced. to payment the goods, for rise that give The Company’s revenue is primarily derived from fixed consideration; however, we do have contract terms 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 the Company's portfolio of experience across customers to record reductions in revenue that is consistent with the expected value method outlined in ASC 606. Management has concluded that these the methods consideration the Company will be entitled to from its customers. the best estimate of result in recognize The Company has elected to present all sales taxes on a net basis, account for shipping and handling activities as the fulfillment activities, 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 are valued at the lower of cost or market value and include all costs directly associated with manufacturing products: materials, labor and manufacturing overhead. In the United States, costs of raw materials and finished pulp and paper products, are generally determined using the last-in, first-out method. Other inventories are valued using the first-in, first-out or average cost methods. See Note 9 for further details. 57 LEASED ASSETS leases primarily relate 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 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 to approximate a rate collateralized rate, and apply the rate based on the currency of the lease, which is updated on a quarterly liabilities. basis 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 except for certain gas and chemical agreements. See Note 10 for further details. for measurement of new risk-adjust lease that PLANTS, PROPERTIES AND EQUIPMENT Plants, properties and equipment are stated at cost, less accumulated depreciation. Expenditures for betterments are capitalized, whereas normal repairs and maintenance are expensed as incurred. The units-of-production method of depreciation is used for pulp and paper mills, and the straight-line method is used for other plants and equipment. 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. 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 58 occurred that would result in the impairment of a reporting unit’s goodwill. the Company The Company has the option to evaluate goodwill for first performing a qualitative impairment by 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, is required the quantitative goodwill to perform 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, market multiples and transaction 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 profit margins, and discount rates. The determination of fair value using market multiples and transaction multiples requires management to make significant assumptions revenue multiples and 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. related to IMPAIRMENT OF LONG-LIVED ASSETS changes Long-lived assets are reviewed for impairment upon the occurrence of events or 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 the asset and International Paper uses 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. 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 judgments and estimates made by the Company are based on management’s evaluation of the technical merits of a matter, assisted as necessary by consultation with outside consultants, historical experience and other assumptions that management believes are appropriate and reasonable under current circumstances. Actual resolution of these matters may differ from recorded estimated amounts, resulting in adjustments that could materially affect future financial statements. See Note 13 for further details. 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 tax jurisdiction and relies on both positive and negative evidence available, with significant weight placed on recent financial results. Cumulative reported pre-tax is completed by to estimate when deferred 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 tax logical methods 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 income, as well as generating successful implementation of various tax planning strategies. taxable future International Paper uses the flow-through method to account for investment tax credits earned on eligible open-loop biomass facilities and combined heat and power system expenditures. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned rather than a reduction in the asset basis. ENVIRONMENTAL REMEDIATION COSTS Costs associated with environmental remediation obligations are accrued when such costs are probable and reasonably estimable. Such accruals are adjusted as further information develops or circumstances change. See Note 14 for further details. TRANSLATION OF FINANCIAL STATEMENTS Balance sheets of international operations are translated into U.S. dollars at year-end exchange rates, while statements of operations are translated at average rates. Adjustments resulting from financial statement translations are included as cumulative translation adjustments in Accumulated other comprehensive income (loss). FAIR VALUE MEASUREMENTS The guidance for fair value measurements and disclosures sets out a fair value hierarchy that groups fair value measurement inputs into the following three classifications: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. 59 operating as a buyer in a supplier finance agreement to disclose qualitative and quantitative information about its supplier finance programs. This guidance is effective for annual reporting periods beginning after December 15, 2022, and interim periods within those years. The Company adopted the provisions of this guidance in the first quarter of 2023. See Note 9 - Supplementary Financial Statement Information. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED Segment Reporting In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." This guidance requires companies to disclose incremental segment information on an annual and interim basis. This guidance is effective for annual reporting periods beginning after December 15, 2023 and interim periods within those years beginning after December 15, 2024. Early adoption of these amendments is permitted and amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance. Income Taxes income In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This guidance requires companies tax disclosures, particularly to enhance around rate reconciliations and income taxes paid information. This guidance is effective for annual reporting periods beginning after December 15, 2024. Early adoption of these amendments is permitted and amendments should be applied prospectively. The Company is currently evaluating the provisions of this guidance. Level 3: Unobservable inputs for the asset or liability reflecting the reporting entity’s own assumptions or external inputs from inactive markets. Transfers between levels are recognized at the end of the reporting period. NOTE 2 RECENT ACCOUNTING DEVELOPMENTS Other than as described below, no new accounting pronouncement issued or effective during the fiscal year has had or is expected to have a material impact on the consolidated financial statements. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS Reference Rate Reform transitioning away In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This guidance provides companies with optional guidance to ease the potential accounting burden associated with from reference rates that are expected to be discontinued. This guidance issuance and is effective upon generally can be applied through December 31, 2024. The Company has applied and will continue to apply this guidance to account for contract modifications due those modifications occur. We do not expect this guidance to have a material impact on our consolidated financial statements and related disclosures. to changes rates as reference in Liabilities - Supplier Finance Programs In September 2022, the FASB issued ASU 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." This guidance requires a business entity 60 NOTE 3 - REVENUE RECOGNITION DISAGGREGATED REVENUE Reportable Segments Primary Geographical Markets (a) United States EMEA Pacific Rim and Asia Americas, other than U.S. Total Operating Segments North American Industrial Packaging EMEA Industrial Packaging Global Cellulose Fibers Intrasegment Eliminations Corporate & Intersegment Sales Total 2023 Industrial Packaging Global Cellulose Fibers Corporate & Intersegment Total $ 13,340 $ 2,570 $ 430 $ 16,340 1,398 37 821 96 224 — — — — 1,494 261 821 $ 15,596 $ 2,890 $ 430 $ 18,916 $ 14,293 $ — $ — $ 14,293 1,398 — (95) — — 2,890 — — — — — 430 1,398 2,890 (95) 430 $ 15,596 $ 2,890 $ 430 $ 18,916 (a) Net sales are attributed to countries based on the location of the reportable segment making the sale. Reportable Segments Primary Geographical Markets (a) United States EMEA Pacific Rim and Asia Americas, other than U.S. Total Operating Segments North American Industrial Packaging EMEA Industrial Packaging Global Cellulose Fibers Intrasegment Eliminations Corporate & Intersegment Sales Total 2022 Industrial Packaging Global Cellulose Fibers Corporate & Intersegment Total $ 14,970 $ 3,032 $ 480 $ 18,482 1,572 46 863 121 74 — — 3 — 1,693 123 863 $ 17,451 $ 3,227 $ 483 $ 21,161 $ 16,011 $ — $ — $ 16,011 1,572 — (132) — — 3,227 — — — — — 483 1,572 3,227 (132) 483 $ 17,451 $ 3,227 $ 483 $ 21,161 (a) Net sales are attributed to countries based on the location of the reportable segment making the sale. 61 Reportable Segments Primary Geographical Markets (a) United States EMEA Pacific Rim and Asia Americas, other than U.S. Total Operating Segments North American Industrial Packaging EMEA Industrial Packaging Global Cellulose Fibers Intrasegment Eliminations Corporate & Intersegment Sales Total 2021 Industrial Packaging Global Cellulose Fibers Corporate & Intersegment Total $ 14,006 $ 2,510 $ 253 $ 16,769 1,506 59 755 109 113 — (4) 35 21 1,611 207 776 $ 16,326 $ 2,732 $ 305 $ 19,363 $ 14,944 $ — $ — $ 14,944 1,508 — (126) — — 2,732 — — — — — 305 1,508 2,732 (126) 305 $ 16,326 $ 2,732 $ 305 $ 19,363 (a) Net sales are attributed to countries based on the location of the reportable segment making the sale. REVENUE CONTRACT BALANCES A contract asset is created when the Company recognizes revenue on its customized products prior to having an unconditional right to payment from the customer, which generally does not occur until title and risk of loss passes to the customer. A contract liability is created when customers prepay for goods prior to the Company transferring those goods to the customer. The contract liability is reduced once control of the goods is transferred to the customer. The majority of our customer prepayments are received during the fourth quarter each year for goods that will be transferred to customers over the following twelve months. Current liabilities of $32 million and $38 million are included in Other current the accompanying consolidated balance sheet as of December 31, 2023 and 2022, respectively. The Company also recorded a contract liability of $115 million related to a previous acquisition. The balance of this contract liability was $92 million and $99 million at December 31, 2023 and 2022, respectively, and is recorded in Other current the liabilities and Other Liabilities accompanying consolidated balance sheet. liabilities in in The difference between the opening and closing balances of the Company's contract assets and contract liabilities primarily results from the difference between the price and quantity at comparable points in time for goods which we have an unconditional right to payment or receive prepayment from the customer, respectively. 62 PERFORMANCE JUDGMENTS OBLIGATIONS AND SIGNIFICANT International Paper's principal business to manufacture and sell fiber-based packaging and pulp goods. As a general rule, none of our businesses provide equipment installation or other ancillary services outside of producing and shipping packaging and pulp products to customers. is The nature of the Company's contracts can vary based on the business, customer type and region; however, in all instances it is International Paper's customary business practice to receive a valid order from the customer, in which each parties' rights and related payment terms are clearly identifiable. Contracts or purchase orders with customers could include a single type of product or it could include multiple types/grades of products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contracts or purchase orders. The Company does not bundle prices; however, we do negotiate with customers on pricing and rebates for the same products based on a variety of factors (e.g. level of contractual volume, geographical location, etc.). the prices Management has concluded negotiated with each individual customer are representative of the stand-alone selling price of the product. that NOTE 4 EARNINGS PER SHARE ATTRIBUTABLE TO INTERNATIONAL PAPER COMPANY COMMON SHAREHOLDERS Basic earnings per share is computed by dividing earnings by the weighted average number of common shares outstanding. Diluted earnings per share is computed assuming that all potentially dilutive securities were converted into common shares. There are no adjustments required to be made to net income for purposes of computing basic and diluted earnings per share. A reconciliation of the amounts included in the computation of basic earnings (loss) per share from continuing operations, and diluted earnings (loss) per share from continuing operations is as follows: In millions, except per share amounts 2023 2022 2021 Earnings (loss) from continuing operations attributable to International Paper common shareholders Weighted average common shares outstanding Effect of dilutive securities: $ 302 $ 1,741 $ 811 346.9 363.5 389.4 Restricted performance share plan 2.2 3.5 3.0 Weighted average common shares outstanding – assuming dilution 349.1 367.0 392.4 Basic earnings (loss) per share from continuing operations Diluted earnings (loss) per share from continuing operations $ 0.87 $ 4.79 $ 2.08 $ 0.86 $ 4.74 $ 2.07 NOTE 5 OTHER COMPREHENSIVE INCOME The following table presents changes in Accumulated Other Comprehensive Loss ("AOCI"), net of tax, reported in the consolidated financial statements for the years ended December 31: In millions Defined Benefit Pension and Postretirement Adjustments Balance at beginning of period Other comprehensive income (loss) before reclassifications Reclassification related to Sylvamo Corporation spin-off Amounts reclassified from accumulated other comprehensive loss Balance at end of period Change in Cumulative Foreign Currency Translation Adjustments Balance at beginning of period Other comprehensive income (loss) before reclassifications Reclassification related to Sylvamo Corporation spin-off Amounts reclassified from accumulated other comprehensive loss Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest Balance at end of period Net Gains and Losses on Cash Flow Hedging Derivatives Balance at beginning of period Other comprehensive income (loss) before reclassifications Reclassification related to Sylvamo Corporation spin-off Amounts reclassified from accumulated other comprehensive loss Balance at end of period 2023 2022 2021 $ (1,195) $ (962) $ (1,880) (167) (319) — 86 — 86 713 80 125 (1,276) (1,195) (962) (722) (694) (2,457) (76) — 517 — (38) — 10 — (115) 1,692 184 2 (281) (722) (694) (8) — — — (8) (10) — — 2 (8) (5) 3 1 (9) (10) Total Accumulated Other Comprehensive Income (Loss) at End of Period $ (1,565) $ (1,925) $ (1,666) 63 Reclassifications out of AOCI for the three years ended December 31 were as follows: Amount Reclassified from Accumulated Other Comprehensive Loss 2023 2022 2021 Location of Amount Reclassified from AOCI $ In millions Defined benefit pension and postretirement items: Prior-service costs Actuarial gains/(losses) Total pre-tax amount Tax (expense)/benefit Net of tax Reclassification related to Sylvamo Corporation spin-off Total, net of tax Change in cumulative foreign currency translation adjustments: Business divestiture Tax (expense)/benefit Net of tax Reclassification related to Sylvamo Corporation spin-off Total, net of tax Net gains and losses on cash flow hedging derivatives: Cash flow hedges Total pre-tax amount Tax (expense)/benefit Net of tax Reclassification related to Sylvamo Corporation spin-off Total, net of tax (23) $ (92) (115) 29 (86) — (86) (517) — (517) — (517) — — — — — — (23) $ (91) (114) 28 (86) — (86) (10) — (10) — (10) (3) (3) 1 (2) — (2) (20) (a) Non-operating pension expense (146) (a) Non-operating pension expense (166) 41 (125) (80) (205) (184) (b) — (184) (1,692) (1,876) 11 11 (2) 9 (1) 8 Paid-in Capital Net (gains) losses on sales of equity method investments, Discontinued Operations, net of taxes and Net (gains) losses on sales and impairment of businesses Paid-in Capital Cost of products sold, Discontinued operations, net of taxes, and Interest expense, net Paid-in Capital Total reclassifications for the period, net of tax $ (603) $ (98) $ (2,073) (a) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note 18 - Retirement Plans for additional details). (b) See Note 11 - Equity Method Investments for additional details for 2023 amounts. 64 NOTE 6 RESTRUCTURING AND OTHER CHARGES, NET approximately €71 million (approximately $83 million based on the April 1, 2021 exchange rate). 2023: During 2023, restructuring and other charges, net, totaling $99 million before taxes were recorded. The charges included: The following table summarizes the final fair value assigned to assets and liabilities acquired as of April 1, 2021: In millions 2023 In millions Orange, Texas mill closure costs (a) $ 81 Cash and temporary investments $ Pensacola mill and Riegelwood mill pulp machine shutdowns (b) Building a Better IP (c) Total 37 (19) 99 $ (a) Includes $25 million of severance charges, $30 million of inventory impairment charges and $26 million of other costs associated with the closure of our containerboard mill in Orange, Texas. The majority of the severance charges will be paid in 2024. (b) Includes $21 million of severance charges, $12 million of inventory impairment charges and $4 million of other costs associated with the permanent shutdown of pulp machines at our Riegelwood, North Carolina and Pensacola, Florida mills. The majority of the severance charges will be paid in 2024. (c) Revision of severance estimates related to our Building a Better IP initiative. 2022: During 2022, restructuring and other charges, net, totaling $89 million before taxes were recorded. The charges included: In millions Early debt extinguishment costs (see Note 16) Other restructuring items Total 2022 $ $ 93 (4) 89 2021: During 2021, restructuring and other charges, net, totaling $509 million before taxes were recorded. These charges included: In millions 2021 Early debt extinguishment costs (see Note 16) $ 461 Building a Better IP (a) EMEA packaging restructuring (b) Other restructuring items Total 29 12 7 $ 509 (a) Severance related to our Building a Better IP initiative which is focused on value creation through streamlined operations and process optimization. All severance has been paid as of December 31, 2023. (b) Severance related to the optimization of our EMEA Packaging business. All severance has been paid as of December 31, 2023. NOTE 7 ACQUISITIONS 2021: On April 1, 2021, the Company closed on the previously announced acquisition of two box plants located in Spain. The total purchase consideration, inclusive of working capital adjustments, was Accounts and notes receivable Inventories Plants, properties and equipment Goodwill Intangible assets Total assets acquired Short-term debt Accounts payable and accrued liabilities Other current liabilities Long-term debt Deferred income taxes Total liabilities assumed Net assets acquired $ 5 10 3 50 23 13 104 2 4 2 1 12 21 83 Pro forma information has not been included as it is impracticable to obtain the information due to the lack of availability of historical U.S. GAAP financial data. The results of the operations of these businesses do not have a material effect on the Company's consolidated results of operations. The Company has accounted the above acquisition under ASC 805, "Business Combinations" and the results of operations have been included in International Paper's financial statements beginning with the date of acquisition. for In April 2021, 2021: the Company received a noncontrolling interest in a U.S-based corrugated packaging producer. In the second quarter, the Company recorded its investment of $115 million based on the fair value of the noncontrolling interest, and a corresponding contract liability that is amortized over 15 years. The Company is party to various includes a agreements with containerboard supply agreement. The Company is accounting for its interest as an equity method investment. the entity which NOTE 8 DIVESTITURES PRINTING PAPERS SPIN-OFF 2021: On October 1, 2021, the Company completed the previously announced spin-off of its Printing Papers segment along with certain mixed-use coated paperboard and pulp businesses in North America, France and Russia into a standalone, publicly-traded 65 company, Sylvamo Corporation ("Sylvamo"). The transaction was implemented through the distribution of shares of Sylvamo International Paper's shareholders (the "Distribution"). As a result of the independent public Distribution, Sylvamo is an company the New York Stock Exchange under the symbol "SLVM". trades on that to to The Distribution was made the Company's stockholders of record as of the close of business on September 15, 2021 (the "Record Date"), and such stockholders received one share of Sylvamo common stock for every 11 shares of International Paper common stock held as of the close of business on the Record Date. The Company retained 19.9% of the shares of Sylvamo at the time of the separation with the intent to monetize its investment and provide additional proceeds to the Company. The spin-off was tax-free for the Company and its shareholders for U.S. federal income tax purposes. 2022, the Company no longer had an ownership interest in Sylvamo. the Sylvamo All historical operating results of businesses, as well as the results of our Kwidzyn, Poland mill that was sold on August 6, 2021, are presented as Discontinued Operations, net of tax, in the consolidated statement of operations. Kwidzyn was previously part of the Printing Papers business prior to its sale in August 2021. See the Kwidzyn Mill section below for further details regarding this sale. The following summarizes the major classes of line items comprising Earnings (Loss) Before Income Taxes and Equity Earnings reconciled to Discontinued Operations, net of tax, related to the Sylvamo businesses and Kwidzyn the year ended December 31, 2021 presented in the consolidated statement of operations: for a other transition agreements govern following that the parties In connection with the Distribution, on September 29, 2021, the Company and Sylvamo entered into a separation and distribution agreement as well as the various the relationships between Distribution, services including agreement, a tax matters agreement and an employee matters agreement. These agreements provided for the allocation between the Company and Sylvamo of assets, liabilities and obligations attributable to periods prior to, at and after the Distribution and govern certain relationships between the Company and Sylvamo after the Distribution. The Company operational agreements with Sylvamo under which it sells fiber, paper and other products. Related party sales under these agreements were $630 million and $185 million for the year ended December 31, 2022 and 2021, respectively. Following the sale of the Company's ownership interest in Sylvamo during the third quarter 2022, Sylvamo is no longer considered a related party. ongoing various has In the second quarter 2022, the Company exchanged 4,132,000 shares of Sylvamo common stock owned by the Company in exchange and as repayment for an approximately $144 million term loan obligation which resulted in the reversal of a $31 million deferred tax liability due to the tax-free exchange of the Sylvamo common stock. In the third quarter 2022, the Company exchanged the remaining 4,614,358 shares of Sylvamo common stock owned by the Company in exchange for $167 million and as partial repayment of a $210 million term loan obligation. This also resulted in the reversal of a $35 million deferred tax liability due to the tax-free exchange of Sylvamo common stock. As of the end of the third quarter 66 In millions Net Sales Costs and Expenses Cost of products sold Selling and administrative expenses Depreciation, amortization and cost of timber harvested Distribution expenses Taxes other than payroll and income taxes Net (gains) losses on sales of fixed assets Net (gains) losses on sales and impairments of businesses Interest expense, net Earnings (Loss) Before Income Taxes and Equity Earnings Income tax provision (benefit) Discontinued Operations, Net of Taxes $ 2021 $ 2,417 1,508 224 113 229 24 (86) (351) (19) 775 145 630 The following summarizes the total cash provided by operations and total cash used for investing activities related to the Sylvamo Corporation businesses and Kwidzyn and included in the consolidated statement of cash flows: In millions Cash Provided by (Used For) Operating Activities Cash Provided by (Used For) Investment Activities 2021 290 757 $ $ In anticipation of the spin-off, Sylvamo incurred $1.5 billion in debt during the third quarter of 2021 with the proceeds used for a distribution to the Company and other expenses associated with the transaction. The Company was an obligor of the debt prior to the spin- off as Sylvamo was a wholly-owned subsidiary. Subsequent to the distribution of the net assets, the Company was no longer an obligor of the Sylvamo debt. The $1.5 billion of borrowings was comprised of issued $450 million of 7.00% senior unsecured notes due 2029 It was also in September 2021. comprised of the senior secured credit facility that Sylvamo entered into in September 2021 which consisted of $450 million of borrowings related to its term loan “B” facility, $520 million of borrowings related to its term loan “F” facility, and the $100 million draw on its revolving credit facility which had a capacity of $450 million. Additionally, at the time of the spin-off in the fourth quarter of 2021, the Company distributed $130 million to Sylvamo. The to Sylvamo debt Corporation are classified as financing activities in the accompanying consolidated statement of cash flows. issuance and distribution KWIDZYN MILL 2021: On August 6, 2021, the Company completed the sale of its Kwidzyn, Poland mill for €669 million (approximately $794 million using the July 31, 2021 exchange rate) in cash. The business included the pulp and paper mill in Kwidzyn and supporting functions. During the third quarter of 2021, the Company recorded a net gain of $360 million ($350 million after taxes) including a gain of $404 million ($394 million after taxes) related to the sale of net assets and a loss of $44 million (before and after taxes) related to the cumulative foreign currency translation loss. During the fourth quarter of 2021, the Company incurred $9 million ($6 million after taxes) of costs related to the sale of Kwidzyn. All historical operating results for Kwidzyn have been presented as the Discontinued Operations, net of consolidated statement of operations. tax, in OLMUKSAN INTERNATIONAL PAPER to Mondi Group 2021: On May 31, 2021, the Company completed the sale of its 90.38% ownership interest in Olmuksan International Paper, a corrugated packaging business in Turkey, for €66 million (approximately $81 million using the May 31, 2021 exchange rate). During the twelve months ended December 31, 2021, the Company recorded a net gain of $4 million ($2 million after taxes) related to the business working capital adjustment and cumulative foreign currency translation loss. In conjunction with the announced agreement in the fourth quarter of 2020, a determination was made that the current book value of the Olmuksan International Paper disposal group exceeded its estimated fair value of $79 million which was based on the agreed upon transaction price. As a result, a preliminary charge of $123 million (before and after taxes) was recorded during the fourth quarter of 2020. 67 NOTE 9 SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION 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 notices are treated as cash equivalents and are stated at cost. Temporary investments totaled $950 million and $690 million at December 31, 2023 and 2022, respectively. ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable, net, by classification were: In millions at December 31 2023 2022 Accounts and notes receivable: Trade (less allowances of $34 in 2023 and $31 in 2022) Other Total INVENTORIES $ 2,841 $ 3,064 218 220 $ 3,059 $ 3,284 In millions at December 31 Raw materials Finished pulp and packaging products Operating supplies Other Inventories 2023 2022 $ 229 $ 267 975 1,071 622 63 516 88 $ 1,889 $ 1,942 International Paper’s U.S. The last-in, first-out inventory method is used to value most of inventories. Approximately 81% of total raw materials and finished products inventories were valued using this method. The last-in, first-out inventory reserve was $343 million and $282 million at December 31, 2023 and 2022, respectively. PLANTS, PROPERTIES AND EQUIPMENT In millions at December 31 Pulp and packaging facilities Other properties and equipment Gross cost 2023 2022 $ 28,661 $ 27,773 1,050 1,029 29,711 28,802 Less: Accumulated depreciation 19,561 18,371 Plants, properties and equipment, net $ 10,150 $ 10,431 Non-cash additions to plants, property and equipment included within accounts payable were $141 million, $185 million and $106 million at December 31, 2023, 2022 and 2021, respectively. in invested in capital projects Amounts the accompanying consolidated statement of cash flows are presented net of insurance recoveries of $26 million and $17 million received during the years ended December 31, 2022 and 2021, respectively. There were no insurance recoveries received during the year ended December 31, 2023. Annual straight-line depreciable lives generally are, for buildings - 20 to 40 years, and for machinery and equipment - 3 to 20 years. Depreciation expense was $1.4 billion, $996 million and $1.1 billion for the years ended December 31, 2023, 2022 and 2021. Depreciation ended December 31, 2023 includes $422 million of accelerated depreciation related to mill strategic actions. Cost of products sold excludes depreciation and amortization expense. expense year the for ACCOUNTS PAYABLE Under a supplier finance program, International Paper agrees to pay a bank the stated amount of confirmed invoices from its designated suppliers on the original maturity dates of the invoices. International Paper or the bank may terminate the agreement upon at least 90 days’ notice. The supplier invoices that have been confirmed as valid under the program require payment in full on the due date with no terms exceeding 180 days. The accounts payable balance included $122 million of supplier finance program liabilities as of both December 31, 2023 and 2022. INTEREST Interest payments of $463 million, $380 million and $473 million were made during the years ended December 31, 2023, 2022 and 2021, respectively. Amounts related to interest were as follows: In millions Interest expense Interest income Capitalized interest costs 2023 2022 2021 $ 421 $ 403 $ 430 190 22 78 18 93 12 ASSET RETIREMENT OBLIGATIONS At December 31, 2023 and 2022, we had recorded liabilities of $103 million and $105 million, respectively, related to asset retirement obligations. In connection with potential future closures or redesigns of certain production facilities, it is possible that the Company may be required to take steps to facilities. remove certain materials Applicable regulations and standards provide that the removal of certain materials would only be required if these from the facility were to be demolished or underwent major renovations. At this time, any such obligations have an indeterminate settlement date, and the Company believes that adequate information does not exist to apply an expected-present-value to estimate any such potential obligations. Accordingly, the Company does not record a liability for such remediation until a decision is made that allows reasonable estimation of timing of such remediation. technique the NOTE 10 LEASES leases various International Paper real estate, including certain operating facilities, warehouses, office space and land. The Company also leases material handling equipment, vehicles, and certain other equipment. The Company's leases have remaining lease terms of up to 30 years. COMPONENTS OF LEASE EXPENSE In millions 2023 2022 2021 Operating lease costs, net $ 177 $ 153 $ 138 Variable lease costs Short-term lease costs, net Finance lease cost Amortization of lease assets Interest on lease liabilities 39 71 12 3 39 57 11 3 40 53 11 3 Total lease cost, net $ 302 $ 263 $ 245 SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES In millions Assets Operating lease assets Classification 2023 2022 Right of use assets $ 448 $ 424 Finance lease assets Plants, properties and equipment, net (a) 47 49 Total leased assets Liabilities Current $ 495 $ 473 Operating Other current liabilities $ 153 $ 147 Finance Noncurrent Operating Notes payable and current maturities of long-term debt 11 10 Long-term lease obligations 312 283 Finance Long-term debt 44 49 Total lease liabilities $ 520 $ 489 (a) Finance leases are recorded net of accumulated amortization of $67 million and $59 million at December 31, 2023 and 2022, respectively. 68 LEASE TERM AND DISCOUNT RATE NOTE 11 EQUITY METHOD INVESTMENTS In millions 2023 2022 Weighted average remaining lease term (years) Operating leases Finance leases 4.0 years 4.1 years 7.7 years 8.4 years Weighted average discount rate Operating leases Finance leases 3.99 % 4.78 % 2.96 % 4.57 % SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES In millions 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows related to operating leases Operating cash flows related to financing leases Financing cash flows related to finance leases Right of use assets obtained in exchange for lease liabilities $ 180 $ 160 $ 166 3 3 4 13 10 14 Operating leases Finance leases 216 12 221 156 6 9 MATURITY OF LEASE LIABILITIES In millions Operating Leases Financing Leases Total 2024 2025 2026 2027 2028 Thereafter Total lease payments Less imputed interest Present value of lease liabilities $ 171 $ 127 89 60 33 31 511 46 14 $ 12 11 10 8 14 185 139 100 70 41 45 69 580 14 60 $ 465 $ 55 $ 520 The Company accounts for the following investments under the equity method of accounting. ILIM S.A. ("Ilim") On September 18, 2023, pursuant to a previously announced agreement, the Company completed the sale of its 50% equity interest in Ilim, which was a joint venture that operated a pulp and paper business in Russia and has subsidiaries including Ilim Group, to its joint venture partners for $484 million in cash. The Company also completed the sale of all of its Ilim Group shares (constituting a 2.39% stake) for $24 million, and divested other non-material residual interests associated with Ilim, to its joint venture partners. Following the Company no longer has an interest in Ilim or any of its subsidiaries. Additionally, we incurred transaction fees of $36 million in connection with the sale of our investment. The Company reclassified currency translation adjustments in AOCI of $517 million to the investment at the completion of the transaction. the completed sales, As of December 31, 2022 and for all subsequent periods, the Company concluded that the held for sale balance sheet classification criteria had been met and classified the investment as Assets held for sale in the consolidated balance sheet. Also, all current and historical results of the Ilim investment have been presented as Discontinued Operations, the consolidated statement of net of operations. taxes in Also in conjunction with the previously announced agreement entered into in January 2023 to sell the Company's ownership interests in Ilim and related offer for the Company's shares in Ilim Group, a determination was made that in the fourth quarter of 2022 and for all subsequent periods through the third quarter 2023, the combined book value of our investments, plus associated cumulative translation losses, exceeded fair value based upon the agreed upon transaction price of $484 million for Ilim and the offer price of $24 million for Ilim Group and the company recorded impairment charges as presented in the table below. 69 The following summarizes the items comprising Equity Earnings, Impairment Charges, Tax Expense (Benefit), Discontinued Operations and Dividends related to the sale of our equity interest in Ilim: In millions Equity Earnings Impairment Charges Tax Expense (Benefit) Discontinued Operations, net of tax (a) Dividends Twelve Months Ended December 31, 2022 Twelve Months Ended December 31, 2023 $ $ 296 $ 112 $ 533 $ 135 $ — $ (9) $ (237) $ 204 (14) $ 13 (a) Discontinued operations, net of tax is Equity Earnings less Impairment Charges and Tax Expense (Benefit). GRAPHIC PACKAGING INTERNATIONAL PARTNERS, LLC The Company completed the transfer of its North American Consumer Packaging business in exchange for an initial 20.5% ownership interest (79,911,591 units) in Graphic Packaging International Partners, LLC ("GPIP") in 2018. The Company has since fully monetized its investment in GPIP with transactions beginning in the first quarter 2020 through the second quarter 2021. Date Transaction Type Units Proceeds Pre-Tax Gain After-Tax Gain In millions except units 2021 First Quarter Units exchange and open market sale 24,588,316 $ 397 $ 33 $ 2021 First Quarter TRA (a) 2021 Second Quarter Units exchange and open market sale 22,773,077 403 2021 Second Quarter TRA (a) 42 64 66 25 31 48 50 (a) The tax receivable agreement ("TRA") entitles the Company to 50% of the amount of any tax benefits projected to be realized by GPIP upon the Company's exchange of its units. The Company made income tax payments of $310 million in 2021 as a result of the monetization of its investment in GPIP. As of June 30, 2021, the Company no longer had an ownership interest in GPIP. The Company recorded equity earnings of $4 million for the twelve months ended December 31, 2021. The Company received cash dividends from GPIP of $5 million during 2021. The Company's remaining equity method investments are not material. 70 NOTE 12 GOODWILL AND OTHER INTANGIBLES GOODWILL The following table presents changes in the goodwill balances as allocated to each business segment for the years ended December 31, 2023 and 2022: In millions Balance as of December 31, 2021 Goodwill Accumulated impairment losses Currency translation and other (a) Accumulated impairment loss additions/reductions Balance as of December 31, 2022 Goodwill Accumulated impairment losses Balance as of December 31, 2023 Goodwill Accumulated impairment losses Total (a) Represents the effects of foreign currency translations and reclassifications. (b) Reflects the impairment of the EMEA Industrial Packaging reporting unit. Industrial Packaging Global Cellulose Fibers $ 3,426 $ (296) 3,130 (13) (76) (b) 3,413 (372) 3,041 3,413 (372) $ 3,041 $ 52 (52) — — — 52 (52) — 52 (52) — Total $ 3,478 (348) 3,130 (13) (76) 3,465 (424) 3,041 3,465 (424) $ 3,041 to to test impairment fair value of testing by applying its annual goodwill The Company performed the quantitative impairment goodwill its North America Industrial Packaging reporting unit as of October 1, 2023. This was performed by comparing the carrying amount of the North America Industrial Packaging reporting unit fair value. The its estimated estimated the reporting unit was calculated using a weighted approach based on discounted future cash flows, market multiples and transaction multiples which are classified as Level 2 and Level 3 within the fair value hierarchy. The determination of fair value using the discounted cash to make flow approach significant estimates and assumptions related to forecasts of future revenues, operating profit margins, and discount rates. The determination of fair value using market multiples and transaction multiples to make requires management significant assumptions revenue multiples and to adjusted earnings before interest, taxes, depreciation, requires management related and amortization ("EBITDA") multiples. The results of our quantitative goodwill impairment test indicated that the carrying amount did not exceed the estimated fair value of the North America Industrial Packaging reporting unit. Industrial Packaging In the fourth quarter of 2022, the Company performed the quantitative goodwill impairment test related to its EMEA reporting unit and estimated fair value in the same manner noted above. The results of our quantitative goodwill impairment test indicated that the carrying amount exceeded the estimated fair value of the EMEA Industrial Packaging reporting unit and it was determined that all of the goodwill in the reporting unit, totaling $76 million, was impaired. The decline in the fair value of EMEA Industrial Packaging and resulting impairment charge impacts of certain negative was due macroeconomic conditions, including the impacts from inflation and the geopolitical environment to the reporting unit. the to 71 OTHER INTANGIBLES Identifiable intangible assets are recorded in Deferred Charges and Other Assets in the accompanying consolidated balance sheet and comprised the following: In millions at December 31 Customer relationships and lists 2023 2022 Gross Carrying Amount Accumulated Amortization Net Intangible Assets Gross Carrying Amount Accumulated Amortization Net Intangible Assets $ 494 $ 335 $ 159 $ 490 $ 303 $ Tradenames, patents and trademarks, and developed technology Land and water rights Other Total $ 170 8 21 693 $ 154 2 19 510 $ 16 6 2 183 $ 170 8 23 691 $ 146 2 20 471 $ The Company recognized the following amounts as amortization expense related to intangible assets: 187 24 6 3 220 In millions Amortization expense related to intangible assets 2023 2022 2021 $ 37 $ 44 $ 44 Based on current intangibles subject to amortization, estimated amortization expense for each of the succeeding years is as follows: 2024 – $40 million, 2025 – $36 million, 2026 – $29 million, 2027 – $11 million, 2028 – $8 million, and cumulatively thereafter – $53 million. NOTE 13 INCOME TAXES The components of International Paper’s earnings from continuing operations before income taxes and equity earnings by taxing jurisdiction were as follows: In millions Earnings (loss) U.S. Non-U.S. 2023 2022 2021 $ 129 $ 1,469 $ 906 253 42 93 Earnings (loss) from continuing operations before income taxes and equity earnings (losses) $ 382 $ 1,511 $ 999 The provision continuing operations interests) by taxing jurisdiction was as follows: for from (excluding noncontrolling (benefit) income taxes In millions 2023 2022 2021 Current tax provision (benefit) U.S. federal U.S. state and local Non-U.S. Deferred tax provision (benefit) U.S. federal U.S. state and local Non-U.S. Income tax provision (benefit) $ 157 $ 454 $ 413 16 42 56 27 47 37 $ 215 $ 537 $ 497 $ (164) $ (775) $ (274) 3 5 (39) 41 (27) (8) $ $ (156) $ (773) $ (309) 59 $ (236) $ 188 72 income The Company’s deferred tax provision (benefit) includes a $6 million benefit, a $3 million benefit and an $8 million benefit for 2023, 2022 and 2021, respectively, for the effect of various changes in non-U.S. and U.S. federal and state tax rates. International Paper made income tax payments, net of refunds, of $340 million, $345 million and $601 million in 2023, 2022 and 2021, respectively. A reconciliation of income tax expense using the statutory U.S. income tax rate compared with the actual income tax provision follows: In millions 2023 2022 2021 Earnings (loss) from continuing operations before income taxes and equity earnings $ 382 $ 1,511 $ 999 The tax effects of significant temporary differences, representing deferred income tax assets and liabilities at December 31, 2023 and 2022, were as follows: In millions Deferred income tax assets: 2023 2022 Postretirement benefit accruals $ 67 $ Pension obligations Tax credits Net operating and capital loss carryforwards Compensation reserves Lease obligations Environmental reserves Other 61 182 699 146 116 114 319 68 18 175 568 151 108 119 271 Gross deferred income tax assets $ 1,704 $ 1,478 Less: valuation allowance (a) (848) (677) Net deferred income tax asset $ 856 $ 801 Statutory U.S. income tax rate 21 % 21 % 21 % Deferred income tax liabilities: Intangibles Investments Right of use assets $ (141) $ (147) 3 (2) (116) (108) Plants, properties and equipment (1,650) (1,778) Forestlands, related installment sales, and investment in subsidiary Gross deferred income tax liabilities Net deferred income tax liability (485) (485) $ $ (2,389) $ (2,520) (1,533) $ (1,719) (a) The net change in the total valuation allowance for the years ended December 31, 2023 and 2022 was an increase of $171 million and a decrease of $(31) million, respectively. income tax assets and Deferred liabilities are recorded in the accompanying consolidated balance sheet under the captions Deferred charges and other assets and Deferred income taxes, respectively. The $485 million of deferred tax liabilities for forestlands, in related subsidiary is attributable to a 2007 Temple-Inland installment sale of forestlands (see Note 15 - Variable Interest Entities). installment sales, and investment Tax expense (benefit) using statutory U.S. income tax rate State and local income taxes Impact of rate differential on non-U.S. permanent differences and earnings Foreign valuation allowance Tax expense (benefit) on exchange of Sylvamo shares Adjustment to tax basis of assets Non-deductible business expenses Non-deductible impairments Non-deductible compensation Tax audits Timber Monetization Audit Settlement Foreign derived intangible income deduction US tax on non-U.S. earnings (GILTI and Subpart F) Foreign tax credits General business and other tax credits Tax expense (benefit) on equity earnings Legal entity restructuring gain (loss) Other, net 80 2 (10) — 317 44 1 45 — (56) 210 15 5 — — — — (14) 7 — 7 (4) 2 16 13 6 — (604) 2 — 8 (8) 27 8 1 — 11 9 — (7) 5 (6) (38) (43) (39) (4) (1) 4 5 — (3) — — (2) Income tax provision (benefit) $ 59 $ (236) $ 188 Effective income tax rate 15 % (16) % 19 % 73 A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 is as follows: In millions 2023 2022 2021 Balance at January 1 $ (177) $ (166) $ (143) (Additions) reductions for tax positions related to current year (Additions) for tax positions related to prior years Reductions for tax positions related to prior years Settlements Expiration of statutes of limitations Currency translation adjustment (13) (7) (13) (11) (10) (23) 1 17 11 (1) 3 1 1 1 1 10 1 1 Balance at December 31 $ (173) $ (177) $ (166) If the Company were to prevail on the unrecognized tax benefits recorded, substantially all of the balances at December 31, 2023, 2022 and 2021 would benefit the effective tax rate. Pending audit settlements and the expiration of statutes of limitations could reduce the uncertain tax positions by $7 million during the next twelve months. income The Company accrues interest on unrecognized tax benefits as a component of interest expense. Penalties, if incurred, are recognized as a component of tax expense. The Company had approximately $34 million and $29 million accrued for the payment of estimated interest and penalties tax benefits at associated with unrecognized December 31, 2023 and 2022, respectively. The Company is currently subject to audits in the United States and other taxing jurisdictions around the world. Generally, tax years 2009 through 2022 remain open and subject to examination by the relevant tax authorities. The Company frequently faces challenges regarding the amount of taxes due. These challenges include positions taken by the Company related to the timing, nature, and amount of deductions and the allocation of income among various tax jurisdictions. are that years currently On January 5, 2024, the Company received a notice of proposed adjustment from the Internal Revenue Service relating to investment tax credits for the under 2017-2019 examination. We estimate the net incremental tax liability associated with the proposed adjustments would be approximately $50 million. We disagree with the proposed adjustments and plan to initiate the administrative appeals process in the first quarter. An unfavorable resolution in the current examination, future administrative proceedings, or tax litigation could result in cash tax payments and could adversely impact the effective tax rate. future The Company provides for foreign withholding taxes and any applicable U.S. state income taxes on earnings intended to be repatriated from non-U.S. subsidiaries, which we believe will be limited in the future to each year's current earnings. No provision for these taxes on approximately $1.6 billion of undistributed earnings of non-U.S. subsidiaries as of December 31, 2023 has been made, as these earnings are considered invested. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted in a taxable manner is not practicable. indefinitely If management decided to monetize the Company’s foreign investments, we would recognize the tax cost related to the excess of the book value over the tax basis of those investments. This would include foreign withholding taxes and any applicable U.S. Federal and state income taxes. Determination of the tax cost that would be incurred upon monetization of the Company’s foreign investments is not practicable; however, we do not believe it would be material. The following details the scheduled expiration dates of the Company’s net operating loss and income tax credit carryforwards: 2024 Through 2033 2034 Through 2043 Indefinite Total $ 1 $ 225 $ 426 $ 652 38 9 — 47 In millions U.S. federal and non-U.S. NOLs State taxing jurisdiction NOLs (a) U.S. federal, non- U.S. and state tax credit carryforwards (a) Total $ 121 $ 237 $ 523 $ 82 3 97 182 881 Less: valuation allowance (a) (83) (220) (475) (778) Total, net $ 38 $ 17 $ 48 $ 103 (a) State amounts are presented net of federal benefit. NOTE 14 COMMITMENTS AND CONTINGENT LIABILITIES GUARANTEES commonly makes In connection with sales of businesses, property, equipment, forestlands and other assets, International representations and Paper warranties relating to such businesses or assets, and may agree to indemnify buyers with respect to tax and of representations and warranties, and other matters. Where liabilities for such matters are determined to be probable and reasonably estimable, accrued liabilities are recorded at the time of sale as a cost of the transaction. environmental breaches liabilities, 74 and fees currently penalties Brazil Goodwill Tax Matter: The Brazilian Federal Revenue Service has challenged the deductibility of goodwill amortization generated in a 2007 acquisition by Sylvamo do Brasil Ltda. ("Sylvamo Brazil"), which was a wholly-owned subsidiary of the Company, until the October 1, 2021 spin-off of the Printing Papers business, after which it became a subsidiary of Sylvamo. Sylvamo Brazil received assessments for the tax years 2007-2015 totaling approximately $119 million (adjusted for variation in currency exchange rates) in tax, plus interest, penalties and fees. The total interest, approximately $274 million (adjusted for variation in currency exchange rates), which reflects a recent law change pursuant to which the Brazil tax authority on January 16, 2024 agreed to cancel a portion of the interest, penalties and the approximately assessments currently $393 million (adjusted in currency exchange rates). After an initial favorable ruling challenging these assessments, Sylvamo Brazil received subsequent unfavorable decisions from the Brazilian Administrative Council of Tax Appeals. Sylvamo Brazil has appealed these future decisions and unfavorable administrative judgments to the Brazilian federal courts; however, this tax litigation matter may take many years to resolve. Sylvamo Brazil and International Paper believe the transaction underlying these assessments was appropriately evaluated, and that Sylvamo Brazil's tax position would be sustained, based on Brazilian tax law. total for variation fees. Accordingly, to appeal any the basis intends for the liability under tax matters agreement. The contingent liability was determined in accordance with ASC 460 "Guarantees" based on the probability weighting of various possible outcomes. The initial fair value estimate and recorded liability as of December 31, 2021 was $48 million and remains this amount at December 31, 2023. This liability will not be increased in subsequent periods unless facts and circumstances change such that an amount greater than the initial recognized liability becomes probable and estimable. ENVIRONMENTAL AND LEGAL PROCEEDINGS Environmental in and party The Company has been named as a potentially responsible environmental ("PRP") remediation actions under various federal and state laws, including the Comprehensive Environmental Liability Act Response, Compensation ("CERCLA"). Many of these proceedings involve the cleanup of hazardous large commercial landfills that received waste from many different sources. While joint and several liability is authorized under CERCLA and equivalent state laws, as a practical matter, liability for CERCLA cleanups is typically allocated among the many PRPs. There are other remediation costs typically associated with the cleanup of hazardous substances at the Company’s current, closed and formerly-owned facilities, and recorded as liabilities in the balance sheet. substances at into between This matter pertains to a business that was conveyed to Sylvamo as of October 1, 2021, as part of our spin- off transaction. Pursuant to the terms of the tax the matters agreement entered Company and Sylvamo, the Company will pay 60% and Sylvamo will pay 40%, on up to $300 million of any assessment related to this matter, and the Company will pay all amounts of the assessment over $300 million. Under the terms of the agreement, decisions concerning the conduct of the litigation related to this matter, including strategy, settlement, pursuit and abandonment, will be made by the Company. Sylvamo thus has no control over any decision related litigation. The Company intends to vigorously defend this historic tax position against the current assessments and any similar assessments that may be issued for tax years subsequent to 2015. The Brazilian government may enact a tax amnesty program that would allow Sylvamo Brazil to resolve this dispute for less than the assessed amount. As of October 1, 2021, in connection with the recording of the distribution of the spin-off assets and transaction, liability representing the initial fair value of the contingent liabilities resulting the Company established a this ongoing from to Remediation costs are recorded in the consolidated financial statements when they become probable and reasonably estimable. International Paper has estimated the probable liability associated with these environmental remediation matters, including those described herein, to be approximately $251 million and $243 million in the aggregate as of December 31, 2023 and December 31, 2022, respectively. Other than as described below, completion of required environmental is not expected to have a material effect on our consolidated financial statements. remedial actions ("RAs") Cass Lake: One of the matters included above arises out of a closed wood-treatment facility located in Cass Lake, Minnesota. In June 2011, the U.S. Environmental Protection Agency ("EPA") selected and published a proposed soil remedy at the site with an estimated cost of $46 million. In April 2020, the EPA final plan concerning clean-up standards at a portion of the site, the estimated cost of which is included within the soil remedy referenced above. The total reserve for the Cass Lake superfund site was $46 million and $47 million as of December 31, 2023 and 2022, respectively. issued a 75 that Kalamazoo River: The Company is a PRP with respect to the Allied Paper, Inc./Portage Creek/ Kalamazoo River Superfund Site in Michigan. The is contaminated by EPA asserts polychlorinated biphenyls primarily as a result of discharges from various paper mills located along the Kalamazoo River, including a paper mill formerly owned by St. Regis Paper Company ("St. Regis"). The Company is a successor in interest to St. Regis. the site • Operable Unit 5, Area 1: In March 2016, the Company and other PRPs received a special notice letter from the EPA (i) inviting participation in implementing a remedy for a portion of the site known as Operable Unit 5, Area 1, and (ii) demanding reimbursement of EPA past costs totaling $37 million, including $19 million in past costs previously demanded by the EPA. The Company responded to the special notice letter. In December 2016, the EPA issued a unilateral administrative order to the Company and other PRPs to perform the remedy. The Company responded to the unilateral administrative order, agreeing to comply with the order subject to its sufficient cause defenses. • Operable Unit 1: In October 2016, the Company and another PRP received a special notice letter from the EPA inviting participation in the remedial design ("RD") component of the landfill remedy for the Allied Paper Mill, which is also known as Operable Unit 1. A Record of Decision ("ROD") establishing the final landfill remedy for the Allied Paper Mill was issued by the EPA in September 2016. The Company responded to the Allied Paper Mill special notice letter in December 2016. In February 2017, the EPA informed the Company that it would make other arrangements for the performance of the RD. In the summer 2021, the EPA initiated RA activities. In October 2022, the Company received a unilateral administrative order to perform the RA. As a result, the Company increased its reserve by $27 million in the fourth quarter of 2022. The total reserve for the Kalamazoo River superfund site was $27 million and $37 million as of December 31, 2023 and 2022, respectively. in In addition, in December 2019, the United States published notice the Federal Register of a proposed consent decree with NCR Corporation (one of the parties to the allocation/apportionment litigation described below), the State of Michigan and natural resource trustees under which NCR Corporation would make payments of more than $100 million and perform work in Operable Unit 5, Areas 2, 3, and 4 at an estimated cost of $136 million. In December 2020, 76 the Federal District Court approved the proposed consent decree. is involved The Company’s CERCLA liability has not been finally determined with respect to these or any other portions of the site, and except as noted above, the Company has declined to perform any work or reimburse the EPA at this time. As noted below, the Company in allocation/apportionment litigation with regard to the site. Accordingly, it is premature to predict the outcome or estimate our maximum reasonably possible loss or range of loss with respect to this site. We have recorded a liability for future remediation costs at the site that are probable and reasonably estimable, and it remains reasonably possible that additional losses in excess of this recorded liability could be material. fixed (plus interest The Company was named as a defendant by Georgia-Pacific Consumer Products LP, Fort James Corporation and Georgia Pacific LLC (collectively, "GP") in a contribution and cost recovery action for alleged pollution at the site. NCR Corporation and Weyerhaeuser Company were also named as defendants in the suit. The suit seeks contribution under CERCLA for costs purportedly expended by plaintiffs ($79 million as of the filing of the complaint) and for future remediation costs. In June 2018, the Federal District Court issued its Final Judgment and the past cost amount at Order, which approximately $50 million to be determined) and allocated to the Company a 15% share of responsibility for those past costs. The District Court did not address responsibility for future costs in its decision. In July 2018, the Company and each of the other parties filed notices appealing the Final Judgment and prior orders incorporated into that Judgment. In April 2022, the Sixth Circuit Court of Appeals reversed the Judgment of the Court, finding that the suit against the Company was time-barred by the applicable statute of limitations. In May 2022, GP filed a petition for rehearing with the Sixth Circuit Court of Appeals, which was denied in July 2022. In November 2022, GP filed a petition for writ of certiorari with the U.S. Supreme Court. In October 2023, the U.S. Supreme Court denied GP's writ petition, the Sixth Circuit's decision that GP's suit against the Company was time-barred. In January 2024 GP requested that the District Court’s final order declare that each party is jointly and severally liable for future costs, arguing that the Sixth Circuit decision only applies to past costs. The Company believes the Sixth Circuit decision dismisses all of GP’s claims against it, whether for past or future costs, and is opposing GP’s request. thus rendering final Harris County: International Paper and McGinnis Industrial Maintenance Corporation ("MIMC"), a subsidiary of Waste Management, Inc. ("WMI"), are PRPs at the San Jacinto River Waste Pits Superfund Site in Harris County, Texas. The PRPs have been actively participating in the activities at the site and share the costs of these activities. In October 2017, the EPA issued a ROD selecting the final remedy for the site: removal and relocation of the waste material from both the northern and southern impoundments. The EPA did not specify the methods or practices needed to perform this work. The EPA’s selected remedy was accompanied by a cost estimate of approximately $115 million ($105 million for the northern impoundment, and $10 million for the southern impoundment). Subsequent to the issuance of the ROD, there have been numerous meetings between the EPA and the PRPs, and the Company continues to work with the EPA and MIMC/WMI to develop the RD. To this end, in April 2018, the PRPs entered into an Administrative Order on Consent ("AOC") with the EPA, agreeing to work together to develop the RD for the northern impoundment. That RD work is ongoing. The AOC does not include any agreement to perform waste removal or other construction activity at the involves adaptive management it site. Rather, techniques and a pre-design the objectives of which include filling data gaps (including but not limited to post-Hurricane Harvey technical data generated prior to the ROD and not incorporated into the selected remedy), refining areas and volumes of materials to be addressed, determining if an excavation remedy is able to be implemented in a the manner protective of human health and environment, and investigating potential impacts of remediation activities to infrastructure in the vicinity. investigation, technical issues previously preventing During the first quarter of 2020, through a series of meetings among the Company, MIMC/WMI, our consultants, the EPA and the Texas Commission on Environmental Quality, progress was made to resolve the key Company from determining the manner in which the selected remedy for the northern impoundment would be these developments the Company reserved the following amounts in relation to remediation at this site: (a) $10 million for the southern impoundment; and (b) $55 million impoundment, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs. implemented. As a result of the northern feasibly for We submitted the Final Design Package for the southern impoundment to the EPA, and the EPA 77 approved this plan in May 2021. The EPA issued a Unilateral Administrative Order for RA of the southern impoundment in August 2021. An addendum to the Final 100% RD (Amended April 2021) was submitted to the EPA for the southern impoundment in June 2022. This addendum incorporated additional data collected to date which indicated that additional waste material removal will be required, lengthening the time to complete RA. With respect to the northern impoundment, the PRPs submitted the final component of the 90% RD to the EPA in November 2022. Upon submittal of the final component, an updated engineering estimate was developed, and the Company increased the reserved amount by approximately $21 million, which represents the Company's 50% share of our estimate of the low end of the range of probable remediation costs. On January 5, 2024, the PRPs received comments from the EPA on the November 2022 90% RD submittal. The PRPs responded to the EPA comments in late January 2024. While several key technical issues have been resolved, respondents still face significant challenges remediating this area in a cost-efficient manner that will not result in a release of contaminated materials to the environment during the excavation, removal and transport of the materials. Our discussions with the EPA on the best approach to remediation will continue. Because of ongoing questions regarding cost effectiveness, timing and gathering other technical data, additional losses in excess of our recorded liability are possible. The total reserve for the southern and northern impoundment was $83 million and $95 million as of December 31, 2023 and 2022, respectively. a the 57-acre Versailles Pond: The Company is a responsible remediation of party investigation and for Versailles Pond, river dammed impoundment that historically received paperboard in Sprague, Connecticut. A mill wastewater comprehensive investigation has determined that Versailles Pond is contaminated with PCBs, mercury, and metals. A preliminary remediation plan was prepared in the third quarter 2023. Negotiations with state and federal governmental officials are ongoing regarding the scope and timing of the remediation. The total reserve for Versailles Pond was $30 million as of December 31, 2023. Asbestos-Related Matters We have been named as a defendant in various asbestos-related personal injury litigation, in both state and federal court, primarily in relation to the prior operations of certain companies previously acquired by the Company. The Company's total recorded liability with respect to pending and future asbestos-related claims was $97 million, net of respectively. While estimated insurance recoveries and $105 million, net of insurance recoveries as of December 31, 2023 and December 31, 2022, is reasonably possible that the Company may incur losses in excess of its recorded liability with respect to asbestos-related matters, we are unable to estimate any loss or range of loss in excess of such liability, and do not believe additional material losses are probable. it Antitrust the ("IP Italy"), subsidiary In March 2017, the Italian Competition Authority ("ICA") commenced an investigation into the Italian packaging industry to determine whether producers of corrugated sheets and boxes violated the applicable European competition law. In April 2019, the ICA concluded its investigation and issued initial findings alleging that over 30 producers, including our Italian packaging improperly coordinated the production and sale of corrugated sheets and boxes. In August 2019, the ICA issued its decision and assessed IP Italy a fine of €29 million (approximately $31 million at then-current exchange rates) which was recorded in the third quarter of 2019. We appealed the ICA decision, and our appeal was denied in May 2021. We further appealed the decision to the Italian Council of State ("Council of State"), and in March 2023 the Council of State largely upheld the ICA’s findings but referred the calculation of IP Italy’s fine back to the ICA, finding that it was disproportionately high based on the conduct found. We have further appealed the Council of State decision to uphold the ICA’s findings. The Company and other producers also have been named in lawsuits, and we have received other claims, by a number of customers in Italy for damages associated with the alleged anticompetitive conduct. We do not believe material losses arising from such private lawsuits and claims are probable. General The Company is involved in various other inquiries, administrative proceedings and litigation relating to environmental and safety matters, personal injury, product liability, labor and employment, contracts, sales of property, intellectual property, tax, and other matters, some of which allege substantial monetary damages. See Note 13 - Income Taxes for details regarding a tax matter. Assessments of lawsuits and claims can involve a series of complex judgments about future events, can rely heavily on estimates and assumptions, and are otherwise subject to significant uncertainties. As a result, there can be no certainty that the Company will not ultimately incur charges in excess of presently recorded liabilities. The Company believes that loss contingencies arising from pending matters including the matters described the herein, will not have a material effect on 78 in the light of consolidated financial position or liquidity of the Company. However, inherent uncertainties involved in pending or threatened legal matters, some of which are beyond the Company's control, and the large or indeterminate damages sought in some of these matters, a future adverse ruling, settlement, unfavorable development, or increase in accruals with respect to these matters could result in future charges that could be material to the Company's results of operations or cash flows in any particular reporting period. Taxes Other Than Payroll and Income Taxes in that included to us at the basis of In 2017, the Brazilian Federal Supreme Court decided that the state value-added tax (VAT) should not be federal VAT calculations. In 2018 and 2019, the Brazilian tax authorities published both an internal consultation and a normative ruling with a narrow interpretation of the effects of the case. Based upon the best information available time, we determined an estimated refund was probable of being realized. As of March 31, 2021, we had recognized a receivable of $11 million based upon the authority's narrow interpretation. On May 13, 2021, the Brazilian Federal Supreme Court ruled again on the case. This ruling provides a much broader definition of the state VAT, which increased the exclusion amount from the Federal VAT calculations. Therefore, we recognized an additional receivable of $70 million during the three months ended June 30, 2021, which brought the total receivable to $81 million as of June 30, 2021. The $70 million of income recognized during the second quarter of 2021 included income of $42 million and income of $28 million of net interest expense and is recorded in Discontinued Operations, net of the accompanying consolidated statement of operations. A portion of this receivable has been consumed by offsetting various taxes payable leaving a remaining receivable of $48 million. This remaining receivable was conveyed to Sylvamo on October 1, 2021, as part of our spin-off transaction. taxes, in NOTE 15 VARIABLE INTEREST ENTITIES In connection with the acquisition of Temple-Inland in February 2012, two special purpose entities became wholly-owned subsidiaries of International Paper. The use of the two wholly-owned special purpose entities discussed below preserved the tax deferral that resulted from the 2007 Temple-Inland timberlands sales. As of December 31, 2023, this deferred tax liability was $485 million, which will be settled with the maturity of the notes in 2027. In October 2007, Temple-Inland sold 1.55 million total acres of for $2.4 billion. The timberland to consideration consisted almost entirely of notes due in 2027 issued by the buyer of the timberland, which Temple-Inland contributed two wholly-owned, bankruptcy-remote special purpose entities. The notes are shown in Long-term financial assets of variable the accompanying consolidated balance sheet and are supported by $2.4 billion of irrevocable letters of credit issued by three banks, which are required to maintain minimum credit ratings on their long-term debt. interest entities in two wholly- In December 2007, Temple-Inland's owned special purpose entities borrowed $2.1 billion which is shown in Long-term nonrecourse financial liabilities of variable interest entities. The loans are repayable in 2027 and are secured by the $2.4 billion of notes and the irrevocable letters of credit securing the notes, and are nonrecourse to us. The loan agreements provide that if a credit rating of any of the banks issuing the letters of credit is downgraded below the specified threshold, the letters of credit issued by that bank must be replaced within 30 days with letters of credit from another qualifying financial institution. As of both December 31, 2023 and 2022, the fair value of the notes receivable was $2.3 billion. As of both December 31, 2023 and 2022, the fair value of this debt was $2.1 billion. The notes receivable and debt are classified as Level 2 within the fair value hierarchy. Activity between the Company and the 2007 financing entities was as follows: In millions Revenue (a) Expense (b) Cash receipts (c) Cash payments (d) 2023 2022 2021 $ 146 $ 65 $ 24 136 122 123 58 28 40 24 5 16 (a) The revenue is included in Interest expense, net, in the accompanying consolidated statement of operations and includes approximately $19 million for the years ended December 31, 2023, 2022 and 2021, respectively, of accretion income for the amortization of the purchase accounting adjustment on the Financial assets of variable interest entities. (b) The expense is included in Interest expense, net, in the accompanying consolidated statement of operations and includes approximately $7 million for the years ended December 31, 2023, 2022 and 2021 respectively, of accretion expense for the amortization of the purchase accounting adjustment on the Long-term nonrecourse financial liabilities of variable interest entities. (c) The cash receipts are interest received on the Financial assets of special purpose entities. (d) The cash payments are interest paid on Nonrecourse financial liabilities of special purpose entities. 79 forestlands, In connection with the 2006 sale of approximately 5.6 million acres of International Paper received installment notes (the "Timber Notes") totaling approximately $4.8 billion. The Timber Notes were used as collateral for borrowings from third party lenders, which effectively monetized the Timber Notes through the creation of newly formed special purposes entities (the "Entities"). The monetization structure preserved the tax deferral that resulted from the 2006 forestlands sales. During 2015, International Paper initiated a series of actions to extend the 2006 monetization structure and maintain the long-term nature of the deferred tax liability. The Entities, with assets and liabilities primarily consisting of the Timber Notes and third-party bank loans (the "Extension Loans"), were restructured which resulted in the bankruptcy-remote formation special purpose entities "2015 Financing Entities"). of wholly-owned, (the the Timber Notes. This resulted In August 2021, the Timber Notes of $4.8 billion and the Extension Loans of $4.2 billion related to the 2015 Financing Entities both matured. We settled the Extension Loans at their maturity with the proceeds in cash from proceeds of approximately $630 million representing our equity in the variable interest entities. Maturity of the the monetization structure also resulted in a $72 million tax liability that was paid in the fourth quarter of 2021. installment notes and termination of to the Company was required On September 2, 2022, the Company and the Internal Revenue Service agreed to settle the previously disclosed timber monetization restructuring tax matter involving the 2015 Financing Entities. Under this agreement, fully resolve the matter and pay $252 million in U.S. federal income taxes. As a result, interest was charged upon closing of the audit. The amount of interest expense recognized in 2022 was $58 million. As of December 31, 2023, $252 million in U.S. federal income taxes and $58 million in interest expense have been paid as a result of the settlement agreement. The Company paid $163 million in U.S. federal income taxes and $30 million in interest during the first quarter of 2023 and fully satisfied the payment terms of the settlement agreement regarding the 2015 Financing Entities timber monetization restructuring tax matter during the second quarter of 2023. The reversal of the Company’s remaining deferred the 2015 Financing Entities of $604 million was recognized as a one-time tax benefit in the third quarter of 2022. liability associated with tax Activity between the 2015 Financing Entities for the year ended 2021 was as follows: the Company and In millions Revenue (a) Expense (a) Cash receipts (b) Cash payments (c) 2021 $ 61 34 95 38 (a) The revenue and expense are included in Interest expense, the accompanying consolidated statement of in net operations. (b) The cash receipts are interest received on the Financial assets of variable interest entities. (c) The cash payments represent interest paid on Current nonrecourse financial liabilities of variable interest entities. NOTE 16 DEBT AND LINES OF CREDIT Amounts related to early debt extinguishment during the years ended December 31, 2023, 2022 and 2021 were as follows: In millions 2023 2022 2021 Early debt reductions (a) $ — $ 503 $ 2,472 Pre-tax early debt extinguishment costs (b) — 93 461 (a) Reductions related to notes with interest rates ranging from 3.00% to 8.70% with original maturities from 2021 to 2048 for the years ended December 31, 2022 and 2021. (b) Amounts are included in Restructuring and other charges in the accompanying consolidated statements of operations. The Company had no early debt reductions in 2023. The Company had debt reductions of $780 million in 2023, related primarily to capital leases, commercial paper, debt maturities and international debt. During the first quarter of 2023, the Company entered into a variable term loan agreement providing for a $600 million term loan which was fully drawn on the date of such loan agreement and matures in 2028. The $600 million debt was issued following the repayment of $410 million of commercial paper earlier in 2023. Additionally, during the first quarter of 2023, the Company issued an approximately $72 million environmental development bond ("EDB") with an interest rate of 4.00% and a maturity date of April 1, 2026. The proceeds from this issuance were used to repay an approximately $72 million outstanding EDB that matured on April 1, 2023. interest During the second quarter of 2023, the Company issued approximately $24 million of debt with a rate and a maturity date of variable December 1, 2027. The Company had debt reductions of approximately $49 million of variable interest EDBs with current maturities. Additionally, during the second quarter of 2023, the Company issued an approximately $54 million EDB with a variable rate and a maturity date of May 1, 2028. The proceeds of this were used to repay an approximately $54 million EDB that matured on May 1, 2023. The Company issued an approximately $25 million EDB with a variable rate and a maturity date of June 1, 2030. The proceeds of this were used to repay an approximately $25 million EDB that matured on June 1, 2023. During the third quarter of 2023, the Company repaid an approximately $70 million EDB with an interest rate of 2.90% that matured on September 1, 2023. During the fourth quarter of 2023, the Company repaid an approximately $87 million note with an interest rate of 6.875% that matured on November 1, 2023. issued the approximately $11 million of debt with a variable interest rate and a maturity date of December 1, 2027. Additionally, Company The Company had debt issuances in 2022 of $354 million of term loan agreements, $410 million of commercial paper and $248 million of environmental development bonds. The Company had debt issuances in 2021 of $1.5 billion related primarily to Sylvamo debt issuances as discussed further in Note 8 - Divestitures. The borrowing capacity of the Company's commercial paper program is $1.0 billion supported by its $1.4 billion credit agreement. Under the terms of this 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 floating rate notes. The Company had no or borrowings outstanding as of December 31, 2023 and $410 million borrowings outstanding as of December 31, 2022 under this program. At December 31, 2023, the Company's credit facilities totaled $1.9 billion. The credit facilities generally provide for interest rates at a floating rate index plus a pre-determined margin dependent upon International Paper's credit rating. The credit facilities previously included a $1.5 billion contractually committed bank facility with a maturity date of June 2026. In June 2023, the Company amended and restated its credit agreement to, among other things, (i) reduce the size of the contractually committed bank facility from $1.5 billion to $1.4 billion, (ii) extend the maturity date from June 2026 to June 2028, and (iii) replace the LIBOR-based rate with a SOFR-based rate. The liquidity facilities also include up to $500 million of uncommitted financings based on eligible receivables balances under a receivable securitization program that expires in June 2025. As of December 31, 2023 80 and December 31, 2022, the Company had no borrowings outstanding under the program. A summary of long-term debt follows: In millions at December 31 2023 2022 6.875% notes – due 2023 7.350% notes – due 2025 7.750% notes – due 2025 7.200% notes – due 2026 6.400% notes – due 2026 7.150% notes – due 2027 6.875% notes – due 2029 5.000% notes – due 2035 6.650% notes – due 2037 8.700% notes – due 2038 7.300% notes – due 2039 6.000% notes – due 2041 4.800% notes – due 2044 5.150% notes – due 2046 4.400% notes – due 2047 4.350% notes – due 2048 Floating rate notes – due 2023 – 2027 (a) Environmental and industrial development bonds – due 2023 – 2028 (b) Floating rate term loan - due 2028 Total principal Capitalized leases Premiums, discounts, and debt issuance costs Terminated interest rate swaps Other Total (c) Less: current maturities Long-term debt $ — $ 39 22 58 5 7 10 407 3 86 453 585 686 449 647 740 308 419 600 87 39 22 58 5 7 10 407 3 86 453 585 686 449 647 740 732 489 — 5,524 5,505 55 59 (41) 54 1 (42) 55 2 5,593 5,579 138 763 $ 5,455 $ 4,816 (a) The weighted average interest rate on these notes was 5.4% in 2023 and 4.6% in 2022. (b) The weighted average interest rate on these bonds was 2.4% in 2023 and 2.4% in 2022. (c) The fair market value was approximately $5.5 billion at December 31, 2023 and $5.2 billion at December 31, 2022. Debt fair value measurements use Level 2 inputs. the At December 31, 2023, contractual obligations for future payments of debt maturities (including finance lease liabilities disclosed in Note 10 - Leases and excluding structures disclosed in Note 15 - Variable Interest Entities) by calendar year were as follows over the next five years: 2024 – $138 million; 2025 – $189 million; 2026 – $143 million; 2027 – $333 million; and 2028 – $670 million. timber monetization financial covenants require The Company’s the maintenance of a minimum net worth, as defined in our debt agreements, of $9 billion and a total debt-to- capital ratio of less than 60%. Net worth is defined as the sum of common stock, paid-in capital and retained earnings, less treasury stock plus any cumulative goodwill impairment charges. The calculation also excludes accumulated other comprehensive income/loss and both the current and long-term Nonrecourse Financial Liabilities of Variable Interest Entities. The total debt-to-capital ratio is defined as total debt divided by the sum of total debt plus net worth. As of December 31, 2023, we were in compliance with our debt covenants. NOTE 17 CAPITAL STOCK The authorized capital stock at both December 31, 2023 and 2022, consisted of 990,850,000 shares of common stock, $1 par value; 400,000 shares of cumulative $4 preferred stock, without par value (stated value $100 per share); and 8,750,000 shares of serial preferred stock, $1 par value. The serial preferred stock is issuable in one or more series by the Board of Directors without further shareholder action. The following is a roll forward of shares of common stock for the three years ended December 31, 2023, 2022 and 2021: In thousands Balance at January 1, 2021 Issuance of stock for various plans, net Repurchase of stock Common Stock Issued Treasury 448,916 55,817 — (1,855) — 16,400 Balance at December 31, 2021 448,916 70,362 Issuance of stock for various plans, net Repurchase of stock — (1,569) — 29,839 Balance at December 31, 2022 448,916 98,632 Issuance of stock for various plans, net Repurchase of stock — — (1,647) 5,894 Balance at December 31, 2023 448,916 102,879 81 NOTE 18 RETIREMENT PLANS International Paper sponsors and maintains the Retirement Plan of International Paper Company (the "Pension Plan"), a tax-qualified defined benefit pension plan that provides retirement benefits to certain employees. The Pension Plan provides defined pension benefits based on years of credited service and either final average earnings (salaried employees and hourly employees receiving salaried benefits), hourly job rates or specified benefit rates (hourly and union employees). The Company also has two unfunded nonqualified defined benefit pension plans: the Pension Restoration Plan that provides retirement benefits based on eligible compensation in excess of limits set by the Internal Revenue Service, and the Unfunded Supplemental Retirement Plan for Senior Managers ("SERP"), which is an alternative retirement plan for salaried employees who are senior vice presidents and above or who are designated by the chief executive officer as participants. These nonqualified plans are only funded to the extent of benefits paid, which totaled $22 million, $29 million and $21 million in 2023, 2022 and 2021, respectively, and which are expected to be $20 million in 2024. credited including the Company service froze Effective January 1, 2019, participation, and compensation, for salaried employees under the Pension Plan, the Pension Restoration Plan and the SERP. This change does not affect benefits accrued through December 31, 2018. For service after December 31, 2018, employees affected by the freeze receive a Company contribution their individual Retirement Savings Account as described later in this Note 18. to Many non-U.S. employees are covered by various retirement benefit arrangements, some of which are considered to be defined benefit pension plans for accounting purposes. OBLIGATIONS AND FUNDED STATUS The following table shows the changes in the benefit obligation and plan assets for 2023 and 2022 and the plans’ funded status. In millions Change in projected benefit obligation: Benefit obligation, January 1 Service cost Interest cost Actuarial loss (gain) Plan amendments Benefits paid Special termination benefits 2023 2022 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans $ 8,816 $ 54 $ 11,833 $ 65 48 459 225 4 3 85 338 3 2 (3) (2,863) (11) 26 — 16 — (593) (3) (593) (2) 1 — — — Effect of foreign currency exchange rate movements — 3 — (3) Benefit obligation, December 31 Change in plan assets: Fair value of plan assets, January 1 Actual return on plan assets Company contributions $ 8,982 $ 58 $ 8,816 $ 54 $ 8,845 $ 18 $ 12,075 $ 19 562 22 1 (2,666) — 3 29 2 (2) Benefits paid (593) (3) (593) Effect of foreign currency exchange rate movements — 1 — (1) Fair value of plan assets, December 31 $ 8,836 $ 20 $ 8,845 $ 18 $ (146) $ (38) $ 29 $ (36) $ 118 $ — $ 297 $ — (20) (2) (22) (2) (244) (36) (246) (34) $ (146) $ (38) $ 29 $ (36) Funded status, December 31 Amounts recognized in the consolidated balance sheet: Overfunded pension plan assets Underfunded pension benefit obligation - current Underfunded pension benefit obligation - non- current Amounts recognized in accumulated other comprehensive income (loss) under ASC 715 (pre- tax): Prior service cost (credit) $ 91 $ — $ 89 $ — Net actuarial loss (gain) 1,663 (10) 1,563 $ 1,754 $ (10) $ 1,652 $ (7) (7) The non-current asset for the qualified plan is included in the accompanying consolidated balance sheet under Overfunded Pension Plan Assets. The non-current portion of the liability is included with the pension liability under Underfunded Pension Benefit Obligation. 82 assets and other assumption changes. These net gains and losses are recognized prospectively over a period that 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 in subsequent years. NET PERIODIC PENSION EXPENSE Service cost is the actuarial present value of benefits attributed by the plans’ benefit formula to services rendered by employees during the year. Interest cost represents the increase in the projected benefit obligation, which is a discounted amount, due to the passage of time. The expected return on plan assets reflects the computed amount of current-year earnings from the investment of plan assets using an estimated long-term rate of return. Net periodic pension expense for qualified and nonqualified U.S. and non-U.S. defined benefit plans comprised the following: 2023 2022 2021 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans In millions Service cost $ 48 $ 4 $ 85 $ 3 $ 100 $ Interest cost 459 3 338 2 333 5 4 Expected return on plan assets Actuarial loss (gain) Amortization of prior service cost Special termination benefits Net periodic pension (income) expense (530) (1) (649) (1) (705) (7) 93 (1) 87 1 138 2 23 — 23 — 22 — 1 — — — — — $ 94 $ 5 $ (116) $ 5 $ (112) $ 4 The components of net periodic pension expense other than the Service cost component are included in Non-operating pension (income) expense in the Consolidated Statement of Operations except for $(3) million related in 2021 recorded in Discontinued Operations. to Sylvamo participants The increase in 2023 pension expense primarily reflects lower asset returns, higher interest cost due to a higher discount rate, higher actuarial loss, and lower service cost. The largest contributor to the actuarial loss affecting the benefit obligation was the decrease in the discount rate from 5.40% at December 31, 2022 to 5.10% at December 31, 2023. The components of the $102 million and $(3) million related to U.S. plans and non-U.S. plans, respectively, in the amounts recognized in OCI during 2023 consisted of: In millions Current year actuarial (gain) loss Amortization of actuarial loss Current year prior service cost Amortization of prior service cost Effect of foreign currency exchange rate movements Non- U.S. Plans U.S. Plans $ 192 $ (93) 26 (23) — $ 102 $ (3) 1 — — (1) (3) The portion of the change in the funded status that was recognized in net periodic benefit cost and OCI for the U.S. plans was $197 million, $474 million and $(1.0) billion in 2023, 2022 and 2021, respectively. The portion of the change in funded status for the non-U.S. plans was $2 million, $(6) million, and $(73) million in 2023, 2022 and 2021, respectively. The accumulated benefit obligation at December 31, 2023 and 2022 was $9.0 billion and $8.8 billion, respectively, for our U.S. defined benefit plans and $49 million and $46 million, respectively, at December 31, 2023 and 2022 for our non-U.S. defined benefit plans. following The for table summarizes pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2023 and 2022: information 2023 2022 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans In millions Projected benefit obligation $ 264 $ 57 $ 268 $ 54 Accumulated benefit obligation Fair value of plan assets 264 — 49 20 268 — 45 18 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 83 ASSUMPTIONS Paper evaluates International actuarial assumptions annually as of December 31 (the measurement date) and considers changes in these long-term factors based upon market conditions and the requirements for employers’ accounting for its pensions. These assumptions are used to calculate benefit obligations as of December 31 of the current year and pension expense to be recorded in the to following year (i.e., determine the benefit obligation as of December 31, 2023 is also the discount rate used to determine net pension expense for the 2024 year). the discount rate used Major actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit plans are presented in the following table: Actuarial assumptions used to determine benefit obligations as of December 31: Discount rate Rate of compensation increase Actuarial assumptions used to determine net periodic pension cost for years ended December 31: 2023 2022 2021 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans 5.10 % 5.88 % 5.40 % 5.31 % 2.90 % 2.59 % 3.00 % 3.40 % 3.00 % 3.36 % 3.00 % 2.92 % Discount rate (a) Expected long-term rate of return on plan assets (a) Rate of compensation increase 5.40 % 5.31 % 2.90 % 2.59 % 2.67 % 2.32 % 6.50 % 3.83 % 6.00 % 3.66 % 6.40 % 4.99 % 3.00 % 3.36 % 3.00 % 2.92 % 2.25 % 3.66 % (a) Represents the weighted average rate for the U.S. qualified plans in 2021 due to the spin-off remeasurement.. 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. Projected rates of return are developed through an asset/liability study in which projected returns for each of the plan’s asset classes are determined after analyzing historical experience and future expectations of returns and volatility of the various asset classes. Based on the target asset allocation for each asset class, the overall expected rate of return for the portfolio is developed considering the effects of active portfolio management and expenses paid from plan rate assumption was assets. The discount determined from a universe of high-quality corporate bonds. A settlement portfolio is selected and matched to the present value of the plan’s projected benefit payments. To calculate pension expense for 2024, the Company will use an expected long-term rate of return on plan assets of 7.00% for the Retirement Plan of International Paper, a discount rate of 5.10% and an assumed rate of compensation increase of 3.00%. The Company estimates that it will record net pension income of approximately $7 million for its U.S. defined benefit plans in 2024, compared to expense of $94 million in 2023. For non-U.S. pension plans, assumptions reflect economic assumptions applicable to each country. 84 following The the effect on pension expense for 2024 of a 25 basis point decrease in the above assumptions: illustrates In millions Expense (Income): Discount rate Expected long-term rate of return on plan assets PLAN ASSETS 2024 $ 12 21 International Paper’s Board of Directors has appointed a Fiduciary Review Committee that is responsible for fiduciary oversight of the U.S. Pension Plan, approving investment policy and reviewing the management and control of plan assets. Pension Plan assets are invested to maximize returns within prudent levels of risk. The Pension Plan maintains a strategic asset allocation policy that designates target allocations by asset class. Investments are diversified across classes and within each class to minimize the risk of large losses. Derivatives, including swaps, forward and futures contracts, may be used as asset class substitutes or for hedging or other risk management purposes. Periodic reviews are made of investment policy investment manager and performance. For non-U.S. plans, assets consist principally of common stock and income securities. objectives fixed International Paper’s U.S. pension allocations by type of fund at December 31, 2023 and 2022 and target allocations were as follows: Asset Class Hedging assets Return seeking assets (a) 2023 2022 Target Allocations 66 % 34 % 64 % 36 % 61% - 72% 28% - 39% Total 100 % 100 % (a) Return seeking assets include Real Estate (9% for both 2023 and 2022) and Private Equity (7% and 8% for 2023 and 2022, respectively). The fair values of International Paper’s pension plan assets at December 31, 2023 and 2022 by asset class are shown below. Hedge funds disclosed in the following table are allocated to hedging assets for target allocation purposes. Fair Value Measurement at December 31, 2023 Quoted Prices in Active Markets For Identical Assets (Level 1) Total Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Asset Class In millions Equities Fixed income Derivatives Cash and cash equivalents Other investments: Hedge funds Private equity Real estate funds $ 1,336 $ 835 $ 501 $ — — 49 4,684 — — 4,691 71 49 1,293 644 752 Total Investments $ 8,836 $ 884 $ 5,185 $ 78 Fair Value Measurement at December 31, 2022 Quoted Prices in Active Markets For Identical Assets (Level 1) Total Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) — 7 25 — $ 1,353 $ 889 $ 464 $ — — 82 4,543 — — 4,550 25 82 1,319 688 828 Asset Class In millions Equities Fixed income Derivatives Cash and cash equivalents Other investments: Hedge funds Private equity Real estate funds Total Investments $ 8,845 $ 971 $ 5,007 $ 32 In accordance with accounting standards, certain investments that are measured at NAV and are not classified in the fair value hierarchy. 85 Other Investments at December 31, 2023 Investment Fair Value Unfunded Commitments Redemption Frequency Remediation Notice Period In millions Hedge funds $ 1,293 $ Private equity Real estate funds 644 752 Total $ 2,689 $ 103 81 94 278 Quarterly to semi-annually 45 - 60 days (a) None Quarterly 45 - 60 days (a) A private equity fund investment ("partnership interest") is contractually locked up for the life of the private equity fund by the partnership agreement. Limited partners do not have the option to redeem partnership interests. Other Investments at December 31, 2022 Investment Fair Value Unfunded Commitments Redemption Frequency Remediation Notice Period In millions Hedge funds $ 1,319 $ 120 Daily to annually 1 - 100 days Private equity Real estate funds 688 828 Total $ 2,835 $ 126 129 375 (a) None Quarterly 45 - 60 days (a) A private equity fund investment ("partnership interest") is contractually locked up for the life of the private equity fund by the partnership agreement. Limited partners do not have the option to redeem partnership interests. — 7 71 — Equity securities consist primarily of publicly traded U.S. companies and international companies. Publicly traded equities are valued at the closing prices reported in the active market in which the individual securities are traded. corporate Fixed income consists of government securities, mortgage-backed bonds, securities, common collective funds and other fixed income investments. Government securities are valued by third-party pricing sources. Mortgage-backed security holdings consist primarily of agency-rated holdings. The fair value estimates for mortgage securities are calculated by third-party pricing sources chosen by the custodian’s price matrix. Corporate bonds are valued using either the yields currently available on comparable securities of issuers with similar credit ratings or using a discounted cash flows approach that utilizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. Common collective funds are valued at the net asset value per share multiplied by the number of shares held as of the measurement date. futures, investments such as Derivative forward contracts, options and swaps are used to help manage risks. Derivatives are generally employed as asset class substitutes (such as when employed in a portable alpha strategy), for managing asset/liability fide hedging or other mismatches, or bona investments (commingled, multi-manager wide range of different securities and derivative instruments. These investments are made through funds-of-funds fund in through direct structures) and individual hedge funds. Hedge funds are primarily valued by each fund’s third-party administrator based upon the valuation of the underlying securities and instruments and primarily by applying a market or income valuation methodology as appropriate depending on type of security or instrument held. Funds-of-funds are valued based the underlying upon investments in hedge funds. the net asset values of the specific Private equity consists of interests in partnerships that invest in U.S. and non-U.S. debt and equity securities. Partnership interests are valued using the most recent general partner statement of fair value, updated for any subsequent partnership interest cash flows. Real estate funds include commercial properties, land and timberland, and generally include, but are not limited to, retail, office, industrial, multifamily and hotel properties. Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments which include flows, inputs such as cost, discounted cash based independent comparable data. and market appraisals appropriate risk management purposes. Derivative instruments are generally valued by the investment managers or in certain instances by third-party pricing sources. The following tables summarize derivative holdings as of December 31, 2023 and 2022, respectively: In millions Collateral Credit Default Swap Interest Rate Swap Bond/Equity Swap Total $ $ Derivatives at December 31, 2023 Gross Asset Gross Liability Total 7 $ (7) $ 2 4 65 — — — 78 $ (7) $ Derivatives at December 31, 2022 In millions Collateral Gross Asset Gross Liability Total $ 9 $ — $ Credit Default Swap Interest Rate Swap Bond/Equity Swap Options Total 1 16 3 6 $ 35 $ — — — (10) (10) $ — 2 4 65 71 9 1 16 3 (4) 25 Hedge funds are investment structures for managing private, loosely-regulated investment pools that can pursue a diverse array of investment strategies with a 86 The following is a reconciliation of the assets that are classified using significant unobservable inputs (Level 3) at December 31, 2023: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) In millions Beginning balance at December 31, 2021 Actual return on plan assets: Relating to assets still held at the reporting date Relating to assets sold during the period Purchases, sales and settlements Transfers in and/or out of Level 3 Ending balance at December 31, 2022 Actual return on plan assets: Relating to assets still held at the reporting date Relating to assets sold during the period Purchases, sales and settlements Transfers in and/or out of Level 3 Ending balance at December 31, 2023 FUNDING AND CASH FLOWS The Company’s funding policy for the 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 plans, tax deductibility, cash flow generated by the Company, factors. The Company continually and other reassesses timing of any the amount and discretionary contributions. No voluntary contributions were made in 2021, 2022 or 2023. Generally, International Paper’s non-U.S. pension plans are funded using the projected benefit as a target, except in certain countries where funding of benefit plans is not required. At December 31, 2023, projected future pension benefit payments, excluding any termination benefits, were as follows: In millions 2024 2025 2026 2027 2028 2029-2033 $ 620 632 639 639 639 3,175 OTHER U.S. PLANS International Paper sponsors the International Paper Company Salaried Savings Plan and the International Paper Company Hourly Savings Plan, both of which 87 Other fixed income Derivatives Total 16 $ (21) $ (5) (9) 10 (10) — 7 $ — — — — 7 $ 38 29 (189) (179) 197 187 — 25 $ 57 48 — 32 57 48 (59) (59) — 71 $ — 78 $ $ $ are tax-qualified defined contribution 401(k) savings plans. Substantially all U.S. salaried and certain hourly employees are eligible to participate and may make elective deferrals to such plans to save for retirement. International Paper makes matching contributions to participant accounts on a specified percentage of employee deferrals as determined by the provisions of each plan. The Company makes Retirement Savings Account contributions equal to a percentage of an eligible employee’s pay. Beginning in 2019, as a result of the freeze for salaried employees under the Pension Plan, all salaried employees are eligible for the contribution to the Retirement Savings Account. contributions) when The Company also sponsors the International Paper Company Deferred Compensation Savings Plan, is an unfunded nonqualified defined which contribution plan. This plan permits eligible employees to continue to make deferrals and receive company matching contributions (and Retirement their Savings Account contributions to the International Paper Salaried Savings Plan are stopped due to limitations under U.S. tax law. Participant deferrals and Company contributions are not invested in a separate trust, but are paid directly from International Paper’s general assets at the time benefits become due and payable. Company contributions totaled approximately $160 million, $159 million and $172 million for the plan years ended in 2023, 2022 and 2021, respectively. the plans to NOTE 19 POSTRETIREMENT BENEFITS U.S. POSTRETIREMENT BENEFITS The weighted average assumptions used to determine the benefit obligation at December 31, 2023 and 2022 were as follows: International Paper provides certain retiree health care and life insurance benefits covering certain U.S. salaried and hourly employees. These employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. International Paper does not fund these benefits prior to payment and has the right to modify or terminate certain of these plans in the future. In addition to the U.S. plan, certain Moroccan employees are eligible for retiree health care and life insurance benefits. The components of postretirement benefit expense in 2023, 2022 and 2021 were as follows: In millions 2023 2022 2021 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans Service cost $ — $ — $ — $ — $ — $ — Interest cost 7 — 5 — Actuarial loss — — 3 — 5 5 1 1 — — — — — (2) Amortization of prior service credits Net postretirement expense 2023 2022 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans Discount rate 5.20 % 6.10 % 5.50 % 5.70 % Health care cost trend rate assumed for next year Rate that the cost trend rate gradually declines to Year that the rate reaches the rate it is assumed to remain 7.00 % 4.00 % 7.25 % 4.00 % 5.00 % 4.00 % 5.00 % 4.00 % 2032 2023 2032 2023 The plans are only funded in an amount equal to benefits paid. The the following changes in benefit obligation and plan assets for 2023 and 2022: table presents In millions 2023 2022 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans Change in projected benefit obligation: Benefit obligation, January 1 $ 125 $ 4 $ 172 $ 5 Service cost Interest cost — — — — 7 — 5 — Participants’ contributions 2 — 3 — Actuarial (gain) loss 8 — (33) — $ 7 $ — $ 8 $ — $ 10 $ — Benefits paid (24) — (23) — its Paper evaluates International actuarial assumptions annually as of December 31 (the measurement date) and considers changes in these long-term factors based upon market conditions and the for requirements of employers’ accounting postretirement benefits other than pensions. The discount rate assumption was determined based on a hypothetical settlement portfolio selected from a universe of high-quality corporate bonds. The discount rates used to determine net U.S. and non-U.S. postretirement benefit cost for the years ended December 31, 2023, 2022 and 2021 were as follows: 2023 2022 2021 U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans U.S. Plans Non- U.S. Plans Discount rate 5.50 % 5.70 % 2.90 % 5.20 % 2.50 % 6.91 % Less: Federal subsidy — — 1 — Currency Impact — — — (1) Benefit obligation, December 31 Change in plan assets: Fair value of plan assets, January 1 $ 118 $ 4 $ 125 $ 4 $ — $ — $ — $ — Company contributions 22 — 20 — Participants’ contributions 2 — 3 — Benefits paid (24) — (23) — Fair value of plan assets, December 31 $ — $ — $ — $ — Funded status, December 31 $ (118) $ (4) $ (125) $ (4) Amounts recognized in the consolidated balance sheet under ASC 715: Current liability $ (13) $ — $ (15) $ — Non-current liability (105) (4) (110) $ (118) $ (4) $ (125) $ (4) (4) Amounts recognized in accumulated other comprehensive income (loss) under ASC 715 (pre-tax): Net actuarial loss (gain) $ 2 $ (1) $ (6) $ (1) Prior service credit — — — — $ 2 $ (1) $ (6) $ (1) 88 The non-current portion of the liability is included with the postemployment liability in the accompanying consolidated balance sheet under Postretirement and postemployment benefit obligation. Additionally, restricted stock, which may be deferred into RSUs, may be awarded under a Restricted Stock and Deferred Compensation Plan for Non-Employee Directors. The components of the $8 million and $0 million change in other comprehensive income ("OCI") during 2023 for U.S. and non-U.S. plans, respectively, consisted of: the amounts recognized in In millions Current year actuarial (gain) loss Amortization of actuarial (loss) gain U.S. Plans Non- U.S. Plans $ 8 $ — — — $ 8 $ — The portion of the change in the funded status that was recognized in net periodic benefit cost and OCI for the U.S. plans was $(2) million, $44 million and $27 million in 2023, 2022 and 2021, respectively. The portion of the change in funded status for the non-U.S. plans was $0 million, $0 million, and $1 million in 2023, 2022 and 2021, respectively. At December 31, 2023, estimated future postretirement benefit payments, net of participant contributions and estimated future Medicare Part D subsidy receipts, were as follows: total In millions Benefit Payments Subsidy Receipts Benefit Payments 2024 2025 2026 2027 2028 2029– 2033 U.S. Plans U.S. Plans $ 14 $ 1 $ Non- U.S. Plans 13 12 11 11 45 1 1 1 1 2 — — — — — 1 NOTE 20 INCENTIVE PLANS and 2009 International Paper currently operates under its Incentive Restated Amended Compensation Plan ("ICP"). The ICP authorizes grants of restricted stock, restricted or deferred stock units ("RSUs"), performance awards payable in cash or stock upon the attainment of specified performance goals ("PSUs"), dividend equivalents, stock options, stock appreciation rights, other stock-based awards, and cash-based awards at the discretion of the Management Development and Compensation Committee of the Board of Directors (the "MDCC"). The MDCC administers the ICP. LONG-TERM INCENTIVE PLAN Effective January 1, 2023, the MDCC renamed the Performance Share Plan ("PSP") to the Long-Term Incentive Plan ("LTIP") and began incorporating RSUs into its annual grant process as a complement to PSUs to better align with market and aid in our recruitment and retention efforts. Under the LTIP, contingent awards of International Paper common stock are granted by the MDCC. that may be The maximum aggregate number of shares of the Company’s common stock issued pursuant to awards under the ICP shall not exceed 15.4 million shares. Shares for which payment is in cash, including the shares withheld to cover associate payroll taxes, as well as shares that expire, terminate, or are canceled or forfeited, may be awarded,or granted again under the ICP. Performance Share Units PSU awards are earned over a three-year period based on the achievement of pre-established performance goals of Return on Invested Capital ("ROIC") measured against our internal benchmark and our relative performance in Total Shareholder Return ("TSR") compared to the TSR peer group. The 2021-2023, 2022-2024 and 2023-2025 Awards are for all weighted 50% ROIC and 50% TSR participants. The ROIC component of the PSU awards is valued at the 20-trading day average closing price immediately prior to the grant date. As the ROIC component contains a performance condition, compensation expense, net of estimated forfeitures, is recorded over the requisite service period based on the most probable number of awards expected to vest. The TSR component of the PSU awards is valued using the same methodology as the RSUs but then adjusted using a factor derived from a Monte Carlo simulation as the TSR component contains a market condition. The Monte Carlo simulation estimates the fair value of the TSR component based on the expected term of the award, a risk-free rate, expected dividends, and the expected volatility for the Company and its competitors. The expected term is estimated based on the vesting period of the awards, the risk-free rate is based on the yield on U.S. Treasury securities matching the vesting period, and the volatility is based on the Company’s historical volatility over the expected term. PSUs are payable the Company's discretion. in cash or shares at 89 Restricted Stock Units in to vest three equal Time-based RSU awards granted under the LTIP are installments expected commencing on February 1st following the first anniversary of the grant date over a 3-year service period, subject to forfeiture and transfer restrictions. the RSUs are payable Company’s discretion. in cash or shares at Generally, the requisite service period is the vesting period. In the case of retirement (eligibility for which is based on the associate's age and years of service as provided in the relevant award agreement), awards vest pro-rata based on length of service during the award period, subject to continued employment and paid upon termination. and special recognition purposes. It provides for awards of RSUs to key employees. The following summarizes the activity of the RA Program for the three years ended December 31, 2023: Outstanding at December 31, 2020 126,075 $44.83 Weighted Average Grant Date Fair Value Shares Granted Shares issued Forfeited Outstanding at December 31, 2021 Granted Shares issued Forfeited 85,098 (85,768) (21,636) 103,769 132,200 (104,177) (5,400) 126,392 123,454 (81,629) (11,643) 50.90 45.59 45.52 49.03 43.38 44.53 47.78 46.88 35.51 45.40 39.77 Dividend equivalents are generally accrued on PSUs and RSUs outstanding as of the record date. These dividend equivalents are paid only on PSUs and RSUs that ultimately vest. Outstanding at December 31, 2022 Granted Shares issued Forfeited The following table sets forth the assumptions used to determine compensation cost for the market condition component of the LTIP plan: Expected volatility Risk-free interest rate Twelve Months Ended December 31, 2023 35.97% - 37.11% 0.17% - 4.18% The following summarizes LTIP activity for the three years ended December 31, 2023: Weighted Average Grant Date Fair Value Share/Units Outstanding at December 31, 2020 5,620,025 $40.36 Granted Shares issued Forfeited 2,316,295 (994,052) (1,016,126) Outstanding at December 31, 2021 5,926,142 Granted Shares issued Forfeited 1,899,211 (1,130,236) (1,382,637) Outstanding at December 31, 2022 5,312,480 Granted - LTIP PSU Granted - LTIP RSU Shares issued - LTIP PSU Shares issued - LTIP RSU Forfeited 1,619,481 1,411,042 (972,563) (15,161) (1,234,328) 45.24 63.54 57.55 35.43 50.32 40.23 42.03 38.01 37.78 34.63 40.44 34.63 45.38 Outstanding at December 31, 2023 6,120,951 $35.31 RECOGNITION AWARD PROGRAM The Recognition Award Program ("RA Program") is service-based and designed for recruitment, retention Outstanding at December 31, 2023 156,574 $39.22 At December 31, 2023, 2022 and 2021 a total of 5.5 million, 7.3 million and 7.7 million shares, respectively, were available for grant under the ICP. Stock-based compensation expense and related income tax benefits were as follows: In millions 2023 2022 2021 Total stock-based compensation expense (included in selling and administrative expense) Income tax benefits related to stock- based compensation $ 58 $ 124 $ 130 12 13 13 At December 31, 2023, $58 million of compensation cost, net of estimated forfeitures, related to unvested restricted performance shares, executive continuity awards and restricted stock attributable to future performance had not yet been recognized. This amount will be recognized in expense over a weighted-average period of 1.4 years. NOTE BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION BY FINANCIAL 21 International Paper’s business segments, Industrial Packaging and Global Cellulose Fibers are consistent with the internal structure used to manage these businesses. See the Description of Business Segments on pages 35 and 36 in Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for a description of the types of products and services from which each reportable segment derives its revenues. On October 1, 2021, the Company completed the previously 90 announced spin-off of its Printing Papers business into a new, publicly-traded company, Sylvamo, listed on the New York Stock Exchange as SLVM. the Company Additionally, on August 6, 2021, completed the sale of its Kwidzyn, Poland mill which included the pulp and paper mill in Kwidzyn and supporting functions. As a result of the Sylvamo spin- off and the sale of Kwidzyn, the Company no longer has a Printing Papers segment, and all prior year amounts have been adjusted to reflect the Sylvamo and Kwidzyn businesses as a discontinued operation. Both segments are differentiated on a common product, common customer basis consistent with the business segmentation generally used in the Forest Products industry. that trends Business segment operating profits are used by International Paper’s management to measure the earnings performance of its businesses. Management believes this measure allows a better in costs, operating understanding of efficiencies, prices and volumes. Business segment operating profits are defined as earnings (loss) from continuing operations before income taxes and equity earnings, but including the impact of less than wholly owned subsidiaries, excluding interest expense, net, corporate items, net, corporate net special items, business net special items and non-operating pension expense. External sales by major product is determined by aggregating sales from each segment based on similar products or services. External sales are defined as those that are made to parties outside International Paper’s consolidated group, whereas sales by segment table are determined using a management approach and include intersegment sales. the Net Sales in INFORMATION BY BUSINESS SEGMENT Net Sales Operating Profit (Loss) In millions 2023 2022 2021 Industrial Packaging $ 1,266 $ 1,742 $ 1,638 Global Cellulose Fibers (17) 106 (3) Business Segment Operating Profit 1,249 1,848 1,635 Earnings (loss) from continuing operations before income taxes and equity earnings Interest expense, net Adjustment for less than wholly owned subsidiaries (b) Corporate expenses, net (a) Corporate net special items Business net special items Non-operating pension (income) expense Assets In millions Industrial Packaging Global Cellulose Fibers Corporate and other Assets Capital Spending 382 231 (2) 27 28 529 1,511 325 (5) 34 99 76 999 337 (5) 134 352 18 54 (192) (200) $ 1,249 $ 1,848 $ 1,635 2023 2022 $ 16,060 $ 16,425 3,369 3,832 3,625 3,890 $ 23,261 $ 23,940 In millions 2023 2022 2021 Industrial Packaging $ 928 $ 762 $ Global Cellulose Fibers Subtotal Corporate and other Capital Spending 177 1,105 36 143 905 26 $ 1,141 $ 931 $ 382 83 465 15 480 Depreciation, Amortization and Cost of Timber Harvested In millions 2023 2022 2021 Industrial Packaging $ 1,144 $ 783 $ 286 2 255 2 829 265 3 $ 1,432 $ 1,040 $ 1,097 In millions Industrial Packaging 2023 2022 2021 $ 15,596 $ 17,451 $ 16,326 Global Cellulose Fibers 2,890 3,227 2,732 Global Cellulose Fibers Corporate Depreciation and Amortization Corporate and Intersegment Sales (a) 430 483 305 External Sales By Major Product Net Sales $ 18,916 $ 21,161 $ 19,363 In millions Industrial Packaging Global Cellulose Fibers Other (c) Net Sales 2023 2022 2021 $ 15,596 $ 17,441 $ 16,276 2,883 437 3,219 501 2,730 357 $ 18,916 $ 21,161 $ 19,363 91 INFORMATION BY GEOGRAPHIC AREA Net Sales (d) In millions 2023 2022 2021 United States (e) $ 16,340 $ 18,482 $ 16,769 EMEA Pacific Rim and Asia Americas, other than U.S. 1,494 1,693 1,611 261 821 123 863 207 776 Net Sales $ 18,916 $ 21,161 $ 19,363 Long-Lived Assets (f) In millions United States EMEA Americas, other than U.S. Long-Lived Assets 2023 2022 $ 9,021 $ 9,333 757 390 738 378 $ 10,168 $ 10,449 (a) Includes sales of $44 million in 2021 and operating profit (losses) of $9 million in 2021, from previously divested businesses. There were no sales or operating profit (losses) from previously divested businesses in 2022 and 2023. (b) Operating profits for industry segments include each segment’s percentage share of the profits of subsidiaries included in that segment that are less than wholly-owned. The pre-tax earnings for these subsidiaries is added here to present consolidated earnings from continuing operations before income taxes and equity earnings. Includes $44 million in 2021 from previously divested businesses. (c) (d) Net sales are attributed to countries based on the location of the seller. (e) Export sales to unaffiliated customers were $2.7 billion in (f) 2023, $3.2 billion in 2022 and $2.6 billion in 2021. Long-Lived Assets Properties and Equipment, net. includes Forestlands and Plants, 92 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES As of December 31, 2023, an evaluation was carried out under the supervision and with the participation of the Company’s management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). Based upon this evaluation, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2023. CHANGES REPORTING IN INTERNAL CONTROL OVER FINANCIAL There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. See Item 8. Financial Statements and Supplementary Data on pages 46 and 47 of this Form 10-K for management's annual report on our internal control over financial reporting and the attestation report of our independent public accounting firm. ITEM 9B. OTHER INFORMATION On November 14, 2023, Ms. Kathryn D. Sullivan, a member of the Company’s Board of Directors, adopted a trading arrangement for the sale of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c). The Rule 10b5-1 Trading Plan provides for the sale of up to 12,000 shares of common stock pursuant to the terms of the Rule 10b5-1 Trading Plan beginning in February 2024 and ending in November 2024. With the exception of Ms. Sullivan, during the quarter ended December 31, 2023, no other director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements, as defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 93 respect Information with to compliance with Section 16(a) of the Exchange Act and our corporate governance is hereby incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. ITEM 11. EXECUTIVE COMPENSATION Information with respect to the compensation of executives and directors of the Company is hereby incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS A description of the security ownership of certain beneficial owners and management and equity compensation plan information is hereby incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE A description of applicable information with respect to certain relationships and related transactions and hereby director incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. independence matters, is ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information with respect to fees paid to, and services independent registered public rendered by, our accounting firm, and our policies and procedures for pre-approving those services, is hereby incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. PART III. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information concerning our directors is hereby incorporated by reference to our definitive proxy statement that will be filed with the Securities and Exchange Commission ("SEC") within 120 days of the close of our fiscal year. The Audit and Finance Committee of the Board of Directors has at least one member who is a financial expert, as that term is defined in Item 401(d)(5) of Regulation S-K. Further information concerning the composition of the Audit and Finance Committee and our audit committee financial experts is hereby incorporated by reference to our definitive proxy statement that will be filed with the SEC within 120 days of the close of our fiscal year. to our executive officers is set forth on pages 9 and 10 in Part I of this Form 10-K under the caption, “Information About Our Executive Officers.” Information with respect Executive officers of International Paper are elected to hold office until the next annual meeting of the Board of Directors following the annual meeting of shareholders and, until the election of successors, subject to removal by the Board. The Company’s Code of Conduct (the "Code") is applicable to all employees of the Company, including the CEO and senior financial officers, as well as the Board of Directors. We disclose any amendments to our Code and any waivers from a provision of our Code granted to our directors, CEO and senior financial officers on our website within four business days following such amendment or waiver. To date, no waivers of the Code have been granted. We make our Corporate Governance Principles, our Code and the Charters of our Audit and Finance Committee, MDCC, Governance Committee and PPE Committee available free of charge on our website (www.internationalpaper.com), and in print to any shareholder who requests them. In addition, requests for printed copies may be directed to the corporate secretary at our corporate headquarters. Please direct your request to: International Paper Company Attn: Mr. Joseph R. Saab, Corporate Secretary 6400 Poplar Avenue Memphis, TN 38197 94 PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (1) Financial Statements – See Item 8. Financial Statements and Supplementary Data. the consolidated (2) Financial Statement Schedules – The following additional financial data should be read in conjunction with financial statements in Item 8. Financial Statements and Supplementary Data. Schedules not included with this additional financial data have been omitted because they are not applicable, or the required the consolidated financial statements or the notes thereto. information shown in is (2.1) (2.2) Additional Financial Data 2023, 2022 and 2021 Transaction Agreement, dated October 23, 2017, by and among the Company, Graphic Packaging Holding Company, Gazelle Newco LLC and Graphic Packaging Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated October 24, 2017). International, Separation and Distribution Agreement, dated as of September 29, 2021, by and between International Paper Company and Sylvamo Corporation (incorporated the by reference Company’s’ Current Report on Form 8-K dated October 1, 2021). to Exhibit 2.1 to Incorporation Restated Certificate of (incorporated by of the Company reference the to Exhibit 3.1 Company’s Current Report on Form 8-K dated May 13, 2013). to By-laws of the Company, as amended through May 9, 2023 (incorporated by the to Exhibit 3.1 reference Company’s Current Report on Form 8-K dated May 9, 2023). to Indenture, dated as of April 12, 1999, between the Company and The Bank of New York, as Trustee (incorporated by reference the to Exhibit 4.1 Company’s Current Report on Form 8-K dated June 16, 2000). to Supplemental Indenture (including the form of Notes), dated as of June 4, 2008, between the Company and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated June 4, 2008). Supplemental Indenture (including the form of Notes), dated as of December 7, 2009, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference the Company's Current Report on Form 8-K dated December 7, 2009). to Exhibit 4.1 to Supplemental Indenture (including the form of Notes), dated as of November 16, 2011, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference the Company's Current Report on Form 8-K dated November 16, 2011). to Exhibit 4.1 to (3.1) (3.2) (4.1) (4.2) (4.3) (4.4) 95 (4.5) (4.6) (4.7) (4.8) (4.10) (4.11) (10.1) (10.2) Supplemental Indenture (including the form of Notes), dated as of June 10, 2014, between the Company and The Bank of New York Mellon Trust trustee Company, (incorporated to Exhibit 4.1 to the Company's Current Report on Form 8-K dated June 10, 2014). N.A., by reference as Supplemental Indenture (including the form of Notes), dated as of May 26, 2015, between the Company and The Bank of New York Mellon Trust trustee Company, (incorporated to Exhibit 4.1 to the Company's Current Report on Form 8-K dated May 26, 2015). N.A., by reference as Supplemental Indenture (including the form of Notes), dated as of August 11, 2016, between the Company and The Bank of New York Mellon Trust Company, trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated August 11, 2016). N.A., as Supplemental Indenture (including the form of Notes), dated as of August 9, 2017, between the Company and The Bank of New York Mellon Trust Company, trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated August 9, 2017. N.A., as Item accordance with In 601 (b)(4)(iii)(A) of Regulation S-K, certain instruments respecting long-term debt of the Company have been omitted but will be furnished to the SEC upon request. Description of Securities (incorporated by reference to Exhibit 4.13 to the Company's Annual Report on Form 10- K for the fiscal year ended December 31, 2019). Amended and Restated 2009 Incentive Compensation Plan ("ICP") (corrected version of a previously filed exhibit) (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019). + Stock Restricted and Deferred Compensation Plan for Non-Employee Directors, Amended and Restated as of (incorporated by May 10, 2010 reference the to Exhibit 10.1 Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010). + to (10.3) (10.4) (10.5) (10.6) Form of Notice of Award under the Recognition Plan Restricted Stock Unit Award Agreement (stock settled) providing for accelerated vesting. * + Form of Notice of Award under the Recognition Plan Restricted Stock Unit Award Agreement (stock settled). * + Form of Notice of Award under the Recognition Plan Restricted Stock Unit Award Agreement (cash settled).* + Form of Performance Share Plan award certificate (incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017). + (10.6.1) Form of Notice of Award under the Long- Term Incentive Plan Performance Stock Unit Award Agreement (cash settled). * + Form of Notice of Award under the Long- Term Incentive Plan Performance Stock Unit Award Agreement (stock settled). * + Form of Notice of Award under the Long- Term Incentive Plan Restricted Stock Unit Award Agreement (cash settled). * + Form of Notice of Award under the Long- Term Incentive Plan Restricted Stock Unit Award Agreement (stock settled). * + International Paper Company Pension Restoration Plan for Salaried Employees effective April 1, 1991 (corrected version of previously filed exhibit). * + to Amendment Number One the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2013 (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to Amendment Number Two the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2013 (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10K for the fiscal year ended December 31, 2019). + to Amendment Number Three the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2015 (incorporated by reference the to Exhibit 10.10 Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to (10.6.2) (10.6.3) (10.6.4) (10.7) (10.8) (10.9) (10.10) 96 (10.11) (10.12) (10.13) to Amendment Number Four the International Paper Company Pension Restoration Plan for Salaried Employees effective July 1, 2014 (incorporated by reference the to Exhibit 10.11 Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to to Amendment Number Five the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2019 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to Amendment Number Six the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020). + (10.13.1) Amendment Number Seven the International Paper Company Pension Restoration Plan for Salaried Employees effective September 1, 2021. * to (10.13.2) Amendment Number Eight the International Paper Company Pension Restoration Plan for Salaried Employees effective January 1, 2023. * to (10.14) (10.15) (10.16) International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers, as amended and restated effective January 1, 2008 (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007). + Amendment No. 1 to the International Unfunded Paper Company Supplemental Retirement Plan for Senior Managers, effective October 13, 2008 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated October 17, 2008). + Amendment No. 2 to the International Unfunded Paper Company Supplemental Retirement Plan for Senior Managers, effective October 14, to 2008 (incorporated by reference Exhibit 10.5 to the Company’s Current Report on Form 8-K dated October 17, 2008). + Amendment No. 3 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers, effective December 8, 2008 (incorporated by reference the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008). + to Exhibit 10.20 to Amendment No. 4 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers, effective January 1, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009). + Amendment No. 5 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers, effective October 31, 2009 (incorporated by reference the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009). + to Exhibit 10.17 to Amendment No. 6 to the International Paper Company Unfunded Supplemental for Senior Managers, Retirement Plan effective January 1, 2012 (incorporated by reference the to Exhibit 10.21 Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011). + to Amendment No. 7 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers effective July 12, 2016 (incorporated by reference the to Exhibit 10.20 Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to Amendment No. 8 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers effective January 1, 2019 (incorporated by reference the to Exhibit 10.21 Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019). + to Amendment No. 9 to the International Paper Company Unfunded Supplemental Retirement Plan for Senior Managers effective November 1, 2019 (incorporated by the Company's Quarterly Report on Form 10- Q for the quarter ended September 30, 2019. + to Exhibit 10.1 reference to (10.17) (10.18) (10.19) (10.20) (10.21) (10.22) (10.23) 97 (10.24) (10.25) (10.26) (10.27) (10.28) (10.31) (10.32) Form of Non-Competition Agreement, entered into by certain Company employees (including named executive officers) who have received restricted stock units. * + Form of Non-Solicitation Agreement, entered into by certain Company employees (including named executive officers) who have received restricted stock units. * + senior "grandfathered" Form of Change-in-Control Agreement - Tier I, for the Chief Executive Officer and all vice presidents elected prior to 2012 (all but one named executive officer) - approved (incorporated by September 2013 the to Exhibit 10.1 reference Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013). + to II, for all Form of Change-in-Control Agreement - Tier future senior vice presidents and all "grandfathered" vice presidents (one named executive officer) elected prior to February 2008 - 2013 approved (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013). + September of Agreement Indemnity Form (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). + Time Sharing Agreement, dated October 17, 2014 (and effective November 1, 2014), by and between Mark S. Sutton and International Paper Company (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 14, 2014). + 26, 2017, Agreement, Commitment dated between September International Paper Company and The Prudential Insurance Company of America, relating to the Retirement Plan of International Paper Company (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017). + (10.33) (10.34) (10.35) (10.36) (10.37) 25, dated Commitment Agreement, September between 2018, International Paper Company and The Prudential Insurance Company of America, relating to the Retirement Plan of International Paper Company (corrected version of previously filed exhibit) (incorporated by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018). + to the Second Amendment No. 20 Amended and Restated Credit and Security Agreement, dated June 8, 2023, by and among International Paper Company, as servicer, Red Bird Receivables, LLC, as borrower, the lenders and co-agents from time to time party thereto, and Mizuho Bank, Ltd., as Administrative Agent.* among Third Amended and Restated Five-Year Credit Agreement, dated as of June 7, 2023, International Paper Company, JPMorgan Chase Bank, N.A., individually and as administrative agent, Citibank, individually and as syndication agent, and certain lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 7, 2023. Term Loan Agreement dated January 24, 2023, between International Paper Company and CoBank, ACB, as administrative agent (incorporated by the to Exhibit 10.1 reference Company's Current Report on Form 8-K filed January 24, 2023).+ to for Share Purchase Agreement the International Paper- Divestiture of Kwidzyn SP. Z.O.O. by and among International Paper (Poland) Holding SP. Z.O.O., Mayr-Melnhof Containerboard International, GMBH, Mayr-Melnhof International Paper Karton AG and Company dated August 4, 2021, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed October 28. 2021. 98 (101.INS) XBRL Instance Document - the instance document does not appear the Interactive Data File because its XBRL tags are embedded within the inline XBRL document. * in (101.SCH) XBRL Taxonomy Extension Schema * (101.CAL) XBRL Taxonomy Extension Calculation Linkbase * (101.DEF) XBRL Taxonomy Extension Definition Linkbase * (101.LAB) XBRL Taxonomy Extension Label Linkbase * (101.PRE) XBRL Extension Presentation Linkbase * (104) Cover Page (formatted as contained in Exhibit 101. * Interactive Data File Inline XBRL, and + Management contract or compensatory plan or arrangement. * Filed herewith ** Furnished herewith † Confidential treatment has been granted for certain information pursuant to Rule 24b-2 under the Securities Act of 1934, as amended. Item 16. Form 10-K Summary None. (10.38) (10.39) (19) (21) (23.1) (23.2) (24) (31.1) (31.2) (32) (97) (99) Share Purchase Agreement, dated February 12, 2021, by and between International Investments Paper (Luxembourg) S.a.r.l, Mayr-Melnhoff Cartonboard International GmbH, Mayr- Melnhof Karton AG, International Paper Company (Poland) Holding Sp. Z O.O., and International Paper Company (incorporated by reference to Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q filed on April 30, 2021). Transfer Notice from International Paper to Pulp Holding Switzerland GmbH Luxembourg S.A.R.L and ILIM Holding Luxembourg S.A.R.L dated December 15, 2022. International Paper Company Trading Policy.* Insider Subsidiaries and Joint Ventures.* Consent of Public Accounting Firm. * Independent Registered Consent of Public Accounting Firm. * Independent Registered Power of Attorney (contained on the signature page to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010). * Certification by Mark S. Sutton, Chairman and Chief Executive Officer, pursuant the Sarbanes-Oxley Act of 2002. * to Section 302 of Certification by Timothy S. Nicholls, Senior Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * to 18 U.S.C. Certification pursuant Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** International Paper Company Clawback Policy.* Report of Independent Auditors for Ilim S.A and subsidiaries as of and for the years ended December 31, 2022 and 2021. * 99 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERNATIONAL PAPER COMPANY By: /S/ JOSEPH R. SAAB Joseph R. Saab Senior Vice President, General Counsel and Corporate Secretary POWER OF ATTORNEY February 16, 2024 KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy S. Nicholls, Joseph R. Saab and Amanda M. Jenkins as his or her true and lawful attorney-in-fact and agent, acting alone, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this annual report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite or necessary to be done, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: Signature Title Date /S/ MARK S. SUTTON Mark S. Sutton Chairman of the Board & Chief Executive Officer and Director February 16, 2024 /S/ CHRISTOPHER M. CONNOR Director Christopher M. Connor February 16, 2024 /S/ AHMET C. DORDUNCU Director February 16, 2024 Ahmet C. Dorduncu /S/ ILENE S. GORDON Director February 16, 2024 Ilene S. Gordon /S/ ANDERS GUSTAFSSON Director February 16, 2024 Anders Gustafsson /S/ JACQUELINE C. HINMAN Director February 16, 2024 Jacqueline C. Hinman 100 /s/ CLINTON A. LEWIS, JR. Director Clinton A. Lewis, Jr. /s/ KATHRYN D. SULLIVAN Kathryn D. Sullivan Director /s/ ANTON V. VINCENT Director Anton V. Vincent /S/ RAY G. YOUNG Ray G. Young Director February 16, 2024 February 16, 2024 February 16, 2024 February 16, 2024 /S/ TIMOTHY S. NICHOLLS Timothy S. Nicholls /S/ HOLLY G. GOUGHNOUR Holly G. Goughnour Senior Vice President and Chief Financial Officer February 16, 2024 Vice President – Finance and Corporate Controller February 16, 2024 101 (This page intentionally left blank.) APPENDIX I Fridley, Minnesota Minneapolis, Minnesota leased Shakopee, Minnesota White Bear Lake, Minnesota Houston, Mississippi Jackson, Mississippi Magnolia, Mississippi leased Olive Branch, Mississippi Fenton, Missouri Kansas City, Missouri (2 locations) Maryland Heights, Missouri North Kansas City, Missouri leased St. Joseph, Missouri St. Louis, Missouri Omaha, Nebraska McCarran, Nevada Barrington, New Jersey Bellmawr, New Jersey 2023 LISTING OF FACILITIES (all facilities are owned except noted otherwise) INDUSTRIAL PACKAGING Containerboard U.S.: Modesto, California Ontario, California Salinas, California Sanger, California Pine Hill, Alabama Prattville, Alabama Selma, Alabama (Riverdale Mill) Santa Fe Springs, California (2 locations) Tracy, California Golden, Colorado Cantonment, Florida (Pensacola Mill) Wheat Ridge, Colorado Rome, Georgia Savannah, Georgia Cayuga, Indiana Cedar Rapids, Iowa Henderson, Kentucky Maysville, Kentucky Bogalusa, Louisiana Campti, Louisiana Mansfield, Louisiana Vicksburg, Mississippi Valliant, Oklahoma Springfield, Oregon Orange, Texas (1) International: Veracruz, Mexico Kenitra, Morocco Madrid, Spain Corrugated Packaging U.S.: Bay Minette, Alabama Decatur, Alabama Dothan, Alabama leased Huntsville, Alabama Conway, Arkansas Fort Smith, Arkansas (2 locations) Russellville, Arkansas (2 locations) Tolleson, Arizona Yuma, Arizona Anaheim, California Buena Park, California leased Camarillo, California Carson, California Cerritos, California leased Compton, California Elk Grove, California Exeter, California Gilroy, California (2 locations) Los Angeles, California Putnam, Connecticut Orlando, Florida Plant City, Florida Tampa, Florida leased Columbus, Georgia Forest Park, Georgia Griffin, Georgia Lithonia, Georgia Savannah, Georgia Tucker, Georgia Aurora, Illinois (3 locations) 1 leased Milltown, New Jersey leased Bedford Park, Illinois (2 locations) 1 leased (2) Belleville, Illinois Carol Stream, Illinois Des Plaines, Illinois Lincoln, Illinois Montgomery, Illinois Northlake, Illinois Rockford, Illinois Butler, Indiana Crawfordsville, Indiana Fort Wayne, Indiana Spotswood, New Jersey Thorofare, New Jersey Binghamton, New York Buffalo, New York Rochester, New York Scotia, New York Utica, New York Charlotte, North Carolina (2 locations) 1 leased Lumberton, North Carolina Manson, North Carolina Newton, North Carolina Indianapolis, Indiana (3 locations) Statesville, North Carolina Saint Anthony, Indiana Tipton, Indiana Cedar Rapids, Iowa Waterloo, Iowa Garden City, Kansas Byesville, Ohio Delaware, Ohio Eaton, Ohio Madison, Ohio Marion, Ohio Bowling Green, Kentucky Marysville, Ohio leased Lexington, Kentucky Louisville, Kentucky Walton, Kentucky Bogalusa, Louisiana Lafayette, Louisiana Shreveport, Louisiana Springhill, Louisiana Auburn, Maine Three Rivers, Michigan Arden Hills, Minnesota Austin, Minnesota A-1 Middletown, Ohio Mt. Vernon, Ohio Newark, Ohio Streetsboro, Ohio Wooster, Ohio Oklahoma City, Oklahoma Beaverton, Oregon Hillsboro, Oregon Portland, Oregon Salem, Oregon leased Atglen, Pennsylvania Bags U.S.: Buena Park, California Beaverton, Oregon Grand Prairie, Texas GLOBAL CELLULOSE FIBERS Pulp U.S.: Cantonment, Florida (Pensacola Mill) Flint River, Georgia Port Wentworth, Georgia Columbus, Mississippi (2 locations) New Bern, North Carolina Riegelwood, North Carolina Georgetown, South Carolina Franklin, Virginia International: Grande Prairie, Alberta, Canada Gdansk, Poland DISTRIBUTION International: Guangzhou, China leased Hong Kong, China leased Shanghai, China leased Japan leased Korea leased Singapore leased 1) Closed December 2023 2) Closed one location January 2023 Biglerville, Pennsylvania (2 locations) Puebla, Mexico leased Eighty-four, Pennsylvania Hazleton, Pennsylvania Kennett Square, Pennsylvania Lancaster, Pennsylvania Mount Carmel, Pennsylvania Georgetown, South Carolina Laurens, South Carolina Lexington, South Carolina Ashland City, Tennessee leased Cleveland, Tennessee Elizabethton, Tennessee leased Morristown, Tennessee Murfreesboro, Tennessee Amarillo, Texas Carrollton, Texas (2 locations) Edinburg, Texas El Paso, Texas Ft. Worth, Texas leased Grand Prairie, Texas Hidalgo, Texas McAllen, Texas San Antonio, Texas (2 locations) Sealy, Texas Waxahachie, Texas Lynchburg, Virginia Petersburg, Virginia Richmond, Virginia Moses Lake, Washington Olympia, Washington Yakima, Washington Fond du Lac, Wisconsin Manitowoc, Wisconsin International: Rancagua, Chile Cabourg, France Chalon, France Espaly, France Mortagne, France Saint Amand, France Bellusco, Italy Catania, Italy Pomezia, Italy San Felice, Italy Apodaco, Mexico leased Ixtaczoquitlan, Mexico Juarez, Mexico leased (2 locations) Los Mochis, Mexico Reynosa, Mexico San Jose Iturbide, Mexico Santa Catarina, Mexico Silao, Mexico Toluca, Mexico Zapopan, Mexico Agadir, Morocco Casablanca, Morocco Tangier, Morocco Ovar, Portugal Barcelona, Spain Bilbao, Spain Gandia, Spain Grinon, Spain Las Palmas, Spain Madrid, Spain Montblanc, Spain Tavernes de la Valldigna, Spain Tenerife, Spain Valls, Spain Recycling U.S.: Phoenix, Arizona Fremont, California Norwalk, California West Sacramento, California Itasca, Illinois Des Moines, Iowa Wichita, Kansas Roseville, Minnesota Omaha, Nebraska Charlotte, North Carolina Beaverton, Oregon Springfield, Oregon leased Carrollton, Texas Salt Lake City, Utah Richmond, Virginia Kent, Washington International: Monterrey, Mexico leased Xalapa, Veracruz, Mexico leased A-2 2023 CAPACITY INFORMATION (in thousands of short tons except as noted) Industrial Packaging Containerboard (a) Global Cellulose Fibers Dried Pulp (in thousands of metric tons) (b) APPENDIX II U.S. EMEA Americas, other than U.S. Total 13,829 560 27 14,416 2,749 — 373 3,122 (a) In addition to Containerboard, this also includes saturated kraft, kraft bag, and gypsum. U.S capacity includes Orange, Texas mill, which was permanently closed in December 2023. (b) U.S. capacity includes pulp machines at Riegelwood, North Carolina and Pensacola, Florida mills, which were permanently shutdown in December 2023 and August 2023, respectively. A-3 (This page intentionally left blank.) INTERNATIONAL PAPER LEADERSHIP As of March 1, 2024 Elected Officers / SLT: Mark S. Sutton Chairman of the Board and Chief Executive Officer Clay R. Ellis Senior Vice President Global Cellulose Fibers and IP Asia Aimee K. Gregg Senior Vice President Supply Chain and Information Technology W. Thomas Hamic Senior Vice President North American Container and Chief Commercial Officer Allison B. Magness Senior Vice President Manufacturing and Environment, Health and Safety Timothy S. Nicholls Senior Vice President and Chief Financial Officer Thomas J. Plath Senior Vice President Global Human Resources and Corporate Affairs James P. Royalty, Jr. Senior Vice President Containerboard and Recycling Joseph R. Saab Senior Vice President General Counsel and Corporate Secretary Ksenia N. Sosnina Senior Vice President and President International Paper Europe, Middle East and Africa Company Officers / VPs: Lee C. Alexander Vice President Global Fiber Supply Michael H. Anderson Vice President and Chief Information Officer Santiago Arbelaez Vice President, Strategy Industrial Packaging Sophie N. Beckham Vice President and Chief Sustainability Officer John D. Berry Vice President and General Manager North American Container Central Area September G. Blain Vice President Disruptive Technologies Paul J. Blanchard Vice President IPG Supply Chain and Supply Chain Operations Vincent P. Bonnot Vice President Financial Planning and Analysis Eric Chartrain Vice President Strategy Acceleration and Operational Excellence Europe, Middle East and Africa Nicole J. Cody Vice President Total Rewards Donald P. Devlin Vice President Finance and Strategic Planning Industrial Packaging Kenneth R. Goldberg Vice President Tax Holly G. Goughnour Vice President Finance and Corporate Controller John F. Grover Vice President Enterprise Converting Optimization North American Container Guillermo J. Gutierrez Vice President and General Manager North American Container Latin America and South Texas Border Area Charles Levell Hairston Vice President Recycling and Recovered Fiber Jason J. Handel Vice President Sales and Marketing Global Cellulose Fibers Errol A. Harris Vice President and Treasurer Russell V. Harris Vice President Manufacturing Containerboard Kally Hodgson Vice President Global Sourcing David Hunt Vice President Technology and Capital Execution Chris J. Keuleman Vice President Global Government Relations Shawn M. Lawson Vice President and General Manager European Packaging Brian N.G. McDonald Vice President Strategic Planning Marcez N. Mitchell Vice President and General Manager North American Container, Specialty Business Mark P. Nellessen Vice President Investor Relations Leslie A. Petrie Vice President Environment, Health and Safety Jose Maria Rodriguez Meis Vice President and General Manager North American Container West Area Christopher M. Roeder Vice President and General Manager North American Container East Area F. David Segal Vice President Investment Excellence Keith R. Townsend Vice President and General Manager North American Container South Area Carol W. Tusch Vice President Trusts and Investments Marc Van Lieshout Vice President Corporate Audit Kevin N. Walls Vice President Manufacturing Containerboard Hunter M. Whiteley Vice President Manufacturing Global Cellulose Fibers Sylvia M. Williams Vice President Deputy General Counsel and Assistant Corporate Secretary Ron P. Wise Vice President and General Manager Commercial and National Accounts North American Container BOARD OF DIRECTORS As of March 1, 2024 SHAREHOLDER INFORMATION Mark S. Sutton Chairman of the Board and Chief Executive Officer International Paper Company Christopher M. Connor Lead Director Retired Executive Chairman, Chief Executive Officer The Sherwin-Williams Company Ahmet C. Dorduncu Retired Chief Executive Officer Akkok Group Ilene S. Gordon Retired Executive Chairman, President and Chief Executive Officer Ingredion Incorporated Anders Gustafsson Executive Chairman, Former Chief Executive Officer Zebra Technologies Corporation Jacqueline C. Hinman Chief Executive Officer Atlas Technical Consultants Clinton A. Lewis, Jr. Chief Executive Officer AgroFresh Solutions, Inc. Kathryn D. Sullivan Senior Fellow Potomac Institute for Policy Studies & Ambassador-at-Large Smithsonian National Air and Space Museum Anton V. Vincent President Mars Wrigley North America Ray G. Young* Retired Vice Chairman and Chief Financial Officer Archer Daniels Midland Company *Ray Young will not stand for re-election when his current term of service ends in May 2024. CORPORATE HEADQUARTERS International Paper Company 6400 Poplar Avenue Memphis, TN 38197 (901) 419-9000 ANNUAL MEETING The next annual meeting of shareholders will be held at International Paper’s headquarters in Memphis TN at 11:00 a.m. CDT on Monday, May 13, 2024 TRANSFER AGENT AND REGISTRAR Computershare, our transfer agent, maintains the records of our registered shareholders and can help you with a variety of shareholder related services at no charge including: • Change of name or address • Consolidation of accounts • Duplicate mailings • Dividend reinvestment enrollment • Lost stock certificates • Transfer of stock to another person • Additional administrative services Telephone: (800) 678-8715 (U.S.) (201) 680-6578 (International) MAILING ADDRESSES Shareholder correspondence should be mailed to: Computershare Investor Services P.O. Box 43006 Providence, RI 02940-3006 USA Overnight mail delivery: Computershare Investor Services 150 Royall Street, Suite 101 Canton, MA 02021 USA SHAREHOLDER WEBSITE www.computershare.com/investor Shareholder online inquiries https://www-us.computershare.com/investor/Contact STOCK EXCHANGE LISTINGS Common shares (symbol: IP) are listed on the New York Stock Exchange DIRECT PURCHASE PLAN Under our plan, you may invest all or a portion of your dividends, and you may purchase up to $250,000 of additional shares each year. You may also deposit your certificates with the transfer agent for safe-keeping. For a copy of the plan prospectus, call or write to Computershare. https://www-us.computershare.com/Investor/#DirectStock INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Suite 350 6075 Poplar Avenue Memphis, TN 38119-0112 USA REPORTS AND PUBLICATIONS This Annual Report is being delivered to our shareholders to comply with the annual report delivery requirements of the New York Stock Exchange Act. All information required by those applicable rules are contained in this Annual Report, including certain information contained in the Form 10-K included herein, which has previously been filed with the Securities and Exchange Commission. Copies of this Annual Report (including the 10-K), SEC filings and other publications may be obtained free of charge by visiting our Web site, http:// www.internationalpaper.com, by calling (800) 332-8146, or by writing to our investor relations department at the corporate headquarters address listed above. INVESTOR RELATIONS Investors desiring further information about International Paper should contact the investor relations department at corporate headquarters, (901) 419-4352. 429195_IP_AR23_CoverOnly-v2a_R2.indd 4-6 429195_IP_AR23_CoverOnly-v2a_R2.indd 4-6 3/19/24 2:24 PM 3/19/24 2:24 PM EMEA Headquarters ©2024 International Paper Company. All rights reserved. The International Chaussée de la Hulpe, 166 Paper logo is a trademark of International Paper Company or its affiliates. 1170 Brussels, Belgium From Fortune © 2023. Fortune Media IP Limited All rights reserved. FORTUNE is a registered trademark of Fortune Media IP Limited and is used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, International Paper Company. “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC. FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that International Paper has been independently assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices. The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and other products. All product names, logos and brands are property of their respective owners. I n t e r n a t i o n a l P a p e r 2 0 2 3 A n n u a l R e p o r t 2023 Annual Report World Headquarters International Paper 6400 Poplar Avenue Memphis, TN 38197 United States of America internationalpaper.com 429195_IP_AR23_CoverOnly-v2a_R2.indd 1-3 429195_IP_AR23_CoverOnly-v2a_R2.indd 1-3 3/19/24 2:24 PM 3/19/24 2:24 PM 

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